After four years of highly disruptive conditions, global poultry markets are moving toward more “normal” market conditions, according to Rabobank’s “Global poultry quarterly Q3 2024” report. Firm analysts said accelerated growth in poultry meat consumption (up 1.5% to 2%) and disciplined supply growth in many markets are contributing to the improved outlook.

Global growth has been driven by strong local market conditions rather than trade. Further, lower feed prices have made chicken more affordable, supporting demand recovery, the report noted. Relatively strong demand, controlled production growth, and rising prices are particularly boosting performance in the EU and the U.S. The main exceptions to this relatively strong market environment are China and Japan, where the industry has experienced overly ambitious growth rates above 3% this year, which negatively impacted local profitability, the authors report. Brazil had also been heading toward an oversupply, but the report said recent production cuts are expected to help balance the markets.

Highly pathogenic avian influenza (HPAI) remains a global threat for the poultry industry, requiring ongoing vigilance and strict biosecurity practices to mitigate risks, Rabobank said. “Risks are currently shifting back into the Southern Hemisphere, with recent outbreaks in Australia and ongoing cases in South Africa and Latin America,” the report noted. “These outbreaks could lead to sudden shifts in trade flows, both for imports and exports.”

According to Rabobank, the ongoing battle with HPAI has prompted growing interest in a vaccine. Several Latin American and Asian countries as well as France are already vaccinating. So far, this has led to “significant reduction” in cases in the Southern Hemisphere, which Rabobank said may encourage other EU countries to begin vaccinating. 

Continue focus on operations necessary

Rabobank analysts suggested global trade will become more competitive than in the past two years due to shifts in trade flows. In China, rising production, low prices, and sharply dropping imports will significantly impact global trade. The U.S., Brazil, and Russia are expected to seek alternative markets to offset the impact of reduced Chinese trade. This will particularly affect chicken feet and legs markets. Additionally, the report pointed out that the new EU import quota for Ukraine will impact global trade in breast meat and whole chicken, particularly as Ukraine will increasingly look for alternative markets.

A continued focus on operations will be necessary in the current environment, analysts stated.

Feed costs have reached their lowest point, and grain prices have started rising. As such, procuring feed ingredients and optimizing feed formulations will need to be a strong focus, especially given the risk a La Niña season poses to global crop harvests.

U.S. supplies tight

Limited industry growth has led to tight U.S. domestic chicken supplies. The report relayed that year-to-date chicken production is down 0.2% year over year. While egg sets have been a little higher, ongoing hatchability issues have led to reduce chick availability. Additionally, disease challenges are affecting bird livability. Firm analysts said integrators have shifted toward heavier weights to offset the supply shortfall. In the second half of 2024, Rabobank expects a slight increase in productivity and stable chicken prices.