World poultry industry faces turbulence
With feed prices up between 10-15% on expectations, and AI outbreaks in China, as well as a weaker Asian economy, Rabobank is warning the sector that margins maybe squeezed in the second quarter of 2014.
Analyst Nan-Dirk Mulder said: "The effect on companies hinges on their regional market balance and longer-term forward-hedging.
"A slowdown in global trade volumes and lower product prices, especially for leg quarters, will affect companies in international trade and lead to shifts in global trade streams. Brazil is likely to be affected the most, while Thailand is likely to benefit due to its recent return in the Japanese raw chicken market."
Further disruption is expected in the quarter, ranging from pending anti-dumping duties on European Union poultry trade in South Africa, the temporary free trade agreement between Ukraine and the EU and the potential return for US producers to the Chinese market.
According to Rabobank, the US is likely to see a profitable year, due to constrained supply within other protein sectors, while the Chinese poultry sector is suffering from AI outbreaks which have dampened demand among consumers. Russia continues to struggle with oversupply issues and, while exports are rising, they remain limited.
