According to Rabobank’s Poultry Quarterly report, the market is expected to remain volatile for the first half of the year before gradually improving in the latter half. Overall global poultry trade declined 2% in 2018 due to trade wars, changing trade standards in the Middle East and Avian Influenza outbreaks.
The report suggests that the international poultry market will be dictated by China, particularly supply and a potential trade agreement with the US.
On the supply side, cases of African Swine Fever in China will limit supply in 2019, increasing the need for imported produce.
“In 2H 2019, we expect markets to gradually recover, with China in the forefront given the impact of African swine fever,” said Nan-Dirk Mulder, Senior Analyst – Animal Protein and lead author of the report. “This will likely lead to increasing broiler prices in China, as some consumers substitute chicken for pork, and as global poultry trade focuses will focus more on China as local Chinese chicken production is restricted by low breeding-stock availability.”
Mulder said this will give countries with permission to export to China a distinct advantage. A potential US trade deal with China is described as a “game changer” for global trade, with the US theoretically challenging Brazil’s position as a market leader.
“Countries who can supply China are well positioned to benefit from this situation, such as Brazil and some Eastern European countries (including Russia) who are just gaining access to Chinese markets,” said Mulder. “Wildcards for the outlook are the outcome of the China-US trade negotiations and ongoing avian influenza pressure. Both factors could change global poultry market conditions, especially when combined with a return of US chicken in the Chinese chicken market, which would be a major blow for global trade flows.”
Meanwhile, the report also warned that Avian Influenza is a “wild card” for the market, despite a drop in outbreaks in the past year compared others. The winter season in the Northern Hemisphere usually leads to more cases with the report suggesting that “any new outbreaks of AI, especially in exporting countries, would again shake up global markets”.
Elsewhere, it predicts that it will take at least another year for Brazil to completely regain access in the European Union, and the relationship between Saudi Arabia and Brazil is no longer “attractive” due to changing standards causing cost differences.