US profits, China struggles: Q1 2014 poultry outlook

Increasing grain prices, caused by political and climatic instability, are impacting the poultry market, according to Rabobank’s Poultry Quarterly Q1. Margins in Q2 are likely to be affected by avian influenza outbreaks in China, the weakening Asian economy and feed prices, which are up 10 to 15% on earlier expectations.

“The effect on companies hinges on their regional market balance and longer-term forward hedging,” said Rabobank analyst Nan-Dirk Mulder.

“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.”

The US can look forward to a “very profitable” year, Rabobank analysts say, while the Chinese poultry industry is suffering after a second avian influenza outbreak in less than a year has impacted demand, with consumers concerned about the safety of poultry.