Impact of avian flu set to continue throughout 2015

By Georgi Gyton contact

- Last updated on GMT

The US is still achieving strong margins despite a raft of bird flu outbreaks
The US is still achieving strong margins despite a raft of bird flu outbreaks

Related tags: Bird flu outbreaks, Influenza, Livestock, Poultry

The global trade and price of poultry is likely remain under pressure for the remainder of this year, due to the fallout from avian influenza outbreaks across the world.

According to analyst Rabobank’s latest Poultry Quarterly Q2 report, the longer-term effect of these outbreaks has the potential to be significant, due to several trade bans on breeding stock in importing countries.

That said, it is by no means doom and gloom for all poultry producers, as countries with balanced markets, such as Brazil, South Africa, Japan and the US, are continuing to enjoy healthy margins, it said.

Breaking down the industry on a regional basis, the EU looks set to see slight margin recovery and an improved trade position due to the weak euro and the possibility that avian flu-related trade restrictions will be lifted.

The US is still achieving strong margins despite a raft of bird flu outbreaks, as the broiler industry has been affected less than the turkey sector, and domestic demand remains strong.

Thailand is predicted to see oversupply despite strong exports, while Brazil is in a competitive position due to the weak real, and bans on competitor countries.

The outlook for the Russian market is expected to be less bullish, with higher ongoing feed costs. South Africa is expected to see improved margins, but the likely return of EU exporters will play their part, and China is expected to see margins at their lowest levels for five years, with the impact of bird flu outbreaks, causing sustained problems.

Nan-Dirk Mulder, animal protein analyst at Rabobank, said poultry industry fundamentals were facing "meaningful headwinds",​ with stronger-than-anticipated feed prices, due to the strong US dollar, increased competition from falling pork prices and restrictions on trade.

"Prices for whole chicken, leg quarters and chicken feet are declining further, while breast meat prices remain relatively strong,"​ he added.

Rabobank’s report noted the importance of global approaches to biosecurity, as well as adjusted business models to deal with the changing market. It also predicted that many Asian countries, including China, which have implemented restrictions on the trade of breeding stock, may well find themselves affected by low supply next year.

Global trade volumes fell by 13% in Q1 compared to the end of last year, with the US and EU experiencing the largest declines.

Related topics: Meat

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