Poultry production in China could fall by 15% in the next year-and-a-half and the drop is likely to be a boon for Brazil, Argentina, Poland and Russia. US poultry on the other hand, is expected to lose all competitiveness in one of the world’s most desirable markets after the Chinese government recently imposed anti-dumping duties on US broiler exporters for another five years.
After several weak years in the Chinese market, the global poultry industry is entering “a period of improved market conditions,” according to Rabobank’s senior animal protein analyst Nan-Dirk Mulder.
This bullish market outlook is based on Rabobank’s Global Quality Poultry Report, published on 14 September.
‘High prices’ in China
“The production downturn [in China] will lead to a shortage situation in the Chinese market and this will lead to high prices and a push to restore as much as possible supply in the market via breeding stock imports (but this will be slow), hatching egg imports or poultry meat imports,” Mulder explained.
“This push will affect prices in international markets, and Brazil especially will benefit as it is the most competitive country which has direct access to the Chinese market.”
A downturn in China’s poultry production derives from its reliance on imports of grandparent breeding stock of broiler chickens, shipped in to satisfy the country’s massive appetite for fast-food chicken.
Over the past two years the country has seen a sharp reduction in breeding stock imports due to avian influenza outbreaks in key markets like the US, UK, France and the Netherlands. Bans of these countries has led to a 50% reduction in breeding stock imports, with China becoming highly dependent on Spain and New Zealand.
Mulder said the shortage supply in China may lead to a “wake-up call” for the local industry that could spark investment to improve its value chain. This will be positive news for equipment manufacturers, which may see cash-rich China buy into European or US machinery.
It may not be such good news for the likes of Brazil, Argentina, Poland and Russia, all of which Rabobank has tipped to “benefit” from China’s supply shortage through the export of breeding stock, eggs or poultry meat.
But for the short-to-mid future, the global poultry industry has gone from relapse to recovery with bullish market conditions in a string of countries thank to the historic decline in China’s poultry industry.