UTRECHT, NETHERLANDS — Based on information published in Rabobank’s latest forecast, the poultry report for Q1 2023 , the outlook for global trade of poultry will remain strong in 2023, as lower feed costs benefit producers and consumers benefit from trading down to the more affordable protein option.

Analysts with the financial services company said an economic downturn would affect market conditions with ongoing high inflation pressuring consumer spending power and operational issues will continue to challenge producers.

Senior analyst of Animal Protein at Rabobank, Nan-Dirk Mulder stated in the report that a number of countries are risking oversupply. Global markets are expected to stay strong in 2023, with global poultry demand expected to benefit from consumers trading down to cheaper protein. However, global economic growth is expected to fall, while inflation is expected to stay high.

“This will pressure demand as consumers become more price-driven and raise the question of what price consumers are prepared to pay,” Mulder said. “This could lead to demand destruction, especially among low-income consumers. This is happening globally but especially in emerging markets in Asia, Africa and Latin America.”

Rabobank shared producers will face challenges on the operational side, namely feed and energy prices, labor cost and availability, avian influenza (AI) and supply discipline.

Even with feed prices moving slightly lower than the second half of 2022, feed and other input costs like energy, day-old chicks, and labor are all expected to stay high.

The report stated that tight global agriculture commodity inventories, geopolitical changes, and ongoing La Niña conditions mean feed commodity prices can change rapidly. Other input costs like gas, electricity, oil and freight have been highly volatile, with significant regional differences.

“Leading in terms of efficiency, procurement, feed formulation, biosecurity, and flexibility could make a difference under price-driven market conditions in the coming year,” Mulder said.

The global poultry trade was exceptionally strong in 2022 and it is expected to stay strong in 2023 on the back of tight supply conditions. Still, artificial intelligence, government interventions and oversupply could create significant volume and price swings.

“Disease pressure, which is currently very high in the Northern Hemisphere, is now moving into South America. Optimal biosecurity, monitoring, and compensation programs will be key, and further discussions about adaptation of vaccination as a tool will become more relevant,” Mulder said. “The potential spread of AI into Brazil could shake up global markets and poultry availability if it reaches key production areas in South or Center-West.”

Mulder added that government interventions during long periods of high food prices, weak economic conditions, and pressured consumer spending power are also important factors and could include measures such as an opening of imports or restrictions on exports, as seen in 2022.