UTRECHT, NETHERLANDS — According to a recent Rabobank report, global poultry market conditions are gradually recovering after a weak second half of 2023. Several markets that faced oversupply and falling prices have seen local market conditions improve in the first quarter of 2024. In most cases, these improvements were driven by production cuts to rebalance supply, which was pressuring demand.

“We expect global markets to continue to improve slightly,” notes Nan-Dirk Mulder, senior analyst of Animal Protein at Rabobank. “Price will still drive market demand, but less so than in 2023, due to lower consumer price inflation and higher incomes.”

This would indicate some recovery in demand for value-added poultry, like processed chicken and poultry concepts and improved demand in foodservice. In those markets, business should start to normalize, but price-conscious consumers will remain a key driver. Keeping market balance through disciplined growth of supply will be the key challenge.

“From a global perspective, we expect growth of 1.5% to 2% for 2024, driven primarily by emerging markets in Asia, the Middle East, Africa and Latin America. Growth in Europe, the United States and Japan will be slow,” Mulder said.

Geopolitical tensions in the Black Sea region, attacks in the Red Sea and drought affecting water levels in the Panama Canal pose potential distribution challenges and could be a wild card for outcomes. Increasing rerouting via southern routes could challenge and impact global trade in poultry and related inputs, with rising costs, delayed supply, and constrained container availability.

European, Asian, Middle Eastern, and African trade flows are particularly vulnerable to changes. This could cause the focus to shift to regional trade, where possible, or otherwise lead to higher costs and potentially delayed supply. These conditions could especially affect goods primarily produced in a single region, such as feed additives, equipment, animal-health products, or specific poultry products like processed poultry or whole birds for the Middle East.

“Regional trade flows in Asia, Europe, and the Middle East are expected to benefit from the situation, while traders shipping to those destinations will be negatively affected,” Mulder added.

The report also said operational challenges will persist for poultry producers. While overall feed costs have decreased by an average of 15% to 25% compared to 2023 levels, regions in the Southern Hemisphere and countries like India and Indonesia are increasingly exposed to dry weather at critical times for their summer crops, raising local feed supply worries. However, feed supplies in Northern Hemisphere countries such as the United States, the European Union and Russia, along with Brazil are in good shape and face declining prices. From a supply/demand perspective, global commodity prices appear to have reached their lowest point, primarily due to concerns about geopolitics, trade issues, and weather (such as El Niño).

Avian influenza (AI) remains an ongoing concern. AI risks will shift in the coming months to the Southern Hemisphere, where more countries are turning to vaccines to protect the industry.

“Any outbreak in the southern states of Brazil – especially in a commercial flock – could have a substantial impact on global trade,” Mulder said.

Particular attention will be paid to AI risks in key exporting countries like Brazil and Thailand, where outbreaks could challenge global market conditions and trade flows.

The report said that in light of the challenges, it expects the global poultry trade to grow in line with forecast demand and processed poultry trade to recover after a weak 2023 gradually.