Fragile Recovery for Poultry Trade After Covid Storm, Says Rabobank

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The global poultry industry is recovering from the Covid-19 (SARS-CoV-2) pandemic’s economic hit during the first half of 2020, and the outlook is gradually improving, according to Rabobank’s Poultry Quarterly Q3 2020 report. Demand is expected to be more bullish in the second half of this year as strict virus containment measurements are eased by governments in many countries, lifting sales in the foodservice sector.

The report says the biggest driver will be the economic downturn, making global markets more volatile and price driven. Such conditions are generally positive for consumption of poultry, being the cheapest meat protein with a short and flexible production cycle.

Prices will see some recovery after historic lows in the first half of 2020. Breast meat should benefit from the reopening of foodservice outlets, although trade will remain difficult. Dark meat will likely do better. Supply in some markets will be tight, due to reduced parent stock.

“Volatility could be exacerbated by ongoing challenges to balance supply and demand and by exchange rate instability. On the other hand, the relatively bearish feed price outlook will provide producers some relief on the cost side of their businesses,” said Nan-Dirk Mulder, senior animal protein analyst at Utrecht, Netherlands-headquartered Rabobank.

Nan-Dirk Mulder

Global trade will likely remain unstable in the second half. Although demand will recover, supply-demand imbalances, exchange volatility, and access issues could distort trade flows. A trend of buying local may also have an impact.

Trade agreements and restrictions have the potential to keep shaking up global trade flows as well. The US-China business relationship, Brexit and a move in the Middle East to further improve food security are the main factors that could disrupt the global poultry business.