Inflation, labor shortages and avian flu driving costs
Rabobank said in a Q3 2022 report that the global poultry market is bullish, in high demand and tight in supply, despite cost pressures and operational challenges. Due to inflation, labor availability and avian influenza (AI), we operate at high feed and energy prices. gas prices are more than double that of the second quarter of 2020. Europe is particularly affected by gas prices because it relies heavily on Russia for its resources. soy flour has also increased by 60%.
Feed costs expected to remain high
Rabobank expects feed prices to remain high, but below their second-quarter highs. Rabobank noted the significant impact of AI on the global poultry market. Europe has experienced the most pressured fertility season in history, with 53 million birds killed. Highly pathogenic bird flu struck the United States in February, killing 38 million birds in the past few months. Outbreaks are also seen in Japan, the Philippines, Mexico and Russia. “As a result of this difficult environment, there is a shortage of supplies,” Mr. Malder said. “Small and medium-sized manufacturers are expanding in response to increasing working capital requirements and risks. Soaring steel prices, rising interest rates, rising logistics costs, and rising capital costs due to tight labor. In the face of new investment projects, new investment projects have been postponed.
Consumers are switching to more chicken products
“Slow economic growth and diminished consumer confidence (partly related to Russia’s invasion of Ukraine) has attracted more consumers switching to chicken, “Malder added. Rabobank predicts that production in 2022 will increase by up to 0.5% to up to 1%. Due to the high demand for imports, countries such as Mexico, Qatar, Egypt and Sri Lanka have temporarily lifted import restrictions. The EU has also lifted import restrictions on Ukrainian products to help the country during the war. “The strong global demand for imported chicken is occurring in a very difficult trading environment, with AI restrictions, high logistics costs and limited container availability,” said Mulder. “
In this situation, Brazil and the United States are ahead after strong demand in the first quarter of 2022. The EU is in the market due to its many AI outbreaks and associated trade restrictions. I’m losing share. Thailand is recovering, but remains relatively expensive due to high local prices. “
Also read: Poultry exports from Brazil up 33.6%.