Global Poultry Quarterly Q2 2023

Optimistic Outlook Despite Volatility, but Avian Influenza Is a Wild Card

Published by the Global Animal Protein Sector team

Lead author: Nan-Dirk Mulder March 2023

See back cover for full list of authors and contact details RaboResearch Food & Agribusiness
Global Poultry Quarterly Q2 2023
Market conditions remain strong, despite operational challenges
Global market outlook 2023
Although prices have been somewhat under pressure in Q1 2023, we are still optimistic about the outlook for global poultry
markets. At a time when eggs are reaching record-high prices globally and competing proteins like beef and pork are expected to
remain expensive in most markets, demand for poultry meat, the cheapest animal protein, remains strong. Having said this,
ongoing high prices at a time of weaker economic conditions are leading to some demand erosion in markets with sizable
populations of low-income consumers. This is happening in Africa and Asia in particular, where consumers are returning to
cheaper, traditional plant-based protein sources.
Currently, performance varies between regions. For example, the US, Brazil, India, and Indonesia operate under difficult conditions,
while conditions in Mexico, Japan, China, the Philippines, Russia, and Saudi Arabia are strong. Nevertheless, in most regions, the
focus in the coming period should again be on the operational side, given ongoing high and volatile feed and energy costs, limited
availability of breeding stock, high construction costs, and major avian influenza (AI) risks.
Over the course of the year, we expect soybean and corn prices to drop 5% to 10% compared to Q1 2023 levels, mainly driven by
expectations of good harvests in Brazil and eastern Europe and improving US forecasts. This will provide some relief for producers,
but will still mean historically high feed prices in most regions. Meanwhile, energy prices, which have been volatile, depend on
developments in the Russia-Ukraine war and competition for liquefied natural gas in global markets, especially once China’s
economy normalizes following the removal of Covid-19 measures.
Global poultry trade is expected to stay strong this year. Major importing countries and regions like Europe, Japan, China,
Singapore, the Philippines, Saudi Arabia, and the Gulf States are operating under relatively tight conditions, due partly to supply
challenges and partly to AI. Import volumes will likely rise, and prices will be affected by availability in Brazil and the US, which
looks relatively abundant for this year.
The big wild card for trade will be the development of AI, which poses an ongoing global threat. Some countries have already
adopted vaccination programs, while others are mulling it over. AI has continued to spread further into Latin America, getting
closer to Brazil’s southern production states, which cover more than 60% of the country’s production. If AI hits some of these states,
the potential impact on global trade could be big. Major importing countries may choose to change their sourcing, benefiting
alternative exporters like the US, the EU, Ukraine, Russia, Turkey, Thailand, and China. This would result in higher prices, and for
some submarkets, like breast and whole birds, there would be insufficient supply, which could have an additional bullish impact
on prices.

Main global issues for 2023

• The impact of declining consumer spending power due to economic downturn and high inflation
• Ongoing high and volatile operating costs for feed, energy, and construction
• Major AI risks, with possible impacts on Brazilian production and global trade
• The impact of geopolitical changes (including direct sanctions) on global trade, supply chain strategies, and investments

Source: Rabobank 2023

Global Poultry Markets Summary
Most regional industries perform above breakeven, the US and Brazil under challenging conditions
United States: Good start to the year
• Chicken prices rebound seasonally
• Production to slow in Q2, but accelerate by 2H
2023
• Breast meat stocks high; wings and legs lower
• Exports off to a strong start after a record 2022
Brazil: AI concerns
• Exports still strong, up 12% in
January/February
• Domestic market weak but
recovering somewhat
• AI impact on industry could be
significant if southern states are
affected
Source: Rabobank 2023
3
Europe: Concerns over rising supply China: Rising prices and increased imports
• Production set to increase in 1H 2023, • Demand picking up, especially in food service
following 4% decline in Q4 2022 • Tight supply as day-old chick (DOC), grandparent
• AI pressure to stay, but ease in Q2/Q3 (GP) stock imports have been low
• Balanced supply needed due to high import • Soy meal prices down 20%
pressure and declining exports • Rising import volumes expected in 2023
Thailand: Weaker, but with AI-related upside Japan: Tight market
• Recovering pork supply and panic sales of pigs by • More than 16m birds culled in Q1
suspected ASF-infected farms impact outlook 2023, due to AI
• Export outlook worse than in 2022, but AI outbreak • Supply and stocks tight, leading
in Brazil could lead to very bullish demand for Thai traders to decide between
products chicken or cheaper pork
• Processed imports more stable
Global Market Outlook for 2023
Operational conditions are ever more challenging, but outlook remains strong

Global markets: Mixed picture, but lower prices on average Figure 1: Global meat and feed price monitor: lower prices
170 250

meat and poultry price index

Since the beginning of 2023, global chicken market conditions have been changing slightly,
with prices for chicken and feed trending lower (see Figure 1). However, performance varies 150 200

feed price index

(Jan 2019=100)
widely across regions. Industries in the US, Brazil, South Africa, Indonesia, and India have been

(Jan 2019=100)
130
struggling with oversupply and lower prices, while those in Mexico, Japan, the Philippines, 150
China, Russia, Pakistan, and Saudi Arabia have been operating under strong market conditions. 110
Conditions in Europe and Thailand have been strong, but recent price volatility in these 100
90
markets indicates oversupply.
70 50
Although chicken and feed prices have declined, they remain high and put some strain on
chicken demand globally. Even though chicken is the cheapest meat protein, the pressure on 50 0

Sep 2019

Sep 2020

Sep 2021

Sep 2022
May 2022
Jan 2019
May 2019

Jan 2020
May 2020

Jan 2021
May 2021

Jan 2022

Jan 2023
spending power, combined with high chicken and meat prices, is leading lower-income
groups in Africa and Asia to significantly reduce consumption. For example, total chicken
consumption in South Africa dropped by 4% to 5% in 2H 2022.

Poultry outlook 2023: Challenging conditions, but prices will be strong Feed price index Poultry Pork Beef
The outlook for global poultry markets is still relatively strong. At a time of ongoing economic
downturn and pressure on consumer spending power, poultry meat will remain the preferred Figure 2: IMF consumer confidence index: slight recovery
protein among consumers due to its affordability. Prices for competing proteins (eggs, pork, 105

consumer confidence
and beef) are expected to stay high, putting poultry in a strong position in many markets as
consumers are trading down. Growing consumer confidence or slightly better-than-expected 100

indicator
economic conditions will help to boost demand further. 95
On the supply side, challenges are expected to persist. High costs, AI risks, and limited
90
availability of breeding stock will keep supply relatively tight. Many markets are expected to
remain robust. As Covid-19 restrictions have been lifted, China’s economic growth is expected 85
to improve. This will impact global markets. Chicken prices are already high in China and could 80
increase further. Among other markets in Asia, Japan and the Philippines are expected to stay

Jan 2019

Jan 2020

Jan 2021

Jan 2022
Jul 2019

Jul 2020

Jul 2021

Jul 2022
Oct 2019

Oct 2021
Apr 2019

Apr 2020

Oct 2020

Apr 2021

Apr 2022

Oct 2022
strong, while Indonesia and India are gradually improving. Likewise, Malaysia should also
improve in 2023, though the country is currently struggling with the impacts of government
interventions in 2022. Market conditions in Europe have been strong, and the outlook for 2023
should also be healthy if the industry maintains supply discipline. Conditions in the US will China Euro area Brazil
gradually improve, especially when beef supply drops later in the year. South America will be United States Turkey Japan
heavily impacted by low supply due to AI. This will likely mean higher prices .

Source: Bloomberg, IMF, Food and Agriculture Organization of the United Nations, Rabobank 2023

4
Supply Outlook 2023
With high input costs and rising AI concerns, focus on operations is essential

Ongoing high and volatile operational costs in 2023 Figure 3: Agri commodity price developments and forecast
We expect ongoing high and volatile operational costs in 2023. Feed costs will be the most 2,000
Rabobank
important, as they represent 60% to 70% of producers’ costs. Though feed ingredient prices
forecast
will stay high, they will be at slightly lower levels than in 2022 ( see Figure 3). Rabobank 1,500

USc/bushel
forecasts corn prices to trade below USD 6/bushel in 2H due to lower export demand for US
stocks due to better competition from Brazil. Concerns about Argentina’s corn crop have been 1,000
offset by high expectations for Brazil’s crop and a rebound in the US crop. Similarly, soybean
prices are forecast to fall below USD 14/bushel, mainly due to the positive outlook for the
500
Brazilian harvest.
Other operational challenges are likely to persist. FX volatility is currently high ( see Figure 4) -

Q1 2023f
Q2 2023f
Q2 2023f
Q4 2023f
Q1 2024f
Q1 2022
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021

Q2 2022
Q3 2022
Q4 2022
and could quickly impact trade flows. Energy prices have been highly volatile. And, although
prices dropped in Q4 2022 and Q1 2023, some new upside potential exists in 2H, especially for
Europe, when competition with China to purchase gas might arise.
Therefore, a strong focus on operational efficiency is key and will make a bigger difference
than in years of lower costs. Wheat Corn Soybean

Avian influenza: A major source of market swings in 2023 Figure 4: FX development: USD strength to gradually ease in 2023
AI continues to spread worldwide, and is rapidly expanding beyond Asia, Europe, and North 140

index (Jan 2019=100)

Rabobank
America and into South and Central America. Currently, northeast Asia, especially Japan, has
forecast
been heavily impacted, with more than 16m birds culled in Q1 2023. The impact on local 105
supply, especially of eggs, is significant. Europe still faces many cases across the region.
70
Presently, the biggest challenge is the fast rise in cases of AI in South and Central America.
Over the last few months, countries like Colombia, Peru, Venezuela, Ecuador, Bolivia, Chile, 35
Argentina, and Uruguay have been hit hard. Of the major producing countries in this region,
only Brazil and Paraguay remain free of AI. Concerns about AI spreading to these countries are 0

Oct 2019

Oct 2020

Oct 2021

Oct 2022

Jul 2023f
Jan 2019

Jan 2020

Jan 2021

Jan 2022

Jan 2023
Apr 2023 f

Oct 2023f
Jul 2019

Jul 2020

Jul 2021

Jul 2022
Apr 2019

Apr 2020

Apr 2021

Apr 2022

Jan 2024f
rising, especially as the cases reported in Argentina and Uruguay have occurred near Brazil’s
three southern states, which account for more than 60% of production.
A growing number of countries is turning to vaccination, especially non-exporting countries
and countries with limited exports like Mexico, China, Egypt, and Vietnam. Meanwhile, other USD/EUR USD/BRL USD/CNY
countries, like Peru, Colombia, Argentina, Ecuador, Bolivia, and the EU are mulling vaccination
USD/JPY USD/RUB USD/THB
programs too.

Source: Bloomberg, National statistics bureaus, CBOT, MATIF, Rabobank Agri Commodity Outlook November 2022, Rabobank 2023

5
Global Poultry Trade in 2023
Major import markets relatively short on supply – AI in Brazil could shake up trade flows

Global trade: Trade volumes remain high, but at lower prices Figure 5: Global chicken trade: slower growth in Q4 2022
Global poultry trade in Q4 2022 remained strong at 3.3m metric tons, a slight decline of 1% 1,400 3,600

(thousand metric tons)

(thousand metric tons)
compared to the same quarter in 2021 (see Figure 5). For the full year, trade grew by 2.8% to

trade by exporter
3,400
1,050

global trade
13.4m metric tons, an all-time record. The winning exporter in Q4 was Thailand, with a 4% rise
in volumes, driven by strong exports of processed chicken. The US (+2%), Brazil (+1%), and 3,200
Turkey (+1%) also saw export growth in Q4 2022, compared to Q4 2021. In contrast, European 700
trade was negatively impacted by AI restrictions and high local prices. Total European exports 3,000
dropped 15% YOY in Q4 2022. 350
2,800
Prices for poultry in global markets have been under pressure (see Figure 6). The main reasons
for lower prices are oversupply in the US and Brazil – both key exporting countries – and - 2,600
Ukraine’s unlimited access to the European market, which increased competition with Brazil Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3 Q1 Q3
and Thailand in the breast meat market.
2017 2018 2019 2020 2021 2022
Import demand looks strong, potential AI outbreak in Brazil is a wild card
Global (RHS) EU27+UK Brazil
We expect trade to stay strong in 2023. Global import demand is forecast to remain robust,
especially as supply in key import markets like Japan, Europe, China, Saudi Arabia, and Mexico US Thailand China
will be relatively tight, and prices will stay high. This should lead to record-high trade volumes.
Having said that, ongoing oversupply in Brazil and the US will challenge price levels and could
lead to a competitive market for raw chicken cuts. Figure 6: Chicken cut prices: high but pressure on prices high
The development of AI is the main wild card for the outlook. Outbreaks have heavily impacted 200
Europe’s position in global markets and are similarly affecting the positions of Argentina and

index (Q1 2020=100)

Chile, as both countries stopped exporting after cases of AI were reported. They might return 150
soon, in line with the guidelines of the World Organization for Animal Health, but there may
still be an impact on global volumes. The biggest wild card is a potential outbreak in Brazil’s key
production areas in the south. If that happens, global trade flows could turn fast and prices 100
would rise.
The magnitude of the impact would depend on the number of outbreaks and the states 50
affected. In this context, major importing countries in Asia and the Middle East would be
pushed to rethink sourcing. Alternative suppliers like the US (for legs and feet), Thailand (for
-
breast meat), Russia, Turkey, and Ukraine could benefit.
2020 Q2 Q3 Q4 2021 Q2 Q3 Q4 2022 Q2 Q3 Q4 2023
If most southern Brazilian states, or even all of Brazil, were restricted from trade, it would Q1 Q1 Q1 Q1
significantly impact most poultry cut markets, and for some, such as those for breast meat,
whole chickens, and bulk markets such as those for legs, feet, and mechanically deboned meat, Whole chicken Breast Leg Feet
there would be insufficient alternative supply available.
Source: Bloomberg, National statistics bureaus, Rabobank 2023

6
Global Poultry Market Dashboard
Live chicken and chicken cut price monitor

Figure 7: Live chicken price monitor

2021 2022 2023 Change
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1f Q2f Q3f Q4f Q3-Q4 Q4-Q1f
EU 1.02 1.11 1.13 1.13 1.25 1.43 1.41 1.39 1.51 -2.0% 8.7%

Live broilers Brazil 0.82 0.98 1.14 0.98 1,04 1.25 1.13 1.02 0.95 -9.4% -7.4%
USD/kg China 1.36 1.35 1.22 1.19 1.24 1.40 1.35 1.26 1.34 -7.0% 6.2%
Thailand 1.07 1.05 0.92 0.99 1.19 1.19 1.29 1.26 1.23 -2.6% -1.9%
Wheat (USD/bu) 646 680 698 779 905 1073 814 810 736 748 765 785 -0.5% -9.1%
Grains &
Corn (USD/bu) 538 659 560 559 662 777 625 668 665 655 625 580 1.2% -0.4%
oilseeds
Soymeal (USD/mt) 434 400 352 342 449 436 430 427 470 460 430 425 -7.4% 10.1%

Figure 8: Chicken cut price monitor

2021 2022 2023 Change
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1f Q2f Q3f Q4f Q3-Q4 Q4-Q1f

Whole Brazil wholesale 113.1 132.4 153.3 129.9 131.7 157.2 151.0 140.5 134.8 -7.0% -4.1%
chickens EU wholesale 228.7 243.8 235.3 234.6 263.4 273.6 260.5 268.4 277.8 3.0% 3.5%
EU import price Brazil 173.3 180.9 173.4 211.8 274.4 243.5 265.1
Breast meat
EU import price Thailand 228.3 238.1 217.3 253.7 317.6 287.0 25.2% -9.6%

Leg US leg quarters, northeast 88.8 116.5 112.1 94.4 93.5 121.2 120.2 81.2 82.2 -32.4% 1.2%
quarters Japan import price 159.2 161.7 181.5 187.6 182.9 184.2 197.4 226.6 212.6 14.8% -6.2%
Feet China import price 256.4 263.1 298.5 300.3 305.9 343.7 457.4 445,7 -2.6%
Wings China import price 306.8 315.4 317.5 315.1 319,2 322,2 336,4 346,3 2.9%

Source: Eurostat, USDA, UBABEF, Local statistics, Rabobank 2023

7
 US
Chicken markets stabilize as seasonal demand picks up

Production increase puts pressure on market, but recovery possible in 2H Figure 9: Chicken inventory in cold storage, 2021-2023
950
YTD chicken production is up 1.5% YOY, at 5.7bn pounds, with slaughter weights and
volumes contributing to the increase. Winter weather disruptions continue to impact weekly 900
comparability, yet trailing six-week chick placements continue to average 1% above a year

million pounds
ago. Weights also continue to average above year-ago levels following product mix changes 850
at some plants. However, average weights for heavier commodity production were down in
recent weeks. We currently expect Q1 2023 ready-to-cook (RTC) production to slow, with 800
slightly higher growth for the full year (+1.9% YOY) given recent increases in pullet
750
placements.
700
Seasonal price improvement, in line with historical averages
650
Slowing production growth in recent weeks has helped work through chicken inventory, yet
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
total stocks remain elevated (+12% YOY) versus last year’s depressed level (see Figure 9).
Breast meat inventories remain elevated, yet lower leg quarters (-20% YOY) and wing 2021 2022 2023 Five-year average
inventories (-35% YOY) were an offset. Despite the increase, boneless skinless breast meat
prices have firmed (+23% MOM) and are only slightly below the five-year average (see Figure Figure 10: Boneless breast meat prices, 2021-2023
10). Lower prices have encouraged retailers to feature chicken more frequently and have
4.00
improved foodservice interest for chicken. We expect an even stronger 2H 2023 in response
to shrinking domestic beef availability and a shift toward lower-cost proteins. Integrator 3.50
margins remain below breakeven despite the rebound but should improve in spring.
3.00

USD/pound
Strong trade outlook driving improved leg quarter markets 2.50
Broiler exports reached record levels in 2022, both in volume (3.8m metric tons, + 4.6% YOY) 2.00
and value (USD 5.2bn, +17% YOY). Record export volumes to the Philippines and several
African markets more than offset weaker exports to Mexico (-7.3% YOY) and Cuba (-12.4% 1.50
YOY). Paw exports to China also posted a record in value, topping USD 1bn in 2023 (+26% 1.00
YOY). Early indications suggest shipments to Cuba and Mexico have rebounded in 2023,
supporting strong leg quarter values (+18.3% YOY). Rabobank expects stronger whole muscle 0.50
exports in 2023, as chicken remains a good value, but acknowledges it may be challenging to Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
duplicate record exports to China given AI-related trade disruption. Five-year average 2021 2022 2023

Source: USDA, Rabobank 2023

8
 Mexico
Supply runs short of demand, strengthening prices

Demand strength drives price rebound Figure 11: Chicken prices rise as consumers shift toward value
70
Chicken prices in Q1 2023 have risen 12% YOY and 49% above the five-year average, to
MXN 58/kg. Continued strong demand is driving down inventories, while expectations 60

MXN/kg
for slower supply growth are causing supply to lag behind needs (see Figure 11).
Although outbreaks of AI continue to pose a threat and have caused some variability in 50
production, efforts to vaccinate the flock are helping to limit its disruptive impact. Retail
price trends are less uniform, with whole bird prices down 4% YOY, while breast and leg 40
meat are up 20% YOY and 27% YOY, respectively. The government remains focused on
food cost inflation as the 2024 election approaches, which may limit the possibility of
30
additional price increases. Production remains steady despite cost pressure
Chicken production reached a record 3.8m metric tons in 2022, up 3.3% YOY. Supply 20
exceeded our expectations, with December production up 3.6% YOY despite earlier AI Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
losses (see Figure 12). January production also remained strong and 10% above the five- Five-year average 2021 2022 2023
year average. We expect production growth to moderate in order to balance supply with
demand, helping to offset feed costs, which remain historically high. Expectations for a
large US crop in 2023 and the recent government decision to allow GMO corn imports
Figure 12: Production moves higher despite challenges
from the US for feed use are favorable for the sector. 350

Imports drop on larger domestic supplies 330

thousand metric tons

Chicken imports declined 2.8% YOY in volume to 2.2m metric tons, but rose 16% YOY in
310
value. The US represents 85% of total imports by volume, but volumes to both Brazil and
Chile grew in 2022, up 23% YOY and 8% YOY, respectively. January shipments increased
290
28% YOY, with imports from Brazil increasing nearly fivefold, along with strong gains
from the US (+16% YOY) and Chile (+30% YOY). Rabobank expects chicken imports to
270
taper in the coming months, barring any change in AI status. Domestic supply
constraints have also limited Mexican chicken exports, with negligible shipments in
250
January. Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2021 2022 2023

Source: SNCI, Rabobank 2023

9
 Brazil
Exports continue at record pace, while domestic market shows signs of
seasonal recovery – risk of AI outbreaks increases

Exports continue at record pace at start of the year Figure 13: Brazil February 2023 poultry exports hit record
500 2,500
Brazilian chicken exports remain strong, with January and February setting records in
both volume and value. In the first two months of the year 781,000 metric tons were 400 2,000

USD/metric ton
shipped (+12% YTD), totaling USD 1.6 bn (+ 26%). China remains the leading destination,

thousand metric tons

300 1,500
with a 23% increase in purchases in these months, followed by Saudi Arabia, which
increased imported volumes by 72%, becoming the second largest buyer. Shipments to 200 1,000
South Africa also increased in the same period, resulting in the country becoming the
third largest importer. High external demand has helped reduce excess production in the 100 500
domestic market and improve live broiler and chicken prices, which have been on a
0 0
downward trend since Q2 2022. In February 2023, wholesale chicken prices stabilized,

Jun 2022
Jun 2021
Feb 2021
Apr 2021

Feb 2022

Feb 2023
Aug 2021
Oct 2021
Dec 2021

Apr 2022

Aug 2022
Oct 2022
Dec 2022
and partial data for March indicates an inversion of price trends, resulting from a
combination of a seasonal recovery in domestic demand after the Carnival holiday and
the issuance of paychecks at the beginning of the month. For live broilers, the recovery
in prices is still limited. However, in general, prices should trend toward recovery in the Exports (LHS) Average export prices (RHS)
coming months.
Figure 14: Margins challenged despite lower costs
AI risks increase sharply in Brazil 10.00 2.5
With new AI cases advancing rapidly in South America and impacting commercial
8.00 2
production in Argentina and Bolivia, the risks to the southern region (responsible for
approximately 60% of total chicken meat production) have increased significantly. As the 6.00 1.5

BRL/kg

BRL/kg
end of summer approaches, the risk of virus spread is expected to increase. Still, the
modern and vertically integrated production profile of the industry, combined with 4.00 1
stricter prevention protocols, has increased health security in producing regions. 2.00 0.5
Despite the significant increase in the risk of AI entering the country, partial data on 0.00 0
exports in the first week of March indicates a substantial increase in average daily Feb 2021

Feb 2022

Feb 2023
Jun 2021

Jun 2022
Apr 2021

Aug 2021

Aug 2022
Oct 2021
Dec 2021

Apr 2022

Oct 2022
Dec 2022
shipments of 39% YOY and a recovery in the average price (in USD) of 3.9% over the
same period. The increase in international demand may result from anticipatory
movements by importers due to AI risks.
Feed Whole chicken chilled (LHS) Live broiler

Source: Secex, Cepea, JOX, Rabobank 2023.

10
 Europe
Market remains healthy, but concerns about oversupply are rising

Stable prices amid lower supply, high costs, and AI threats Figure 15: EU broiler prices improving after slower start of the year
300

whole bird price (EUR/100kg)

Despite a weak start to the year and falling prices in January, the European poultry
market remains relatively strong. The market is quite healthy due to a 4% YOY drop in
chicken production in Q4 2022. EU production of turkey (-7%) and ducks (-20%) also saw 250
large supply declines (see Figure 16), which led to even stronger prices in March 2023.
Tight supply remains an ongoing issue. AI has necessitated culling and restricted 200
expansion, and high production costs have led small and midsized players to reduce
their supply. While production in Poland was higher in Q4 2022, production in Germany, 150
France, and the Netherlands dropped. This trend is now continuing in 1H 2023.

High European prices are leading to higher imports 100

1 4 7 10 13 16 19 22 25 28 31 34 37 40 43 46 49 52
The tight supply situation in Europe has resulted in ongoing higher import demand. week #
Total EU imports in Q4 2022 increased by 6% to 227,000 metric tons, driven mainly by
more imports from Brazil (+7%), Ukraine (+60%), and Thailand (+50%). Imports from the Five-year average 2020 2021 2022 2023
UK dropped by 30% due to tight local market conditions and high local prices. The high
import volumes from Ukraine can be attributed to the European Commission having Figure 16: European poultry production: ongoing tight supply
lifted import restrictions on Ukraine to support the local industry in wartime. 10.0%

change 2020-2022 vs. 2019

On the export side, high EU prices and restrictions on trade due to AI cases in Europe are 0.0%
challenging European exporters. Total export volumes dropped by 15% in Q4 2022 to
-10.0%
360,000 metric tons, with exports to the UK and other non-European destinations
combined down 11%. -20.0%
-30.0%
Supply discipline needed, especially in summer months
-40.0%
The outlook for the European poultry market remains quite strong, although supply
growth might challenge prices and margins somewhat in a context of ongoing high feed -50.0%
prices. Keeping supply in balance with the market will be key for producers. This will be Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
especially important in the European summer months, when AI risks are lower. Later in 2020 2021 2022
the year there will also be new cost price inflation risks, mainly caused by energy prices,
which will depend on how the Ukraine war develops and on whether Europe is able to Broiler Turkey Duck
replenish its gas stocks.
Source: Eurostat, Rabobank 2023

11
 South Africa
Supply rebalance needed amid operational challenges and weaker economy

Industry challenged by weaker economy, power cuts, and high costs Figure 17: South African chicken prices keep rising on higher
The South African chicken industry is operating in a challenging context of high costs feed costs
and major infrastructure challenges, especially due to the load shedding that has been 35 9,500

feed price (ZAR/metric ton)

producer price ( ZAR/kg)
occurring in the country since early 2022. The industry now faces power cuts of six to
8,000
eleven hours a day, urging the sector to invest in diesel generators to replace power 30
from the grid. These challenges have impacted industry costs and supply and coincide 6,500
with a period of high feed costs (see Figure 17) and economic downturn in South Africa. 25
5,000
Markets have become more price-focused, which is impacting demand.
20
3,500
More expensive chicken and lower supply are eroding consumption
15 2,000
Most poultry players have been operating under highly challenging conditions since 2H Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4Q1f
2022, when production costs rose sharply and value-chain supply became challenging.
2019 2020 2021 2022 2023
Feed costs went up by 20% to 25%, while power cuts led to additional costs and
disrupted supply, resulting in significant shortages of small birds (see Figure 17). On the Feed Frozen broiler
positive side, imports dropped sharply following the introduction of new safeguards for
Brazil and some European countries, which lowered 2H imports by 40%. Higher chicken Figure 18: South African consumption down 4% to 5%
prices are now eroding chicken consumption in South Africa by 4% to 5% (see Figure 18). 600,000
500,000

thousand metric tons

Need to rebalance supply amid operational challenges
400,000
The outlook for the South African poultry industry remains challenging. Power
availability will remain an issue, and concerns are rising about water availability in the 300,000
country. However, feed costs are expected to decline slightly in line with global price 200,000
parity. And South Africa’s corn crop is expected to rise slightly (1%) to 15.6m metric tons 100,000
(8.2m for white corn and 7.4m for yellow corn).
-
The main challenge for the industry is rebalancing supply with demand. Import volumes -100,000
are expected to remain below 2021 levels, but local production also needs to be Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4f
rebalanced with lower consumption. Beef and pork prices increased in Q4, then fell back 2019 2020 2021 2022
slightly in Q1, but are expected to stay strong. This will provide some support for higher
chicken prices. Local production Imports Exports

Source: SAPA, News24, SAFEX, Rabobank 2023

12
 China
Strong market outlook due to recovery in demand and tight supply of
breeding stock

China’s reopening leads to rebound in poultry demand Figure 19: White feathered broiler prices expected to stay high
White broiler prices rebounded strongly in February in response to the gradual recovery in Q2
of the consumer market. As white broiler is closely associated with foodservice and 15 12
institutional consumption in China, the reopening from Covid-19 restrictions is
impacting demand for white bird more than pork, which is a staple food for home 10 8

CNY/bird
CNY/kg
consumption. Live bird prices increased to CNY 9.8/kg in February, up 26% YOY (see
Figure 19). Day-old chick (DOC) prices increased at an even faster pace, reflecting a tight 5 4
supply of DOC and parent stock. Meanwhile, feed prices have started to decline, as
soymeal prices have dropped around 20% from their November 2022 peak. However,
0 0
feed prices are still higher than a year ago. Farming profits have improved greatly, but

Jul 2019

Jul 2020

Jul 2021

Jul 2022
Jan 2019

Jan 2020

Jan 2021

Jan 2022

Jan 2023
Apr 2019

Apr 2020

Apr 2021
Oct 2019

Oct 2020

Oct 2021

Apr 2022

Oct 2022
slaughterhouse and processor margins are being squeezed. We expect farmgate prices
to stay strong in Q2. However, the consumer market needs to recover further before
processors can pass on costs downstream.
Breeding stocks are relatively low compared to the past two years, as imports of Live brolier price DOC (RHS)
grandparent stock dropped significantly in 2022 due to import suspensions following AI
outbreaks in many exporting countries. Although local production of breeders is quickly Figure 20: Poultry imports face uncertainty in 2023
catching up, total supply of new breeders for replacement declined in 2022. This will 200,000 200,000
limit the growth pace of white bird production in 2023. Players will focus on efficiency
and productivity improvements to increase supply. 150,000 150,000

metric tons

metric tons
Poultry imports have growth potential amid rising uncertainty 100,000 100,000
Poultry imports declined in 2022, down 11% YOY to 1.3m metric tons. The leading export
countries remain Brazil (42.5%), followed by the US (26.8%), Russia (10%), Thailand (6.4%), 50,000 50,000
and Argentina (5.7%). However, the product mix has changed, reflecting the temporary
0 0
channel shift resulting from Covid-19 policies in 2022. Bone-in cut imports saw the

Jan 2020

Jan 2021

Jan 2022

Jul 2022
Jul 2020

Jul 2021
Oct 2020

Oct 2021

Oct 2022
Apr 2020

Apr 2021

Apr 2022
largest drop (-38%), while imports of chicken wings stayed flat, and imports of feet
declined 10%. Looking ahead, we expect bone-in cut imports to rebound and shipments
of wings and feet to stabilize. Given local demand recovery and local supply tightness,
we believe imports have growth potential. However, uncertainty rises as AI spreads to Argentina Brazil Thailand
more countries. Since China depends highly on Brazilian supply, any sudden Russia United States Total (RHS)
developments in Brazil would cause great market volatility.
Source: MARA, China Customs, Boyar, Rabobank 2023

13
 Japan
Spread of AI into Brazil would present major supply issues

Chicken is the protein of choice, but competition from pork is returning Figure 21: Tight domestic supply and imports in Japan
500,000
Japan’s meat consumption grew for the second year in a row in 2022 (+0.6%) after
declines in 2019 and 2020. Chicken has become the protein of choice in the Japanese 400,000
market, with 1.2% consumption growth over 2022. Pork consumption dropped again in

metric tons
2022 (-1.3%), but better availability and lower prices suggest some recovery is likely in 300,000
2023. Changes in at-home consumption are the major driver of these trends, with
chicken and pork consumption in Q4 2022 each increasing 5% compared to 2019, while 200,000
beef and fish consumption declined 9% and 20%, respectively. 100,000
Expensive chicken prompted traders to shift to pork imports
0
Japan’s chicken production hit its seasonal peak in Q4 2022, but at a lower level than the Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
same quarter in 2021 (-1%). Strong chicken demand and lower production have led to
2018 2019 2020 2021 2022
persistently low stock levels in Japan. That should have spurred higher imports of
poultry meat. However, total imports in Q4 2022 only reached 280,000 metric tons, 8% Production Imports
below Q4 2021. The high stocks and good availability of pork imports compared
unfavorably to expensive chicken, resulting in lower-than-expected poultry import
Figure 22: Japanese wholesale chicken prices remain high
volumes. Raw chicken demand declined 13% in Q4 2022, hitting imports from Brazil in
particular. Meanwhile, processed chicken imports remained flat, with Thailand gaining 1000 500

breast meat price (JPY/kg)

position ahead of China. 800 400

leg price (JPY/kg)

Strong conditions and competition between pork and chicken to stay 600 300
The outlook for the Japanese poultry market remains favorable. The current outbreaks of
AI (16m cases as of mid-March) have had a significant impact on poultry markets, with 400 200
egg prices peaking and chicken prices expected to stay strong. This will likely worsen the 200 100
price competitiveness of chicken versus pork and lead to some demand shifts. The
biggest concern for Japanese traders will be the AI situation in the main importing 0 0

Sep

Sep

Sep

Sep

Sep
Jan

Jan

Jan

Jan

Jan

Jan
May

May

May

May

May
countries, especially in Brazil, which accounts for 70% of Japan’s raw chicken imports.
Outbreaks of AI in Brazil and any resulting restrictions on trade could have a big impact
on the Japanese market and force traders to shift to alternatives in Brazil (if open for 2018 2019 2020 2021 2022 2023
trade), Thailand, the US, or Europe. There might also be more substitution by other
Legs Breast
proteins and by processed chicken.

Source: ALIC, Rabobank 2023

14
 Thailand
Market outlook weaker but could turn very bullish should AI reach Brazil and
pork production remain low

Price decline after historically strong 2022 Figure 23: Thailand poultry and feed price index: falling prices
The Thai poultry industry has had a strong year due to the outbreak of African swine fever 200
(ASF) in early 2022. This caused significant declines (up to -35%) in pork production, especially 180

index (Jan 2019=100)

in 1H 2022, but the pork industry is now gradually recovering. As the best-positioned protein 160
to replace pork, chicken is benefiting from the ASF outbreak, especially since no pork imports
140
are allowed. Prices for broilers and DOCs were increasing sharply until early 2023, but then
started to fall sharply. These price movements were related to sudden increases in pig 120
slaughter in the market due to panic selling followed by a recovery in pork supply. DOC 100
availability has been a serious challenge in the chicken industry for quite a while. This has been 80
restricting expansion, but the situation looks now more balanced.
60
Another record year for Thai poultry exports, but Q4 2022 was weaker Jan Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan
Total Thai poultry exports for 2022 reached a record 1.1m metric tons, an 8% increase from 2019 2020 2021 2022 2023
2021. Processed meat exports were especially strong, rising 18% to 650,000 metric tons, while
raw and salted chicken exports dropped 5% to 425,000 metric tons combined. However, in Q4 Feed index Broiler DOC index
2022, the trend reversed, with exports of raw and salted chicken increasing 12% to 120,000
metric tons, while exports of processed chicken dropped 5% to 150,000 metric tons. Raw and Figure 24: Record-high Thai export volumes in 2022
salted exports to the EU, the UK, China, and Malaysia were especially strong (but with pressure
350,000
on prices), while Japan’s processed imports decreased sharply (-11%).
300,000
Weaker outlook, but AI in Brazil and slow pork recovery are wild cards
250,000

metric tons
The 2023 outlook for the Thai poultry industry is quite uncertain. It will highly depend on how
200,000
fast pork production in Thailand recovers and how AI develops globally, particularly if it
reaches Brazil. The base-case outlook appears moderately positive until 2H 2023, when 150,000
markets are still expected to be balanced. During this period, more pork will gradually enter 100,000
the market. Poultry export volumes will be quite strong, but prices will be lower than last year,
50,000
while feed prices will likely still be high.
The main wild cards for the Thai poultry industry are outbreaks of AI in Brazil and a slower-
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
than-expected recovery of pork production in Thailand. If AI reaches Brazil and trade is
restricted, Thailand will be well-positioned to benefit from strong demand and high prices for 2021 2022
its products. If the recovery of pork production (now expected in 2H 2023) is slower than
Processed Raw Salted
expected, chicken prices will stay strong.

Source: Bloomberg, Thai Feed Mill Association, Rabobank 2023

15
 RaboResearch Food & Agribusiness
Global Animal Protein Sector Team
Global Poultry Quarterly
Lead author: Global Strategist:

Nan-Dirk Mulder Justin Sherrard

nan-dirk.mulder@rabobank.com justin.sherrard@rabobank.com

Contributing authors:
Chenjun Pan – China Wagner Yanaguizawa – Brazil
chenjun.pan@rabobank.com wagner.yanaguizawa@rabobank.com
Christine McCracken – North America Matz Beuchel – Europe
christine.mccracken@rabobank.com matz.beuchel@rabobank.com

Other Global Animal Protein Sector Team Members:

Angus Gidley-Baird – Australia Genevieve Steven – New Zealand Lance Zimmerman – North America
angus.gidley-baird@rabobank.com genevieve.steven@rabobank.com lance.zimmerman@rabobank.com

Éva Gocsik – Europe Gorjan Nikolik – Europe Novel Sharma– Europe

eva.gocsik@rabobank.com gorjan.nikolik@rabobank.com novel.sharma@rabobank.com

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