Stakeholders in the global poultry trade may see the second quarter get hit with a triple whammy — sharp increases in grain prices; bird flu outbreaks in China and weaker Asian economy, Rabobank noted in its poultry quarterly report.
The crisis in Ukraine and the effects of El Nino have led to sharp increases in grain prices, according to Rabobank. Feed prices have jumped 10 percent to 15 percent higher than earlier forecasts. Headwinds for international companies in the poultry trade include a second big avian influenza outbreak in China and a slowing economy and Asia.
"The effect on companies hinges on their regional market balance and longer term forward-hedging," noted Nan-Dirk Mulder Rabobank analyst. "A slowdown in global trade volumes and lower product prices, especially for leg quarters, will affect companies in international trade and lead to shifts in global trade streams. Brazil is likely to be affected the most, while Thailand is likely to benefit due to its recent return in the Japanese raw chicken market."
Additional major shifts that could have a large impact on global poultry trade during the quarter include pending anti-dumping duties on European Union poultry trade in South Africa; a new temporary free trade agreement between Ukraine and the EU; and the potential return of US exports of poultry to Chinese markets.
