Rabobank: Poultry outlook 2023
Demand remains strong and supply limited, but the context is changing. An economic downturn will affect market conditions, and ongoing high inflation will pressure consumer spending power. This typically translates to strengthening demand for chicken, eggs, and cheaper cuts, and, in markets where more expensive, slower-growing, and organic options are available, strengthening demand for conventional chicken products.
Although a rising number of countries are risking oversupply, global markets are expected to stay strong in 2023, with global poultry demand expected to benefit from trading-down. However, in many countries, demand growth will be restricted by tight supply, leading to ongoing high prices. Although chicken is the best positioned protein in terms of affordability, it raises the question of what price consumers are prepared to pay. This could lead to demand destruction, especially among low-income consumers. This is happening globally but especially in emerging markets in Asia, Africa, and Latin America.
In addition to these market changes, producers will face key challenges on the operational side, namely feed and energy prices, labor cost and availability, avian influenza (AI), and trade. Although feed prices will be slightly lower than in 2H 2022, feed and other input costs, such as energy, DOC, and labor, are all expected to stay high. Further, in several regions the availability of breeding stock has been tight, restricting expansion. Leading in terms of efficiency, procurement, feed formulation, biosecurity, and flexibility could make a big difference under high-cost production and price-driven market conditions in the coming year.
We expect global poultry trade to stay strong in 2023, on the back of tight supply conditions, with all major exporters benefiting from high trade volumes and strong prices. The key themes to watch include AI, government interventions, and supply discipline among producers. Government interventions during ongoing periods of high food prices, weak economic conditions, and pressured consumer spending power are important and could include measures such as an opening of imports or restrictions on exports, as we have seen in 2022. This is another factor which could support global traders in 2023.
Avian influenza will be a key factor affecting many markets worldwide. The potential spread of AI in South America is particularly important, especially a move into Brazil, which could shake up global markets, particularly if it occurs in key production areas in the South or Center-West regions. Optimal biosecurity, monitoring, and compensation programs will be key, and further discussions about adaptation of vaccination as a tool will become more relevant.
In this context of major supply and demand volatility, being disciplined in supply is key – the recent oversupply in the US shows how fast markets can turn. Countries like Brazil and Thailand are facing increasing challenges. In the case of Thailand, recovering pork production means rising domestic meat supply.
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