Dark-chicken meat to support poultry sales in Asia
Poultry exports to Asian countries affected by the ASF virus will support a gradual recovery for the global poultry industry but it will have a certain downside as the main products imported in China, Vietnam, South Korea and the Philippines are chicken legs, wings or other parts identified as "dark-chicken meat".
These trade flows will be positive for dark-meat prices, though they will be subject to increased volatility. Improved beef prices (the main substitute for fresh poultry), stable global average feed prices, and more balanced supply will also all support the gradual recovery. The downside is that global whole-bird and breast-meat markets will remain pressured and have limited price upside, reports Rabobank.
"African swine fever (ASF) will increasingly push chicken expansion in Asia in 2020. This will help fill the gap in local protein markets affected by ASF, but it also raises concerns about future oversupply. Strong growth in local supply – from poultry companies and pig farmers who invest in poultry farming – and rising imports are boosting supply. This will likely result in local price volatility in 2020," explained Nan-Dirk Mulder, Senior Global Specialist – Animal Protein.
Dark-chicken meat prices are expected to stay at average to high levels, but with more volatility. Supply growth in ASF-affected markets, rising availability of dark meat after Russia’s and Ukraine’s entry to global markets, and the reopening of US chicken exports to China will all add to volatility in global trade flows.
The top-performing markets in 2020 will be China, which is expected to see short supply in the next four to five years, and Mexico, where supply will also remain short, after outbreaks of avian influenza (AI) in early 2019. The US – and, to a lesser extent, the EU and Russia – will see improvement if supply stays balanced. Several wildcards could impact markets in 2020, including Brexit, the ongoing risk of AI, feed-price volatility (the base-case scenario indicates limited growth), and potential trade disruptions. In trade, we see more openings in Asia (partly because of AI), but also rising restrictions in Africa and the Middle East.
Last year, China has reported an increase of 12% in poultry production and the trend is expected to remain as many of the small pig farmers have turned to poultry to avoid losses in case of new ASF outbreaks.
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