Retailers may have to brace themselves for higher processed poultry prices in coming months as Asian markets feel the pinch from bird flu import bans.
Global chicken prices went into freefall at the end of last year, with leg quarter prices down 50%, whole birds 15% to 20%, breast meat 20% and processed meat down 20% in Q4 2015 compared with the same period a year ago.
But Rabobank’s Q1 2016 Poultry Quarterly update warns tighter supplies and increased demand for poultry will push up prices this year.
Global demand for poultry is set to rise as the expected economic slowdown hits red meat consumption in Brazil, Russia, South Africa and Indonesia, with consumers trading down to cheaper poultry cuts.
Supplies will be hit by the hangover from last year’s bird flu outbreaks, which prompted Asian countries to ban poultry breeding stock imports from the US and EU, resulting in reductions in breeding flocks.
Production in Thailand - a major exporter of processed poultry to the UK - is likely to be “flat at best” and could fall by 3% to 5% if restrictions remain. “It is therefore expected that prices for Thailand later this year will be relatively high,” says Rabobank.
China’s breeding stock could fall by as much as 50% - forcing the country to import more and putting further pressure on global supplies.
Rabobank predicts Brazilian poultry prices will also rise because low Brazilian beef production in the first half of the year will drive increased domestic consumption of poultry.
It says market indicators suggest European prices, which were down 15% in January 2016 compared with September 2015, have reached their bottom, and will increase as demand starts picking up in the spring and summer.