fbpx

Demand for breastmeat down globally

Weak global demand for breastmeat is leading to lower profitability for global players in the poultry sector, according to the latest Rabobank report.

Many regions are in oversupply, and demand created by African Swine Fever (ASF) is expected to have little impact on worldwide markets – at least in the short term.

The latest estimates suggest some 200 million pigs will have been culled by the end of the year, because of the disease.

China buys relatively little from global markets, mainly speciality cuts of dark meat like feed, lets and wings. Breastmeat is not a favoured cut, the report says, and even if ASF drives demand, the price difference between domestic and global is too great for imports to be attractive.

Only regions that supply directly into ASF-hit countries, like China and Vietnam, are directly benefitting at present. One “notable positive” for global markets will be feed prices improving, with “relatively good feed grain position” expected in Europe and Latin America.

Rabobank says the focus for global businesses needs to be on more disciplined supply growth if poultry prices are to recover.

In Europe, prices have fallen back after some recovery in the second quarter, as feed has dropped and more producers have come on stream, in particular in Eastern Europe and Spain.

In addition, Brazilian imports are also recovering, according to the report (up 23% in the first half).

Exports are performing well, making leg prices in Europe relatively high.

On European prices, it says: “Seasonal demand improvement, some supply reduction, expected strong pork prices due to ASF, and the good grain harvest which should keep prices relatively low should all help,” the report says.

Finally, it warns of the disruption a no-deal or hard Brexit could cause. “The UK is, together with Germany, the number one EU intra-trade import market. The Netherlands and Poland could be affected most by changes in trade access under a hard Brexit.”