However, along with the very high and volatile feed prices, the bank’s poultry report notes the industry is facing a raft of major challenges: COVID-19-related market disruption, avian influenza (AI) in the northern hemisphere, and volatility coming from a bumpy recovery in countries affected by African swine fever (ASF).
Global grain and oilseed prices increased further in Q1 2021, driven by La Niña-upended weather in key producing countries and an unprecedented and long-lasting import demand generated from China, said the team. This is problematic for chicken producers, as feed represents 60% to 70% of the cost of production, they noted.
The analysts expect ongoing high prices during 2021, but slightly down from the current Q1 2021 level.
“Key for producers in 1H 2021 will be to have a very disciplined supply growth, a focus on cost reduction via procurement, production efficiency, and feed formulation, as well as being prepared for big swings in demand driven by Covid-19-related government decisions,” said Nan-Dirk Mulder, senior analyst, animal protein, Rabobank.
Some countries who have been disciplined under these challenging conditions have seen significant improving market conditions, for example the US, Mexico, Russia, and Japan. Others, however, still face oversupply, such as the EU, South Africa, and Thailand, he said.
“As we expect more control over Covid-19 in 2H, poultry markets are expected to gradually recover, with local producers especially seeing the benefits. Global traders will also gradually benefit when foodservice reopens and stock levels fall.”
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March 30, 2021 at 06:37PM
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Chicken producers told to focus on cost reduction via feed formulation as price volatility endures - FeedNavigator.com
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