Global Poultry Quarterly Q3 2022                                                                                                                                                                                            Bullish global markets- dealing with operational challenges more important than ever:

Global market outlook 2H 2022
The outlook for the global poultry industry for 2H 2022 is bullish, despite significant cost pressures and other operational
challenges. Demand is strong, with most countries open after adopting ‘living with Covid’ strategies. This is pushing up poultry
demand, while global pressure on spending power and high food prices are also leading consumers toward the lowest-priced
meat protein: poultry.
The biggest challenge for the industry is on the operational side. Feed and energy prices are higher than they have been in many
years and are expected to stay high into 2023. In addition to lingering Covid-19 impacts, the industry currently faces one of the
highest-pressure avian flu (AI) seasons in history. The Ukraine crisis directly affects global feed commodity, energy, and fertilizer
prices, further challenging industry operations in 2H 2022.
One consequence of this challenging context is that supply will be tight. Midsized and small producers are downscaling in
response to higher working capital requirements and risks. New investment projects have been delayed, given the rise in
investment costs, with high steel prices, rising interest rates, high logistical costs, and a tight labor supply. Genetics supply has
tightened following Covid-19-related downscaling. In Asia, African swine fever (ASF) has also had a big impact on the local meat
supply, with Thailand and the Philippines especially affected and facing tight local meat supply conditions.
Rabobank expects global average margins to remain positive. We expect global demand can only grow by 0.5% to 1% in 2022
due to these supply restrictions. This is significantly below a ‘normal’ year’s growth of around 2.5%. For lower-income countries,
this could lead to food security challenges, which should command attention from governments and the industry.
In this challenging market context, the differences between winners and losers will be significant. Companies with strong market
power, strong biosecurity, and strong operations – with high efficiency and solid procurement – will likely outpace the market.
Traders are expected to benefit, as global trade volumes will rise, with leading countries and companies that do not face AI
restrictions also benefiting. These include Brazil, the US, Thailand, and smaller countries like Argentina, Chile, and Turkey. (read the full report here)

Published by the Global Animal Protein Sector team
Lead author: Nan-Dirk Mulder
See back cover for full list of authors and contact details