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POULTRY

Global poultry trade highly volatile, says Rabobank report for ’18 Q3
Wednesday, 04 July, 2018, 08 : 00 AM [IST]
Global poultry trade has become highly volatile, with Brazil very much at the centre of the turmoil. These were the findings of Rabobank’s latest report, titled Poultry Quarterly Q3 2018: Trade Volatility, but Local Markets Bullish.

“Aside from issues surrounding the weak flesh investigation and associated trade implications, the country has also faced a major truckers’ strike, which led to the massive culling of birds,” it added.

Rabobank expected the global turmoil to continue in the second half of 2018, as new issues are set to impact trade, such as rising US-Chinese trade tensions, the recent safeguard measures on Brazilian poultry set by China and changes to Saudi Arabia’s halal stunning requirements.

The report stated that this could lead to further changes in global trade, along with a risk of volatility in feed costs and trade arrangements.

Nan-Dirk Mulder, senior analyst, animal protein, RaboResearch, said, “Global trade has recently become highly volatile, and we have seen some major movements in trade streams and prices due to several important factors.”

These include:
In April, the European Union (EU) removed 20 Brazilian plants from the export allowance list due to violation of EU import requirements regarding salmonella control. This is affecting the global breast-meat market heavily, as the EU is the world’s key importer of these products, and other potential buyers like the United States are not open to Brazilian poultry imports. Although the EU reduced imports between January and April by only nine per cent, Brazil’s imports were down 45 per cent
Saudi Arabia is in the process of implementing its new halal allowance standards, which have already led to a drop of 30 per cent in imports in the first quarter of 2018. Saudi Arabia is Brazil’s number one export market and a key buyer for whole chicken
China has now issued a special safeguard on imports of Brazilian poultry. This will lead to implementation of company-specific import levies and will certainly impact import volumes of Brazilian poultry in China
In response to recently-announced US taxes on Chinese imports, China has announced a set of import taxes on US agricultural products, including soybeans, as of early July. Although there is still room for negotiation, if this happens, it will also shake up global trade in the coming months, as Chinese feed prices will rise. As traders will move to Brazil to source soybeans, local soybean prices will also rise, impacting the already-weak Brazilian poultry industry. Others like the US, the EU, and South-East Asia might face lower feed prices
Directly linked to the US-Chinese trade tensions is the introduction of a 25 per cent tariff on US chicken imports into China, further delaying the prospect of US chicken accessing the market
Mexico has imposed import levies on US pork. This will indirectly impact the North American poultry markets. Prices in Mexico for pork – and indirectly for chicken – will likely rise. Aside from good performance for the Mexican chicken industry, this will also result in a more bullish market environment for imports of poultry

As follow-up on this trade turmoil, Brazil’s poultry industry exports (-10 per cent) and production (-3 per cent) are set to decline this year, and this will lead to opportunities for alternative exporters in markets in which Brazil has to step back. Ukraine, Russia, Poland, Thailand and Argentina are already increasing exports, and this is set to continue in the second half of 2018.

Many local industries are still performing well, as supply in regions like the EU, South Africa, Mexico, Indonesia and India is well-balanced, creating good, profitable conditions for the industry. The EU and Mexico are further set to benefit from the recent tensions in trade with rising local prices.
 
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