Rabobank’s senior analyst for animal protein Nan-Dirk Mulder described the global poultry trade as “highly volatile” and said he expected turmoil to continue into the second half of 2018.
“Global trade has recently become highly volatile, and we have seen some major movements in trade streams and prices due to several important factors,” said Mulder.
Here are the factors that Mulder has highlighted:
Poultry plummet
Brazil’s poultry exports are set to decline by 10% and production is set to fall by 3% as a result of a number of factors. These included the EU removing 20 Brazilian plants from the export allowance list, due to violation of EU import requirements regarding salmonella control.
This affected the global breast meat market heavily, according to the analyst, who revealed that the EU is the world’s key importer of this product.
Trump trade tensions
In response to recently-announced US taxes on Chinese imports, China announced a set of import taxes on US agricultural products, including soybeans, as of 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.
Special safeguards
China has issued a special safeguard on imports of Brazilian poultry. This will lead to implementation of company-specific import levies and will certainly affect import volumes of Brazilian poultry in China.
Halal allowance standards
Saudi Arabia is in the process of implementing its new halal allowance standards, which have already led to a drop of 30% in imports in first-quarter results for 2018. Saudi Arabia is Brazil’s number-one export market and a key buyer for whole chicken.
It seems as though it is not just the poultry industry that is struggling, as Rabobank also highlighted challenges among the beef and pork industry in its latest results.