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Food Outlook – Global Market Analysis – June 2011

by 5m Editor
5 July 2011, at 12:00am

A resurgence of avian influenza and high feed prices may halve poultry meat output growth, according to the latest <em>Food Outlook</em> report from the UN Food and Agriculture Organization (FAO).


Meat and Meat Products Market Summary

According to FAO, high feed prices, disease outbreaks and depleted animal inventories are forecast to limit the expansion of global meat production to only one per cent in 2011, to 294 million tonnes. The increase is anticipated to be driven by gains in the poultry and pig meat sectors, while world bovine and ovine meat outputs are expected to be constrained by a retention of animals for herd rebuilding.

Strong demand for imports, especially in Asia where a number of countries are facing tight supplies and high domestic prices, is expected to foster a 2.4 per cent growth in world meat trade, bringing it to 26.8 million tonnes. Much of the expansion would stem from increased flows of pig meat, and to a lower extent, poultry and bovine meats. On the other hand, trade in ovine meat may stagnate, limited by short availabilities in traditional exporting countries.

Relatively high retail prices are foreseen to keep per capita meat consumption in 2011 stalling around 41.9kg. In the developing countries, steady economic growth may foster a minimal increase to 32.0kg, while per capita consumption in the developed countries is expected to remain at 78.4kg.

International meat prices have maintained steady increases since January 2011, progressing by five per cent over the first quarter, mainly sustained by a 10 per cent increase in pig meat prices. In the near term, the combination of strong world import demand and limited export availabilities points toward a further firming of world meat prices in the next few months.

World meat markets at a glance
(FAO Food Outlook report, 2011)
2009 2010
est.
2011
f'cast
Change 2011
over 2010
million tonnes %
WORLD BALANCE
Production 283.2 290.6 294.0 1.1
Bovine meat 64.9 64.9 65.0 0.2
Poultry meat 93.6 98.0 100.2 2.3
Pig meat 106.3 109.2 110.0 0.7
Ovine meat 12.9 13.0 13.1 0.5
Trade 25.2 26.2 26.8 2.4
Bovine meat 7.2 7.5 7.7 1.9
Poultry 11.1 11.5 11.7 1.6
Pig meat 5.8 6.1 6.4 5.0
Ovine meat 0.9 0.8 0.8 0.8
SUPPLY AND DEMAND INDICATORS
Per capita food consumption (kg/year):
World 41.3 41.9 41.9 0.1
Developed 78.0 78.4 78.4 0.0
Developing 31.1 31.8 32.0 0.5
FAO MEAT PRICE INDEX
(2002-2004=100)
2009 2010 2011
Jan-May
Change:
Jan-May 2011
over Jan-May 2010
(%)
133 152 175 19.9



FAO international meat price indices
(2002-2004 = 100)

POULTRY MEAT

World poultry meat output is forecast by FAO to grow by two per cent to 100 million tonnes in 2011, half the rate of the previous year, as high feed costs and diseases constrain the profitability of the sector. However, its growth remains much faster than that predicted for the other meat sectors.

High feed prices are currently challenging supply growth in Brazil, China, the EU and the United States, which, together, account for nearly two-thirds of global output. In China, although the sector is benefiting from increased availability of breeding stock, high prices of other meats and restrictions on imports, rising costs are expected to slow down production expansion from the seven per cent reported in 2010 to three per cent in 2011. In the EU, only slight gains are anticipated, as the sector adjusts to the higher costs of production deriving from new EU broiler welfare rules implemented in 2011. Output gains in Brazil and the United States will be supported by strong consumer demand due to lower relative prices of poultry meat compared with other meats. In the Russian Federation, poultry investments estimated at nearly US$2 billion in 2010, and policies focused on enhancing meat self-sufficiency, in particular through import barriers and the provision of subsidised feed, will keep production gains at near double-digit figures.

Meanwhile, the FAO Food Outlook report adds, there has been a near record resurgence of avian influenza outbreaks since early January in Hong Kong, Japan, Myanmar, the Republic of Korea and Viet Nam, with the virus still circulating in Bangladesh, Egypt and Indonesia and other countries. This has reminded the global community of the potential threat of H5N1 and other diseases to national and global health. Diseases are largely behind the expectation of a halving of production growth in Asia to two per cent, notwithstanding expectations of output gains in India, Turkey and other smaller markets, such as the Islamic Republic of Iran, Iraq, Kazakhstan, Nepal and Turkey, where the number of poultry farms doubled last year.


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"A resurgence of avian influenza and high feed prices may halve poultry meat output growth"

Poultry meat exports in 2011 are expected by FAO to expand by 1.6 per cent to 11.7 million tonnes, substantially slower than the four per cent growth recorded last year. In Asia, shipments to the Republic of Korea will be supported by the recent opening of a 50,000 tonne tariff-free quota and vigorous consumer demand. Imports to Japan, the Hong Kong SAR of the People's Republic of China and Viet Nam as well as to Middle East countries are all forecast up. Purchases by Japan may for the first time surpass the one million tonne threshold, as additional supplies are needed not only to compensate for the declining production but also to respond to a possible shift of consumers away from fish, which may especially favour poultry.

In South Africa, the 2011 expiration of 10-year-old anti-dumping tariffs against poultry from the United States may support additional imports. Those increases are likely to more than offset reduced purchases in several important markets.

In the EU, lower imports are expected in response to the shifting definition of the use of frozen poultry and confusions about the EU-27 licensing system applied in 2010, a policy move that may prompt a WTO appeal by Brazil.

Deliveries to the Russian Federation, previously the world's largest poultry market, are expected to contract for the fourth consecutive year, following the halving of the country's TRQ to 350,000 tonnes. Likewise, China may cut poultry imports, owed to the imposition of anti-dumping and countervailing duties against product from the United States, China's principal supplier.

Among exporters, the United States is expected to witness a contraction of sales in 2011, which may even lead to its relinquishing its position as the world's top poultry exporter. The fall would mainly reflect tight domestic supplies but would also be due to market restrictions in China and the Russian Federation. Consequently, Brazil is likely to turn into the world's largest poultry exporter in 2011, with deliveries to foreign markets expected to exceed four million tonnes, equivalent to over one-third of global trade prospects.

Exports from Thailand are expected to expand, sustained by larger sales of cooked poultry products to both the EU and Japan. Continued investments in poultry operations in China may result in increased poultry deliveries, especially to other Asian countries.


Evolution of poultry meat/feed index prices (2002-2004=1)


Poultry meat statistics (thousand tonnes, carcass weight equivalent)
(FAO Food Outlook report, 2011)
Production Imports Exports Utilisation
2010 est. 2011 f'cast 2010 est. 2011 f'cast 2010 est. 2011 f'cast 2010 est. 2011 f'cast
ASIA 34,640 35,421 6,057 6,382 2,032 2,198 38,665 39,611
China 17,601 18,102 1,815 1,890 1,056 1,143 18,360 18,849
- of which Hong Kong, SAR 45 45 1,039 1,145 550 600 534 590
India 2,670 2,720 2 2 2,668 2,718
Indonesia 1,435 1,438 7 7 1,442 1,445
Iran, Isl. Rep. 1,765 1,820 45 55 28 30 1,782 1,845
Japan 1,392 1,322 973 1,030 10 10 2,355 2,342
Korea, Rep. 647 660 117 121 17 16 747 765
Kuwait 44 44 300 320 1 1 343 364
Malaysia 1,100 1,120 32 30 22 25 1,110 1,125
Saudi Arabia 590 600 684 726 3 3 1,271 1,323
Singapore 95 100 123 120 7 7 211 214
Thailand 1,208 1,305 1 1 659 725 550 587
Turkey 1,300 1,400 95 105 120 130 1,275 1,375
Yemen 145 147 110 115 255 262
AFRICA 3,990 4,034 1,132 1,214 39 42 5,083 5,206
Angola 8 8 185 195 193 203
South Africa 1,020 1,028 253 266 31 35 1,242 1,259
CENTRAL AMERICA 4,028 4,081 1,239 1,316 40 42 5,227 5,355
Cuba 34 34 240 270 274 304
Mexico 2,659 2,699 700 736 14 16 3,345 3,419
SOUTH AMERICA 17,047 17,655 407 466 4,250 4,451 13,204 13,670
Argentina 1,346 1,472 7 6 250 293 1,103 1,185
Brazil 11,787 12,200 1 1 3,873 4,028 7,915 8,173
Chile 620 625 70 85 107 108 583 602
Venezuela 740 730 237 275 977 1,005
NORTH AMERICA 20,820 21,099 298 306 4,019 3,852 17,117 17,557
Canada 1,223 1,247 192 200 186 191 1,229 1,257
USA 19,597 19,852 95 95 3,833 3,661 15,877 16,289
EUROPE 16,398 16,863 1,853 1,540 1,068 1,045 17,182 17,359
European Union 12,272 12,321 806 805 1,010 986 12,068 12,140
Russian Fed. 2,635 2,872 672 403 8 8 3,300 3,268
Ukraine 900 1,063 156 105 17 18 1,040 1,151
OCEANIA 1,049 1,067 61 64 33 33 1,076 1,096
Australia 886 900 7 9 26 26 867 881
New Zealand 140 144 1 7 7 134 138
WORLD 97,972 100,220 11,047 11,288 11,482 11,664 97,554 99,853
Developing
countries
56,579 58,107 7,400 7,859 6,311 6,677 57,669 59,295
Developed
countries
41,393 42,113 3,646 3,429 5,171 4,986 39,886 40,558
LIFDCs 26,273 26,849 2,341 2,404 546 580 28,067 28,673
LDCs 1,821 1,807 707 749 2,528 2,556
LIFDCs = Low-Income, Food-Deficit Countries
LDCs = Less Developed Countries

Further Reading

- You can view the full report by clicking here.


July 2011