Meat Prices Hover at Near–Record Levels

Global meat markets are likely to face heightened trade competition in 2012, at the same time that recovering meat production in Asia is set to dampen growth in global import demand. Overall, meat trade is expected to expand by two per cent, to 29.2 million tonnes, much of which is anticipated to be taken up by developing country exporters, which could increase their share of the global trade to 44 per cent.

Disease outbreaks in 2011, drought–reduced cattle inventories and high feed costs sustained international meat prices to near record levels in the first quarter of 2012. In April, the FAO meat price index edged up to 182 points, surpassing the record 181 points registered in November 2011.

Variable feed prices influence pork and poultry price movements

World meat market at a glance

Indications of slowing import demand, especially for pig and poultry meats, portents a potential moderation of meat prices in the coming months, which, along with high feed costs, is raising concern about the profitability of the meat sector in 2012.

Poultry Meat

Poor returns to limit production growth in 2012

Growth of the poultry sector, historically one of the most dynamic meats, is being dampened by high feed prices, the resurgence of avian influenza (AI) outbreaks in Asia and ongoing trade disputes. As a result, global output is forecast to rise by only two per cent to 103.5 million tonnes in 2012.

Much of the increase will likely originate in Asia, in particular in China, India, Japan, the Republic of Korea and Turkey. However, escalating cases of AI, with a record seven countries in Asia reporting outbreaks in February, clouds the region’s production outlook. In Bangladesh, an estimated 6,000 poultry farms have closed since the beginning of the year because of AI and high feed costs.

In Africa, the spread of AI to Egypt in early 2012 is expected to hinder the development of the sector in the course of the year.

Declining output in the United States, as indicated by falling chick placements in early 2012, and only slight gains in the EU point to prospects for stable production in developed countries. However, the sector is forecast to grow by six per cent to 3.0 million tonnes in the Russian Federation, which has launched 10 new investment projects.

Despite producer concerns about sliding poultry prices in early 2012, Brazil’s output is forecast to edge up by three per cent to 12 million tonnes, while vertical integration and high prices for other meats are supporting a two per cent increase in output to 2.9 million tonnes in Mexico.

In Africa, despite investments in some countries such as Namibia, high feed prices and rising imports are hindering production growth in Ghana, Angola, Benin and the Congo. At the same time, imposition of anti-dumping duties on poultry originating in the United States and Brazil is keeping South Africa’s output on an upward trend.

Poultry trade outlook dominated by policy uncertainties

Despite the imposition of import restrictions by several countries, world poultry trade is forecast to rise by three per cent to 13.0 million tonnes in 2012, with expansion expected to be sustained by larger deliveries to Hong Kong SAR, Viet Nam and Indonesia, as well as Saudi Arabia and the United Arab Emirates. Imports by Saudi Arabia, the third largest market after Hong Kong SAR and Japan, will be influenced by the status of a government feed subsidy granted to national poultry operations in 2011, the depletion of which is pushing up poultry prices and stimulating import demand.

Deliveries to the Russian Federation, which was the world’s largest market until the imposition of restrictive import measures four years ago, are expected to edge up somewhat, following a WTO-induced increase in the poultry tariff-rate quota.

Rising domestic demand will continue to boost imports by African countries, in particular Egypt, Angola, Benin and Ghana, with the resultant regional dependency on imports now estimated at 24 per cent of domestic consumption, compared to 18 per cent in 2009.

Import growth in Latin America and the Caribbean will be led by Chile, Mexico and Venezuela.

By contrast, following the imposition of anti-dumping duties on poultry originating in the United States, China may buy less, although part of the product delivered to Hong Kong SAR is likely to be re-exported to the mainland. The application of anti-dumping tariffs on Brazilian product by South Africa is likely to negatively influence Brazil’s deliveries to South Africa in 2012, while improved domestic availability is forecast to depress purchases by Japan.

The continued imposition by India, a minor importer, of non-tariff barriers on poultry and the resulting request by the US for consultations under the dispute settlement provisions of the World Trade Organization (WTO) is illustrative of the multiple constraints facing international poultry trade.

As for poultry meat exports, a return to a more favourable exchange rate may support a two per cent increase in Brazilian shipments, despite the slow relisting of Brazilian poultry plants by the Russian Federation. Exports from Thailand will be supported by the EU decision in April to lift an eight–year ban on raw poultry shipments by mid-year. Similarly, sales by Turkey are likely to be boosted by the granting of access to the Saudi Arabian market, after a six-year ban. Strong regional demand, particularly from Chile and Venezuela, are sustaining a steady growth in shipments from Argentina. On the other hand, limited domestic supplies and more restricted access to markets may dampen growth in the United States to less than one per cent and even result in declining shipments by the EU.

Further Reading

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