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Poultry, feed production outlook in the second half of 2024
20 Plays1 year ago
Rabobank's senior protein analyst Nan-Dirk Mulder joins the pod to review highlights of RaboResearch's Q2 poultry report.
Recommended
Transcript
Introduction to Feed Strategy Podcast
00:00:04
Speaker
Hi everyone.
00:00:05
Speaker
Welcome to Feed Strategy Podcast.
00:00:08
Speaker
I'm your new host, Jackie Rumke, Editor-in-Chief of Watts Feed Brands.
00:00:13
Speaker
This edition of Feed Strategy Podcast is brought to you by FeedStrategy.com.
00:00:18
Speaker
FeedStrategy.com is your source for the latest news and leading edge analysis of the global animal feed industry.
Global Poultry Report Overview with Nandirk Mulder
00:00:27
Speaker
Today we're joined by Nandirk Mulder, Senior Analyst for Animal Protein at Rabobank.
00:00:32
Speaker
He's here to share the highlights of Rabo Research's latest global poultry report and to provide an outlook for feed producers.
00:00:41
Speaker
Hi Nandirk, how are you today?
00:00:42
Speaker
Yeah, I'm good.
00:00:45
Speaker
Hi, good morning, Jackie.
00:00:48
Speaker
Yeah, I'm doing well.
00:00:51
Speaker
Excellent.
00:00:52
Speaker
Well, thank you so much for taking the time to speak with me.
00:00:55
Speaker
And from there, let's get right into it.
00:00:57
Speaker
Now, from your perspective, what are the three key takeaways from the report regarding global poultry demand and, of course, production?
00:01:09
Speaker
Yeah, thank you very much for this question.
00:01:11
Speaker
I think very, very relevant.
00:01:12
Speaker
If you look to the reports that we published, I think the most important one is that the malt is recovery for poultry.
00:01:23
Speaker
Consumption is benefiting at the moment from lower feed prices.
00:01:30
Speaker
and which makes chicken more affordable.
00:01:35
Speaker
At the same time, in a lot of countries worldwide, competing protein prices are very high.
00:01:42
Speaker
You know, beef prices, pork prices, but also in a lot of country egg prices.
00:01:48
Speaker
So the price positioning of chicken in the market is relatively strong.
00:01:55
Speaker
So that helps consumption.
00:01:58
Speaker
So all over the world we see improving consumption of poultry.
00:02:04
Speaker
Feed prices are down.
00:02:06
Speaker
We had a period of two years where feed prices have been dropping.
00:02:12
Speaker
And, you know, that is always a very good thing for chicken because you're talking about 60, 70 percent of cost of production.
00:02:21
Speaker
So it helps to make the industry relatively more competitive.
Impact of Political Tensions on Agriculture
00:02:30
Speaker
Another factor here to mention is the political tensions and the impact that it has on the business.
00:02:40
Speaker
And here there are several factors which are relevant.
00:02:45
Speaker
First of all, of course, the Ukraine war situation and the impact it has on global agriculture market.
00:02:53
Speaker
Ukraine is a major exporter of and also Russia of corn and soy of sunflower meal.
00:03:03
Speaker
We'd for more relatively for Russia.
00:03:07
Speaker
And that is still having big impact on markets.
00:03:13
Speaker
Also, the situation in the Middle East, in the Israel-Hamas war at the moment is having impact and also the Houthi attacks in Red Sea.
00:03:28
Speaker
So we've seen a lot of reshipping of meat.
00:03:34
Speaker
feed ingredients and other products on the European Asia route.
00:03:42
Speaker
And of course, that is also having big impact on feed producers because, you know, it's getting a lot more difficult to, you know, to supply source products for both regions.
00:03:55
Speaker
And there's a delay, there's a cost issue, which also is having big impact.
00:04:01
Speaker
The other factor, and you asked for free, but I want to add one more, is global trade.
Challenges in Global Chicken Trade
00:04:08
Speaker
So if you look to global trade of chicken, it's in a very difficult situation.
00:04:13
Speaker
So most countries worldwide perform relatively well, and in some cases even historically well.
00:04:22
Speaker
But the main exception here is China.
00:04:26
Speaker
So the performance of Chinese chicken industry is not good.
00:04:30
Speaker
The industry has been growing a lot and perhaps too fast.
00:04:34
Speaker
So pork prices are finally doing well, but chicken is very low.
00:04:38
Speaker
So last year, chicken production was growing 4% per year, 4.5%.
00:04:45
Speaker
And also this year, there is still ongoing growth.
00:04:48
Speaker
So the industry is perhaps growing too fast.
00:04:51
Speaker
And this is having impact on prices.
00:04:53
Speaker
They are low.
00:04:54
Speaker
And import of chicken from China dropped 40% in the first quarter of this year, which is a massive drop in trade.
00:05:05
Speaker
And this is having big impact on global traders.
00:05:08
Speaker
So if you look in the market now and in the coming months, this will impact trade flows and especially the exporters from US and Brazil, who will need to find alternative markets.
00:05:27
Speaker
Great, thank you for that, for those insights.
Factors Influencing Global Feed Prices
00:05:30
Speaker
Now you mentioned how feed prices have hit their lowest point in a few years.
00:05:35
Speaker
What factors have contributed to that decline globally?
00:05:42
Speaker
Yeah, also here, a series of factors.
00:05:46
Speaker
The real peak in feed prices we had was in the first half of 2022.
00:05:55
Speaker
There was a period where global feed supply was really tight.
00:05:59
Speaker
So stock levels were low.
00:06:01
Speaker
And exactly at that moment, the war in Ukraine started.
00:06:09
Speaker
major grain producer and that really impacted global prices, global trade flows.
00:06:16
Speaker
We saw in some regions, we saw shortages, especially Africa, high dependence on this region.
00:06:22
Speaker
So really stressful situation and also a lot of the feed manufacturers, I think that were
00:06:28
Speaker
really in a challenging position in relocating trade flows, sourcing, procurement, feed formulation, all in that very important.
00:06:38
Speaker
But since then, you know, we had we had actually we had we had we had we had pretty good crop of crop harvest in especially South America.
00:06:48
Speaker
I think Brazil has been pretty good.
00:06:53
Speaker
For wheat also, I think from Europe and especially also Russia, I think a lot of supply in the markets, low prices.
00:07:02
Speaker
And also corn was recovering both in Latin America, but also I think in the US.
00:07:11
Speaker
uh and and that has led in uh in a period of two years of of lower prices um coming also together with uh you know with uh slower economy calls so the the the demand side for feed cranes was also a bit slower uh in this period so it's actually it's it's it's the the combination of more supply with uh with relative soft demand
00:07:38
Speaker
strong US dollar that reacted in a, you know, forced a situation where, you know, where prices have been doping actually already two years ago.
00:07:53
Speaker
How do you see the feed costs evolving throughout the rest of the year?
00:07:57
Speaker
You know, you mentioned volatility and other risks.
00:08:01
Speaker
Do you think that the outlook is good?
00:08:05
Speaker
Yeah, I must say, you know, we are still in a very volatile market context.
00:08:15
Speaker
And that's something where we also expect to stay.
00:08:19
Speaker
If you look back over the last couple of months, we had a sort of term in the market.
00:08:27
Speaker
So two years in a row, declining agriculture prices.
00:08:33
Speaker
And then I would say since Q1, a term where especially wheat prices went up for some time, also corn was following, especially linked to worries about supply for wheat in the European region, also for Russia.
00:09:00
Speaker
and in Europe relative bad conditions.
00:09:02
Speaker
So there was a lot of uncertainty in the markets.
00:09:04
Speaker
I think soybean was still relative, yeah, I think, relative high stock as well.
00:09:12
Speaker
So the soy was not a problem, but there was more in the grain side.
00:09:17
Speaker
And what is changing actually?
00:09:19
Speaker
So we were maybe a month ago also a bit worried about prices, so maybe even going up a bit.
00:09:26
Speaker
for producers which could have impact on chicken markets but now last couple of weeks we see a big drop in clean prices so i think wheat prices dropped more than double digits i think almost 20 percent
00:09:41
Speaker
And also corn has been following in that direction.
00:09:45
Speaker
So the main reason for this is also, you know, for wheat, Russia is an important supplier.
00:09:54
Speaker
And the predictions for Russia is now higher.
00:09:58
Speaker
I think there was really a worry about historic low supply.
00:10:04
Speaker
but it's higher at the moment.
00:10:06
Speaker
So I think that the decline is expected to be lower.
00:10:10
Speaker
And also we see definitely better conditions in North America for wheat and for corn.
00:10:19
Speaker
um so supply situation is uh is uh is uh is better in uh in the crane markets at the moment while if you look to soybean um you know stocks are still still high and i think there is very limited upside in in the uh in the soybean market for for the coming period so if you look to what it means for feed prices
00:10:43
Speaker
I would say a month ago, our fuel was relatively stable to slightly increasing feed prices.
00:10:53
Speaker
Now we are a little bit more bearish and thinking that it's going to be, I think, stable or maybe even a slight decline.
00:11:02
Speaker
And that's, of course, positive news for poultry and for other protein producers, because we've seen in the last...
00:11:12
Speaker
lost one year that you know the low feed prices helping consumption so if you can go even if you go a little further that should help consumption and and perhaps also the margins which is already quite good in poultry
00:11:32
Speaker
So you mentioned North America and what's happening with our grain stocks.
Climate Effects on Grain Markets
00:11:37
Speaker
So we've had a lot of inclement weather here in the Midwest and in other parts of the U.S. How has El Nino impacted commodity markets so far this year?
00:11:49
Speaker
And then looking ahead, how may La Nina shape global crop harvest and feed prices?
00:11:56
Speaker
Yeah, good question.
00:11:57
Speaker
Absolutely.
00:11:58
Speaker
This is certainly an issue.
00:12:00
Speaker
And I think if you look back over the last couple of months, I think the biggest impact I've seen is on the southern hemisphere countries because of heat waves, which is, I think, an El Nino impact.
00:12:20
Speaker
So if you look to South, Southeast Asia, really,
00:12:26
Speaker
Really very dry weather conditions, heat waves, big impact on production, local prices, feed prices really are peaking locally.
00:12:39
Speaker
And also the production is lower at the moment.
00:12:46
Speaker
And also South Africa, Southern Africa, not a complete country, South Africa, especially the northern region of South Africa, Sambia, very dry conditions and high feed prices at the moment.
00:12:58
Speaker
So I think that if you talk about impact of El Nino, I would say it's in this region.
00:13:05
Speaker
You see also that it impacts productivity of the chicken sector.
00:13:13
Speaker
And this also links to, I think, the better profitability in certainly Southeast Asia.
00:13:21
Speaker
So what we have seen, okay, higher feed prices, but the productivity of chicken farms is significantly lower.
00:13:27
Speaker
So there's still a lot of...
00:13:30
Speaker
you know, open farms in these countries.
00:13:33
Speaker
And these farms have been really impacted by the heat at the moment.
00:13:36
Speaker
So productivity much lower.
00:13:38
Speaker
So supply in the market is lower.
00:13:41
Speaker
So tight market conditions.
00:13:42
Speaker
So price is high, but I think also profitable.
00:13:48
Speaker
So if you look to Indonesia, Philippines, Thailand, Vietnam, India, all these markets are doing better at the moment.
00:13:57
Speaker
And that's also for a lot related to the weather, the dry conditions, El Niño.
00:14:04
Speaker
The other one, El Niña,
00:14:07
Speaker
Yeah, that's the other, you know, of course, it's never sure if this is going to happen, but there's a lot of talk about it in the industry at the moment.
00:14:18
Speaker
And I think the chance that's going to happen is quite significant.
00:14:26
Speaker
And what does it mean?
00:14:28
Speaker
I think it means that we are going to have relative dry conditions in Latin America, especially Brazil.
00:14:35
Speaker
And that could, of course, have a significant impact on prices in, let's say, December, early next year, in my view.
00:14:47
Speaker
So then potentially you can see the impact on prices.
00:14:52
Speaker
On the the the crazy market it's in India, of course, it's not going to impact so much chicken production in Brazil.
00:15:00
Speaker
Their their farms are, I think, more climate controlled than in Southeast Asia, but for for grain markets, it's certainly in a major worry.
00:15:11
Speaker
And switching gears a little bit, you mentioned Brazil.
EU Regulation on Deforestation-Free Soybeans
00:15:15
Speaker
How might regulations like the EU deforestation regulation affect global soybean supply chains and protein meal prices for the feed market?
00:15:25
Speaker
Yeah, that's the other big topic.
00:15:29
Speaker
It's certainly very relevant, especially for European producers.
00:15:33
Speaker
So, you know, Europe is going to introduce the EUDR, the EU deforestation regulation as of 30th of December.
00:15:49
Speaker
And from that moment,
00:15:55
Speaker
all the soybean, but also beef, cattle, has to be guaranteed deforestation free in Europe.
00:16:06
Speaker
And that's quite a challenge, you know, because it means you need also, you need as a trader,
00:16:15
Speaker
You need a system to track that actually and that goes back into Brazil or other countries also.
00:16:24
Speaker
It is actually as we can see it now is going to be for all countries who supply soybean also United States soy or European or anything.
00:16:36
Speaker
and there is still a big worry about it that the system is not ready and so potentially
00:16:46
Speaker
it could have huge impact on markets for Europe because if we feed markets in Europe, because if it's not ready or you cannot guarantee it and still we have the regulation, yeah, there can be a very short supply situation with high prices suddenly.
00:17:05
Speaker
So it is a potential
00:17:09
Speaker
factor that can cause lots of volatility in the european market in my view so perhaps not so much in international indirectly because europe is a big buyer but the biggest impact is potentially in europe
00:17:24
Speaker
we have to see how is corner development um there's still an evaluation pending uh should should be um yeah it should be uh should come out quite soon
00:17:41
Speaker
um but um yeah we have to see that but this is this is one of the big topics in my view uh for european uh feed and chicken producers for the next uh for six months or one year and are you seeing uh or hearing about those producers hedging
00:18:04
Speaker
and preparing for those high costs?
00:18:07
Speaker
Are they doing anything to, I guess, prepare or mitigate the risk of that sort of both supply and cost issues?
00:18:18
Speaker
I'm sure a lot of traders are thinking about scenarios, how to deal with the situation.
00:18:26
Speaker
You know, traders are traders.
00:18:28
Speaker
And usually they are very good in finding solutions for difficult situations.
00:18:35
Speaker
And this could also be the case now, but it's still complex in my view, not easy to solve and end up with big uncertainty.
00:18:42
Speaker
You know, you can, you can, of course, you can, you can, you can, if this is going to happen, maybe you go to a situation that that traders will buy a lot of cranes before the deadline.
00:18:55
Speaker
um and and have stocks and increase the stocks to to be there to get some um some um you know some flexibility in supply or you can benefit from the old situation as long as possible so there could be maybe a scenario that could happen but then still you know if if the if the the if the the timeline is changed
00:19:17
Speaker
Yeah, they have big stocks and yeah, so the risk is also high.
00:19:22
Speaker
So there is still, I think, too much uncertainty about it.
00:19:29
Speaker
Yeah, about making it really this, but the most important one, of course, is
00:19:35
Speaker
is that you know we need we need uh systems um and with tracking and tracing with data i think that can guarantee the the the it's default station free i think that is the that that's actually the the the mission of european commission actually here so
00:19:53
Speaker
So that is at the end, I think, the aim.
00:19:57
Speaker
But yeah, it's still a big question mark if countries will be ready on time, actually, with these systems.
00:20:05
Speaker
Because you need the local sourcing, of course, the local systems which can track this.
00:20:15
Speaker
Right.
00:20:15
Speaker
Always excellent to have those global issues on our radar.
00:20:20
Speaker
So thanks for digging into
Hatchability Issues and Industry Profitability
00:20:22
Speaker
that.
00:20:22
Speaker
Now, of course, with the ongoing hatchability issues here in the U.S. and other regions, are you seeing that affecting poultry and feed production volumes?
00:20:34
Speaker
What's the situation there?
00:20:35
Speaker
Yeah, this is, in my view, one of the reasons why
00:20:41
Speaker
why global prices have been relatively high in a situation where feed costs are going down and why maybe the profitability of the industry is rising.
00:20:52
Speaker
So in my view, there are several factors why the market conditions are relatively good.
00:21:02
Speaker
First of all, it's a better demand.
00:21:03
Speaker
So we talked about that earlier in the podcast.
00:21:07
Speaker
And the other one is supply.
00:21:09
Speaker
So we have at the moment a relative tight supply globally.
00:21:15
Speaker
Not all countries, there are still a few exceptions, but in general, most markets are pretty well in balance.
00:21:24
Speaker
So, and if you are in balance, it means that profitability is relatively high.
00:21:29
Speaker
And one of the reasons, it's not the exclusive reason, but one of the reasons is indeed a very tight chicken supply related to, I think, the productivity or the edgeability indeed in some countries.
00:21:47
Speaker
I think especially in North America, this is a significant issue.
00:21:52
Speaker
And also,
00:21:55
Speaker
It is also availability, I think of breeding stock at the moment or grandparent stock.
00:22:01
Speaker
That's what I hear in a lot of countries, Latin America, but also Africa, parts of Asia.
00:22:13
Speaker
So that's a factor.
00:22:16
Speaker
And the other one is that in Europe, for example, we go to lower densities, extensively reared chickens, limited possibility to build new farms.
00:22:29
Speaker
So there are several factors, but hatchability is certainly one of them.
00:22:34
Speaker
That is a reason why I think we have that relative tight supply situation in a lot of markets.
00:22:43
Speaker
Mm-hmm.
00:22:44
Speaker
Now, during the pandemic and with all the supply chain issues that producers dealt with as far as getting vitamins and minerals, have you noticed any innovative approaches producers are taking in the realm of feed ingredient procurements and then in turn feed formulation optimization?
Antibiotic Reduction and Smart Feeding Systems
00:23:10
Speaker
Yeah, this is of course a topic that is constantly in development.
00:23:17
Speaker
And yeah, of course, we had several trends here.
00:23:24
Speaker
And I think still there is a lot of focus on the antibiotic reduction side, actually.
00:23:33
Speaker
So the cut health.
00:23:35
Speaker
I've been recently speaking at several events here in North America.
00:23:41
Speaker
Europe last week in China and everywhere you see that this is a big focus actually, you know, and come with with all the solutions.
00:23:54
Speaker
So focusing on the good health.
00:23:56
Speaker
So that is still, I think, an area where there is development.
00:24:01
Speaker
Of course, your procurement needs to be very good in this situation.
00:24:05
Speaker
So we have that ongoing volatility in the market.
00:24:09
Speaker
So that means you need to work, I think, with data models, strong flexibility is a factor.
00:24:20
Speaker
What we also see is, I think, is increasingly these...
00:24:25
Speaker
more smart feeding systems etc so the data big data and of course then you you come already a big further you do already a step further than only feed but you know smart feeding smart farming that is definitely something that is developing very fast
00:24:46
Speaker
And that's, in my view, one of the topics actually where I think we can still make a lot of progress in the coming years.
00:24:55
Speaker
So that is an area where I also see development.
00:25:00
Speaker
Very good.
Managing Currency Fluctuations in Feed Production
00:25:01
Speaker
And speaking of volatility, how are producers adapting to currency fluctuations and how are those impacting imported feed ingredients?
00:25:13
Speaker
um yeah that's another one of course so you i think there is still there is uh certainly some hedging as well there in the in the field uh um and um so so so that is um uh certainly a factor uh and and it's also of course a lot about uh you know about uh
00:25:33
Speaker
having a good procurement team at the end and be able to reply very fast to changes in prices actually.
00:25:41
Speaker
And it's the prices of local fee prices, it's the exchange rates.
00:25:48
Speaker
If you see what happened with the Japanese yen in the last one year, I think that's quite unique.
00:25:55
Speaker
It was always a very stable currency, dollar still very strong.
00:26:01
Speaker
So, yeah, these volatilities, of course, have big impact, actually.
00:26:06
Speaker
So I think it's also a lot about, you know, about the procurement side.
00:26:11
Speaker
And, yeah, in combination, I think some of these hedging tools are used.
00:26:19
Speaker
Are there additional risk management strategies that you may recommend for feed producers?
00:26:30
Speaker
Yeah, that's a good question as well.
00:26:32
Speaker
You know, at the end, it's a lot about, you know, at the end, you know, if I look forward, and that's what we also do, looking into maybe the next five to 10 years.
00:26:47
Speaker
I think we go to an even more volatile market context and perhaps with rising feed prices because of, you know, we go in a world where, you know, we have more geopolitical tensions, where also, you know, food security, strategic resource security, all these factors are getting more important.
00:27:13
Speaker
So it means
00:27:15
Speaker
that you know that trade is less easy you get more also these trade tensions so in that situation I think we go to a situation with free prices are going up are going to be fall down so you need
00:27:32
Speaker
As a fee producer, you need to be prepared with that.
00:27:37
Speaker
And you need strong procurement.
00:27:41
Speaker
You know, this comes back every time in the podcast, but it is having the way how you should operate in the current market.
00:27:50
Speaker
So it's the procurement.
00:27:52
Speaker
It's the feed formulation.
00:27:54
Speaker
You need really strong people there.
00:27:56
Speaker
You need good data models.
00:27:58
Speaker
You need flexibility in your feed composition.
00:28:04
Speaker
You need also a strong focus on the farming side, in my view.
00:28:10
Speaker
So that's perhaps feed manufacturers can also
00:28:15
Speaker
add value in helping farmers to become more efficient.
00:28:19
Speaker
So feed feed feed.
00:28:22
Speaker
If you are efficient in the current situation with, you know, with 4TOW, maybe now a little lower feed price, but still historically we are very high prices and at some point they will come up again.
00:28:36
Speaker
So you need also to be very efficient in feed use as well.
00:28:42
Speaker
so i think that is the still the way i think to go actually and then of course you need also these access to all these innovative uh developments uh for for feed uh so um so the priority in my view for the coming years um is is very much on for producers in the in the value chain on the uh upstream side actually so feed but also the farming side i think that's where
00:29:12
Speaker
the strategic value will become much more important for producers than it was maybe 10 years ago.
00:29:19
Speaker
Thank
Avian Influenza and Market Volatility
00:29:22
Speaker
you.
00:29:22
Speaker
Now, disease challenges.
00:29:24
Speaker
During my time covering the industry, it seems every year, every few years, there's a major disease outbreak, of course, in the animal protein markets, H5N1.
00:29:38
Speaker
Huge issue, making headlines.
00:29:42
Speaker
Going a little further, how might ongoing avian influenza concerns in various regions affect global poultry and feed demand throughout the rest of the year?
00:29:55
Speaker
It's nowadays, and I would say, it is a driver of volatility.
00:30:03
Speaker
in markets.
00:30:06
Speaker
If you can say that it's perhaps a business risk for producers.
00:30:11
Speaker
Maybe the impact for avian influenza is a bit different than African wine fulver in pork, where really you see a long-term
00:30:21
Speaker
negative impact for four countries that are affected by African swine fever.
00:30:26
Speaker
So they lose export to export markets for avian influenza.
00:30:30
Speaker
It is the case as well, but it's perhaps shorter term.
00:30:34
Speaker
And usually you can after some time, you can recover.
00:30:37
Speaker
And what I, you know, I follow already the developments of avian influenza, maybe for 25 years.
00:30:44
Speaker
And, you know, it first was in Asia.
00:30:47
Speaker
And if you look back over the years, you see it, you know, you have sometimes you have very high pressure years, sometimes low pressure years.
00:30:56
Speaker
And this is perhaps also what we are going to see.
00:30:59
Speaker
But the problem is maybe that the frequency of cases is higher nowadays.
00:31:05
Speaker
It's global.
00:31:07
Speaker
It was not global.
00:31:08
Speaker
It was Asia that became Europe, Middle East Africa, North America, South America.
00:31:16
Speaker
And so it's constantly impacting the market somewhere in the world, actually.
00:31:23
Speaker
And if you look at the moment, the biggest impact is in South Africa, where South Africa had
00:31:32
Speaker
A couple of months ago, peak outbreak, 30% breeding stock has been killed, more than 40% of the laying rains.
00:31:42
Speaker
So prices are very high, but also in US, I think we have quite a few cases also
00:31:48
Speaker
recently, relatively late in the season.
00:31:50
Speaker
And that's something we also see to some extent in Europe, where also if you think now in June, we still have cases in and that was never the case, you know, summer months, usually low pressure, and we still see them coming on.
00:32:08
Speaker
So we keep that pressure.
00:32:10
Speaker
We need ongoing biosecurity, the highest standard of biosecurity.
00:32:14
Speaker
That's perhaps what you can do.
00:32:17
Speaker
And what you get, of course, at some point is, you know, is that the vaccination discussion, I think, will come up.
00:32:28
Speaker
And also here, I see movements.
00:32:31
Speaker
And, you know, vaccination, in my view, is not the solution for everything.
00:32:37
Speaker
It's a tool you can use.
00:32:40
Speaker
And it's going to be one of the instruments, I think, to reduce the impact of influenza.
00:32:47
Speaker
So if you look to what's happening with vaccination at the moment, you see that especially importing countries of self-sufficient countries have been vaccinating.
00:33:00
Speaker
So we've seen it in Asia.
00:33:03
Speaker
China is doing it in Southeast Asia, Indonesia.
00:33:08
Speaker
several other countries there, Latin America, Mexico for many years, but also in more and more countries in South America.
00:33:18
Speaker
And the country where I think where everybody has been watching to it was France.
00:33:26
Speaker
which was perhaps the first exporter who started to vaccinate chicken as of Q4 last year.
00:33:37
Speaker
And I think that has been relatively successful.
00:33:41
Speaker
So the most problematic area in France is typically South
00:33:48
Speaker
Southwest France, where there's a lot of labo-rusha production, foie-craw production.
00:33:55
Speaker
And I think they started to vaccinate.
00:33:58
Speaker
And since then, the number of cases is significantly lower, almost not existing.
00:34:05
Speaker
So that has been an African and develop a case or we can't exactly look into.
00:34:17
Speaker
And I think in the coming years, more countries will start vaccinating in certainly Europe.
00:34:24
Speaker
um and then we have to see how they will move so so that is the data development so i also apply it's a business risk you need the highest standard of biosecurity and expect i think that vaccination is getting more an issue in the industry and still you know they have worries about export and how importing countries are are reacting and this is i think why us and brazil are not so supportive
00:34:50
Speaker
um but um we have to see it actually and the problem for some countries is you know the compensation programs are often financed from um you know public sources so this is why i think you know you can more also push in the direction of vaccination where i think then people think that it's one of the tools that can reduce the risk
00:35:18
Speaker
Thank you so much for those insights.
00:35:20
Speaker
Now we will move on to our final question, which is my favorite to ask in any interview I'm conducting.
Optimistic Outlook for Poultry and Feed Industry
00:35:28
Speaker
Now, looking ahead to 2025, are there any major trends or challenges that you perceive for the poultry feed industry or producers globally?
00:35:43
Speaker
yeah that's uh that's a that's a good question as well and looking ahead is uh is always uh of course interesting to do um and um but it's also very challenging in the the market conditions where we are with all the changes and all the factors that have impact on global markets um if i look forward
00:36:07
Speaker
I'm optimistic about poultry feed or animal protein in general.
00:36:12
Speaker
I think the positive thing is that feed prices are lower.
00:36:16
Speaker
So what we see is that for this year and likely next year as well, with the current level of feed prices, consumption is recovering.
00:36:26
Speaker
So we are now in our models, we are at a forecast of one half to 2% growth for this year.
00:36:35
Speaker
And I think next year we should also be able to reach that level at least.
00:36:40
Speaker
And this means that consumption is moving back to historic growth level.
00:36:45
Speaker
So poultry is usually going by 2, 2.5% per year.
00:36:51
Speaker
So we are close.
00:36:53
Speaker
So the effort base case that we have is 1.8%.
00:36:57
Speaker
for this year so we are getting close last year it was 1.8 1.1 and the year before it was 0.6 so we are getting back we are going back to the old averages and that should support also um investments in in the industry again actually so it has been investment have been relatively low certainly in some of the uh you know the the traditionally fast-going regions like south southeast asia
00:37:24
Speaker
Africa is doing better.
00:37:28
Speaker
So that helps.
00:37:29
Speaker
So in my view, there's going to be room again for some expansion.
00:37:35
Speaker
We should be disciplined because I think my advice is never have oversupply in a situation of high cost and volatility.
00:37:44
Speaker
But I think there is a better growth outlook to be expected for the industry.
00:37:53
Speaker
So that's an important one.
00:37:55
Speaker
The other one,
00:37:57
Speaker
to mention is and we touched that already is geopolitical tensions.
00:38:04
Speaker
I think that is getting more and more an issue, you know, and that is in my view leading to, yeah, that leading to a more difficult trade situation.
00:38:15
Speaker
You can expect perhaps that we go increasingly more to local.
00:38:19
Speaker
So that's again, against the historic trend where we go more to liberalize global trade.
00:38:27
Speaker
open markets, we are moving a bit back actually.
00:38:31
Speaker
So this is still an issue.
00:38:32
Speaker
So all these issues like distribution, still the uncertainty about Black Sea region with the war, Ukraine, the impact is still going to be a factor which is important.
00:38:46
Speaker
The logistical thing, the use of the Red Sea Canal.
00:38:51
Speaker
the reshipping via South Africa, you know, that is all these issue, the, you know, the trade, the trade war, China, US, EU, which is a bit shaping at the moment.
00:39:05
Speaker
I think that sort of factors also for sure a very important factor.
00:39:14
Speaker
And the other one maybe to mention here is
00:39:19
Speaker
sustainability, social, you know, all these social driven developments.
00:39:27
Speaker
And I think that is still, you know, there are still a lot of commitments made in this direction.
00:39:33
Speaker
Also, at one side to meet UN sustainability objectives, you know, and, you know, reducing the antibiotic use is still, I think, a global commitment.
00:39:51
Speaker
Also important here is I think in a lot of
00:39:58
Speaker
retailers, food service companies, producers, they have made commitments to reduce carbon footprint.
00:40:06
Speaker
So, and that includes also the scope free.
00:40:11
Speaker
So, and this is getting more and more required, I think.
00:40:16
Speaker
So producers need also to work with customers, I think, in these ambitions.
00:40:24
Speaker
And so that's certainly a factor as well.
00:40:27
Speaker
And then the other one is, and we haven't talked too much about it, but it's the animal welfare side.
00:40:34
Speaker
And that's perhaps very much a European thing.
00:40:37
Speaker
But for 2026, the European Chica commitment is a lot of food service, retail,
00:40:48
Speaker
producers have committed to European chicken commitment actually.
00:40:52
Speaker
And that means that all the chicken that these companies are going to buy or a big part of the chicken is going to be slow growing actually.
00:41:01
Speaker
And we have to see how this goes.
00:41:03
Speaker
And there is a paradox also with the sustainability objectives because, you know, the carbon footprint is higher.
00:41:12
Speaker
but these commitments are made so this is also a factor potentially that can have big impact on uh uh or markets in uh in uh certainly in uh in anything that is linked to the european market so there's export brazil into europe
00:41:28
Speaker
Thailand into Europe, European market.
00:41:31
Speaker
And that's another factor which also for feed manufacturers will impact because it means you're going to use a different chicken.
00:41:41
Speaker
I think less chickens in the market if this happens.
00:41:46
Speaker
So it will significantly impact also feed manufacturers.
00:41:52
Speaker
Thank you so much, Nandar.
00:41:54
Speaker
Always a pleasure to speak with you.
00:41:57
Speaker
I really appreciate your time today.
00:41:59
Speaker
Now, if you would like more information on the quarterly poultry and protein reports that Rabobank produces, please visit research.rabobank.com and peruse the food and agribusiness page.
00:42:13
Speaker
Thank you so much, Nandar, and thanks to you for tuning in.