NEW YORK, Nov. 20, 2012 /PRNewswire/ -- Rabobank has
published a new research report on the global poultry industry in
Q4 2012, examining how high feed prices continue to affect poultry
industry margins.
In a new report, Rabobank's Food & Agribusiness Research and
Advisory group says that the global poultry industry continues to
face the challenge of high feed costs, which is putting margins
under pressure in many parts of the world. Profitability
swings are an ongoing problem for the industry, which saw similarly
sharp increases in feed costs in 2008 and 2010. In developed
countries in particular, the industry lacks adequate power to pass
on feed cost increases. Key factors driving this adverse situation
are oversupply, government restrictions regarding plant closures,
fragmented industries, inflexible supply chains, and pricing models
in the value chain.
Commenting on the outlook for the poultry industry, Rabobank
analyst Nan-Dirk Mulder said: "The
first quarter of 2013 is likely to be challenging as higher feed
input costs move through the flocks. Beyond that, returns
will depend on industry discipline in keeping production
sufficiently moderated to get prices higher and offset increasing
costs. Weak global performance is urging industry players to
rationalise supply base, and non-strategic vehicles are being
divested."
Mulder continued, "The most challenged poultry industries are
currently in the U.S., the EU, Thailand and South
Africa, while companies in Russia and Brazil are performing relatively
well. The U.S. has only recently started making supply
cuts, and this is also the case for the EU. South Africa is currently flooded with broiler
import volumes from the EU, with sharply falling local prices. Thai
production expansion in the last two years has been too fast to be
in balance with current market demand. This has resulted in large
oversupply in the domestic Thai market and declining revenues in
concert with increased feed costs."
The EU is an example of a region that has seen a structural
reduction in margins. Recent levels have fallen from historic
averages of 6%-7% to 4%-5% and even temporarily lower during some
of the spikes in compound feed prices seen this year. The U.S. has
even seen negative EBITDA margins in the industry in times of high
feed prices but current margins are slightly higher, although below
historic levels. Supply reductions have paid off in the U.S., but
not yet enough.
The report also looks at recent industry activity, including the
sale of a Perdue processing plant to Wayne Farms in the U.S., a
merger between Avarama and BR Frango, and JBS' acquisition of
Agroveneto in Brazil.
The Rabobank report on the Q4 global poultry industry
is available to media upon request.
Rabobank Group is a global financial services leader providing
wholesale and retail banking, asset management, leasing, real
estate services, and renewable energy project financing. Founded
over a century ago, Rabobank is one of the largest banks in the
world, with nearly $1 trillion in
assets and operations in more than 40 countries. In North
America, Rabobank is a premier bank to the food, beverage and
agribusiness industry. Rabobank's Food & Agribusiness
Research and Advisory team is comprised of more than 80
analysts around the world who provide expert analysis, insight and
counsel to Rabobank clients about trends, issues and developments
in all sectors of agriculture. www.Rabobank.com
SOURCE Rabobank Group