Rabobank: Opportunities Remain Wide Open for African Poultry 

Since the 2016 report ‘Time for Africa,’ we’ve seen ongoing investments in the USD 25 billion African poultry and egg industries, driven by strong long-term fundamentals. This has recently accelerated again after a slowdown in 2016/17 resulting from economic volatility in some African countries, especially those with a high dependence on oil and mining. “The middle class in Africa is expected to continue growing, as the population doubles and more people move to big cities. These core fundamentals, together with the untapped potential of local feed grain production, offer an attractive investment opportunity,” according to Nan-Dirk Mulder, senior animal protein analyst.

“This will all lead to ongoing market growth and modernization at all stages of the value chain, creating an increasingly interesting platform for international investors. The growing demand and modernization of...

Rabobank: Poultry Quarterly Q1 2020

The outlook for global poultry in 2020 is slightly more positive than it was in 2019, when markets suffered from relative oversupply. A key driver of the gradual recovery will be ongoing strength in trade flows to Asia in order to supply African swine fever-affected markets such as China, Vietnam, South Korea, and the Philippines. These trade flows will be positive for dark-meat prices, though they will be subject to increasing volatility. Improved beef prices (the main substitute for fresh poultry), stable global average feed prices, and more balanced supply will also all support the gradual recovery. The downside is that global whole-bird and breast-meat markets will remain pressured and have limited price upside.

African swine fever (ASF) will increasingly push chicken expansion in Asia in 2020. This will help fill the gap in local protein markets affected by ASF, but it also...

Rabobank: Global Beef Trade Into the 2020s

Global Beef Trade Continues to Grow

Global beef trade has continued to grow over the last five years, fueled by growing import demand, and supported by trade agreements and improved access to new and existing markets. This growing demand, seen predominantly in Asian markets, is illustrated in the latest Rabobank World Beef Map, which shows a heavy concentration of trade flows into Asia.

Rabobank believes that beef trade will continue to rise over the next five years, supported by strong importer demand. African swine fever (ASF) will provide a short-term, intense increase in demand, but strong fundamentals of increasing wealth and changing diets in Asian countries support ongoing demand for protein. To meet this growth in demand, we believe production and beef exports will also...

Rabobank Beef Quarterly Q4 2019: Strong Demand to Test Supply in 2020

Beef will see a continuation of strong import demand from China in 2020, according to Rabobank’s Beef Quarterly for Q4 2019.

Report Summary

Strong demand will be the driving force in the global beef market in 2020, while beef production will experience slow growth.

“Although beef is not strictly a fungible product, demand and supply pressures will cause a redistribution of product among markets. Market participants will need to be vigilant for any...

Rabobank: Supply Slide Saves Grounded Demand

Agricultural commodities were heavily impacted by trade wars, African swine fever, and erratic weather in 2019. According to the RaboResearch report "Outlook 2020: Supply Slide Saves Grounded Demand," many of these factors will remain key for agri commodity prices in 2020.

In 2019, agri commodity markets were impacted by several unprecedented incidents and uncommonly severe conditions. China's hog herd declined significantly, as a result of African swine fever (ASF). This drastically weakened demand for feed and, combined with the US-China trade war, resulted in a significant slowdown in the global soybean trade.

Meanwhile, record US corn- and soybean-planting delays drove corn prices from three-year lows to six-year highs within a few weeks. Then, improved...

Rabobank's Global Protein Outlook for 2020

In 2020, global animal protein faces an uncertain world, but opportunities can still be found. African swine fever dominates the outlook, having generated unprecedented change in 2019 – and we expect more in 2020. Trade disputes and sustainability are other notable challenges in the global animal protein complex. But there are also opportunities in global animal protein, such as recovery from ASF, winning on sustainability, and investing to secure ongoing trade flows.

Global Summary

African swine fever (ASF) overwhelms the outlook for 2020 – as it has done during 2019 – and will pull down overall growth, as well as bring uncertainty to...

China’s Recovery from African Swine Fever: Rebuilding, Relocating, and Restructuring

African swine fever (ASF) has already caused huge herd losses and led to soaring pork prices in China in 2019. We believe the disease will continue to spread in the country in the coming years. However, we expect the pace of herd loss to slow down, due to industry participants’ reactions and policy changes. Restocking will likely take around five years, but hog herd levels may find it difficult to recover to pre-ASF levels.

“In addition to the direct impact on the hog herd, ASF will reshape the development of China’s hog supply chain in the coming years,” according to Chenjun Pan, Senior Analyst – Animal Protein at Rabobank. “During the rebuilding process...

Pork Quarterly Q4 2019 – Producers Remain Cautious on Expansion as Risks Outweigh Rewards

Global pork prices continue to rise, as protein shortfalls intensify competition for a shrinking supply, according to Rabobank’s Pork Quarterly Q4 2019.

Pork prices have hit record highs in some regions, while trade barriers continue to limit the upside in the US and Canada. prices will continue to increase through Q4 2019 and into 2020, as markets work to balance supply and demand. “Despite rising economic incentives, we expect a limited global production response, as environmental and regulatory constraints, along with the threat of African swine fever (ASF), constrain the industry’s ability to expand,” according to...

A Hard Landing for Some: US Trade Tariffs on EU Agricultural Products

On Wednesday, October 2, the WTO ruled in favor of the US in a long running trade dispute over illegal government support to European aircraft builder Airbus. It allowed the US to impose tariffs on USD 7.5bn worth of products from the EU-28. The tariffs proposed are not a broad list focused on the whole European agricultural sector, rather it targets specific countries and product categories. For example, in 2018, almost 80% of US wine imports in value terms were imported from the EU-28. Not only do US consumers favor European wines, they also have a taste for whiskies, olive oil and dairy products from the region.

Alcoholic Beverages: French and Spanish Wine Impacted Most, Followed by Scottish Single Malt Whiskies

The US accounts for around 18% of French and 12% of Spanish wine exports in value terms. Even if sparkling wines and those with over 14% alcohol content are...

Rabobank: A Global Update on African Swine Fever 

While African swine fever continues to devastate pig herds and production in China, the focus is now shifting to other parts of Asia, given recent outbreaks in the Philippines, South Korea, and Timor-Leste, according to the latest African Swine Fever Global Update by RaboResearch.

The spread of ASF in Asia, outside of China, has captured attention

“The impacts of African swine fever (ASF) across Asia are likely to be just as challenging as they have been in China, and we expect to see herd and production losses growing as we move into 2020,” says Justin Sherrard, Global Strategist - Animal Protein. “At the same time, price levels in China – for pigs and pork, as well as for other proteins – keep climbing, and...

Rabobank: Poultry Q4 2019 Outlook 

Global poultry markets are expected to see some recovery in the coming months. However, this will be under fragile conditions. Key concerns are the ongoing oversupply situations in many global markets, like the EU, US and South Africa. Actually, only disease-affected China and Mexico, and Brazil (due to the combination of supply reduction and improved export demand), are performing relatively well. Other markets are suffering from oversupply.

Therefore, more disciplined supply should be the key to returning to profitability for the global poultry industry in 2H 2019. Notable positives are the expected ASF-related strength in pork prices, and the limited feed price upside risks, given the relatively good feed grain supply position expected in...

Rabobank: Momentum Is Building in Sustainable Beef

Strong beef demand in China, with imports in 1H 2019 up by more than 50% YOY, and trade uncertainty – including the US-China trade war, Brexit, and new Mercosur access to the EU – are the dominant themes in global beef, according to Rabobank’s Beef Quarterly for Q3 2019.

Senior animal protein analyst Angus Gidley-Baird: “The supply position in the US remains solid, while supply in Australia and New Zealand is tight, but improving in Brazil. At the same time, beef production globally is coming under increasing scrutiny over its impact on animals and the environment. The past 12 months have seen a marked increase in beef supply chain responses to such scrutiny, and we expect even more in the coming 12 months.”

Rabobank expects this pace of change around sustainability in beef supply chains to increase further. The market will continue to... 

Poultry Quarterly Q3 2019: Improved but Fragile Market Conditions

Global poultry has experienced gradually improving market conditions in 1H 2019, and this trend is expected to remain over the coming months.

The main driver for the market improvement has been a more balanced supply in key trading markets like Brazil Thailand, the US and the EU. The gradual improvement has come despite global trade volumes being disappointing due to ongoing trade issues. China is the best performing poultry industry, with exceptionally high poultry prices due to the shift from pork to poultry as a result of the worsening situation with African Swine Fever (ASF) and very low breeding stock levels, which has pushed PS and DOC prices up to historically high levels.

The global poultry market has been on a rollercoaster ride in the past year, with a large oversupply in 2H 2018 and early 2019 greatly affecting prices for globally-traded poultry products...

African Swine Fever Affects China's Pork Consumption

China’s pork consumption has dropped by 10% to 15%, year-to-date, by our estimates, driven by food safety concerns. The level of consumption change varies greatly between the different distribution channels. Looking forward, and reflecting on the current situation and trends, it is quite possible we have seen the ‘peak’ of pork consumption.

Pork Consumption in China has Dropped by 10% to 15%

The losses in China’s pig herd are very difficult to estimate – estimated losses range from 20% to 70%. Data from the Chinese Ministry of Agriculture and Rural Affairs (MARA) has the sow herd down by 22% in the year to April – this is one of the most optimistic estimates we have seen. However, hog and pork prices struggled in April and May, after a brief surge in March, raising significant questions...

Beef Quarterly Q2 2019: Changing of the Guard in the Beef Trimmings Market

The world’s largest beef importer, China, is at the centre of growth in beef trade in general, and trimmings trade specifically. Many of the cuts imported by China have been to satisfy the local cuisine. But as diets and foodservice change, this now includes a growing trend in trimmings trade.

The growing demand for trimmings from Asian countries will create additional competition for the US but it is not expected to shift the market yet. Suppliers of trimmings into the global market should be conscious of possible changes in the trade. While steady growth is evident in the Chinese market to date, a short-term demand increase across all proteins as a result of African Swine Fever will likely cause a spike in demand for trimmings...

Restaurant Food Costs: What does ASF Mean for Protein Prices in the US?

Rabobank expects food costs in the US to increase in the second half of the year, as protein prices are impacted by stronger export demand following the African Swine Fever (ASF) outbreak. Pork and chicken prices will be the most impacted. Beef will be the last to see increases materialize, but QSR patty prices are expected to be the most vulnerable component. If a trade agreement with China were to be brokered, price increases would be faster and steeper.

Restaurants Should Expect Rising Protein Prices

For the past two years, restaurants have been favored by a relatively benign food cost environment, which helped compensate for rising costs in other areas (labor, real estate). We expect this situation to change (for proteins) towards the second half of the year and...

Rabobank: China and Trade Restrictions Drivers for an Improving, but Volatile Global Poultry Outlook

Trade conditions are gradually improving for global poultry thanks to rising global demand – especially from China, which is expected to face a protein shortage this year.

In recent quarters, the global poultry market has gone through one of the most volatile periods in many years, due to a combination of factors, including trade and disease restrictions, along with the impact of the US-Chinese trade war. Production was at an exceptionally high level in many markets, including the US, the EU, and Thailand. Meanwhile, demand dropped because of a general market slowdown and constraints on access to international markets following trade restrictions. This resulted in a period of falling poultry prices between Q2 and Q4 2018.

“However," according to Nan-Dirk Mulder, senior animal protein analyst, "the outlook is changing, Rabobank is gradually becoming more optimistic that ...

Rabobank Beef Quarterly Q1 2019: China’s Trade Sending Waves through South-East Asia

Stricter border policing in China as a consequence of African swine fever is restricting the unofficial meat trade, with flow-on effects in other countries, according to the latest RaboReseach Beef Quarterly report.

Following the outbreak of African swine fever (ASF) in August 2018, the Chinese government strengthened border controls. Rabobank believes the increased enforcement measures have led to the sharp decline in the volume of trade through unofficial channels in Q4 2018. The increased Chinese border enforcement has slowed unofficial bovine trade from Hong Kong and Vietnam. Subsequently we have seen Vietnamese imports of Indian carabeef in Q4 2018 down 60% YOY at 120,370 tonnes and in turn Indian buffalo prices have dropped. But this could easily be reversed.

Other important developments include ...

Rabobank: The Impending Geopolitical G&O Bull/Bear Cycle

The outcome of the current US-China trade negotiations will be drastic and enduring. G&O commodity markets are not reflecting the high risk of extreme impacts of either ‘no-deal’ or ‘super-deal’. The G&O value chain needs to prepare for the next geopolitical bull/bear cycle.

Geopolitical decisions, more than global fundamental supply-and-demand dynamics, threaten to make or break the next G&O bull market. The trade war between the world’s largest producer (the US) and importer (China) of G&O upended global trade fundamentals and precipitated...

Pork Quarterly Q1 2019: Another Uncertain Year – with More Complex Disease and Trade Issues

As 2019 gets underway, we see another year full of potential in global pork, with growth in production and demand in many parts of the world. Yet this is overshadowed by the uncertainty created by complex disease and trade issues, as can be read in the just-released RaboResearch report ‘Pork Quarterly Q1 2019: Another Uncertain Year – With More Complex Disease and Trade Issues’.

Report summary

Rising disease pressures are challenging the global market. “African swine fever (ASF) stands out as the single biggest challenge facing global pork in 2019,” according to Chenjun Pan, Senior Analyst – Animal Protein. “The changes ASF will bring create opportunities for some, and threats for others.” China’s need to lift imports will incentivise continued growth in key exporting countries, but how much pork China will import remains ...