The outlook of US poultry sector remains strong for the years to come
The poultry sector in the US has performed well in the last 7 years and it will continue to do so for the next couple of years, according to the latest sectorial report issued by CoBank. Six new plants are expected to become fully operational in 2020 keep a production growth rate at 1.5%, well below the 2.5% growth rate in the last 5 years but still comforting for the producers.
Domestic demand may not be seen as a driver for growth as large supplies of pork are stockpiling in the US due to the trade wars initiated by Trump administration but there is hope in unlocking the Asian markets for poultry.
The outlook for 2020 is predominately dependent on the impact of ASF in China and Asia broadly and what trade opportunities materialize for US poultry, beef, and pork. Without sizable export volumes of all three major animal proteins, the US poultry sector, and the protein sector, in general, will be facing a significant glut of meat in the domestic market.
A look at the prices of meat and poultry in the summer of 2018, prior to the first news of ASF in China, shows US consumers were beginning to reach a peak in animal protein consumption. That isn’t to say that US consumers stomachs are as full as they could get of meat and poultry, but each marginal pound of consumption would come at significantly lower prices. At these prices, producers would struggle to be profitable.
Due to the ASF situation in Asia and the impact that the disease will have on China's pig inventory (-30%) and in the world's pork supply (-15%) poultry may gain a larger market share in the animal protein market in the region.
"It is only a matter of time before US chicken exports benefit with increased trade volumes, but it would be a reopening of China to US chicken that could also change things. US chicken has been banned in China due to an outbreak of highly pathogenic avian influenza (HPAI) for three years. However, as China’s animal protein shortage becomes increasingly pronounced, it is likely the ban will be dropped", says the report.
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