Rabobank Report: Q4 Global Poultry Industry
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.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV