Review of bird flu safeguards urged to curb new outbreaks

By Jane Byrne contact

- Last updated on GMT

Related tags: Influenza

Review of bird flu safeguards urged to curb new outbreaks
All parties in the poultry supply chain, including feed producers, need to assess how they can help limit avian flu outbreaks, with no certainties about whether the spread of the disease will be checked in the coming weeks, says an industry specialist.  

“They should review hazard points and ensure the highest biosecurity levels are in place to try and prevent new eruptions of the viral disease,”​ said Rabobank's Nan-Dirk Mulder, speaking to FeedNavigator today.

Several avian flu strains are already endemic in several parts of Asia and Mexico, and the disease is increasingly spreading globally via wild birds. Recent months have seen new outbreaks in the EU, Canada, India and Egypt.

Germany, the Netherlands and the UK have confirmed the new avian flu virus strain H5N8 on poultry farms, and German authorities have also found the virus in a wild bird.

Mulder said industries should prepare for ongoing disease challenges, especially in times of bird migration.

Dark meat prices

Obviously, he said, there is going to be “pressure on margins”​ in affected regions such as Canada and the EU due to temporary lost export markets and lower prices especially for dark meat. Such weakness will have a knock-on effect on the profitability of feed makers supplying those markets, added Mulder.

“The extent of that economic impact will, of course, depend on the degree to which the disease spreads,”​ he said.

The outbreaks of avian flu in Northwest Europe have been a big wake-up call for the Russian industry as markets have been highly affected by import restrictions on day old-chicks and hatching eggs. Russia depends on 15% of total hatching egg supply on imports from these countries.

Although Russia is now re-opening imports of hatching eggs and day-old chicks from non-affected regions in these countries, a future supply risk for Russia will remain, reports Rabobank’s review of the global industry for Q4 2014.

Mulder says the outlook for 2015 for non-affected regions like Brazil and US remains strong.

The analyst says those markets could benefit from ongoing bullish conditions such as buoyant demand, low feed costs and high competing meat prices, and therefore capture some exports share from the EU and Canada.  

High margins in the US

“The US poultry industry is experiencing its highest margins for years, which have partly been driven by lower corn costs but the sector has also gained from the elevated prices for beef,”​ said the analyst.

The Dutch group forecasts a growth of 4% for the US poultry market next year, and it maintains a favorable outlook for producer profitability.

Rabobank predicts soymeal prices will drop significantly in the coming months, as the record US soybean crop boosts supplies, and it said beef production is expected to decline 3.2% in 2015, which will help support chicken breast prices.

Brazil deemed trade winner

Brazil is relatively safe from avian flu outbreaks due to its more isolated location from bird migrating routes from Asia.

It has been a big winner in term of global trade, and obviously has benefited from the Russian ban on imports from the EU, Canada, Australia and Norway but, nevertheless, the level of poultry exports to Russia, in terms of volume, was not as high as had been expected, said Mulder.

“The Brazilian producers, knowing they had a dominant supply position, possibly priced their products a little too high and, subsequently, took a hit,”​ he said.

The Chinese poultry industry had entered a period of relative stability earlier in the year, but avian flu is once again a major concern. And several cases are reported of people being affected by the disease, says the Rabobank report.

The market there is expected to have higher volatility in the coming months, especially as the high risk winter and spring seasons are kicking in.

Margins in the EU poultry sector have been slightly under pressure, particularly as hatching egg prices have also increased, but most of the lower sales prices are being compensated by lower feed costs.

Poultry processors have been more affected by weaker market circumstances, as price competition at the retail level in Germany and the UK has risen sharply due to price wars between leading supermarket chains in those markets, notes the quarterly review. 

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