NASHVILLE, TENN. – The US poultry industry is well positioned in 2024, as market shifts have improved the overall outlook for global production, said Christine McCracken, senior protein analyst at Rabobank, during a presentation on global grains, oilseeds and poultry markets at the 2024 Annual Meat Conference held in Nashville March 18-20.

She identified some trends in the industry stakeholders should consider as the year progresses. For the egg industry, the cage-free movement and corporate commitments to switch to cage-free from conventional egg production practices may have an impact. Producers are making decent money after some difficult years. But the transition to cage-free production is expensive, and the costs aren’t always offset with premiums in the market, she said.

“I think going forward, the thing to watch is this ongoing shift to cage free,” McCracken said. “You’ve got six states mandating cage free, but another four that are coming on online. This cliff is coming, and that potentially could have some impact. And there’s five more states talking about implementing cage free. We’ll see how that goes. So, a lot on the regulatory front that could impact egg supplies as we head into the coming year.”

On the broiler side, lower feed costs will be a tailwind for producers although productivity continues to be an issue.

“When the industry made some changes to address some quality issues a few years ago and at the same time moved away from antibiotics and ionophores, we took some of this productivity out of the supply,” McCracken said. “We’re now hitting record lows for this time of year — we’re hitting 79% hatchability here this last week, and that normally, historically was running 82% to 83%. That’s a pretty big hit in performance, and I think that’s a big part of why we have seen a drop in production.”

The United States continues to dominate global poultry supplies, but Brazil and Southeast Asia have experienced growth, McCracken said.

In its “Global poultry quarterly Q1 2024: Outlook 2024,” Rabobank forecasted poultry to be the fastest-growing animal protein in the global market. Lower feed costs, which should drive a decline in prices, are expected to generate 1.5% to 2% growth, according to the report. Those and other developments have improved the outlook for poultry production and consumption.

In a follow-up interview McCracken identified several additional issues that may impact the global poultry market, most notably highly pathogenic avian influenza.

“It’s (HPAI) obviously hit the layers more, but it continues to be a challenge from a trade perspective,” she said. “We’re not able to get the same trade volumes into a few markets.

“We’ve been successful, obviously with countries that hold up their end of the bargain when it comes to how they treat these outbreaks. China has been a struggle, as you may know, and we’re hopeful that we’ll continue to make progress there, but you know, with those states that are involved, it’s been tough to get product exported to China, and that was a huge market for us last year.

“We (the US) still face a lot of competition from Brazil, which hasn’t had a commercial case of HPAI yet. So, they continue to absorb some of those markets and are very competitive on a price perspective.”

From a geopolitical perspective, McCracken said there are several risks that are worth industry attention.

“Our economist has been super vocal about the risks of disruption in the Red Sea because you’ve already got the Panama Canal with issues and then this,” she said. “The biggest issue — which I find fascinating — is if they are forced to ship around the Cape of Good Hope and land in Africa. There is not just a piracy risk, but apparently there are only so many ports. So, it’s an infrastructure issue, and then it takes 10 to 14 days longer, so you’re effectively reducing the number of ships available. You’ve seen rates go up.

“It shouldn’t impact anything we send to Mexico, obviously Canada, those are top markets for us. It doesn’t really affect anything going through the West Coast. But when you think about Europe, that raises all kinds of challenges for them. And not just on the exporting of meat, but the feed side is really where they get hammered.”