NEW YORK — Global poultry prices are gaining upward momentum in the second quarter, according to Rabobank's “Poultry quarterly Q2: Prices taking off.”

Driving the trend are higher prices for beef and pork, along with recovering demand for poultry. Additionally, poultry producers have successfully achieved a balanced supply and demand in most regions of the world, Rabobank noted.

“Under improved global market conditions, led by the North American region, a slight increase in global chicken prices is expected,” said Nan-Dirk Mulder, Rabobank analyst. “We see an increasingly balanced market, where supply discipline is more the order of the day and improving margins will be the likely result. However, markets remain volatile and any change in fundamentals, especially from the supply and feed side, will impact global prices. Suppliers should look to keep production growth disciplined.”

In its report, Rabobank cautioned that volatility may return to the poultry market. Global feed prices are expected to decline in the third and fourth quarters, but volatility remains a threat because feed stocks remain low. Ongoing concerns about the conflict in Ukraine and the threat of an El Niño event have created some market volatility, according to Rabobank. Additionally, animal diseases remain a concern.

Poultry prices in the United States are on pace to exceed 2013 prices. Rabobank noted that 2014 is on track to become one of the most profitable years in the last decade. The U.S. poultry industry is primed to benefit from lower beef and pork production, a limited breeder flock, increasing exports due to the risk of another avian influenza outbreak in Mexico, and lower feed costs.

Margins in the E.U. poultry industry are currently strong, Rabobank said. Supply-demand mix is reasonably well balanced, with reduced poultry production and relatively strong demand.

Avian influenza outbreaks declined in China. Demand for poultry is recovering, and the market is now showing signs of gaining momentum with increasing poultry prices in both retail and live bird prices.

Poultry meat prices in Brazil are expected to hold firm in the second quarter on higher prices for competing proteins rising demand in both domestic and international markets.

Oversupply of poultry continues to drag on the Russian poultry industry, according to Rabobank. Market conditions in the South African poultry industry have normalized after a long period of oversupply with rising imports.