Imports from the US set to extend in 2024
22 December 2023
4 minute learn
Regardless of some headwinds from manufacturing slowdowns, excessive feed prices and a current change in tariff price quotas for poultry, broiler operation profitability shall be constructive all through the outlook interval, in line with a current market report from Farm Credit score Canada (FCC).
Whereas feed prices have fallen from their highs in 2022, Western canola, representing meal and wheat rations shall be pressured by 2023’s drought-limited manufacturing. Japanese soybeans might keep elevated with Brazil’s climate difficult manufacturing amid sturdy international demand.
Canadian broiler manufacturing is forecast up year-over-year in 2023, 2024 and 2025 (Determine 1), however there are cautions about whether or not such development is attainable. In 2022 and 2023, there have been shortfalls in manufacturing relative to allocations (i.e., deliberate manufacturing) deficits attributable to a scarcity in chicken availability since early 2022. Canada and the U.S., which provides roughly 20% of Canada’s provide of day-old chicks and hatching eggs, skilled widespread losses of their breeding and hatching flocks in 2022 as a result of Avian influenza. Determine 1 represents the hen meat manufacturing best-case state of affairs based mostly on inhabitants development and present consumption traits. However, the shortages which have restricted manufacturing in 2022 are anticipated to proceed to hamper manufacturing in 2023 and 2024.
On the different finish of the spectrum, the USDA’s International Agricultural Service (FAS) has forecasted Canadian hen manufacturing to develop 3% YoY in 2023 and a couple of.5% YoY in 2024. Via October 2023, hen manufacturing in weight was working 1.2% larger relative to a 12 months in the past, a acquire made attainable by slaughtering heavier birds.
British Columbia (BC) hen meat manufacturing has been hit particularly onerous in a 12 months that some are calling the worst on report. An AI outbreak (2022 –2023) has introduced the province’s contaminated premises to 142 (of 387 for Canada), and BC accounts for 52% of all Canadian impacted birds as of November 19 (9.3 million birds, or lower than 1% of complete Canadian chicken slaughter in 2022 and 2023). The entire variety of eggs laid in BC was down 14.3% YoY (January to August), and the overall variety of eggs laid in BC hatcheries (i.e., for layer and broiler manufacturing) was down much more.
The excellent news for the sector is that Canadians’ urge for food for hen picked up in 2023 Q3 after displaying declining curiosity earlier within the 12 months (Determine 2). Whereas beef demand continues to outweigh beef consumption and beef has been Canadians’ most most popular meat since 2020 Q1, FCC Economics’ meat demand index exhibits hen meat demand (i.e., client preferences for hen not defined by purely financial components) was the best of the three historically massive sellers (beef, pork and hen) in Q3. Hen was additionally the meat consumed most by Canadians in that interval.
Beef consumption has seen the biggest decline of the three meats since 2021 Q2, with beef costs, as measured by the Shopper Worth Index, rising an extra 8.0% in 2023 (January to September) from already elevated ranges. Compared, hen costs (complete hen, breasts, thighs and drumsticks) have risen 3.2% this 12 months to September. Nonetheless, pork might pose a problem as Canada’s pork provide can be elevated, which ought to preserve costs extra aggressive.
To fulfill sturdy demand in a 12 months of diminished manufacturing, Canadian retailers can entry present manufacturing, storage shares and imports. With manufacturing up solely minimally this 12 months, frozen hen shares have been nonetheless sufficient to fulfill demand in 2022 and early 2023. US imports are 7% larger YoY (September 2022 to August 2023) and will develop additional in 2024 with a rise in Canada’s complete tariff price quotas to 119,000 MT, a 7.4% YoY improve.
Backside line
Poultry producers will begin to fill allotted manufacturing ranges as soon as the damaging avian influenza outbreaks are underneath management – a frightening activity given the illness’s not too long ago advanced skill to contaminate and kill wild chicken and mammal populations. Demand continues to be sturdy from in-home eating and foodservice sectors and is presently being met with the ample frozen shares available. However with costs for aggressive meats nonetheless comparatively a lot larger than these for hen meat, we will anticipate Canadian poultry demand and consumption to stay excessive, pressuring these shares. Inhabitants development total and development stemming from immigration, particularly, may also assist to spice up consumption ranges. Imports from the US are set to extend and ease a number of the strain in 2024, however it could be some time earlier than Canadian producers can meet home demand with our manufacturing.
