As Subdued Feed Prices, Poultry Firms See Promising Future Ahead
The outlook seems promising for India's poultry companies, on expectations of supply deficit and rising consumer demand for chicken and eggs, after nearly four years of downturn.
Due to a sharp increase in feed prices, profit margins of poultry firms were under pressure for four years. Worried at a consumer shift to alternative sources of protein intake, they did not pass on the feed price hike.
Poultry firms raised their product prices only marginally, even during supply deficit days. But now, lower feed prices have offered a cushion to their margins. While broiler chicken prices remain fairly stable at Rs 78 a kg, egg prices have gone up marginally over recent months to trade currently at Rs 4 each.
On the benchmark Chicago Mercantile Exchange, on lower soybean output globally, average soybean meal prices jumped to a high of $405.30 a tonne in June 2016. on increased supply of soybean and thereby meal from the US, India and other major producing countries, it has since declined to trade currently at $316.5 a tonne. Prices of other feeds have also declined.
With a sharp increase in profit margins a recent Rabobank study estimates a promising outlook for India's poultry firms. With prices to remain healthy, it estimates India's demand for poultry products to rise by five per cent yearly.