Fodder costs continue to decline, poultry industry profit margins expand.

Analysts believe that the poultry industry may expand its profit margins due to the decline in fodder and other input costs, which will to some extent mitigate the impact of the ringgit depreciation.

MIDF investment bank analysts pointed out that fodder typically accounts for 65% to 75% of production costs, which is a major bullish factor for the poultry industry.

"We maintain an optimistic outlook on the prices of these csi commodity equity index in 2025, thanks to ample supply from major exporting countries."

"Quanli Resources and Longhe International are capable of seizing this trend, coupled with government support, making the outlook for the industry even more optimistic."

Since early 2024, the prices of key raw materials such as corn and soybean meal have been steadily declining.

In October of this year, the average price of soybeans (accounting for 19% to 32% of fodder costs) was $350 per ton, an 18% year-on-year decrease, due to increased supply from Argentina, the USA, and China.

At the same time, the price of corn, which typically accounts for 55% to 69% of fodder formulations, also decreased by an average of 14% last month, to $1731.9 per ton, thanks to increased production in major regions such as the USA, China, the EU, and Ukraine.

However, analysts also warn that exchange rate fluctuations pose a risk to all poultry companies that procure raw materials in USD. In October, the average exchange rate of the Ringgit against the US Dollar was 4.30, compared to 4.26 the previous month.

"Although the depreciation of the Ringgit has increased cost pressures, we expect this impact to be alleviated by the recent normalization of global commodity prices, which will help stabilize input costs."

The analyst added that looking ahead, the Ringgit is expected to appreciate to around 4.03 against the US Dollar by the end of the year, further reducing input costs for poultry enterprises.