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Livestock & Feed Bussiness Worldwide: January / February 2017

World chicken market: The shakeup

by Eric J. BROOKS
 

How disease outbreaks levelled off world poultry production, boosted chicken meat exports and changed the fortunes of leading suppliers.

The world broiler meat market welcomes the Chinese Year of the Rooster confronted by an odd set of circumstances - disease-driven prosperity, stagnation and blind luck. After leading all proteins and growing by 2% to 4% for decades, global chicken meat production would increase, according to the USDA, by 1.1% in 2017 to 90.5 million tonnes, from 89.5 million tonnes last year.
 
With pork output rising by 3% and beef by 1.3%, chicken's surprisingly weak performance echoes the 2014-15 US bird-flu epidemic's supply shock.
 
America suffered very little visible damage from the epidemic. Despite local egg and turkey shortages, American chicken meat output actually increased during the bird flu years. And although US exports fell steeply, they impacted the world market more than they did to America itself.
While 2015 world chicken meat exports fell 2.2% (from 10.48 to 10.25 million tonnes), America's bird flu crisis was but a fraction of what Thailand endured. Unlike Thailand's multi-year ordeal, the worse was over in less than a year for the US - although it had a huge long term impact on leading chicken producers outside America.
 
Heavily dependent on bird-flu tainted US breeding stock, Thailand was able to import sufficient European grandparent stock and extend the life of aging breeders long enough to sustain production. For a large market like China, no combination of alternative suppliers could supply sufficient breeder birds in place of banned US grandparent stock.
 
Already hobbled by five years of food safety scandals and a decelerating economy, China's broiler production sank amid dwindling, aging AA broiler breeder inventories. Totaling a USDA estimated 11.5 million tonnes in 2017, China's broiler meat output is down sharply (-16%) from its all-time peak of 13.7 million tonnes in 2012.
 
This is perhaps the US bird-flu outbreak's oddest long term side effect. Having endured countless bird-flu epidemics itself, China suffers its steepest-ever chicken production fall from an avian-flu epidemic that happened half the globe away.
 
By the end of 2017, China's chicken output will have fallen by nearly two million tonnes in two years - an amount equal to the entire yearly chicken meat output of exporters such as Thailand, Argentina or Ukraine. Essentially, strong chicken-meat growth in the rest of the world was offset by declining Chinese production, causing overall world poultry meat production to level off.

While China's declining output flattened world broiler meat production, it profoundly stimulated exports. They rose 5.3% in 2016 and are on track to increase another 5.4% in 2017, to a record 11.38 million tonnes. With exports booming amid flat production, the share of broiler meat shipped overseas is also rising - from 8% in 2000 to 11.3% in 2010 and a record 12.6% this year.
 
That's because from 2012 through the end of 2016, China's chicken meat output fell by approximately 170,000 tonnes more than its consumption. In 2017, the gap between China's chicken meat consumption and production will expand to 190,000 tonnes.

From a 157,000 tonne export surplus in 2012, China will import 205,000 tonnes of chicken more than it will export in 2017. That is why China is no longer included in our survey of leading poultry meat exporters.
 
China's sudden, US bird flu-driven change from number four chicken meat exporter to seventh largest importer has “changed the game" for the world poultry market. Some countries like Brazil successfully turned the situation into an export windfall.

While Thailand and Brazil were able to take advantage of the world market changes, Turkish and Argentine export volumes went into a tailspin. Thailand, which once looked ready to be overtaken by either Turkey or Argentina, will export twice as much chicken as they could in 2017.
 
By comparison, America managed a rapid recovery from bird flu just in time for other exporters to endure currency market swings that were not of their making. With The Year of the Rooster's shadow upon us, examine these implications for the world's three leading broiler meat exporters.
 

The full article is published on the January / February 2017 issue of LIVESTOCK & FEED Business. To read the full report, please email to inquiry@efeedlink.com to request for a complimentary copy of the magazine, indicating your name, mailing address and title of the report.
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