July 8, 2004

Minimal Impact Seen on China's Methionine Market from Latest Bird Flu Outbreak in Anhui Province
 

An eFeedLink Exclusive Report
  

China's State Avian Influenza Laboratory has announced on July 6 that chickens in Juchao District, Chaohu City in Anhui Province had died from H5N1, a highly pathogenic strain of the avian flu found in Asian countries.

Upon receiving news about the outbreak, China's Department of Agriculture sent an investigation team to the affected areas where measures were promptly taken to prevent further transmission of the disease. Currently, the outbreak is reported as well under control by the Chinese authorities.

Experts from the Department of Agriculture have investigated the bird flu outbreak and have reached the following conclusion: the avian flu-affected poultry farms are situated on a hill slope. The day-old chicks in the farms were healthy when they were brought in. As these farms are located near Chaohu area, experts believe that waterfowls and migratory birds had transmitted the bird flu virus.

Analysts believe that this round of avian flu outbreak in Anhui province would not severely affect the poultry market in China. Firstly, this round of outbreak is localised in Anhui province, which is not a major poultry-producing region in China.

Besides, there are no major poultry farms in the vicinity of the affected farms. Secondly, swift and effective measures have been taken to prevent further transmission of the disease and the situation is currently well under control.

As long as the disease does not spread beyond Anhui province, analysts strongly believe that the impact of this round of bird flu outbreak on China's poultry market will be minimal.

Nevertheless, China's methionine market sentiments could still be somewhat dampened by the news of the new outbreak. There is currently ample methionine supply in the Chinese market and the market is still in the recovering phase following the bird flu outbreak early this year.

Trade participants are worried over the effects of this round of bird flu outbreak as Chinese feed millers might hold back on their procurement of methionine, waiting to see how the situation would evolve. These actions could forestall recovery in the demand for methionine presently underway.

In the near term, analysts felt that China's methionine prices will still generally be stable, provided that this round of bird flu outbreak would not spread beyond Anhui province. Prices are seen to make small gains amidst general market stability. Given that methionine producers are currently regulating the supply of their products, coupled with the high production cost, China's methionine prices are seen would be well supported at current levels.

In the medium to longer term, methionine inventory in the Chinese market is expected to deplete gradually as demand pick up and producers continue to regulate supply to the market. With the latest bird flu outbreak fully under control, and recovery in the poultry market gaining full speed, analysts see improving prospects.