August 2, 2007

 

China could overtake Russia as largest market for US chicken

 

 

During the announcement of the company's quarterly performance Wednesday (Aug 1), Pilgrim's Pride Corp, the largest chicken processor in the US and in the world, said China is the fastest-growing international market for US chicken and could soon overtake Russia as the largest customer.

 

A cheaper US dollar and buoyant economies throughout the world could help push chicken leg-quarter prices higher, O B Goolsby, the CEO of Pilgrim's Pride said.

 

Disease problems in its pig population is leading to a pork shortage, thus leading China to import more chickens, analysts said.

 

Since chicken leg-quarters are the cheapest muscle protein, analysts predict that sales to China will continue to grow.

 

Wholesale prices for chicken leg-quarters are currently at an all-time high and they are helping chicken processors offset high feed costs.

 

Worries over higher grain prices next year have deterred chicken and livestock producers from carrying out expansion plans but higher prices may soon buoy sentiments, analysts said.

 

US chicken sales (excluding chicken feet) to China and Hong Kong is up 41 percent during the first five months of the year compared to the same period last year, hitting 80,500 tonnes, according to USDA data.

 

US chicken leg-quarter prices to Hong Kong and China is going strong and creating record high prices.

 

The USDA figures also showed that China and Hong Kong account for 93 percent of growth in US chicken exports during the first five months of the year.

 

Leg quarters are traditionally lower in demand in the US and thus feature more prominently in exports. Although Russia remains the top buyer of US leg-quarters, China is rapidly catching up.

 

If China's imports continue at its current pace, US chicken exports to China would total 636,000 tonnes for this year, exceeding last year by 37 percent and exceeding the last five-year average by 66 percent.

While China has increased its purchases, sales to Russia have slowed slightly during the first part of this year, so the markets may not be rising overall, analysts said.