September 20, 2004

Japan's 2005 Broiler Meat Supply To Remain Tight

Japan's 2005 overall broiler meat supply is forecast to remain tight, according to information from the U.S. Department of Agriculture's Foreign Agricultural Service Web site.
 
Overall broiler meat supply to remain tight
 
Similar to 2004, the continued absence of broiler meat (generic) from Thailand and China will likely keep consumption relatively low in 2005, at about 1.45 million metric tons. When combined with imported prepared products, Japan's total broiler consumption in 2005 is projected at 1.66 million MT, up 1% from 2004.
 
Trade sources don't anticipate that Japan will lift its Avian Influenza bans on Thai and Chinese broiler meat in the near term due to sporadic outbreaks of highly pathogenic avian influenza (HPAI). Japan's bans have been in place since January 2004, when the recent outbreaks started.
 
Broiler meat supplies are projected relatively unchanged from 2004 levels at 1.135 million MT (dressed weight) for domestic production, and 530,000 MT (customs clearance basis: bone-in and boneless mixed) for imports (320,000 MT for broiler meat 320,000 MT and 210,000 MT for cooked products). Assuming Japan maintains its import bans on Thailand and China in 2005, imports of broiler meat from Brazil are projected at 270,000 MT (84% import share), unchanged from 2004, but up substantially from 2003 (175,000 MT or 38%).
 
Imports from the United States are expected to more than double to 35,000 MT (11% import share) from a low of 15,000 MT in 2004 due to an import ban (February-June) following the detection of a case of HPAI in Texas. Limited supplies of imported broiler meat will likely keep the market price for Brazilian boneless cuts relatively high throughout 2005, which will likely hurt Japan's food service industry, which is a major end user of imported meat. Broiler meat stocks are also expected to remain tight in 2005. A challenge for U.S. suppliers is to boost exports of boneless meat to Japan that is specifically portioned for the market. With China and Thailand currently out of market for this product there could be opportunities for U.S. suppliers.
 
Total consumption is expected to rise slightly in 2005, keeping market prices of domestic broiler meat relatively firm. In 2004, domestic and international AI outbreaks made consumers wary and discouraged household consumption, particularly during the first half of the year. Japanese producers will likely remain cautious about boosting production due to uncertainties, particularly regarding the beef market outlook and possible resumption of U.S. beef imports. [Note: According to Japan's agriculture ministry (MAFF), Japan's chicken consumption share (generic) was 33% for households (mainly domestic fresh/chilled cuts), 11% for processing (mainly domestic spent hen and imports), and 56% for food service and catering (mainly imports and partly domestic) in 2003.]
 
[Supplemental Note: As of September 2004, Japan's AI problems appear to have been contained with no further outbreaks reported since early April 2004. Four HPAI cases were reported from December 2003 to April 2004, and 275,000 birds were depopulated. As a result, Japan implemented new AI measures to improve prevention and response.]
 
Full recovery is expected for cooked products from Thailand and China
 
In 2005, imports of cooked poultry products (broiler) from Thailand and China are expected to rebound, projected up by 17% to 210,000 MT, from low levels in 2004 due to a temporary ban. The unavailability of Chinese and Thai broiler meat is expected to strengthen import demand for cooked products in the food service and prepared food sectors.
 
Japan initially banned prepared products from China and Thailand in 2004 due to HPAI outbreaks. However, the Government of Japan negotiated a permit system on a plant-byplant basis with China and Thailand to allow trade in cooked poultry products to resume.
 
Currently, 22 plants in Thailand and 35 plants in China are eligible for export to Japan. Many of the eligible plants are reportedly joint venture operations with Japanese investors.
 
2004 Situation Update and Forecast
 
Japan's total broiler meat consumption, including imported prepared products, is forecast down by 11% to 1.645 million MT in 2004. Broiler meat consumption (excluding prepared products) is forecast down by 9% to 1.465 million MT. The overall decline is largely attributed to smaller imports from Asia and the United States following HPAI outbreaks.
 
Imports of broiler meat from Thailand, China and U.S. were suspended in January. The ban on U.S. imports was lifted in June but the bans on Thailand and China remain, and it is unlikely the ban will be lifted in 2004.
 
Japan's 2004 total broiler imports, including cooked products, are forecast to tumble by 28% from a year before to 500,000 MT. Imports of broiler meat are projected down by 31% to 320,000 MT. In absence of Thai and Chinese broiler meat, Brazil became the largest supplier in 2004, particularly for boneless cuts. The average wholesale market price for Brazilian boneless leg meat jumped by 30% to 413 yen per kilogram in 2004, and is expected to remain high for the remainder of the year. Monthly ending stocks in 2004 were generally lower compared to 2003, and are expected to remain tight into 2005.
 
Japan's ban on U.S. poultry imports was imposed in February and was not lifted until June. As a result, imports from the United States during for the first half of 2004 were only about 5,000 MT, one-quarter of the level during the same period in 2003. According to trade sources, small supplies of U.S. boneless leg meat may limit total imports of U.S. broiler meat during the second half of 2004. Monthly import demand for U.S. bone-in leg meat is reportedly at around 2,500 MT-3,000 MT.
 
Imports of cooked poultry products from Thailand and China are projected down by 21% to 180,000 MT in 2004. Increased imports during the second half of the year will likely not be enough to offset the impact of Japan's import ban during the first half of the year.
 
AI outbreaks in Japan and overseas negatively affected the household chicken consumption, resulting in a 12% drop in wholesale prices for domestic broiler leg meat (fresh/chilled boneless).
 
However, retail consumption is expected to rebound late in 2004 as AI concerns recede, possibly increasing prices for domestic leg meat. Wholesale prices for domestic breast meat are expected to remain relatively solid through 2004 supported by strong alternative demand in the food service sector due to the ongoing ban on imported broiler meat from Thailand and China.
 
Japan's 2004 broiler production is forecast unchanged from the previous year at 1.13 million MT, with a first-half decline offset by increases later in the year.

Source: USDA