September 25, 2006
Weak poultry market in Japan for 2007 due to high carry-over
The Japanese broiler market is forecast to be weak in 2007 due to oversupply and large carry-over from last year according to a USDA report released Sep 12.
Japanese import demand would continue to be influenced by bird flu overseas.
In 2006, due to increased domestic production and imports, Japan's total broiler meat supply exceeded demand. As a result, monthly ending stocks of uncooked broiler meat have risen and prices have declined. Although total imports are expected to lower in the second half of 2006, higher year ending stocks would likely be carried over into 2007.
Due to surpluses, the USDA expects a relatively weak Japanese poultry market in 2007.
A recovery would have to depend on scaling back supply as consumption is only projected to grow marginally. This is especially so since prices of beef and pork are still weak. The return of US beef is expected to make only a limited impact on chicken consumption in Japan.
Japan's demand for Brazilian broilers would remain weak in 2007 as continued surplus is expected to cap growth.
Furthermore, there would be increased competition between Thailand and China in the food service and ready-to-eat market segments.
Japan's import demand for US broiler meat is expected to stay constant in 2007. The primary source of demand for US broiler meat would be food service and domestic de-boning operations.
The USDA expects Japan to import more prepared and processed products, which make up more than 40 percent of the total broiler imports.
Meanwhile, a shift is occurring from imports of generic meat to prepared and processed products which makes up over 40 percent of the total imports and are expected to continue grow in 2007.
Japanese meat traders are regaining confidence in Thai cooked poultry products as new traceability and sanitary programmes and procedures gives Thailand a marketing edge over China, currently Japan's top supplier of prepared and processed products.
Japan's total broiler consumption in 2007 is projected up only slightly with generic broiler meat consumption unchanged and imported prepared and processed products up by 1 percent.
However, total imports are projected down by 3 percent to with generic broiler meat down by 5 percent and prepared and processed products unchanged. Brazilian generic broiler meat imports are projected down by 5 percent.
There has been no cutbacks in domestic production even as prices remained weak. One reason for this may be that producers may be anticipating bird flu outbreaks abroad to curb imports, the USDA suggested.
However, market prices would likely force domestic producers to trim outputs at sometime in 2007. Thus, Japan's broiler meat production would fall by 1 percent to 1.2 million tonnes. Still, a large year-end stock of generic poultry meat would remain, projected at 140,000 tonnes.
Brazil's decline in broiler meat export due to the bird flu situation in the early part of the year has led to an oversupply in the country. This was worsened by a Newcastle's disease outbreak in one of Brazil's major poultry producing states which caused more countries to impose restrictions.
However, some Brazilian boneless cuts have been making its way to Japan via overseas brokers offering steep discounts, which led to increased imports from Brazil during the first half of the year.
The oversupply situation would force Japan to cut back on imports from Brazil in the second half.
As bird flu is still occurring in Thailand and China, their chances of exporting poultry meat to Japan in 2007 seems minimal, the USDA said. However, both are concentrating strongly on the processed products making its way into Japan.
Imports of US broiler meat are projected to grow by 9 percent from last year, helped by solid demand. Due to an overall surplus, import growth of the prepared and processed products is anticipated to slow during 2006. Ending stocks are expected to rise substantially, up by 21 percent to 145,000 tonnes.
