January 29, 2004

 

 

Drastic Drop In Corn Prices As Bird Flu Hits Feedstuff Consumption In Thailand

 

Corn prices fell drastically in Thailand as a result of the sharp drop in feedstuff consumption. Millions of poultry were culled and most of its chicken exports suspended as Thailand grapples with the effects of bird flu.

 

The current epidemic spreading through Thailand has reached a third of the country's 76 provinces and claimed 10.7 million chickens, culled in an attempt to curb the spread of the virus. A further 12 million chickens are expected to be slaughtered nationwide.

 

Thailand, the fourth largest poultry exporter in the world, produces around 1.2 billion chickens a year.

 

The sharp drop in chicken population has adversely affected the demand for corn, a main ingredient in chicken feed, has fallen, Commerce Minister Wattana Muangsook said Wednesday.

 

"Corn farmers told me that corn prices are falling significantly, to around 58 baht per (15 kilograms) from THB70 previously...so we need to urgently come up with an intervention measure (to lift prices,)" he said.

 

Feedstuff industry sources say corn constitutes 50% of the raw material used in chicken feed.

 

"If we can't export one (metric) ton of chicken, around 6.5 tons of corn will be left unconsumed," said Panya Chotitawan, chairman of Saha Farms Co. Ltd., one of the country's largest chicken exporters.

 

Panya said domestic demand for chicken has fallen 80% because of the virus, while exports have ground to a halt.

 

Japan, the biggest buyer of Thai chickens, has banned all imports of Thai chicken, while the European Union, the second biggest importer, will only accept cooked chickens now. Hong Kong and Singapore are also accepting cooked chickens.

 

Cooked chicken exports account for only 20% of the country's total exports, which reached around 540,000 tons in 2003.

 

BankThai PCl said in a research note issued late Wednesday that the local animal feed industry will slow by 15%-20% if Thai chickens are banned by importers for about six months.

 

Beside corn, chicken feedstuff is also 25-35% comprised of soymeal and 15%- 25% other ingredients such as fish meal and full fat oil made from soybeans, industry participants said.

 

Thailand produces enough corn for its feedmeal requirements, but depends on soybean and soymeal imports as local output can't meet all of its domestic demand for these products.

 

Thailand is estimated to have consumed around 1.9 million tons of soybeans in 2003, but produced only around 270,000 tons, according to data from the Feedstuff Users Association.

 

Soymeal consumption in 2003 was estimated above 2 million tons, while the country produced only around 800,000 tons - 100,000 tons from domestic beans and 700,000 tons from imported beans, the data show.

 

Kavivud Nerngchamnong, president of the Feedstuff Users Promotion Association, earlier said the country's soybean and soymeal imports for animal feed would rise 10% in 2004, primarily because of increased chicken exports.

 

Those forecasts will need to be revised now, in view of the bird flu outbreak.

 

A source from the association Wednesday said users of feedstuff such as soymeal will have to review their import needs amid the current culling of chickens and bans of Thai chicken imports by overseas buyers.

 

"Imports of soybean meal in 2004 could fall from last year's estimated imports of 1.7 million tons," the source said.

 

According to an official with an animal feed producing company, demand for feedstuff has already slowed and users will buy the commodity only when it is necessary.

 

Although demand for feedstuff still exists in remote areas where the outbreak isn't severe, demand has generally been on the decline, the official said.

 

He said shipments that arrived since December could last for four months instead of the usual one or two.