April 10, 2012

Thailand's CPF confirms EU's lifting of Thai frozen chicken imports ban

Thailand's Charoen Pokphand Foods (CPF) has confirmed that EU will lift the eight-year-old ban of Thai frozen chicken imports effective July 1, 2012, according to the news on EU lifting Thai frozen chicken import ban Sunday (Apr 8).

The lifting of the ban, which was imposed in 2004 after a bird flu outbreak, is positive for Thai poultry industry. Although CPF's resumption of frozen chicken exports to the EU should only boost its net profit by no more than 3%, the company is likely to benefit from higher domestic farm prices and an increase in poultry feed sales (together contributed 14% of total revenue in 2012). Note that the export price of frozen chicken of US$1,500-1,800/tonne or THB45-54 (US$1.45-1.74) per kilogramme is significantly higher than the domestic price. The EU's ending of the import ban is likely to support a recovery in domestic chicken prices which could gather pace if Japan also ends its ban on Thai poultry imports.

The EU is expected to give Thailand an export quota of 100,000 tonnes, similar to the quota in 2004. CPF used to export 60,000 tonnes of frozen chicken a year before the ban and it is still uncertain what its quota will be when exports to the EU resume. A Buy rating on CPF is maintained with an unchanged TP of THB41 (US$1.32).