July 8, 2020
Chinese demand, Thai supplies minimize world poultry's Covid-19 recession
By Eric J. Brooks
An eFeedLink Exclusive
As was the case in other meat lines, Covid-19 has upended longstanding world poultry trade prospects and projections.
Demand-wise, chicken consumption has been impacted less due to the substitution of chicken in place of more expensive meat. Even so, Italy, Thailand, Brazil, and Spain have seen a 95% drop in foreign visitors, who account for much of their meat consumption. Coinciding with high domestic unemployment, their domestic consumption of chicken was impacted by Covid-19's economic impact.
The USDA has already revised down 2020 chicken consumption estimates for the EU(-4.4%), Brazil (-2.7%), India (-18.4%), Philippines (-5.0%), and Thailand (-20%) from its early year estimates to below 2019 levels. Faced with unsellable surpluses at home, attempts to export excess supplies played a role in making poultry export prices crash.
On the supply side, disease-induced labor shortages at processing, poultry price crashes, and lockdown-induced logistical bottlenecks disrupted (and continue to disrupt) chicken meat production and transportation in many major exporting nations including Brazil, Spain, and the United States.
Consequently, instead of rising 3.9% as initially anticipated to 102.9 million tonnes, the USDA expects Covid-19 to limit 2020's world broiler meat production increase to 0.9% and 100.5 million tonnes, which is less than the increase in world population growth.
The resulting supply shortfalls, constrained consumption, and shipping delays mean that instead of rising 2.3% from 2019's 11.881 million tonnes to 12.159 million tonnes in 2020, the USDA now expects exports to fall 1.5%, to 11.708 million tonnes –and even this forecast may be revised downward.
One exception in this wave of bad news was China, where the USDA revised its 2020 broiler meat consumption estimate upward 4.8%, from 15.12 million tonnes to 15.85 million tonnes. This continues a post-2018 trend which made China one of the fastest expanding chicken producers in the world.
For 2020, China's broiler meat output will rise an impressive 12.7% to 15.5 million tonnes –but this will still fall short of consumption, especially with up to half a million tonnes of this being exported.
With China's broiler meat production trailing consumption growth, imports more than doubled. From 342,000 tonnes in 2018 when ASF broke out to 580,000 tonnes last year and a USDA estimated 725,000 tonnes this year.
While China's 2020 chicken meat imports are rising by 145,000 tonnes, in the rest of the world, total chicken imports will fall by roughly 318,000 tonnes. This is because petroleum exporters such as Saudi Arabia, Iraq, Mexico and UAE (who collectively imported 2.2 million tonnes of chicken last year) are eating less chicken as the Covid-19 induced oil price crash shrinks their economies.
Hence, China's strong market support is preventing this minor setback for the world chicken trade from turning into something more serious.
Much like China, Japan got hit by coronavirus earlier than other nations. By recovering more quickly, Japan's world-leading chicken import volume will stay steady in the 1.08 to 1.10 million tonne range. Like China, Japan is a market stabilizing influence even as most other major markets trim their demand for imported chicken.
Import demand has fallen in every major chicken importing nation except China. Coronavirus and Eastern European bird flu outbreaks compromised the domestic supplies and exporting capacity of all leading poultry exporters except Thailand. With chicken meat supply, demand, and trade suffering setbacks on all fronts, only Thailand's supply-side support and China's still growing poultry meat demand is keeping this downturn from turning into something worse.
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