October 8, 2003
Japan's Broiler Market Overview in 2003-04
Japanese Broiler Market Outlook for 2004
Summary: Lethargic retail demand, ample supplies of low-priced domestic broiler meat, and a recovery of imports are forecast for 2004.
Japan's Total Consumption is Projected 1% Higher
As a result of lethargic retail demand, Japan's broiler market will continue to have ample supplies of low-priced domestic product. However, modest growth forecast in the food service sector (for both generic and prepared poultry) and in a segment of the retail sector (prepared products only) is expected to push Japan's 2004 total broiler consumption up by 1% to 1.85 million MT. One factor that could further boost demand in Japan's food service sector is higher expected beef prices in 2004, which may help to strengthen demand for imported broiler meat, following a 6% reduction forecast for 2003.
Japan's Broiler Production is Expected to Fall by 1%
Weak price prospects in 2004 are expected to force domestic producers to cut production, which is forecast to fall by 1% to 1.11 MT. However, this may do little to raise prices given lethargic consumption and the anticipated recovery in imports, which will pressure market prices.
Broiler Import Demand is Expected to Recover in 2004
Total broiler imports are expected to rise by 6% in 2004 to 745,000 MT (customs clearance basis), which is close to the level achieved in 2002. Resumption of imports from China, which were banned for about three months in 2003 due to the detection of Avian Influenza, will largely account for the increased import level in 2004. Imports of generic broiler meat are projected to rise by 7% to 510,000 MT, while imports of prepared poultry products are projected up by 4% to 235,000 MT. (Note: Customs clearance base import figures are used in import figure discussion as the imports are mixed with bone-in and bone-less cuts).
Market prices for imported broiler meat are expected to soften in 2004 as competition strengthens among the major broiler suppliers, namely Thailand, Brazil and China. Although imports from China are expected to recover considerably in 2004, it is uncertain how import shares will be distributed among the various suppliers. Lingering food safety concerns associated with Chinese broiler meat and prepared products could slow the pace of recovery in 2004.
Imports from the United States are expected to rise modestly in 2004, after nearly two years of intermittent bans due to the detection of Avian Influenza. This recovery will likely be limited by several factors. First, a major U.S. supplier reportedly discontinued supplies of boneless meat to Japan in 2003. Further, trade sources report that U.S. legs will face more competition from Asian suppliers. Indonesia, for example, has emerged in recent years as a supplier of low-priced bone-in legs (used for roasting), which are consumed during the Christmas holiday. The U.S. share of Japan's generic broiler imports in 2004 is projected at about 13%, mostly bone-in leg meat.
2003 Market Situation and Update Forecast
Total broiler meat imports are forecast to fall in 2003 due to lethargic demand, ample supplies of low priced domestic broiler meat, and Japan's three-month import ban on Chinese poultry. The resumption of imports from China in August will not be enough to offset the expected decline in imports for the year. During the ban, China continued to supply prepared broiler products produced at plants approved by Japan's agriculture ministry (MAFF), which helped to eased the expected tight supply situation during the summer months. Imports of U.S. broiler meat are forecast to recover modestly in 2003, hampered by high U.S. prices and shrinking exports of boneless broiler meat.
Post's revisions in Japan's 2003 broiler PS&D figures reflect slack alternative (BSE-related) demand for broiler meat, increased domestic broiler production, and Japan's ban on Chinese poultry and the products due to Avian Influenza.
Consumption of generic broiler meat (excluding prepared products) in 2003 is forecast to remain unchanged at 1.61 million MT. Japan's broiler production is forecast to rise by 1% to 1.12 million MT (bone-in basis) in 2003, offsetting reduced imports. Total import demand (broiler and the prepared products combined) is projected to fall by 6% to 700,000 MT (customs clearance basis), with generic broiler meat down by 10% to 475,000 MT, and prepared products up by 3% to 225,000 MT.
The supply gap created by Japan's ban on poultry from China (which is the biggest supplier) was addressed by a draw down of relatively high frozen stocks that accumulated early in 2003, and increased demand for Thai poultry. During May-July (2003), CIF prices for Thai broiler meat jumped by 20% for bone-in legs, and by 40% for boneless legs, and wholesale prices of imported broiler meat has been rising steadily during the summer. Imports of U.S. broiler meat are expected to recover modestly in 2003.
Despite the ban on poultry from China, which is the largest supplier of prepared products to Japan, supplies of yakitori (skewered chicken) and karaage (Japanese fried chicken) were sufficient to meet the summer demand. Increased imports from Thailand and uninterrupted imports from certain MAFF-approved plants in China helped to meet Japan's demand for prepared products. Reportedly, the flow of imported prepared products from China was halved during the three-month ban