December 9, 2020
Worst case scenario averted: Thai broilers rebound strongly from COVID-19
Rapid economic revival, booming exports to China minimize COVID-19 losses, with a strong 2021 recovery ahead. Exports may hit one million tonnes.
By Eric J. Brooks 
An eFeedLink Hot Topic

After years of 4.5% to 7% annual growth, the coronavirus tripped up Thailand's dynamic broiler sector. Fortunately, the decline was less than initially feared and the industry is projected to rebound strongly in 2021.
With visitors consuming a high proportion of meat, travel restrictions devastated this tourism-dependent economy's chicken consumption. An 80% fall in tourism arrivals from 2019's 39.8 million to 8 million this year is denting poultry meat consumption.
Its lockdown dented domestic consumption but Thailand got COVID-19 under control faster than most western nations, as did its major trading partner, China. Consequently, Thailand's economy recovered much faster than anyone anticipated and USDA predicted 12% chicken meat output fall and 15.9% consumption decline were averted.
Instead, 2020 chicken consumption will fall a newly revised, USDA estimated 4.9%, from 2019's 2.47 million tonnes to 2.35 million this year. Production is falling by just 1.5% thanks to buoyant exports: China's rapid economic recovery coincided with Beijing approving additional Thai chicken processing plants for export. 14 plants were approved for exporting to China in 2019, 21 this year, and 30 by some time in 2021.
China offset falling EU shipments, making for a nominal 1.3% increase in 2020 exports to 911,000 tonnes, from a Thai Customs estimated 899,500 last year.
On one hand, with the EU suffering the deepest recession of any part of the world, demand for cooked chicken fell sharply. H1 exports to Britain and the EU fell 17%, to 151,000 tonnes, compared to 182,000 tonnes a year earlier. Fortunately, with H1 2020 exports to Japan rising 5%, it kept the overall January through June decline in cooked chicken exports to 6%.
On the other hand, China's booming poultry imports consist of raw, unprocessed chicken –with chicken feet forming a new line that will soon account for 5% of exports. With ASF afflicted China substituting poultry in place of pork, January to June exports of raw Thai chicken meat to that nation skyrocketed 55%.
With a 7%, China-driven increase in raw chicken exports offsetting a 6% drop in cooked chicken shipments, overall H1 exports fell only 1% on-year. As a result, H1 2020 saw production of unprocessed chicken meat rise by 3% on-year while cooked chicken output fell by 2.5% to 3.0% over this same time. Going forward, growing shipment volumes to China and Japan are expected to see exports resume growth in H2, making for a nominal rise of 1% in 2020 exports (to 890,000 tonnes) over 2019 levels.
With exports holding steady and H2 2020 consumption rebounding sharply, 2020 broiler meat production will fall by only 1.5%, from 3.30 million tonnes in 2019 to 3.25 million in 2020. This is considerably better than the 2.90 million tonne output that was projected just six months ago.
Going forward, we agree with the USDA estimation of 3.0% domestic consumption recovery to near 2019 levels totaling 2.42 million tonnes but differ with them on the question of exports: We believe a brightening trade picture will boost exports into the 970,000 to 1 million tonne range – making for roughly 8% volume growth over the approximately 900,000 to 920,000 tonnes exported in 2019 and 2020.
A year ago we predicted Thailand would become the first tier 2 poultry meat exporter to ship over a million tonnes of chicken meat in 2020. COVID-19 postponed our forecast but did not make it wrong: If the world economy recovers sufficiently, Thailand may yet export over a million tonnes of chicken in 2021.

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