Report Highlights

High broiler meat prices, caused in part by high feed prices, are forecast to continue in Japan through 2008. Although imports of generic cuts, mainly from Brazil and the United States, are expected to bounce back, the increase is expected to remain modest, hampered by high prices. Imports of cooked products, mainly from Thailand and China, are expected to decline further. Lackluster demand for Chinese cooked poultry products is forecast in 2008, due in part to China’s negative food safety image. Japan is not expected to lift its avian influenza-related bans on uncooked poultry from China and Thailand in 2008.

Note: Outline of Japan’s Broiler Market Structure:

Broiler meat makes up about 90% of Japanese poultry meat market, which includes both domestic production and imports. Spent laying hens account for about 10% of the poultry meat market with the consumptions of ducks, turkeys, and other poultry being very limited.

Japanese government data suggest that about 60% of poultry products are used directly by households, 30% by the food service sector, and about 10% for processing. Households predominantly use domestic cuts. In general, leg meat (bone-less) is most preferred over breast meat. Japan’s food service sector utilizes large quantities of imported generic cuts, mainly from Brazil, including those bulk cuts to be processed into prepared products after entry into Japan. Some of U.S. bone-in leg cuts are utilized in this segment as well.

Import figures discussed in the text of this report come from Japanese customs clearance data.

2008 Outlook

Tight Supply Situation to Persist in 2008

Through their trade in cooked poultry, China and Thailand accounted for nearly 18% of Japan’s 2006 total broiler consumption (1.939 million MT). Japan currently allows imports of only the cooked poultry products from MAFF inspected facilities in Thailand (56 facilities) and in China (91 facilities) as of Oct. 2007. Japan is not expected to lift its avian influenzarelated (highly pathogenic avian influenza H5n1) bans on uncooked poultry from China and Thailand in 2008, thus it is assumed that these counties will not be in a position to ship fresh poultry to Japan. Japan will maintain its continued reliance on frozen cuts from Brazil and the United States.

Both Japanese importers and domestic producers are increasingly concerned about the world supply outlook and the price expectations for feed in 2008. Many traders consider it likely that high feed costs will keep broiler meat prices high in 2008. The relatively solid demand for broiler meat reported in EU, the Middle East and in China since 2007 also points to continued strong prices in Japan.

In view of the above, the Japanese broiler market will likely continue to experience tight supply and solid demand in 2008 for both frozen and cooked products.

Amid high market prices, total consumption is projected to fall slightly in 2006 to an estimated 1.913 million MT (generic broiler: down by 1% to 1.588 million MT, and imported prepared and processed products: down by 2% to 325,000 MT) with slightly weaker household consumption anticipated due to high prices. Ending stocks of the generic broiler meat will continue lower.

Imports of Generic Cuts to Recover Modestly in 2008

However, 2008 total imports, due to continued high prices, are projected only up by 1% from a year before to 680,000 MT. This will mainly be due to a recovery in generic broiler imports, which more than offset a further decline anticipated in imports of cooked products (generic broiler cuts: up by 3% to 355,000 MT, and the prepared and processed products: down by 2% to 325,000 MT). Due to a tight supply and low stocks, Japanese importers are likely compelled to make increased purchases of high priced Brazilian boneless cuts in 2008. U.S. broiler meat is also expected to bounce back to the 30,000 MT level, assuming that low pathogenic avian influenza (LPAI) does not cause additional producing U.S. States to be ineligible to ship to Japan.

Imports of Cooked Products to Decline Further in 2008

Due to substantial price hikes made by the exporters in 2007, imports of cooked products are expected to fall further in 2008, projected down by 2% to 325,000 MT. Especially, high priced Chinese cooked poultry products may continue to suffer, partly due to perceived negative image held in Japanese market over food safety related scandals. According to an industry press, China specializes in yakitori products (skewed grilled chicken), which account for 40% of Chinese cooked products exports to Japan (195,000 MT in 2006). Yakitori supply is expected to become very tight in 2008, in part because Thailand can not currently supply the same products as China.

High Feed Cost to Trim Domestic Broiler Outputs Slightly in 2008

Due to high feeding cost, post projects lower domestic broiler output in 2008, down by 1% to 1.225 million MT. Also, continued high prices for the domestic broiler cuts may cause a consumption shift to competitively priced imports in 2008. Meanwhile, high feed cost, high fuel and, high utility prices will put pressure on domestic producers to curb production in 2008.

2007 Summary Situation Update and Outlook

The revised Japan broiler PS&D tables for CY 2007 are constructed based on preliminary production, trade and stock data.

Tight Supply Situation Prevails as Imports Squeezed

For the first 8 months of 2007, high international prices for broiler meat, including cooked products, and unexpectedly solid domestic consumption, made the Japan market tight (table 1, table 3). Imports of generic cuts from Brazil and the United States were reduced (table 5- and 5-b).

Despite a sharp price increase of the Chinese cooked products since spring, Japanese imports kept up at roughly the same level as the previous year up until the third quarter. Imports are expected to slow significantly during the last quarter of 2007. An industry press source reports that reduced pork supplies and rising feed prices in China were the reasons for the substantial price hike. On the other hand, a series of food safety scandals has created negative perceptions of Chinese foods among Japan consumers and this is also a factor in lackluster demand, particularly at the retail level.

Furthermore, given weaker than anticipated fourth quarter domestic production (based on the slightly lower number of chicks placed on feed due to hot summer), the broiler supply in Japan, coupled with reduced imports, will likely become much tighter in the coming months. Ending stocks have been depleted fairly quickly (table 4).

In light of the above, Japan’s total broiler imports in 2007 are projected down by 6% from last year to 675,000 MT (generic meat: down by 7% to 345,000 MT, and cooked products: down by 4% to 330,000 MT). U.S. broiler meat, mainly bone-in leg, is also projected lower, down by 7% from a year before to 25,000 MT.

Japan’s total broiler consumption in 2007 is projected down by 1% from last year to 1.925 million MT (generic broiler meat, both bulk domestic broiler and imported cuts consolidated: unchanged at 1.595 million MT and the imported prepared and processed products: down by 4% to 330,000 MT). The forecast decline is mainly owing to reduced sales of cooked products, mainly from China. Annual domestic output is projected up by 1% to 1.235 million MT in response to high market prices and relatively solid household consumption going into 2008 (Table 1 and table 2). There will be a significant reduction of carryover stocks left at the year beginning of 2007, estimated at 105,000 MT, down 14%.

Further Reading

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List of Articles in this series

To view our complete list of 2007 Poultry and Products Annual reports, please click here

November 2007