More Chinese poultry consumption, imports as domestic pork prices rise

China’s chicken meat production, consumption and imports are forecast to increase in 2020 due to the massive pork supply gap created by African Swine Fever, USDA reported this week.
calendar icon 2 April 2020
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However, annual 2020 growth in all three categories will be constrained by three factors: first, production volatility due to reports of recovering pork production; second, a lack of consumer willingness to switch from pork to chicken; and third, production and transportation slowdowns caused by the novel coronavirus outbreak in China.

Chicken meat production in China is forecast to increase to approximately 15.8 million metric tons (MMT) in 2020. Higher pork prices have driven many consumers to substitute pork for lower-priced chicken, driving strong production increases all across the country, but especially in Central China. However, the industry reported that the influx of new producers entering the broiler industry has resulted in quality issues and many of these new entrants have already exited the market. In addition, the white broiler industry lost access to one of its few remaining live bird suppliers when China closed off imports due to highly pathogenic avian influenza in Poland.

Chicken consumption is forecast to increase to 16.1 MMT in 2020 due to consumers substituting chicken meat for pork due to high pork prices. However, demand from restaurants, canteens, school cafeterias, and other industrial consumers has slowed dramatically since January due to the coronavirus outbreak in China.

Imports of chicken meat are also forecast to increase to 675,000 MT due to high domestic prices. Although imports of U.S. poultry have resumed, the initial volume is expected to be limited; most current imports from the United States are chicken paws, which are not included in this forecast.

Chicken exports are forecast to drop to 375,000 MT due to tightened domestic supplies and trade disruptions related to the coronavirus outbreak.

In addition, domestic breeding programs in China have continued to grow. For example, Chinese local media reported that one of China’s largest poultry companies has announced a breakthrough in white broiler genetics. Its newly-developed genetics were sent to China’s National Poultry Testing Center for performance testing in September 2019. Industry reported that once the genetics pass MARA’s variety registration, it can supply grandparent (GP) stock domestically and internationally. Perceptions of an early pork recovery weaken chicken meat production However, just as the existing pork deficit drives chicken meat production, chicken meat production (and trade) will be affected by actual or perceived improvements to the Chinese swine herd. In the last two months of 2019, nationally reported pork prices fell and stabilized. Chinese government officials attributed this trend to a “bottoming out of the swine herd reduction” and “recovery momentum from swine production.”

With pork prices at or near record highs, many consumers are substituting pork for chicken. However, the 2019 data from the Ministry of Agriculture and Rural Affairs shows there have been only incremental increases to chicken meat prices, indicating weaker demand (than for pork). In fact, chicken prices have steadily fallen since November 2018. This divergence in pricing dynamics suggests Chinese consumers still prefer pork to chicken and changes to the diet will not happen quickly.

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