Report Highlights:

China is the world's second largest poultry market. However, poultry exports from the United States were banned in January, 2015, due to high pathogenic avian influenza (HPAI) outbreaks. Brazil is the top beneficiary from the absence of U.S. suppliers. Post revises the 2016 broiler meat import forecast upward to 400,000 tons, an increase of 140,000 tons compared to the USDA's 2016 official figure. Post revises China's 2016 broiler meat consumption forecast to 12.7 million tons, slightly lower than previous USDA estimates based on softening demand for white-feathered broiler meat.

Poultry, Meat, Broiler

Broiler PS&D Table

2014

2015

2016

Market Begin Year

Jan 2014

Jan 2015

Jan 2016

China

USDA Official

New Post

USDA Official

New Post

USDA Official

New Post

Inventory (Reference)

0

0

0

0

0

0

Slaughter (Reference)

9900

9900

10100

10100

10100

9800

Beginning Stocks

0

0

0

0

0

0

Production

13000

13000

13025

13400

13100

12700

Total Imports

260

260

250

270

260

400

Total Supply

13260

13260

13275

13670

13360

13100

Total Exports

430

430

395

400

375

380

Human Consumption

12830

12830

12880

13270

12985

12720

Other Use, Losses

0

0

0

0

0

0

Total Dom. Consumption

12830

12830

12880

13270

12985

12720

Total Use

13260

13260

13275

13670

13360

13100

Ending Stocks

0

0

0

0

0

0

Total Distribution

13260

13260

13275

13670

13360

13100

(MIL HEAD) ,(1000 MT)

Note: USDA trade statistics for broiler meat do not include feet/paws

Production

Post revised 2015 production upward to 13.4 million tons, due to higher production of white-feathered broiler meat, and adjusted the 2016 production forecast down to 12.7 million tons, a 3 percent decrease from previous USDA's official estimates. HPAI outbreaks around the world have made it difficult for Chinese procedures to replenish their white-feathered broiler stocks.

China relies on imports of the grandparent stocks for white broiler meat, and the United States once accounted for approximately 90 percent imports while France and New Zealand supplied the remaining imports. In January 2015, China banned U.S. poultry imports because of HPAI detections in the United States. China banned France for HPAI in the fall of 2015 leaving only New Zealand and other small suppliers eligible to export to China. However, these smaller players have limited supply to meet China's demand.

The table below illustrates China declining imports of white broiler meat grandparent stocks.

China white broiler breeder imports

2014

1.17 million pairs of birds

2015

694,000 pairs of birds

2016

Under 500,000 breeding pairs (estimate)

To deal with reduced grandparent stocks, some Chinese operations have utilized forced-molting to extend the breeding span of both grandparent and parent stocks of white-feathered broilers. With the supply of grandparent stocks disrupted, Post forecasts white-feathered broiler meat production will drop 10 percent in 2016. Yellow-feathered broiler meat production will increase but overall broiler meat production will decline.

Comparison between White Feathered and Yellow Feathered Chickens

White Feathered Chicken

Yellow Feathered Chicken

Species

90% grandparent stocks imported from the United States

Local species

Market share in 2015*

55%

30%

Feed to meat ratio

1.8:1

2.5:1

Sales channel

Fast food restaurants, canteens and food processing plants

Wet markets and supermarkets , targeting family consumption

Sales specification

Frozen cuts and chilled

Live, chilled as whole, some cuts

*Percentage of total poultry market share

Consumption

Post adjusted 2015 consumption upward to 13.27 million tons, to reflect increased production and imports. Post revised the 2016 consumption forecast downward to 12.72 million tons, slightly below the previous USDA forecast.

The changing manufacturing structure in China, with more factories closing as a result of production moving to lower cost countries, has reduced the number of factory canteens where white white-feathered broiler meat was once widely consumed by workers because of its low cost. According to industry sources, another factor hindering white-feathered broiler meat consumption are the high fees charged for slot space by some supermarkets because white-feathered broiler breast meat is perceived to be less popular than wings, legs, and paws.

The main outlet yellow-feathered broiler meat is wet markets. However, the government's desire to end live bird slaughtering in wet markets as part of its efforts to enhance food safety and prevent AI from spreading to humans hampers consumption.

Imports

Post adjusted 2015 imports to 270,000 tons adjusted the 2016 import forecast upward to 400,000 tons, Imports from South American countries are increasing especially from Brazil as more poultry plants export to China.

Import Policy

China imposes avian influenza-related import restrictions that are inconsistent with World Organization for Animal Health (OIE) guidelines. In contrast, many countries have utilized regionalization policies rather than country bans to protect their consumers while allowing trade to flow following OIE guidelines.

Other policies China has imposed that are inconsistent with OIE guidelines are suspensions of states due to low-pathogenic avian influenza. OIE guidelines do not recommend trade suspension on poultry meat due to low pathogenicity notifiable avian Influenza detections.

Exports

Post adjusted 2015 exports down to 400,000 tons, and adjusted China's 2016 broiler meat exports down to 380,000 tons. Japan and Hong Kong are the leading export destinations for Chinese poultry, with amarket share of 42 percent and 34 percent respectively. Japan's purchases of Chinese poultry have declined more than 20 percent since 2014 spurred by high profile food scares in China.

Regarding poultry exports to Europe, China has filed a complaint with the World Trade Organization over the EU's high poultry tariffs. The EU import quota established a low-tariff rate for a set amount of poultry imports. Much of the Quota was awarded to Brazil and Thailand while 4 percent was reserved for China. Poultry that falls outside the quota are subject to tariffs of approximately 40 percent.

Price Table (based on RMB/KG, $1=RMB6.4)

China Retail Broiler Meat Prices on Average, 2008-2015

(RMB /KG)

2011

2012

2013

2014

2015

% Change 2014/2015

January

16.32

17.65

17.92

17.55

19.09

8.8%

February

16.71

17.46

18.41

17.15

19.28

12.4%

March

16.33

17.04

17.90

16.83

19.08

13.4%

April

16.32

16.99

16.39

17.15

18.73

9.2%

May

16.45

16.73

15.32

17.93

18.56

3.5%

June

16.95

16.74

16.00

18.22

18.43

1.2%

July

17.49

16.71

16.40

18.32

18.65

1.8%

August

17.94

16.90

16.89

18.78

19.10

1.7%

September

18.05

17.28

17.33

19.16

19.25

0.5%

October

18.00

17.43

17.45

19.22

18.95

-1.4%

November

17.57

17.50

17.40

19.14

18.82

-1.7%

December

17.39

17.70

17.51

19.06

18.96

-0.5%

Source: China's Ministry of Agriculture collected from over 400 markets of farm produce.