Report Highlights:

China banned imports of all poultry and poultry products from the United States in January 2015 due to high pathogenic avian influenza (HPAI) outbreaks in the United States. Imports from Brazil and other South American countries have benefited from the absence of U.S. suppliers. Post forecasts 2016 broiler meat imports at 200 thousand tons, a decrease of 7 percent compared to USDA's 2015 official figure. Post forecasts China's 2016 broiler meat consumption at 12.8 million tons largely unchanged from USDA's 2015 official estimate.

Poultry, Meat, Broiler

Poultry, Meat, Broiler

2014

2015

2016

Market Begin Year

Jan-14

Jan-15

Jan-16

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

0

10100

Beginning Stocks

0

0

0

0

0

0

Production

13080

13000

13110

13025

0

13100

Total Imports

260

260

215

210

0

200

Total Supply

13340

13260

13325

13235

0

13300

Total Exports

430

430

430

450

0

430

Human Consumption

12910

12830

128 95

12785

0

12870

Other Use, Losses

0

0

0

0

0

0

Total Dom. Consumption

12910

12830

12895

12785

0

12870

Total Use

13340

13260

13325

13235

0

13300

Ending Stocks

0

0

0

0

0

0

Total Distribution

13340

13260

13325

13235

0

13300

(MIL HEAD) ,(1000 MT)

Production

Meat from white-feathered western type birds and yellow-feathered local breeds dominate China's broiler meat production. Post forecasts China's 2016 broiler meat production at 13.1 million tons, mirroring USDA's 2015 official figure. A slight shift in consumption from pork to poultry meat underpins the production forecast. Poultry meat and pork are substitute meat options for Chinese consumers and pork prices are predicted to remain high in 2016 because of decreased sow stocks.

In January 2015, China banned U.S. poultry imports because of HPAI detections in the United States. The ban impacts China's white broiler meat production since it relies on the United States for grandparent breeding stock for its domestic production. China has long favored breeding stock from the United States as it tries to improve its own production efficiency. A continued ban could result in lower 2017 production levels. While some decline in white-feathered broiler meat is anticipated in 2016, an uptick in yellow broiler meat production will offset declines white broiler production to maintain overall production levels.

Importers have looked to other sources for breeding stock, particularly to Europe. However, the potential resumption of U.S. imports is a challenge to increasing breeding stock production in those countries.

Consumption

Post forecasts China's 2016 broiler meat consumption at 12.87 million tons, slightly below USDA's official 2015 estimates. The overall economic picture for China, slower economic growth, and constraints on banquet spending per government policy remain in place. Additionally domestic bird flu cases, food safety scandals, and media reports of smuggled meat sold to consumers conspire to restrain consumption.

Record high pork prices are encouraging consumers to move away from pork but both yellow and white broiler meat producers still need to overcome other challenges to satisfy consumers. Traditional yellow-feathered chicken producers must contend with the government's desire to end live bird slaughtering in wet markets as part of its efforts to prevent AI from spreading to humans. Additionally, they must contend with a combination of China's urbanization drive and the younger generation's preference for processed chicken sold at fast food outlets and fresh/frozen broiler meat products sold in supermarkets.

White broiler meat consumption is hampered by association with past fast food scandals and health concerns. Single store sales at fast food restaurants are going down and sales increases are driven by new store openings. Furthermore, the changing structure of the Chinese economy has closed many factories where white broiler meat was widely consumed in the workers canteens. In the long term, Post believes white broiler meat will enjoy a larger market share over the domestic yellow-feathered variety because of its cost advantage, the lower feed to meat ratio, customized cuts, more advanced technology investments by the white broiler meat industry, and new marketing efforts to try to reach families directly.

Comparison between White Feathered and Yellow Feathered Chickens

White Feathered Chicken

Yellow Feathered Chicken

Species

95% grandparent birds import from U.S.

Local species

Market share in 2014

51.7 %

38.1 %

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

Imports

Post forecasts 2016 broiler meat imports at 200 thousand tons, 7 percent down from USDA's 2015 official figure. This reduction is largely attributed to the ban on U.S. imports over HPAI detections.

Imports from South American countries will continue to benefit from the ban on U.S. poultry and poultry products.

Imports: Policy

The U.S. exported approximately $300 million in poultry meat and poultry products to China in 2014. However on January 9, 2015, China banned imports of U.S. poultry and poultry related products because of high pathogenic avian influenza (HPAI) detections in the United States. In response, the USDA sought exemptions for heat treated poultry products, such as chicken paws and rendered meals. Discussions with the Chinese government resulted in the lifting of the ban on U.S. poultry meal and feather meal for use as feed ingredients in China's livestock production.

In accordance with accepted science and international standards, heat treatment of certain duration and temperature is sufficient to ensure destruction of any virus. Prior to the detection of HPAI in the United States, China maintained suspensions of U.S. poultry meat and poultry product imports from five states, due to low-pathogenic avian influenza. This policy is inconsistent with the World Organization for Animal Health (OIE) guidelines, which do not recommend trade suspensions due to low pathogenicity avian Influenza detections.

Note: Chicken paws under HS: 020714 (valued at over $170 million in direct U.S. exports to China in 2014) are not included in USDA's poultry PSD calculations and trade statistics. Also not included is poultry meal HS: 230110 and feather meal HS: 350400

Exports

Post forecasts China's 2016 broiler meat exports at 430,000 tons, no change from USDA's 2015 official estimates. Exports to Japan, China's main export destination, are expected to continue to decline as lingering food safety concerns have caused Japanese buyers to seek other sources for poultry, such as Thailand. Japan and Hong Kong are the main export destinations for China's poultry products.

China mainly exports cooked/preserved broiler meat products. Although exports are expected to remain flat in the near term, China's skilled workers and some state-of-the art facilities give it a competitive advantage in regional markets such as Japan and Hong Kong.

Price Table (based on RMB/KG, $1=RMB6.2)

China Retail Broiler Meat Prices on Average, 2008-2014 (Year to Date)

(RMB /KG)

2010

2011

2012

2013

2014

2015

% Change

2014/2015

January

14.15

16.32

17.65

17.92

17.55

19.09

8.8%

February

14.38

16.71

17.46

18.41

17.15

19.28

12.4%

March

13.98

16.33

17.04

17.90

16.83

19.08

13.4%

April

13.77

16.32

16.99

16.39

17.15

18.73

9.2%

May

13.72

16.45

16.73

15.32

17.93

18.56

3.5%

June

13.76

16.95

16.74

16.00

18.22

18.44

1.2%

July

14.16

17.49

16.71

16.40

18.32

August

14.73

17.94

16.90

16.89

18.78

September

15.24

18.05

17.28

17.33

19.16

October

15.40

18.00

17.43

17.45

19.22

November

15.73

17.57

17.50

17.40

19.14

December

16.02

17.39

17.70

17.51

19.06

Source: The Ministry of Agriculture collected from over 400 markets of farm produce.