China’s broiler production in 2013 is forecast at 14.1 million metric tons, a three percent increase from the revised 2012 estimate (13.7 million metric tons), because of continued demand for cheaper meat protein, according to the U.S. Department of Agriculture Foreign Agricultural Service's latest report. The pace of growth for broiler production seems to be slowing due to higher feed prices.
With tight corn supplies in the U.S. (the lead supplier to China) and recent outbreaks of armyworms in China’s key corn-producing areas in North and Northeast China, prices for domestic and foreign corn supplies are expected to be considerably higher in 2012 and 2013, according to the report. Corn accounts for 65–70 percent of China’s broiler feed; but with higher corn prices, many feed plants in China are changing feed ingredients such as substituting wheat for corn. Despite the possibility of higher wheat demand and prices, China’s available wheat stocks are cheaper than domestic corn prices and may help relax feed cost burdens. Changing ingredients may slightly impact slaughter weight, but the growth for broiler production in 2013 is expected to be higher than other meat production. China’s broiler industry is deemed to be more standardized and industrialized than other meat industries.
China’s consumption in 2013 is forecast to increase by three percent above the revised 2012 figure (13.54 million metric tons) to 13.95 million metric tons because of strong demand for cheaper meat protein, according to the report. Chinese consumers began to purchase more broiler meats than red meats in July and August when prices for broiler meats were $2,657 per ton compared to the average pork price of $3,616 per ton. The significant price difference prompted low-income consumers to shift to cheaper broiler meats. Overall, consumers are becoming more price-sensitive as China’s Gross Domestic Product growth dropped from 9.2 percent in 2011 to 7.6 percent in the second quarter of 2012.
Imports and Exports
Despite rising domestic production in 2013, domestic demand for cheaper imported broiler meat will support a four percent increase over the revised estimate of 250,000 metric tons in imports, said the report. The Foreign Agricultural Service revised its 2012 import estimate upward by 7,000 metric tons to 240,000 metric tons based on larger-than-expected shipments from the U.S. When China implemented its anti-dumping and countervailing measures against U.S. broilers in 2010, export unit prices from South American countries climbed sharply in 2011; for instance, Brazil by 24 percent, Argentina nine percent and Chile 31 percent. With higher prices offered by South American countries, some U.S. prices are competitive, and some Chinese traders are willing to pay the anti-dumping and countervailing tariffs to bring in higher-quality U.S. broiler meats.
Broiler exports in 2013 are forecast to remain flat at 400,000 metric tons. China’s exports to Japan, its largest export market, are expected to continue upward at a pace of five percent in both 2012 and 2013. Yet, increased exports to Japan will be offset by reduced exports to Hong Kong, China’s second-largest export market, mainly attributed to Brazilian competitive export prices of Brazilian product to Hong Kong. Moreover, China’s exports to Malaysia, a traditional export market, will be strongly challenged by less-expensive export prices from Thailand to Malaysia.