China’s chicken production to contract in 2022

China’s chicken industry, with high input costs and slim margins, will contract this year, but the second half should see market conditions improve.

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With traditional markets increasingly disappearing, demand for yellow feather birds is declining. claudio zaccherini | Shutterstock.com
With traditional markets increasingly disappearing, demand for yellow feather birds is declining. claudio zaccherini | Shutterstock.com

Chinese chicken meat production is expected to decline by 3% this year to stand at 14.3 million metric tons (MMT). The decrease will be concentrated in the yellow feather industry, with white feather broiler production expected to remain stable, reports the U.S. Department of Agriculture Foreign Agriculture Service in its latest report on China.

Yellow feather broiler production is being hit as consumers turn away from traditional wet markets, which are increasingly being shut down, and move to online shopping or to modern retail channels. Online, and in modern retail, it is difficult for yellow feather bird offerings to compete with lower priced white feather products.

While production of yellow feather birds is expected to decline this year, that of white feather birds should be much the same as last year. The white feather sector’s outlook should improve as the year progresses.

Difficult start

The reduced margins experienced across the industry over the second half of last year are thought to be continuing into this. While large scale producers may be able to operate in a low margin environment, some small producers are expected to exit the market over the months ahead.

This will give the large-scale producers, which are already thought to account for almost 70% of white feather broiler production, even greater market dominance.

Prices and margins, however, are expected to pick up during the second half of the year. In response, larger producers are expected to restart currently idle capacity, and there should be some relief for surviving smaller producers.

Chicken consumption

Consumption of chicken meat in China is also expected to be lower this year, falling by about 3% to 14.6 MMT. It will be the yellow feather market that will be hardest hit by weakening demand. Amongst factors driving demand lower are a less optimistic economic outlook and the adverse impact on the hotel, restaurant and institutional sectors from COVID-19 measures.

Additionally, lower pork prices through the first half of this year will also weaken interest in poultry meat.

Demand for white feather chicken meat should hold up better in response to the changing tastes of Chinese consumers.

China’s consumers are increasingly looking for chilled rather than frozen product, and 30% of white broiler product is sold chilled. This percentage is expected to increase. Additionally, processed chicken products, which are also growing in importance for Chinese consumers, are primarily made from white broiler meat.

The catering industry is expected to increase its use of fully or partially cooked chicken products to improve efficiency and margins, and this will further raise demand for white bird meat.

Imports, exports

At 800,000 MT, imports of chicken meat, excluding paws, are forecast to be higher this year. Where paw imports are concerned, the strong demand witnessed last year is expected to continue into this, with most paws coming from the U.S. and Brazil.

Exports, at 460,000 MT will be flat this year.


What’s happening in the Asian poultry industry?

www.WATTAgNet.com/articles/44178


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