China’s import ban on US chicken used for breeding has been in place for nearly two years and supplies of poultry in one of the world’s largest markets are worryingly low.
Imports of chicken for the whole year to China are expected to reach 400,000 units, a drop of close to 45% when compared to 2015, according to Rabobank.
With the US out of the fold, Spain and New Zealand are the other major supplies of chicken to China, albeit from a considerably lower base. Trade from New Zealand is expected to pick up for the rest of the year, according to Pan Chenjun, senior analyst at Rabobank, but this will not be enough to offset a steep rise in prices.
China’s reliance on America
When asked if the market could stabilise if the Chinese government ended its ban on US chicken, Chenjun was not convinced.
“In 2017, [production and supply of chicken] would not recover, but in 2018, that’s possible, if China lifts the ban by early next year.”
China relies on imported breeding stock of white-feathered chicken for use mainly in fast-food. The country has bene unable to produce its own line of high-quality white-feathered chickens, and has had to rely on what Chenjun calls the “grandparent stock” from places like the US.
But the grandparent stock in China has hit a “historic low” in the last five years, that has led Chenjun to speculate production of white bird meat will decline more this year – possibly by 15%.
With a decline in production, it means prices of poultry in China could rise throughout 2016 and 2017.