Bird flu hits China's poultry consumption, curbs soybean
demand DSMcv1 SMc1 - RTRS
24-Apr-2013 23:00
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Bird flu heightens China's food safety concerns
Poultry demand drops by 70-80 pct in eastern China
Soybean imports to fall on lower feed demand
Slowdown may last for months on reports of new cases
By Naveen Thukral and Dominique Patton
SINGAPORE/BEIJING, April 25 (Reuters) - A dropoff in Chinese demand for
soybeans used to feed poultry and livestock could last for months, as consumers lose
their appetite for poultry in response to a deadly bird flu virus outbreak and amid
lingering images of rotting pig carcasses floating in a river.
China, which buys 60 percent of the world's traded soybeans, could further reduce bean
imports this year - already down some 13 percent year to date on food security concerns
and high stocks - which will likely curb a rally in benchmark Chicago prices.
Authorities have culled tens of thousands of birds as it tries to contain the spread of the
H7N9 virus that has killed 22 people and infected 108 since the first deaths were
reported in March.
"We are not eating chickens anymore," said Shao Fei, a 35-year-old office worker in
downtown Shanghai. "We have tried to switch to beef and fish, but those are expensive,
so we are having a lot more vegetables at home these days."
In Shanghai, where the flu has been most pronounced, about 111,000 birds had been
culled as of last week and authorities have shut down live poultry trading at 196
markets. The impact has been felt among restaurants on Shanghai's streets. One popular
chain, The Grandma's, has pulled a popular green-tea chicken dish off the menu.
Poultry sales have dropped by 80 percent in eastern China and by about 30 percent in
other parts of the country, analysts and industry officials say. Fewer birds to feed means
less demand for soybeans and corn.
"We don't see any signs of recovery" for poultry consumption, said Wang Xiaoyue, an
analyst at Beijing Orient Agri-business Consultant Co. "There is a possibility of 20 to
30 percent decline in consumption this year if the flu lasts for some time."
The price of one-day-old chicks, which poultry farmers buy from breeders to restock,
have plunged more than 85 percent, according to the National Poultry Industry
Association.
Breeders have scaled back and, in the northeast city of Shenyang, millions of baby
chicks were burned as prices fell to 0.5 yuan each compared with 4.75 yuan per chick
last year, local media reported.
SETBACK FOR PRICES
"The bird flu could have a big impact as the poultry sector consumes almost half of total
feed production," said Jean Yves Chow, a senior livestock industry analyst at Rabobank
in Hong Kong.
"The slowdown could last for one or two quarters depending on how quickly the
government is able to contain the disease."
China's soybean imports had risen for eight consecutive years, rising almost five-fold to
58.39 million tonnes in 2012 from 10.43 million tonnes in 2000, driven by rising wealth
and demand for high-protein food such as pork, poultry and seafood. China now
accounts for half of the world pork consumption and close to 15 percent of the global
poultry production.
China’s soybean imports in 2012/13 could still be in line with last year's level because
of strong growth in pork consumption, the China National Grain & Oil Information
Center said.
But this year, soybean imports have already dropped more than 13 percent to 11.49
million tonnes in January-March from a year ago as port congestion in Brazil delayed
shipments while demand slowed partly in response to a tainted chicken scandal. (Full
Story)
Lower soybean stocks should typically translate into increased purchases, but that has
not materialized.
"There is no rush to buy," said a trading manager at Singapore-based international
trader. "In a normal situation it would have resulted in aggressive buying."
Soybeans are crushed to make soymeal, which is used with corn to make animal feed.
A decline in soybean imports by China, which buys close to a quarter of the world's soy
production, is likely to be bearish for Chicago Board of Trade prices Sc1. However,
benchmark prices have notched their biggest two-week gain since early September,
driven by tight old-crop supplies in the United States.
Bird flu fears could also reduce China's corn imports, which are expected to climb to a
record 6-7 million tonnes in the 2013/14 marketing year beginning Oct. 1 on lower
domestic supplies.
The avian influenza was first detected in China's commercial capital Shanghai and
adjoining provinces at the end of March but cases have since been reported in the
northeastern and central parts of the country. Investigators have yet to detect any
human-to-human transmission of the virus.
The bird flu outbreak comes after some 16,000 pigs were found dead in China’s
Huangpu river last month, and KFC's parent Yum Brands YUM.N saw its sales slide
following the tainted chicken scare late last year, heightening concerns over food safety
in China.
On Tuesday, Yum, which runs more than 5,100 restaurants across China, warned that
fears surrounding the flu were continuing to depress sales. (Full Story)
Analysts said consumption of pork, the staple meat for Chinese consumers, remained
steady. China had per capita animal protein consumption of 76.2 kilograms in 2010, one
of the highest in Asia, according to analysts. That compared with U.S. protein intake of
129.5 kilograms per person in 2010.
(Additional reporting by Niu Shuping in BEIJING and Fayen Wong in SHANGHAI;
Editing by Amran Abocar and Ken Wills) ((naveen.thukral@thomsonreuters.com)(+656870-3829)(Reuters Messaging: naveen.thukral.thomsonreuters.com@reuters.net))
Keywords: CHINA BIRDFLU/MEAT