Chinese chicken prices plunge 25% amid more plentiful pork supplies
October 14, 2020 - China’s chicken producers are facing excess supply, which has forced prices to drop 25% in the past month and pushed producer margins into negative territory, according to an insight published by Gro Intelligence.
The chicken oversupply comes as the country’s hog population continues its rebound and the industry provides larger volumes of pork, China’s preferred meat.
Since the outbreak of African swine fever in 2018, chicken became an alternative protein source to pork. Broiler chicken slaughter volume has increased 30% since 2018 and is expected to reach 16 billion head this year.
White feather broilers account for more than 50% of the Chinese broiler market and are the species of choice served by fast-food restaurants and institutions because of their lower cost.
School closures for the summer have decreased demand for white feather broilers, and prices have dropped 25% to 2.95 rmb/jin (5.90 rmb/kg) in the past month, and are down 57% from a peak in October 2019.
Producer margins for white feather broilers also have dropped sharply to minus 1.87 rmb/head from positive 1.23 rmb/head in August, and from 8.06 rmb/head in October 2019. Producer margins are weighed down by broiler oversupply as China’s hog population increases and the high price of feed.
The USDA has been adjusting higher its estimates for Chinese imports of soybeans and corn, mainly used for animal feed. It’s important to monitor China’s meat-protein markets in order to get ahead of official import demand estimates.