North Asian poultry market faces challenges amid HPAI outbreaks, inventory concerns

The North Asian poultry market is facing inventory challenges, affecting supply and demand, market sources said this week. While Japan is experiencing stability concerns, despite strong consumption, South Korea is seeing a rebound in chicken demand.

Platts, part of S&P Global Commodity Insights, assessed CFR North Asia chicken legs at $1,885/mt at the end of November, down $15/mt or 0.8% on the month, influenced by persisting high inventory levels and a weak currency, resulting in low buying interest from Japanese importers.

In the Japanese chicken market, high inventory levels are raising concerns among importers about stability, despite robust consumption.

"Due to the weak Japanese yen and heavy stock, we can't bid up now," one market source said.

Retail chicken prices in Japan averaged Yen 511/kg in September, reflecting a 3.2% decrease from the previous year but still above the five-year average, according to a Commodity Insights report. In the year to date, prices have dropped 12%, particularly for chicken legs, making chicken more competitive against pork and beef, which saw price increases of 1.1% and 3%, respectively. Domestic preference remains strong for chicken legs, averaging Yen 687/kg, while breast meat prices are at Yen 381/kg.

Meanwhile, chicken consumption is projected to rise by 3% in 2024, with September figures showing a 1% year-on-year increase, according to a Commodity Insights report. Market sources highlighted that chicken meat consumption typically rises in Japan during the winter, driven by demand for hotpot dishes and festive traditions, including fried chicken during the Christmas season. With Japan's fiscal year ending in March, there is a focus on reducing high inventory levels, according to a market source based in the country.

From January to September 2024, Japan's broiler imports totaled 474,972 mt, reflecting a 6% year-on-year increase, according to the Japanese Agriculture and Livestock Industries Corp. Japan's chicken meat imports in September were down 0.2% year on year but up 2% against the five-year average. For 2024, imports are set to reach 631,625 mt, reflecting an 8% increase from 2023, driven by demand amid more expensive beef and pork prices.

South Korean import demand rebounds

In contrast to Japan, South Korea's chicken inventory levels are lower compared with six months ago, with importers reducing volumes over the past three months, a South Korean importer said. However, demand is beginning to pick up, driving prices higher, the importer added.

A market source in South Korea reported that Brazilian chicken boneless legs (200g and up) for January shipment were recently traded at $1,950/mt CFR Busan.

From August to October, South Korea imported 38,761 mt of chicken meat, marking a 35% year-on-year decline, according to the Korea Meat Trade Association. Notably, imports from Brazil and Thailand fell by 32% and 52%, respectively. However, in October alone, imports totaled 12,367 mt, marking an 11% increase from September.

HPAI developments in South Korea, Japan

Outbreaks of highly pathogenic avian influenza (HPAI) are emerging in North Asia, especially in South Korea and Japan. South Korea's first outbreak of the 2024-25 season was reported in late October, affecting 900 birds, with H5N3 detected in wild ducks in North Jeolla and H5N1 cases across three provinces.

On Dec. 2, H5-type avian influenza antigens were identified at poultry farms in Gangjin and Sejong City, with tests underway to determine if they are highly pathogenic. If confirmed, it would bring the total outbreaks in South Korea this winter to seven. A nationwide standstill order for poultry farms has been enacted, alongside strict quarantine measures, urging farmers to report any symptoms in their flocks.

Meanwhile, Japan reported its first HPAI outbreaks in mid-October, totaling 11 cases that have impacted thousands of laying hens, broilers, and ducks across nine prefectures, underscoring the persistent threat of HPAI in these regions. While a Japanese market source said they expect further developments, the import market has so far shown limited response.