Poultry farmers in Asia are preparing to battle a potential wave of Highly Pathogenic Avian Influenza following reports of outbreaks in South Korea and Japan in the previous weeks. The HPAI cases threaten to put the Asian poultry industry to another stringent test on biosecurity policies and risk damaging feed corn demand.
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South Korea confirmed its first HPAI cases of the 2022-23 season at a farm in Yecheon in the North Gyeongsang province Oct. 11. Birds in a flock of 9,500 ducks had symptoms of the disease, leading to culling of the flock, according to an official report to the World Organisation of Animal Health.
South Korea's Prime Minister Han Duck-soo had earlier announced measures to control HPAI as the agricultural ministry raised the alert level for HPAI to "severe" from "caution" while increasing biosecurity measures on farms.
In Japan, HPAI was detected for the first time in 2022 with a total of more than 340,000 layers being culled in farms in Hokkaido and Okayama prefectures, according to the Japanese agricultural ministry's website Oct. 28.
These cases follow a spate of HPAI outbreaks reported globally with several countries including France raising their alert levels.
However, the Southeast Asian poultry industry remains mostly unscathed currently, with only the Philippines said to have experienced recent struggles with the disease, according to market sources.
Indonesia has not reported HPAI outbreaks in the season but falling prices of chicken and eggs have cut the short-term feed demand outlook.
"[HPAI is] not a problem now but live bird and egg prices are dropping. We are told to cull the supply of hatching eggs and day-old chicks in order to balance the supply and demand," said an Indonesian poultry farmer.
Vietnam and Thailand are similarly unaffected by any HPAI outbreaks in recent times, according to multiple sources in the domestic industry.
"The avian flu could further affect the demand narrative [in Southeast Asia]. Thailand and Indonesia have strong biosecurity measures, but it remains to be seen," said a trader.
"Southeast Asia will be wary, given the size of the industry, they will step up measures," said another grains trader.
Feed corn is a key ingredient for poultry broiler and layer feeds, comprising 50%-60% of the raw materials used in poultry feed formulation. Japan, South Korea and Southeast Asian countries are key destination markets for corn globally.
In the marketing year 2022-23 (September-August), Japan is expected to import 15 million mt, South Korea is expected to import 12.5 million mt, and Southeast Asia countries, on top of domestic production, are expected to import 17.5 million mt of corn, according to the US Department of Agriculture's November release of the World Agricultural Supply and Demand Estimates.
A severe HPAI outbreak in Asia would further cripple feed corn demand in a market where feed millers and livestock farmers are struggling with narrowing margins amid higher grains prices from tight global supplies, costlier financing and depreciating local currencies.
The livestock farming industry is still recovering from the damage of the African Swine Fever and is not entirely out of the woods, with recovery slowed down by fears of another outbreak. Vaccines against ASF are widely anticipated to reach the market in early 2023, alleviating the risks of another reemergence among the hog population and impacting overall demand for feed corn and soybean meal.
Platts assessed corn at 332.75/mt Nov. 11 CFR North East Asia, S&P Global Commodity Insights data showed.