South Korea chicken market cautious ahead of regionalization of Brazilian imports

South Korean importers remain cautious following the government's plans to regionalize Brazilian chicken imports, after a country-wide ban was imposed on Brazil amid a highly pathogenic avian influenza outbreak in May.

A source expressed doubts June 12 that shipments can resume immediately after the import ban is eased. "It is better to wait until the list of reapproved establishments is announced to gain more clarity on the situation," the source added.

The South Korean Ministry of Agriculture, Food and Rural Affairs announced June 11 that it will conclude negotiations with Brazilian officials regarding the regionalization plans.

MAFRA is expected to issue an administrative notice in the next 10 days, outlining revised sanitary conditions that will facilitate the resumption of chicken imports from Brazilian regions unaffected by HPAI. Additionally, the new regulations will permit the importation of breeding chickens from cities without reported HPAI cases.

Price concerns

Following the announcement, market participants in Japan predict that Brazilian chicken prices will rise due to increased demand once South Korean importers reenter the market.

"I expect prices to increase to around $2,300-$2,400/mt once South Korea resumes imports from Brazil," a Japan-based source said, referring to CFR Japan boneless chicken leg prices. Conversely, Thai chicken prices are expected to drop as South Korean importers shift back to a more competitive Brazilian market, the source added.

Another source disagreed that prices would surge significantly. "Prices will slowly return to levels seen before the outbreak," the source said, suggesting a more gradual increase in the coming weeks.

The CFR North Asia boneless chicken leg price hit a three-month low of $2,150/mt on May 23, down $250/mt or 10% from $2,400/mt on May 15, the day before Brazil confirmed its first HPAI case. This significant drop was attributed to increased supplies in Brazil, as major importing countries, including China, the European Union, and South Korea, imposed bans on Brazilian chicken following the HPAI confirmation.

However, prices have since stabilized, buoyed by expectations of import resumption. This follows a statement from Brazil's Ministry of Agriculture and Livestock on June 6, indicating that the outbreak had been contained and negotiations to reduce trade restrictions with the European Union and China were underway.

Platts, part of S&P Global Energy, assessed CFR North Asia boneless chicken leg prices at $2,275/mt June 12, unchanged from June 11. In the adjacent market, Platts assessed boneless chicken leg FCA Brazil at $2,126/mt June 12, stable from June 11.