Surging demand for chicken legs drives historic price inversion in Platts poultry assessment

Frozen boneless chicken legs shipped to north Asia have surpassed the price of skinless boneless breast meat destined for the Middle East for the first time since Platts began assessing these markets in June 2024, driven by diverging demand patterns and supply constraints.

Platts, part of S&P Global Energy, assessed CFR North Asia chicken leg up $925/metric ton, or 50% year over year, at $2,775/mt Dec. 10, while Platts assessed the Middle East skinless boneless chicken breast at $2,680/mt CIF Jebel Ali Dec. 10.

Trades for Brazil-origin unsized boneless legs of 200 g and above were done at $2,750/mt and $2,800/mt CFR Japan for January-February loading, while trades for sized boneless legs were concluded at $2,900/mt CFR Japan, Platts data showed.

"These confirmed prices in Japan are the highest levels in history, and we did not expect these levels," said a Japanese importer, adding that the previous historical highs were $2,600/mt for sized boneless legs and $2,500/mt for unsized boneless legs.

Supply dynamics

The unprecedented price relationship stems from Brazil's increased chicken production meeting unexpectedly weak global demand, particularly for breast meat.

According to Platts specifications, the CFR North Asia assessment covers frozen boneless skin-on legs with a minimum of 200 g shipped in a minimum of 10 40-foot refrigerated containers, while the CIF Middle East assessment reflects frozen boneless skinless breast meat with halal certification.

"Boneless leg is extremely short [in supply]," a Singapore-based trader said, highlighting the tight market conditions driving prices to record levels since Platts began assessing these markets.

The oversupply situation for breast meat has been exacerbated by several factors, including lower-than-expected demand from European markets following Brazil's recovery from bird flu restrictions and delayed buying ahead of Ramadan in the Middle East.

"Producers are chasing big players to sell SBB but there's just too much stock and Chinese products across all markets," a Middle Eastern market source said, referring to skinless boneless breast meat.

Regional demand patterns

Asian markets have been aggressively restocking chicken leg inventories following earlier disruptions from the bird flu in Brazil, with some processors even converting production lines from Middle Eastern shawarma cuts to meet Asian demand for leg meat.

In Japan, demand has been consistently high for winter and spring, when chicken consumption is usually higher.

"We cannot proceed unless we accept their [Brazilian packers'] counteroffer. They are aware that Japan's inventories are insufficient [to sustain for the next few months], leaving us with no choice," another Japanese importer said, adding that demand in both the domestic and export markets in Brazil remains robust.

"While most local importers believe inventory levels have recovered from the previous [H5N1] bird flu-related suspension in Brazil, I remain unconvinced," a South Korean importer said, explaining the continued strong demand despite prices reaching historic highs.

Meanwhile, Middle Eastern buyers are contending with cold storage facilities still full of earlier high-volume imports, when Brazil faced export restrictions due to bird flu concerns.

Market participants expect this atypical price relationship to persist in the near term as Brazil continues to adjust production levels to match shifting global demand patterns.