Due to China's African swine fever (ASF) outbreak, China may experience the shortage of pork meat for domestic consumption and need to import other protein sources from other countries. We at KResearch view that the incident will likely benefit Thai livestock products, especially chicken products exported to China, thanks to three factors: 1) China's exponentially high demand for chicken meat as consumers opt for more chicken; 2) China's opening up its market to import fresh, chilled and frozen chicken products from Thailand; and, 3) China's tariff retaliation against its key rivals, namely anti-dumping tariffs on Brazilian chicken imports and tariff hike on US chicken imports as part of its retaliation against the US tariff barrier. Given this, it is expected that Thailand will be able to export chicken products to China at USD230-240 million, surging 265-280 percent YoY in 2019.
However, close attention must be paid to domestic chicken prices as they may rise amid skyrocketing demand for export to China. Meanwhile, the outlook for Thai chicken product exports to China following the end of ASF outbreak may depend on the competitiveness of our key rivals because China will likely need to import substantial amount of chicken products from such rivals even if they are being subjected to China's trade retaliation via tariff measures. Moreover, Thailand has to compete with other countries that export chicken products to China, as well. As a result, this may inhibit our chicken product exports overall somewhat. Investment by leading Thai companies in China may partly affect our chicken product shipments, going forward.
Regarding the outlook for Thai chicken product exports in 2019, aside from a surge in demand for other protein sources to substitute pork meat in China, Thai chicken shipments to other key markets, namely Japan, also look promising, though we have to closely monitor new rivals like Vietnam, which is expected to grab more share of the Japan's chicken market after only two years of its marketing effort there. Close attention must also be paid to the stronger Baht that will make it more difficult for Thai chicken exporters to compete with major rivals, namely Brazil, the US and EU, in terms of price. KResearch expects that the value of Thai chicken product exports may increase to USD3.5 billion or 11.8 percent YoY in 2019, led by processed chicken products.
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