Source:  MEATINGPLACE.COM, 12/22/10

It was a year upheaval in the poultry export market as top U.S. customers Russia and China closed their doors to American products. But as USA Poultry & Egg Export Council President James Sumner explains in an interview with Meatingplace, other buyers have stepped up their purchases, and 2011 could see a return of Chinese demand.

How has the U.S. poultry industry coped after Russia and China essentially closed their borders this year?
Russia and China comprised 40 percent of our export markets for 2009. This was quite a blow to lose our two top export markets for all practical purposes for the first nine months of the year. What we’ve always been doing is trying to develop new markets for our industry so we are less dependent on a handful of markets. Despite losing our two largest markets for exports for the first nine months of this year, our export volume is down only 10.8 percent below the previous year’s level, and down 7.3 percent in value. We’re going to finish the year at probably about the same level.

With Russia and China out, which markets have taken up the slack?
Mexico has become our largest export market, followed by Hong Kong, followed by Iraq, followed by Cuba, Angola, then Canada. We have to find a home for these products obviously. We went out, and it did have an impact on the price of certain items. We had always had exports in those other markets. It enabled us to expand our exports in those other markets to a greater degree. They will be primary markets. I do expect next year that we are going to be increasing our export volume into China again.

Will China again become an importer of U.S. poultry?
Some of our efforts at working with China’s customs officials have paid off, and they are now going to be basing the import duties to mainland China on the actual value of our products including the average value of all imports. This is going to have a very positive effect on our exports. So this should help increase export volume to China. It’s difficult for us to put a number on it right now, but it should be very significant.
 

What was the impact on pricing of losing Russia and China this year?
We’ve seen over the last few months somewhat of a reduction in prices, especially to the Russian market. The initial purchases back in September were at artificially high prices brought about largely by the zeal of the importers to fulfill their quotas with anticipation that this could impact their next year’s quota allocations. Prices were actually higher. This had a very negative impact on these importers, who actually paid more for the product than they could sell it for. Now we are seeing an adjustment in those prices downward, which is hopefully going to enable some recovery for the Russian importers. So we have seen leg-quarter prices trending lower these last few months. Hopefully we’re going to see some additional stabilization in the market next year, which would also hold true for pricing.

How much chicken will the United States end up shipping to Russia this year and in 2011?
We’re estimating between 200,000 and 250,000 metric tons this year, which is well short of our allocation of 600,000. Next year’s total quota is 350,000 metric tons. It is likely the U.S. will get a significant portion of the total quota for next year.

What is the broader outlook for poultry exports in 2011?
Total poultry international trade is trending upward. The primary reason is with increasing feed prices, poultry is by far the most cost-effective protein conversion of feed. So we’re looking to see poultry, both chicken and turkey, but especially chicken, make more inroads into pork and beef consumption worldwide.   

For 2005-2006, 15 percent of broiler production was exported. For 2009, 21.7 percent was exported. This year, 2010, we’re looking at that falling back to 19.3 percent, but still that’s significant, and we’re looking at seeing continued increases in our share of exports both as a percentage of our total production and also as total volume in comparison with our competition.

For more stories, go to www.meatingplace.com.