MONTHLY ASIA CHICKEN WRAP: Boneless chicken leg prices rise in March amid supply concerns

North Asian chicken leg prices surged 5% month over month in March, driven by high demand and continued supply constraints among Brazilian suppliers. The Platts-assessed CFR North Asia chicken leg price reached $2,310/mt on March 28, an increase of $110/mt from the February assessment.

The increase in price came amid heightened demand stemming from low export volumes from Brazil to Japan in February due to ongoing supply constraints. Brazilian producers have faced labor challenges in producing deboned chicken cuts since late 2024, leading to a decline in boneless leg exports to Japan starting November 2024. Consequently, Japanese importers grew concerned about their inventory levels and were willing to pay higher prices to secure market share, despite rising offers from Brazilian suppliers.

Brazilian suppliers have been strategically adjusting their stock levels and export prices, with many reducing offer volumes to Japan to prioritize domestic sales of bone-in legs or exports to regions like West Africa and the Americas, where they see higher profit margins.

In South Korea, participants said concerns were rising due to lagging boneless leg prices in the domestic market. Increasing Brazilian offer prices and elevated trade prices in other countries continue to worry South Korean buyers.

Demand is expected to remain steady but may decline further in May or June, as consumption of 'samgyetang,' or ginseng chicken soup, typically increases during this period along with the requirement for domestic chicken. Additionally, a sluggish economy is adversely impacting South Korea's restaurant sector, leading to decreased meat consumption, according to market sources.

Major South Korean chicken companies were facing severe financial difficulties, with several of them seeing significant losses for the fourth quarter of 2024, according to local media reports. The Korea Poultry Association attributes these declines to increased chicken production, falling sales prices, rising financial costs due to currency fluctuations, and escalating raw material prices. Higher exchange rates have complicated feed material imports, predicting further financial strain for companies in the coming year.

Platts, part of S&P Global Commodity Insights, assessed CFR North Asia chicken leg prices up $20/mt day over day at $2,420/mt April 10 for May to June shipments.