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Bird flu outbreaks present Thailand with a 'golden opportunity'

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Bird flu outbreaks in parts of Asia, as well as the US, represent a "golden opportunity" for Thailand in chicken exports, raising the prospect of another record year – as long as the country remains disease free.

Thailand's government has estimated at 4% the rise in the country's poultry meat exports this year, flagging the reopening of exports to South Korea late in 2016, after a 12-year ban Seoul imposed on bird flu fears.

However, the pace of increase could end up potentially at double that, as bird flu outbreaks affect production in the likes of Malaysia and Vietnam, besides South Korea, while raising question marks over some exporting countries, such as the US, said Bualuang Securities.

The Bangkok-based broker pegged chicken shipments from Thailand - the world's fourth-ranked exporter, after Brazil, the US and the European Union - at a record 780,000-800,000 tonnes.

That compares with 742,969 tonnes last year, according to data from the Thai Broiler Processing Exporters Association.

'Outbreaks have become widespread'

"Bird flu outbreaks have become widespread in Asian chicken-producing countries in the past few months," said Bualuang Securities, even as the World Organisation for Animal Health reported a case of H5N8 bird flu, a severe strain, in Nepal, where the H5N1 was found last month.

Last week, Malaysia reported an outbreak of H5N1 bird flu on a backyard farm in the north of the country, while South Korea culled a further 50,000 birds to take its cull this winter nearly to 35m since a case was found in November.

In Europe, Vienna's Schoenbrunn Zoo culled 20 pelicans on Friday after it finding its flock infected with H5N8 bird flu.

Meanwhile, the US has reported three bird findings this month, two in Tennessee and on in Wisconsin.

Separately, China on Monday reported 61 fatalities and 160 cases last month of human infection from H7N9 bird flu, taking the death toll this winter, since October, to 161.

'Golden opportunity'

The outbreaks are, besides cutting production potential in some nations, prompting import curbs, with Hong Kong, Japan and Taiwan among countries last week imposing restrictions on purchases from the US.

However, the "bird flu crises in the US and Asian countries including Malaysia, Vietnam, Cambodia, China, South Korea and Japan, are providing an opportunity for gains in Thailand's chicken exports in 2017", Bualuang Securities.

The outbreaks present "a golden opportunity for Thailand to increase chicken exports… in 2017, especially to Japan, Malaysia and South Korea".

This was a factor likely to "strengthen domestic chicken prices" this year.

Market reaction…

However, the issue has yet to find an echo in markets, with chicken prices at 39.5 baht per kilogramme up 2.6% year on year as of last week, according to Tisco Securities.

Meanwhile, on the Bangkok stock market, prices of shares in major chicken producers such as Thaifoods Group, GFPT and Charoen Pokphand Foods have headed sideways this month.

Bualuang acknowledged its assessment was based on Thailand remaining bird-flu free.

The country has in fact been free of disease outbreaks in recent years, following considerable investment in it production facilities.

US Department of Agriculture officials in Thailand noted last year that "nearly all broiler houses are equipped with evaporative cooling systems, which reduces disease exposure and mortality rates.

"The closed-farming system has been instrumental in preventing a return of [bird flu] incidents."

By Mike Verdin

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