AGRIBUSINESS: Chinese Bird Flu Outbreak Affects Production, Feed Demand

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The U.S. Grains Council says the impact of the bird flu outbreak in China on poultry production and feed demand is uncertain.

As live bird markets close, the Council says reducing poultry inventories will also reduce feed consumption; if consumers switch to pork, it might offset losses in the poultry sector and reduced the net effect on feed demand.

U.S. Grains Council Director in China, Bryan Lohmar, says any substitution of pork for poultry will dampen the negative effect of reduced poultry production on feed demand because hogs are less efficient converters of feed to meat and use a higher proportion of energy feeds like corn. If consumers switch to fish, Lohmar says soybean demand will likely increase some. Fish prices in China are rising, suggesting the latter.

So far the council estimates a 1% reduction in poultry production. But if the virus spreads, the number could quickly rise to a 5% reduction, which could cut back 1.1% of USDA's total Chinese corn demand figure for the 2012-2013 marketing year.

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