Traders eye demand hit as Japan joins Avian flu outbreak

Demand for animal feeds is said to be untroubled as yet, but market participants are watching the development of Avian flu in the region, as the first outbreak of 2018 was confirmed in Japan over the weekend.

According to the UN's World Animal Health Information System, some 91,000 birds were slaughtered in Kagawa Prefecture, southwest of Osaka, in a bid to stem the outbreak.

Japan joins China, Taiwan, the Philippines, North Korea and South Korea in battling ongoing outbreaks in the region.

South Korea has slaughtered just under 300,000 poultry since the current outbreak was confirmed on November 19 2017, according to data from WAHIS, with the latest outbreak identified on January 10.

While outbreaks of diseases that affect animal stock can have a knock on effect for demand for feed, market sources are monitoring the outbreak but are as yet unworried about its potentially negative impact.

"It's nothing major for now," one Singapore-based trader said, noting that it was not uncommon for Korea and Japan to see outbreaks of Avian flu at this time of the year.

Major South Korean feed buyers have ventured back into the market recently, with MFG and Kocopia buying some 200,000 mt of corn for delivery in April over the last 10 days, seemingly shrugging off the fears of some traders who had speculated that they may abandon efforts to buy or take smaller volumes.

Avian flu outbreaks are being actively battled across large parts of South Africa, the Ivory Coast and Saudi Arabia, while a number of European countries including the United Kingdom and Germany have reported infected birds in the wild population.

Corn competes with other grains and co-products as a feed to animals, with corn's competitiveness relative to other feeds key in drawing demand to the market in recent weeks.

"Corn was really cheap versus the prices of feed wheat and low quality milling wheat," one market source said, with that dynamic providing a supportive factor for corn prices through recent weeks.