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UPDATE 4-China launches probe into Brazilian broiler chicken imports

* China frozen chicken imports worth more than $1 bln a year

* Brazil accounted for 85 pct of imports last year

* China's poultry industry recovering from bird flu crisis (Updating with more details)

BEIJING, Aug 18 (Reuters) - China on Friday launched an anti-dumping investigation into imports of Brazilian broiler chickens after a complaint from the domestic industry that the South American country has been selling its chicken below market value.

Brazil accounted for more than 50 pct of broiler product supplies to China, the world's No. 2 poultry consumer, between 2013 and 2016, according to a preliminary review, the Commerce Ministry said in a statement.

Any move to penalize imports worth more than $1 billion a year would be a major blow to Brazil's meat industry following a scandal over its beef exports earlier this year, which threatened to tarnish the country's powerhouse protein industry.

Brazil replaced the United States as the top supplier of chicken after China slapped anti-dumping duties on U.S. broiler chicken products in 2010.

China is the biggest national consumer of Brazilian meat.

The country relies on imports for its supply of white feather broiler chickens, which are favored by fast-food chains like KFC and McDonalds for their more rapid development and plumper meat, compared with yellow-feathered birds, which are native to China and generally sold retail.

The investigation comes just months after Beijing slapped hefty penalties on sugar imports from top growers such as Brazil and Thailand after lobbying by domestic mills.

In 2016, Brazil accounted for 85 percent of China's frozen chicken imports of almost 600,000 tonnes valued at as much as $1.23 billion, customs data shows.

The push by China's domestic industry for an anti-dumping probe comes as poultry farmers and processors recover from the nation's worst outbreak of bird flu in years and struggle with falling demand.

"This is good news for the domestic chicken market," said a chicken farmer in northern China who gave his surname as Tan.

"The chicken market has been not so good since the second half of last year. Brazil is selling a lot to China at a cheap price while China has ample supplies itself."

In 2017, demand and output are expected to hit their lowest since 2006, according to U.S. government estimates. Domestic supplies are being hurt by low availability of grandparent breeder stock needed to produce more meat.

Worries about the deadly virus hurt demand for chicken meat and sent some regional prices <0#JCI-BROILER> to more than decade lows in February.

Live broiler chicken prices in Shandong province, one of the nation's major producing areas, have since more than doubled, and were around 7.7 yuan ($1.15) on Friday, as the crisis passed and concerns about infection eased.

Import prices from Brazil have remained low in comparison, making it hard for the local industry to compete, analysts said.

Still, any curb on foreign supplies would likely boost domestic prices further, potentially denting demand for chicken as a cheap alternative to pork, the nation's favorite meat.

Broiler chicken sells for 14 yuan ($2.10) per kg, according to government data, almost a third less than pork and more than 70 percent cheaper than beef and lamb.

($1 = 6.6765 Chinese yuan renminbi) (Reporting by Josephine Mason; additional reporting by Beijing and Shanghai newsrooms and Hallie Gu; Editing by Richard Pullin)