Wholesale broiler prices trending upward: ERS

by Meat&Poultry Staff
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WASHINGTON – According to the “Livestock, Dairy, and Poultry Outlook” report issued last week from the US Department of Agriculture’s Economic Research Service, wholesale prices for a number of broiler products “seem to have reached a low point at the end of 2010 or the beginning of 2011.” ERS added that prices are now slowly trending upward.

During the first two months of 2011, USDA’s 12-city wholesale broiler prices averaged approximately $0.76 per lb., down about 4 cents per lb. from the same two months last year, according to the March 18 edition of the Washington Report from the National Chicken Council. By early March, however, the comparable price had risen to around $0.81 per lb. Prices for other broiler parts are mixed.

During January-February, boneless/skinless breast meat in the Northeast market averaged $1.15 per lb., down 12% from the same time in 2010. Boneless/skinless breast meat prices have been gradually increasing in recent weeks.

During the first two months this year, leg quarter prices averaged $0.36 per lb., up fractionally from the year-earlier level, but were 7% lower than the fourth quarter 2010. The strength of the leg quarter prices is in contrast to the analysts’ expectations for a “large decline” in exports of leg quarters when first quarter 2011 is compared with the record high exports of fourth quarter 2010, ERS stated.

Relatively high cold storage stocks and the ongoing level of broiler production will be key factors influencing broiler prices, ERS suggested.

Current prices for all cattle make it difficult for producers to decide to retain either cows or heifers for breeding, ERS said. On Jan. 1, at 26.771 million head – which is 3% below supplies in 2010, feeder cattle outside feedlots were the lowest since the series began in 1996. However, Jan. 1 cattle-on-feed inventories (all feedlots) were higher than those in nine of the previous 16 years and represented the third-highest proportion of the previous year’s calf crop, exceeded only by ratios in 2007 and 2008.

As a result, there is expected to be large amounts of beef in the first half of 2011, but very low numbers of feeder cattle for placement for marketing during the second half of 2011 and 2012. On Jan. 1, the ratio of heifers on feed to total steers and heifers on feed, which is the highest January ratio since 2004, further indicates there were only limited plans at best for either maintaining or increasing the beef cow herd, ERS said.

During the first two months of this year, estimated commercial pork production was about 3% higher than during January-February 2010, ERS stated. Prices of live equivalent 51%-52% lean hogs, however, averaged $58.59 per hundredweight for January-February – almost 19% more this January-February than a year ago. Wholesale pork prices averaged for January and February were 22% higher compared to the same period last year. Such year-over-year price increases accompanying larger supplies can only occur when product demand increases, ERS stated.
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