Many factors shaping decline in broiler production

by Meat&Poultry Staff
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WASHINGTON – US broiler companies are expected to reduce production in 2012 and the “magnitude of the decline will depend on a number of factors,” according to the Livestock, Dairy, and Poultry Outlook report issued last week by US Department of Agriculture’s Economic Research Service.

The Oct. 21 edition of the National Chicken Council’s Washington Report said that any improvements in overall economic conditions and consumer confidence will help moderate downward pressure on broiler production from the higher grain prices, according to the ERS. From Sept. 10 to Oct. 8, the number of broiler chicks placed for growout has been 6 percent lower than in the same period in 2011. Over the last several months, the number of chicks placed has been declining compared with the previous year. This trend is expected to continue through the fourth quarter and into 2012, ERS said.

Analyzing cold-storage holdings of broiler products at the end of August 2011, ERS explained that stock changes were strongly divided between higher inventory levels for breast meat and wings and lower holdings of most leg meat products. Breast meat stocks were up 46 percent from the previous year and wing stocks were 25 percent higher. These increases were offset by declines in stocks for leg quarters (down 24 percent), thighs (down 22 percent) and drumsticks (down 32 percent), according to the ERS report.

Changes in cold storage stock levels have been reflected in wholesale price changes. In the Northeast market, the wholesale price for boneless-skinless breast meat averaged $1.31 per lb. during September, down 22 percent from a year earlier, and the price for breast meat with ribs was down 17 percent.

Rising stocks for wings also put downward pressure on prices, with whole wing prices averaging $1.09 per lb., down 15 percent from September 2010. The falling stocks for most leg meat products were also reflected in their prices. Prices for bulk leg quarters, boneless-skinless thigh meat and drumsticks were 31, 32 and 24 percent higher, respectively, than the previous year.

With broiler production and ending stock levels both expected to be lower in the fourth-quarter 2011, many broiler product prices are expected to gradually strengthen but much will depend on the health of the US economy, ERS said.
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