February 12, 2007

Rising poultry prices to bring US chicken producers out of the red

Rising poultry prices have brought relief to major US chicken companies, which has been sustaining losses due to bird flu last year and rising grain prices this year. 

Higher grain prices would now be offset by increasing poultry prices, analysts said.

USDA figures showed that prices for broilers now have are 16 percent higher than the average price for the whole of last year.

That recovery could hasten the recovery of producers back to profitability much sooner than previously expected.

Paul Aho, an agribusiness economist who owns a consulting firm called Poultry Perspective, said poultry prices have risen enough so that chicken producers can offset higher grain costs and break even. Moreover, the effects of production cuts made by producers last year would also limit supply, lending further support to prices

Analysts are saying that profitability could return to the industry by as early as February even though January remained a loss-making month.

Both the National Chicken Council and Tyson, the largest chicken producer in the US, has said the increased costs for grain would have to be passed on to consumers as it would be a permanent feature.