April 21, 2006

 

US chicken leg quarter prices takes a hit

 

 

Bird flu concerns in export markets and higher chicken production have caused US chicken prices to fall substantially over the past six months.

 

Leg quarter shipments accounted for two thirds of all US chicken export volumes in 2005, thus its price is most affected by changes in export demand.

 

In March, the average price was US$ 0.14/lb, down 54 percent on-year, mainly due to bird flu concerns in export markets, particularly Eastern Europe, the Middle East and Central Asia.

 

High chicken production has also contributed to low chicken prices.

 

Production in December 2005, fuelled by increases in birds processed and average live weights, were 4.3 percent above year ago levels.

 

The USDA estimates that cold storage inventories of chicken at the end of March were 38 percent higher than year ago levels at 419,573 tonnes as unsold stocks accumulated.

 

However, USDA statistics also showed chicken exports in February 2006 were 15 percent higher on-year as low leg-quarter prices made it more popular in international markets.

 

Although exports were weakened in Eastern Europe, where shipments fell 38 percent to 29,937 tonnes, increases in other countries where bird flu is less of a concern more than made up for the loss as importers made use of low prices to increase imports.

 

Exports to Russia doubled to 128,366 tonnes while exports to Hong Kong and China  increased by almost 50 percent  to 37,194 tonnes. Exports to Mexico also saw an increase of 19 percent to 39,462 tonnes. 

 

USDA is expecting the number of chickens processed to decrease in the second and third quarters as producers adjust production in response to the low prices.

 

However, as average live weights of animals remain high, chicken production is expected to increase on-year, for the next several quarters.