April 25, 2009

 

US chicken output to fall for first time in 36 years

US chicken production is expected to fall this year for the first time in 36 years due to a surge in feed costs and the recession, industry sources said.

 

Record feed prices last year and sharply reduced demand from the recession have led to chicken producers liquidating their flocks aggressively in the past year.

 

Poultry production this year is expected to decrease at least four to five percent, said National Chicken Council spokesman Richard Lobb.

 

Restaurant traffic has also decreased as more consumers opt to eat at home due to the recession.

 

But the outlook for poultry companies is seen to improve in the coming weeks as meat demand rises during the grilling season. There is also less chicken on the market, as total chicken stocks in cold storage decreased 17 percent to 647.7 million pounds at the end of March, the USDA said.

 

If demand picks up significantly, the rate of chicken price increase could be unprecedented between now and summer, said Jim Robb, analyst at the Livestock and Meat Information Centre.

 

Chicken breasts could hit US$1.50 to US$1.60 per pound this summer, but chicken meat will be competing with cheaper beef. Dairy producers are selling cows for slaughter to lift milk prices, which would increase the supply of hamburger.

 

The industry have to wait until the third or fourth quarter before chicken prices show solid gains, and demand is yet to return, preventing chicken producers from having strong profits, said Rich Nelson, director of research at Allendale Inc.