May 14, 2007

US chicken production shows signs of revving up

Recent increases in egg count suggest US chicken production may be on the rebound after a tough 2006.

Although most of the largest poultry integrators such as Tyson and Pilgrim's Pride have signaled they are cutting production, USDA data showed 3 percent more eggs were placed in incubators last week for hatching into meat-producing chickens.

The numbers have been increasing 4 percent for the past two weeks before that, compared to year-ago figures.  

High chicken prices are stimulating production, analysts said. However, predictions are hard to justify at this stage; figures would have to rise for one more month before any firm conclusions can be made.

Still, chicken prices have been rising, a signal for producers to bump up production.

The wholesale price for chicken breasts, averaged US$1.85 per lb last week in the significant Georgia market, compared with US$1.70 a month earlier.

Supply growth still lags behind demand growth, and thus the rise in chicken prices, according to an analyst from JP Morgan.

Others are more skeptical about the figures showing the increases, since chicken production tended to be low last year, when major chicken companies started their cutbacks in production. Others felt that there would not be that many laying hens to bring about the increase.  

Still, the USDA seems to have affirmed an imminent rise in production as it revises its 2007 chicken production estimates from 35.19 billion pounds last month to 35.22 billion pounds currently. This is compared with 2006's 35.37 billion lbs.