US chicken industry faces competition from cheap pork

US chicken producers can expect more competition from cheaper pork products in the wake of the AH1N1 outbreak, according to the head of one of the country's largest poultry producers.

Joe Sanderson, chief executive of Sanderson Farms Inc. (SAFM), also said there was no sign of improved demand from the food service sector, which is in addition to a year of falling chicken sales to the casual dining sector.

Sanderson, speaking at an investor conference, said there haven't been any signs of an impact on the meat industry from the outbreak of the AH1N1 virus.

"[But] there's going to be a lot of cheap pork for Memorial Day," he added.

US chicken producers have cut production for the first time in more than a generation to counter soft demand and weak pricing, while repairing balance sheets hit by sour derivatives contracts on poultry feed.

The weak market drove some producers into bankruptcy protection, and Sanderson said the reduced output has helped push prices for chicken destined for supermarkets and fast-food outlets above their five-year average.

The food service sector remains the weak link, however, with no prospect of improved demand until the national employment outlook recovers.