Pilgrim's Pride to boost production by 2012

Pilgrim's Pride stated this week that they will be increasing domestic production by the beginning of 2012.

The announcement sparked concerns among US meat market participants regarding oversupply of poultry.

Back in December 2008, Pilgrim's Pride filed for Chapter 11 bankruptcy and cut production volumes so as to address short-term operational and liquidity challenges. Many of these issues stemmed from high feed ingredient costs, an oversupply of chicken, weak market pricing and softening demand.

For the first three months of 2010, US poultry production increased by 1%, to 4.57 million tonnes cwt. Despite the slight rise in supply and US poultry exports being down on-year, wholesale broiler prices averaged 4% higher than the same time last year.

The latest USDA World Agricultural Demand and Estimates report forecasts US poultry production to increase 2% this year to 19.03 million tonnes cwt as against 2009. Further production increases are also expected in 2011, with volumes 3% up against 2010 at 19.56 million tonnes cwt.

The prospect of increased poultry supplies by 2011 may be troublesome for prices across all meat categories, including beef and pork. US poultry exports are also forecasted to increase 6% in 2011.