December 19, 2006

 

US broiler prices likely to improve as stocks and production scale down

 

 

The combination of low broiler product prices in second-half 2006 and sharply rising feed costs is expected to result in a slight decline in broiler production during first-half 2007, to about 18.0 billion pounds.

 

Broiler products in cold storage at the end of third-quarter 2006 were revised downward to 699 million pounds, a decrease of 10 percent from the end of the second quarter and 7 percent lower than at the end of the third quarter 2005.

 

Broiler meat production totaled 3.18 billion pounds in October, up only 4.3 percent from the previous year even with an additional slaughter day in 2006, analysts said.

 

Over the first 10 months of 2006, broiler production has averaged 2.1 percent higher than the previous year and has totaled 30.1 billion pounds.

 

The increased meat production in October was the result of both an increase in the number of birds slaughtered and an increase in the average live weight of birds at slaughter.

 

So far in 2006, the average weight at slaughter for broilers has been 5.46 pounds 2.1 percent higher than in the same period in 2005.

 

Despite the growth in average weights, the drop in chick placements would probably result in little change in the amount of broiler meat produced in fourth-quarter 2006 and into first-quarter 2007.

 

The number of chicks placed for growout in November has remained lower, averaging 2.6 percent below the same period in 2005.

 

Stocks of many broiler products have been declining over the last several months.

 

Stocks of leg quarters reached 172 million pounds at the end of January, but by the end of October they had fallen to 67 million pounds, almost 50 percent lower than the previous year.

 

With little or no growth in broiler meat production for fourth-quarter 2006, the estimate for ending stocks for 2006 has been reduced 50 million pounds to 700 million.

 

For almost all of 2006, prices for broiler products have been below their year-earlier levels. But over the next few months, with little or no growth in production and lower stocks, prices are expects to climb.

 

Prices for a number of broiler products are expected to move above their year-earlier levels in December.

 

Over the 12 week period ending November 25, there had been strong growth in large broiler slaughter, which raised the average live weight for broilers at slaughter, placing downward pressure on prices. However, over the last 4 weeks, this growth has slowed significantly, as processors attempt to slow production increases.