July 19, 2011

US broiler producers face "challenging market"

A wide range of factors have created a challenging market for broiler producers in the US, from a 9.2% unemployment rate, to record-high breast meat supplies, to record-high feed costs.

The industry will decrease placements of broiler-type chicks placed by 1-2% in each of the coming quarters and into 2012, according to Eric Scholer, manager of Fort Wayne, Indiana-based Express Markets at the National Chicken Council's Marketing Seminar.

Broiler breeder slaughter has risen and will stay up as producers are killing earlier to reduce egg availability, and hatch supply flock will decline into 2012, he said.

In addition, 38% of the nation's corn supply will have gone to ethanol by year's end, stifling profitability.

Starting to come down, Scholer noted, are the high liveweights that have led to record boneless, skinless chicken breast supply, which rose 12% first quarter of 2011 on-year.

"That's had a major impact on our markets," he said, noting the recent average price of just US$1.10 per pound, the lowest July price ever seen by Express Markets, which keeps an actual invoice based on reports that chicken companies submit to the firm.

Seasonal demand will dip in the fall, but Scholer predicted the price to increase to US$1.45 in the summer of 2012.

Nonetheless, 2011 will not see the record losses of 2008, but "definitely significant financial strain" for broiler producers, Scholer said.