July 28, 2010

USDA figures predict poultry output's upward trending

New federal data show that chicken production is on the rise, which also means prices are seen to fall, said analyst Akshay Jagdale, Monday (July 26).

The government released data on pullet placements and breeder flock-indicators of chicken supply. In June, 7.6 million pullets were placed, up 6% over June 2009, while the figure rose 4.5% for May from the same period last year.

Jagdale concluded that chicken production could increase more than 2% in 2011 and "this month's number was bearish for future chicken prices." The industry has been working through a bout of weak pricing brought on by oversupply. Producers had been cutting production to restore pricing.

He maintained "Hold" ratings on shares of Sanderson Farms Inc. and Tyson Foods Inc., saying chicken breast prices tend to peak in May just ahead of the prime summer grilling season. Shares of Tyson rose to US$17.95 in midday trading Monday (July 26), while shares of Sanderson Farms fell US$2.03, or 4%, to US$48.72.