Worse decline in chick-set in 5 years welcomed by US producers

US chicken producers are making significant cutbacks in production, as evidenced by the 11-percent drop in eggs placed in incubators last week reported by the USDA. 

 

The drop to nearly 189 million eggs in the week ending Saturday, 4 October 2008 compared to the eggs set in the same week last October marked the lowest level in five years.

 

The news from the USDA's National Agriculture Statistics Service is expected as the nation's chicken producers have pledged to cut production in the wake of high input costs.

 

The industry has been plagued by soaring feed costs while an oversupply of meat on the market has kept prices down.

 

Top US chicken producers like Pilgrim's Pride Corp. have been pledging to cut production with fewer eggs  being incubated.

 

Pilgrim's Pride, which holds about a quarter of the market, said it was heartened by the news, and it could portend well for the industry in the coming months.

 

The company has completed an agreement with its lenders to provide liquidity during a thirty-day period ending Thursday, 28 October 2008 but tightened credit markets in the wake of the financial crisis puts into question where the company could source for more time after that deadline passes.

 

Richard Lobb, spokesman for the National Chicken Council, the industry's trade group, said production has been dropping, but the latest numbers indicate the pace of the scaling back is picking up.

 

He said the trend this summer towards reduced production has accelerated from 3 or 4 percent to 11 percent, a marked increase.

 

Analysts say the news was a positive development, but are waiting to see for the next two weeks if the trend would continue. If it does, the industry could be out of the red ink three months from now.

 

It takes three months from the time the eggs are placed in incubators until the chickens are processed.