US poultry takes the lead in the meat markets

Red meat producers suffer disadvantage to poultry in adapting to market demands.

 

According to market analysts, a good part of that has to do with the physiology of the birds versus the cattle and hogs that produce beef and pork. Simply put, chicken producers can gear up faster than pork or beef producers as demand rises with economic growth.

Production of all three proteins is down from a year ago as producers pare the numbers of cattle, hogs and chickens in US herds and flocks to better match domestic and export demand. The US Department of Agriculture figures show annual beef production through the week ended Oct. 31 to be down 3.2 percent to 21.511 billion pounds from 22.225 billion in the same period a year ago.

 

The USDA shows year-to-date pork production to be down 1.9 percent at 18.943 billion pounds from 19.302 billion. Year-to-date chicken production is down 4.8 percent at 26.682 billion pounds from 28.041 billion a year ago.

 

USDA data on the number of chicks placed on feed in the growing houses point to a 5 percent to 6 percent decline in broiler slaughter through early December, but Kevin Bost, president of Procurement Strategies Inc., said in his weekly newsletter "Meat Markets Under A Microscope," that data on chick placements "has significantly overestimated production for the past three weeks."

 

Bost said he expected the chicken breast market to follow its seasonal pattern in the short term, meaning prices could be flat to weak for the next two to three weeks and then turn higher just before Christmas.

 

Eric Scholer, market analyst at EMI Analytics Inc., said he thought chicken breast prices at the wholesale level were stable and could remain stable through the end of the year at about US$1.08 to US$1.10 a pound. January prices could rise to about US$1.20, though, since further production cuts already are in the works.

 

Bost said boneless breast prices reached US$1.40 near the end of January, "and I don't know of a good reason why the market could not do at least that well this time around."

 

Continued production cuts for beef and pork also could provide less competition for chicken in 2010, although there will be times when supplies of either red meat overrun wholesale chicken markets, Scholer said.

 

For 2010, with per/capita beef availability down 2 percent from 2009 and pork down 1.5 percent, Scholer sees less competition for chicken. If pork exports remain stable or grow as the global economy improves, pork's 1.5 percent reduction could be magnified.

 

Should meat demand rise at any time, chicken producers could have more product on the retail shelves in about 12 to 14 weeks, an analyst said. This compares with about 18 months for pork and three to four years for beef producers.

 

Chickens can reproduce and reach maturity in that time, according to analysts, whereas the time necessary to increase the overall herd size and grow the offspring to market weights is much longer for hogs and cattle.

 

On the other hand, this week's cattle slaughter was estimated at 629,000 head, compared with 651,000 a week ago and 624,000 a year ago. Year-to-date cattle slaughter is down 4.2 percent from a year ago.

 

The week's hog slaughter estimate was 2.302 million head, compared with 2.294 million a week ago and 2.305 million a year ago. For the year, hog slaughter is off 2.9 percent.

 

The USDA estimated total beef, pork and lamb production for the week at 971.6 million pounds. Last week's output was 988.6 million pounds, and the year-ago figure was 958.5 million pounds. Year-to-date combined meat output is down 2.5 percent.

 

Broiler/fryer slaughter for the week was estimated at 161.105 million head, compared with 160.963 million a week ago and 162.059 million a year ago.