Published on: 11:19AM Nov 07, 2008
Chicken producer profitability has been better in recent weeks compared to the summer. But the improvement did not occur because of production cutbacks or higher chicken prices. The improvement was due to the notable downturn in feed prices. That being said, chicken producer margins have waned during the past few weeks and are still historically poor. Not coincidentally, the boneless skinless chicken breast market is trending at its lowest levels in nearly 2 years and within $.07 of its lowest level this decade. Given the sharp downturn in chicken exports and leg quarter prices, chicken producers now more than even need higher chicken breast prices. The good news for producers is that higher chicken breast prices are likely coming. Why? First we remember that broiler eggs are set roughly 10 weeks before the chicken hatched from the egg comes to slaughter for the US chicken meat supply. And broiler egg sets are a solid indicator of pending chicken production growth or reduction. The current 6 week moving average for broiler egg sets is 7.6% less than last year and the lowest level for any week in 6 years. Thus we expect that chicken output during a large part of this winter could be 5% plus less than last year which likely will be the driver for higher chicken breast prices and improved chicken producer profitability.
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