Chicken Production Changes

Published on: 12:00PM Oct 10, 2008
The chart of the week is weekly chicken production.  Poor chicken producer margins that we have documented since last winter have finally led to a downturn in chicken production.  Chicken output for the week ending October 4th was 3.9% smaller than last year. In the 2 weeks before that, chicken production was roughly 2.4% less than 2007. So far the bullish impact on the chicken markets has been tepid. Chicken wing prices have moved roughly 5% higher in recent weeks. However, chicken breast and leg quarter prices have moved lower which is typical for this time of year. That being said, producers may have intensified plans to slow coming chicken output. Broiler egg sets for last week were a whopping 11% less than last year and the smallest for any week since October 2002. Broiler eggs are set about 10 weeks before the bird from that egg comes to slaughter for the US chicken supply and are a solid indicator of forthcoming chicken production expectations. How do we interpret the notable decline in broiler egg sets last week? Well, if these kind of reductions continue it could be very bullish for the chicken markets going forward.  But if the reductions temper to levels we experienced this summer than chicken producer margins may continue to suffer.  

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