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Historically Small Chicken Supply

Published on: 17:08PM Dec 03, 2009

The chart of the week is six week moving average for broiler egg sets.  Once a broiler egg is set it takes roughly ten weeks for a chick to be hatched, fed to an appropriate weight and then brought to slaughter for the US chicken supply.  Thus, broiler egg set numbers are a good indication of pending chicken output.  As one can tell from the chart, the six week moving average made a six year low last month which suggests that chicken output in the pending weeks will be historically light.  This may be one of the principal reasons we have experienced chicken breast market inflation as of late.  Going forward, lighter chicken output is anticipated to influence many of the chicken markets higher through next month.  However, broiler egg sets have seasonally surged upward during the last three weeks which should lead to expanded chicken output later this winter.  The chicken breast market could respond negatively to expanding chicken output unless demand can expand as well.  That being said, I think it’s important to notice that the upward trend in broiler egg sets in the chart, that started well before 2003, basically ended in 2007.  And given the reduction in the hatchery flock broiler egg sets and chicken output could be tempered for the foreseeable future which, overall, is bullish for the chicken markets.

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