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Watching Chicken Production...Closely

Published on: 17:02PM Jul 09, 2009

The chart of the week is the 6 week moving average for broiler egg sets which is a solid indicator of forthcoming chicken production levels. From the time a broiler egg is set it takes roughly 10 weeks for the chick to be hatched, fed to an appropriate weight and then slaughtered for the chicken meat supply. So looking at the most recent broiler egg set data can give us an indication of chicken slaughter 10 weeks from now. As one can tell, the 6 week moving average for broiler egg sets has been trending well below prior year levels. However, last week’s broiler egg sets were just 3% less than a year ago which is the smallest decline since September. One week does not make a trend but it will be very interesting to see if chicken producers stay disciplined with their cutback plans during the rest of the summer and into the fall when broiler egg sets typically decline anyways. Margins for chicken producers have improved in recent months and feed prices have depreciated greatly of late. Some chicken producers may be tempted to lessen the intensity of the output slowdown in the coming weeks to gain market share. History suggests that they might which could be bearish for chicken prices this fall. Pullet placements and hatchery flock projections suggest they won’t and chicken production cutbacks will remain substantial.

broiler

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