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Broiler Industry Contracting

by 5m Editor
16 December 2008, at 11:50pm

US - LMIC forecasts for broiler production have been lowered for the fourth quarter of 2008 with further year-to-year reductions forecast for 2009.

Livestock Marketing Information Center (LIMC) reports that the US poultry industry is clearly in a contraction phase at this point in time as higher feed costs, an over-supply of broiler meat as well as economic slowdowns in the domestic and foreign markets have pressured poultry prices leaving the industry struggling to maintain any type of profitability. In fact, the recent filing for Chapter 11 bankruptcy by Pilgrim's Pride, a major player in the industry further stresses the current situation in the poultry sector.

In response, the broiler industry has already initiated cutbacks in the hatchery flock and beginning to mitigate recent large year-to-year gains in bird weights. These actions have been evident in the weekly eggs set and chicks placed data since late summer as well as recent broiler slaughter numbers. Since late April, the number weekly eggs set by producers have been consistently below a year ago with the largest year-to-year declines posted in the fourth quarter, in fact during October and November egg sets were down 8 percent and more than 3 per cent lower than the 2002-2006 average. At the same time, the number of chicks placed is down more than 7 per cent thus far this quarter with further below year ago numbers expected given recent declines in egg sets.

According to USDA-NASS, US broiler production for October was below a year ago due to a smaller number of birds, as the number of slaughter days was equal to 2007. According to the report, in October US broiler production (ready-to-cook basis) was down 3 per cent from 2007 but remained about 8 per cent over the 2001-2006 average. Based on preliminary weekly data, US broiler production for November should be 5 to 6 percent lower than 2007. That trend will continue in December and then well into 2009.

Given the current situation, LMIC forecasts for broiler production have been lowered, for the fourth quarter of 2008 with further year-to-year reductions forecast for 2009. For the first quarter of 2009, US broiler production is currently forecast to decline by fully 6 per cent compared to 2008, which would make output the smallest since 2006.