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CME: Chicken Prices Following Seasonal Patterns

06 May 2016

US - Wholesale chicken parts prices are following fairly normal seasonal patterns, but generally at lower levels, write Steve Meyer and Len Steiner.

The normal seasonality indicates good demand for chicken products. Prices have seen some relative strength since the start of the year.

Wholesale chicken breast prices were at 118.02 cents per pound as of the end of April.

This is almost 15 cents above where we started the year, but still 40 cents below year ago and the five year average.

Leg and leg quarter prices have experienced a recent price rally, more so than breast meat. Leg quarter prices increased 13 cents per pound since depressed price levels at the start of the year.

This could potentially indicate some faster recovery in the export markets than initially anticipated.

If this price rally has not come from export improvement (USDA-ERS trade numbers out soon) then this price support would have mainly come from retail movement as leg quarters get comparatively more play there than in foodservice.

Although there has been some wholesale price improvement since the start of the year, it seems to have fallen short of what industry was expecting.

In the face of cheaper pork and increased broiler supply, broiler and chicken meat price levels have had to stay lower to compete with pork prices and clear the broiler meat supply on the market.

This is especially apparent at the retail level, as reported in monthly USDA-ERS average retail prices.

Since the start of the year, retail composite broiler prices have decreased 2 per cent and are tracking 5 per cent below year ago levels (most recent data for March).

Seasonally, the composite broiler retail price stays flat from January to March.

Retail prices do lag from live animal and wholesale market movements and these reported average retail prices tend to amplify that lag, but there is no denying that pork and chicken are vying for the consumer’s dollar at the meat case.

The disappointment in strength of wholesale chicken parts prices, from the processor’s view, seems to now be impacting broiler supply plans for the second half of the year.

USDA-NASS weekly Broiler Hatchery report shows eggs set the last week of April were 1 per cent below year ago levels.

If this trend continues, the supply reduction moving into the rest of the year could provide some price support at the wholesale level.

The Livestock Marketing Information Center’s current forecasts for 2016 broiler production show a 4-5 per cent increase year-over-year.

If poultry processors continue to show restraint from the supply side, the production increase for 2016 could be closer to 2-3 per cent, year-over-year.

Daily Livestock Report - Copyright © 2008 CME. All rights reserved.

ThePoultrySite News Desk

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