CME: Significant Decline in Number of Broilers Coming to Market

US - The broiler production statistics released by USDA yesterday afternoon (Apr. 25) confirmed what the weekly data has been showing for some time, significant declines in the number of broilers coming to market and a sharp contraction in output, write Steve Meyer and Len Steiner.
calendar icon 26 April 2012
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Total broiler RTC (ready-to-cook) production for the month was 3.043 billion pounds, 8.1% lower than a year ago. Broiler slaughter in March was 699.1 million head, 8.5% lower than March 2011.

Implied dressed carcass bird weight for the month was 4.35 pounds, 0.5% higher than a year ago. The reduction in broiler supplies has had a significant impact on broiler prices, particularly the price of wings and dark meat. Wing prices, an item that last April was trading at around 80 cents per pound, current are quoted at about $1.80/lb.

The price of leg quarters, the benchmark dark meat item, currently is hovering at 53-54 cents per pound, compared to around 47-48 cents last year, a 13% increase.

Breast meat values continue to be somewhat subdued but the industry appears to no longer rely on white meat to carry the broiler carcass value. Despite out front corn prices trending lower, producers remain on the defensive, as evidenced by the continued year/year decline in the number of eggs set in incubators and chick placements (see chart).

One issue that needs to be considered when looking at the supply data for chicken is that through the first three months of the year, a discrepancy has formed between the statistics issued in the monthly report (which are the official data) and the weekly USDA supply data. The weekly data are considered estimates and are derived from a smaller sample than the monthly numbers and from time to time there are discrepancies between the two data sets.

This year the discrepancy appears to be quite large, with Q1 broiler slaughter based on the monthly statistics down 2.6% from last year (see chart). Weekly statistics for the same period show a 6.3% decline. We expect the gap between these two reports to narrow with time but for the moment, consider this when looking at the broiler supply numbers.

Further Reading

- You can view the full report by clicking here.
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