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The coming year will be a profitable one for U.S. broiler producers as the economy continues its recovery from recession, according to a panel of economists who spoke at the Poultry Market Intelligence Forum held during the 2010 International Poultry Expo in Atlanta, Ga. The forum was a joint effort of U.S. Poultry & Egg Association and the National Poultry & Food Distributors Association.
Paul Aho of Poultry Perspective said that he expects U.S. bulk leg quarter prices will be lower in the first half of 2010 than they were in the same period in 2009. In the second half of the year, he expects leg quarter prices to exceed year-before levels and end at around $0.10 per pound higher than at the close of 2009. He said that trade difficulties with Russia will create a drag on leg quarters early in 2009, but he expects some resolution to the dispute and that Russia will buy U.S. leg quarters in 2010. Boneless skinless breast meat prices should be higher in the U.S. throughout 2010 than in 2009, according to Aho.
Mike Donohue of Agri Stats said that “2010 should be a good year for the industry” in terms of profitability.
He said that live performance in 2009 was outstanding and credited a number of factors for the long upward trend, including improvements in bird genetics and in on-farm equipment and housing. Average livability for the U.S. industry was more than 96% in 2009, up 1.5% from 20 years ago. Improved flock health has also resulted in a roughly two-thirds reduction in the rate of field condemnations at the processing plant over the same period.
Donohue explained that some of 2009’s outstanding live broiler performance can be attributed to increased downtime between broiler flocks, which was a result of production cutbacks.
The range between the best and poorest performing companies in terms of feed cost per live pound of broiler has increased from around $0.05 per pound in 2005 to $0.11 per pound in 2009. Donohue said that this increased spread results from the costs of grain purchasing positions, logistics of moving grain and differences in bird performance.
Subsidized corn-based ethanol production in the U.S. continues to cost the U.S. broiler, turkey and egg industries billions of dollars, according to Donohue. Based on Agri Stats data, he estimated that U.S. poultry producers have spent $18.5 billion more for corn over the last two-and-a-half years than they would have in the absence of ethanol mandates, subsidies and tariffs.