May 15, 2013By Terrence O'Keefe
The boneless, skinless chicken breast meat price topped $2.00 per pound on May 13, 2013, in the United States. Dr. Paul Aho, consulting economist, Poultry Perspective, told the audience during the WATT Crop Forecast and Meat Supply and Price Outlook webinar that this somewhat unexpected jump in breast meat prices could hang around for a while. He said that the broiler industry has tried to ramp up production, but with a reduced breeder flock, all the way through the grandparent level, it will take time, perhaps into 2014, before U.S. chicken production increases significantly.
The wet weather in the Corn Belt has delayed planting, but it has also brought subsoil moisture levels up; this bodes well for the 2013 U.S. corn crop, according to Tim Brusnahan, vice president of consulting, Brock and Associates. Brusnahan said that the delay in corn planting will make it difficult for this to be an above-trend-line year for corn yield, but that a big enough harvest is expected to lower corn prices significantly below the prices experienced since the impact of last summer’s drought became evident.
All of this means that U.S. broiler producers may enter a period of record profitability, or at least the best profits that economist Dr. Paul Aho has seen in his 30 years of following the U.S. broiler industry. Aho says a good corn harvest, a shortage of broiler breeders and a smaller cattle herd could all lead to extremely good return for the U.S. broiler industry for the rest of 2013.
If the broiler industry is going to be profitable, and it can’t ramp up production by placing more chicks, look for slaughter weights to make a big jump, particularly for deboning birds. The increase in big bird deboning in the U.S., along with improved genetics and tunnel ventilated houses, have combined to allow for increased weights at slaughter for young chickens. The average live weight at slaughter for all young chickens was 5.37 pounds per bird in 2005, and this average increased to 5.47, 5.51 and 5.58 pounds per bird in 2006, 2007 and 2008, respectively, according to United States Department of Agriculture data. The dual effects of the Great Recession dampening demand and high grain prices running up feed costs combined to result in a much smaller increase in the average live weight in the U.S. for young chickens in 2009, just 0.01 pounds per bird.
Since the 5.59 pound average weight at slaughter in 2009, the live weight has increased by an average of 0.087 pounds per bird annually in 2010, 2011 and 2012. For the first three months of 2013, the average live weight at slaughter for young chickens stands approximately 5.90 pounds. Even at wholesale prices well over $2.00 per pound, boneless, skinless breast meat is still a real bargain compared to beef, so demand shouldn’t be dampened too much by the expected higher prices.
This could be the year that the average weight for young chickens in the U.S. goes over 6 pounds per bird.
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