US poultry industry riding wave of optimism
With poultry supply and demand in balance and cheap corn available for feed ingredients, U.S. poultry producers are profitable and expanding production.
At the risk of sounding like a broken record, the U.S. poultry industry continued a lengthy streak of optimism with the Poultry Confidence Index (PCI) tracking scores remaining well above their normative baseline for three consecutive years. Furthermore, several metrics improved slightly versus the second quarter of 2017.
Although a broken record is often considered an annoying repetition, in this case I just don’t grow weary of repeating myself. All is well. Good. Great. Superb.
The Overall Index now stands at 140.1 for the third quarter of 2017, up from 133.8 the previous quarter (100-point baseline = 1996). The Present Situation Index held steady at 170.9 (vs 171.0 last quarter), while the Expectations Index rose to 119.5 from 109.0.
For the third quarter of 2017, the Overall Index and Expectations Index both rose, while the Present Situation Index held steady.
Concerns in second-quarter 2017 about a potential decrease in profits due to higher production and increased competition dampened considerably. Expert predictions of strong fundamentals have proven true.
Poultry producers expanding output
High-profile expansions of poultry production continue to drive enthusiasm.
In addition to poultry production expansions, respondents credited first and foremost a rising general U.S. economy, but also cited the absence of avian influenza. Other favorable factors included the availability of “cheap corn” and the fact that product demand is in fairly close alignment with consumer demand.
The most-recent Consumer Confidence Index (CCI) also showed improvement with the general economy playing a key role. Analysis from the CCI included this: “Consumers’ assessment of current conditions remained at a 16-year high, and their expectations for the short-term outlook improved somewhat after cooling last month...overall, consumers foresee the current economic expansion continuing well into the second half of the year.”
Confidence remains high as respondents cited an improving general economy.
Some poultry industry respondents in the PCI remain concerned with the potentially negative impact of overproduction, but there were far fewer comments related to this issue during this current third quarter than the previous one.
Respondents credited poultry production expansions, the absence of avian influenza and the availability of "cheap corn" among reasons for confidence in the broiler and turkey industries.
Summary: The U.S. poultry industry is riding a wave of optimism. Given current market conditions and expert projections, it appears our broken record could keep repeating itself into the near future.