Despite industry shortages: more poultry meat on consumer platters

Increased prices to the farmer are being passed on to consumers, who recently began feeling the impact of $350 soybean meal, $10 soybeans and $5 a bushel corn. World-wide, the huge demand for energy and very heavy hedge pressure against inflation has pushed energy prices well above most expectations.

So, are we on a new plateau where prices will not fall but eventually go even higher? For this to happen, commercial and consumer demand must not slow down, which is contrary to the law of supply and demand. And that law has not been banished the ups and downs in the housing market provide a good example that it still exists.

Shortages abound. Oil industry is short of refining capacity. Ethanol is short of transportation facilities. Agriculture is short of productive acres to produce more crops that are needed by the world markets. Over time these shortages will be resolved and prices will bounce like ocean waves, up and down.

Broiler prices are no exception. Many of the market fluctuations were smoothed out when the industry went to cut-up and further processed. So the broiler market now follows the cost of production and marketing, which distinctly shows up this year. Super high fuel and grain prices have pushed all types of broiler values higher. These increases will not end until feed and fuel prices fall. We doubt if that can happen until the worldwide crop yield for 2008 is known.

Current prices should encourage a record number of acres to be planted, once or twice this year. Therefore, we pushed corn prices up a dollar a bushel in this report and boosted 12-city whole-broiler values by about 6 cents.

Consumers still are eating everything we produce that is not exported. Per capita meat supplies will exceed last years' well into early 2009. In the first quarter, it was likely up 3.2 percent but will ease slowly from that huge number as we approach year end. Consumer demand for wholesome foods will remain strong, in spite of economic and inflation pressure on most families. This is economics at work.

During 2007, young chicken head slaughtered was up 0.7 percent from 2006. Live weights were up 1.5 percent, but ready-to-cook (RTC) production was up only 1.8 percent. Yields must have fallen. RTC turkey meat produced in 2007 was 5 percent greater than in 2006.

Current data indicates that even more poultry meat will excite consumers' taste buds in 2008.