US poultry industry to have solid year of profitability
Strong exports, improved risk-sharing offsetting weak demand
The U.S. poultry industry is expected to have a solid year of profitability, with cold storage numbers, strong exports, improved risk-sharing and low pullet placements offsetting weak demand at the foodservice level, according to Rabobank International in its Poultry Quarterly report.
March cold storage data offered an encouraging sign for future U.S. chicken prices and breast meat in particular, said Rabobank. Broiler meat in cold storage declined both sequentially and year on year. Boneless, skinless breast meat in cold storage fell to 13 percent below year-ago levels. It had been running at 20 percent to 50 percent above year-ago levels for most of 2011. Breast meat prices remain weaker than most producers would hope.
The U.S. exported a record volume of broiler meat in 2011, according to the report, and sales rose 17.8 percent in value to US$4.5 billion. In general, reduced exports to Russia have been more than offset with exports to Asia, Africa and the Middle East. U.S. costs of production are some of the lowest in the world, especially in a weak U.S. dollar environment. Prospects for continued strength in exports remain good.
U.S. chicken companies have made significant progress in improving risk management, said Rabobank. In 2011, the industry's losses were magnified by long-term fixed price contracts that were not hedged. Many of these contracts have expired and have been replaced with deals that are linked to feed prices, allowing chicken companies to share risk with their customers.