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Poultry industry set to rebound in 2010

The coming year will be a profitable one for US broiler producers, according to a panel of economists who spoke at the 2010 Poultry Market Intelligence Forum held during the International Poultry Expo.

The Forum is a joint effort of US Poultry & Egg Association and the National Poultry & Food Distributors Association.

Dr. Paul Aho, Poultry Perspective, said that he expects US 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 will exceed year before levels and will end the year around $0.10 per pound higher than at the end 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 US leg quarters in 2010.

Boneless skinless breast meat prices should be higher in the US throughout 2010 than in 2009, according to Aho.

Mike Donohue, Agri Stats, said that because of higher grain and energy prices, live production performance is more important than it has been in 20 years. Fortunately, 2009 was an outstanding year for the US industry in terms of live performance.

Donohue credited a number of factors for the long-term trend of improvement, including improvements in bird genetics and in on-farm equipment and housing. Average livability for the industry was over 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 from the levels of 20 years ago. Donohue also 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 US continues to cost the US broiler, turkey and egg industries billions of dollars, according to Donohue. Over the last 2.5 years he estimated that based on Agri Stats data, US poultry producers have spent $18.5 bln more for corn because of the ethanol mandates, subsidies and tariffs.

Commenting on projected profitability of the US poultry industry, Donohue said, “2010 should be a good year for the industry.”

US Poultry & Egg Association

Natalie Berkhout

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