Summary
The result is that chicken production during the last week of August was the largest for any week not following a shortened holiday week in nearly a year.
Analysis
Chicken producers have pretty much kept chicken output curbed throughout 2009 thus far. However, chicken production has edged upward since July. Broiler egg set numbers during the spring and early summer, which give us an indication of pending chicken production levels, did trend ever so slightly upward from earlier in the year which is partially behind the increase in chicken production. But the biggest factor may be the relatively cool temperatures experienced in recent months throughout most of the country which has limited bird death loss. The result is that chicken production during the last week of August was the largest for any week not following a shortened holiday week in nearly a year. How have the markets reacted? The chicken wing and leg quarter markets have held their own but the breast markets have been week. So much so that the chicken breast markets moved counter seasonally downward in August. As of September 9th, the daily chicken breast index was in the low $1.20’s per pound, roughly $.30 off its high made in early July. The general trend for the chicken breast markets is downward during the fall. If pending chicken production is not curbed some then any imminent chicken breast declines could be steeper than the industry is anticipating. Not good news for chicken producer margins.
David Maloni consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
