Over the next 10 years, U.S. chicken exports are likely to increase 50 percent and reach 10 billion pounds worth $7 billion, according to Dr. Paul Aho, president of Poultry Perspectives.  Dr. Aho explained to the National Chicken Council’s Marketing Committee earlier this week that over the last few decades the U.S. poultry industry has enjoyed a trend of increasing export sales. That trend can be expected to continue, albeit somewhat erratically,  Aho said.

Chicken exports will increase despite some serious headwinds, including the recent increase in the cost of grain and slowing consumption increases in the developed world. High-priced grain plays into the strength of chicken production, which is superior in feed conversion compared with beef and pork. Of the total worldwide increase in meat and egg consumption growth projected over the next  ten years of 60 million metric tons, chicken can be expected to capture fully 30 million tons thanks to that feed conversion advantage. Trade in chicken meat can be expected to increase from the relatively low current level of just 12 percent of all chicken meat produced worldwide. Brazil and the United States will continue to dominate world trade in chicken meat. Contrary to popular belief, the United States has gained, not lost, competitiveness to Brazil over the last decade.

The July USDA “World Agricultural Supply and Demand Estimate” report confirmed the worrisome crop situation in the Corn Belt.  Although it is too early to know exactly what will happen, crops have suffered significant damage. The best case scenario now appears to be that the cost of grain for the poultry industry in crop year 2012-2013 will be equal to the record high prices of 2011-2012. The worst case scenario appears to be a repeat of 1988 when yields fell 25 percent below trend. In that case, a new record average of around $7.50 corn per bushel in Chicago can be expected. The next several days are critical to determining the fate of corn users, Aho added.

If the worst should happen, corn and soybean prices will rise significantly from where they are today, numerous ethanol plants will close temporarily, and the animal industry including poultry, cattle, and hogs will all be thinning herds and flocks. New bankruptcies are almost inevitable. On the bright side, the survivors can expect plummeting corn prices next year and, finally, an extended period of profitability, Aho concluded.  Dr. Aho’s presentation is available here.