The latest “Broiler Hatchery” report from USDA, reported a dramatic reduction in egg sets for the week ending October 20 showing that hatcheries placed about 177.1 million eggs in incubators, 3.5 percent less than last year’s already low numbers. This is the smallest number of broiler egg sets since March 12, 1994, 18 years ago. As expected, broiler producers remain in a contraction mode, according to the “Daily Livestock Report” (DLR). USDA pointed out that this data is preliminary and it could be revised, either up or down, in the next two weeks as survey data is further analyzed.
How deep producers cut production will depend in part on feed costs but also on the price of cuts, the DLR added. Corn and soybean meal prices have pulled back some in recent weeks but cash prices remains in the $7.80-per-bushel range for corn and around $480 per ton for soybean meal. These feed prices are up 21 percent and 57 percent, respectively, compared to last year. Futures are indicating corn prices in the $7.50 range through next summer and meal above $430 per ton. Record high corn prices and the risk of further escalation in the price of soybean meal will likely keep broiler producers on the defensive, the DLR noted.
Producers are also struggling with prices for parts, and one of the most problematic areas has been the price of broiler breast meat. The last USDA numbers had wings priced at around $1.89 per pound while boneless-skinless chicken breasts were quoted at around $1.30 per pound. Leg quarter prices are about 36-percent higher when compared to 2005 prices but they have been stagnant in the last 12 months. Output price gains are continuing to not keep up with increases in input costs, hence the continued production declines, the DLR concluded.
