The short supply of breeder birds is hitting the chicken industry hard, particularly since demand for chicken has picked up dramatically as a result of the hike in beef and pork prices this year. Some fertility issues in breeder stock is also having an impact on the industry, which is having a difficult time keeping up with demand. Industry executives have estimated it could be spring of 2015 before the industry will be able to produce a material increase in chicken products in the market, according to a Reuters report.
The difficulties began with feed prices in 2011, when corn was $8 a bushel and the U.S. economy was sluggish, causing chicken processing companies to cut back on production and breeders to reduce their flocks. While grain prices have now fallen and demand for chicken is on the rise, U.S. poultry breeders are still rebuilding their flocks.
Without sufficient breeder stock in the pipeline, it can take 18 months to rebuild breeder stock; 25 weeks for breeder stock grandparents to mature, another 25 weeks for the breeder parents to mature, then an additional 25 weeks for the breeders sold to growers to mature and become productive, according to Mike Cockrell, chief financial officer at Sanderson Farms.
The U.S. Agriculture Department last month reduced its U.S. chicken production forecast for 2014, predicting only a 1 percent increase in poundage from 2013, well below the long-run annual average of 4 percent. The agency predicted 2015 production would be up only 2.6 percent. The limited growth in output is occurring as foreign demand for U.S. chicken is on the rise. U.S. exports of poultry for meat are projected to reach 3.4 million tons in 2014, up from 3.1 million last year.
A lack of accommodation for newly born breeder birds after the 2011 cutback is slowing the rebuilding process, said economist Paul Aho. Constrained production has helped push chicken prices in Georgia, a key market, to record highs, analysts said. Boneless skinless breasts there recently were priced at $2.21 a pound, up 4.5 percent from a year earlier. The production shortfall is adding 50 cents per pound to the cost of chicken breasts, which sell for about $2.02 per pound in the northeastern United States, Aho said.
The high prices would normally spur chicken companies to increase production more than 5 percent from the prior year, had more breeder birds been available, said Bill Roenigk, former NCC senior vice president and chief economist. “Right now they’re scrambling to really put any egg in the incubator that can be in the incubator, ” he said.
Chicken producers also are keeping their hens laying eggs longer than usual to compensate for the lack of new birds – as many as five weeks beyond their typical cut-off age of 65 weeks. Eggs from older hens tend to hatch at a lower rate. JP Morgan in March said the number of eggs per laying hen fell below the 10-year average for the first time since 2010. “
