Source: Dani Friedland, MEATINGPLACE.COM, 8/4/10

Chicken prices should remain high despite increased output, according to a new survey of economic analysts.

The eight analysts who forecast poultry production also expect broiler production to continue to grow through the rest of 2010 and into early 2011, with higher prices for 12-city broilers in the first half of 2011 coming down to meet 2010 figures for the second half of 2011.

There’s potential for the strong chicken market to help other proteins, as well. “I think the chicken price will be very critical to the performance of pork and hog markets next year,” Steve Meyer of Paragon Economics wrote while analyzing the survey in National Hog Farmer. “While beef will be quite supportive to the entire meat/poultry complex, pork and chicken are much closer competitors than they once were. Strong chicken prices are very helpful to wholesale pork prices, and this survey says the support should be good next year.”

Beef supplies expected to decline
The 10 analysts who responded to questions about beef said production will likely stay below 2010 levels throughout 2011, with the largest year-over-year drop forecast for fall 2010. The surveyed analysts pegged the annual decline for both 2010 and 2011 at 1.1 percent.

The predicted lower supply should push prices for fed steer marginally higher in 2011, with annual price estimates varying between $93 and $97 per hundredweight. The economists estimate that the average 2010 price will be $93.01 per hundredweight.

Pork supply growth projected
Nine of the surveyed analysts addressed the pork sector, predicting 0.9 percent growth in total pork production this year. Meyer expects to see a slight increase in output in the first quarter of 2011.

Despite that growth, total 2010 production is expected to be 3.3 percent lower than 2009 figures, and 2011 output should also be below 2009 levels.

When it comes to hog prices, analysts predict pricing will remain relatively constant through 2011, dropping only 1.2 percent below 2010’s average to $72.73 per hundredweight.

“While not stated in survey responses, the relatively small price decline indicates that analysts, on average, expect hog demand to be strong in 2011,” Meyer wrote.

University of Missouri Extension Economist Ron Plain and David Miller of the Iowa Farm Bureau conducted the survey, which was released last week at the Agricultural and Applied Economics Association’s annual meeting. They polled extension marketing economists who are members of the AAEA’s Extension Section.
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