Source:  MEATINGPLACE.COM, 10/7/10

Top industry executives attending the annual meeting of the National Chicken Council in Washington, D.C., predicted more growth ahead for the poultry industry in 2011, but feed cost volatility is causing some unease.

Poultry production companies are performing very well, lofty corn prices are moderating and the export outlook is positive despite back-and-forth this past year with Russia and China, they said.

“Unless those grain prices get extremely high, we (poultry) will continue to grow,” said Mike Roberts, president of Perdue Farms’ Food Products Division.

Jerry Lane, president of Claxton Poultry Farms, expressed concern about the potential for rationing of feed sources over the next several years, including the amount of corn used for ethanol production.

Extreme market volatility will be the new norm for us,” Lane said. “We have to find a better strategy for sourcing our feed grains.”

Despite some pricing pressure, chicken volume movement in the foodservice channel will be a bright spot in the year ahead, executives said.

“Given the condition of the economy, there has been some downward pressure and value-featuring on the part of foodservice customers and that puts pressure on our pricing to them, but in total (2011) will be a positive year for chicken in foodservice,” said Pilgrim’s Pride Chief Executive Don Jackson.
Tyson Foods Inc. President Donnie Smith was also upbeat on the prospects for the foodservice segment.

“Looking ahead into '11, it’s the first year in a long time we can see some growth,” Smith said. “I’m kind of on the 1 percent end of that -- and we’re talking same-store sales, traffic-driven sales -- which, for where we’ve been in the last three years, is a huge win.”

Stephens Inc. analyst Farha Aslam said there was little talk of production cuts at the NCC meeting.
“Rather the chicken companies are steadily increasing production in anticipation of chicken garnering demand due to tight beef and pork supplies,” Aslam wrote in a report to clients.

The weak dollar is expected to bolster exports. Russia is expected to import 200,000 to 250,000 metric tons of chicken this year, and there is talk that the U.S. quota for next year could be as high as 350,000 to 450,000 metric tons, she said. Russia usually announces its quota in January or February.

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