Source:  Tom Johnston, MEATINGPLACE, 7/19/11

Chicken processors have a sense of humor, even if the market doesn’t present all that much to laugh about.

Having painted a bleak outlook here at the National Chicken Council’s Marketing Seminar, Eric Scholer, manager of Fort Wayne, Ind.-based Express Markets, summed it all up by saying, “For broiler producers it’s not looking that great,” promptly adding, “Any questions?”

Attendees simply laughed, which was a relief for Scholer, who had asked at the outset that they not “kill the messenger."

A wide range of factors, Scholer said, have created a highly challenging market for broiler producers, from a 9.2 percent unemployment rate to record-high breast meat supplies to record-high feed costs as corn increasingly is converted to ethanol.

The industry will decrease placements of broiler-type chicks placed by 1 to 2 percent in each of the coming quarters and into 2012.

Meanwhile, broiler breeder slaughter has risen and will stay up as producers are killing earlier to reduce egg availability, and hatch supply flock will decline into 2012, he said.

Starting to come down, Scholer noted, are the high liveweights that have led to record boneless, skinless chicken breast supply, which rose 12 percent first quarter of 2011 year on year.

“That’s had a major impact on our markets,” he said, noting today’s average price of just $1.10 per pound, the lowest July price ever seen by Express Markets, which keeps an actual invoice based on reports that chicken companies submit to the firm.

Seasonal demand will dip in the fall, but Scholer predicted the price to increase to $1.45 in the summer of 2012.

In the meantime, 38 percent of the nation’s corn supply will have gone to ethanol by year’s end, stifling profitability.

Nonetheless, 2011 will not see the record losses of 2008, but “definitely significant financial strain” for broiler producers, Scholer said.

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