Source: Rita Jane Gabbett, MEATINGPLACE, 10/17/14


The chicken cutout margin rebounded in September from the August decline and likely will remain above historical averages for the foreseeable future, BMO Capital Markets analyst Kenneth Zaslow predicted.

Zaslow noted September chicken cutout margins increased more than 1 percent from last month’s nearly 3 percent decline as lower feed costs and higher wing prices offset lower leg prices. He predicted this trend would continue even in the face of a likely smaller-than-normal fall cutback in production.

“We expect 2015 broiler production to increase 3 percent,” he wrote in a recent report, well above the slightly higher than 1 percent increase predicted at a recent Express Markets Inc. conference. He noted the chicken industry’s push for tangibly higher year-over-year chicken production during the fall cutback likely would pressure already seasonally weaker breast and leg prices.

Supported by the fall sports season, wing prices should remain seasonally strong for the next several months, Zaslow predicted.
Meanwhile, turkey cutout values in September declined from August’s near-record levels but remained 58 percent above year-ago levels as feed costs declined 12 percent year over year.

“Turkey margins should continue to far outpace 2013, but likely will subsequently decline as turkey production expansion has begun,” Zaslow predicted.

For more stories, go to www.meatingplace.com.