Source: Lisa M. Keefe, MEATINGPLACE, 2/5/15

Increases in eggs set and predictions of a bumper flock of broilers toward the end of 2015 and into 2016 may be overblown: Many of pullets set in the U.S. appear to ultimately be headed to Mexico to help that country recover from its avian influenza issues, according to analyst Brett Hundley with BB&T Capital Markets.

In a report to investors, he notes that USDA data suggested a broiler layer flock “that could reach increases of 4 percent year-over-year by summer,” undercutting profitability gains among poultry processors.

“However, we have recently heard from multiple industry contacts that Mexico-based Bachoco has been using its US subsidiary, OK Foods, to set incrementally more pullets in the US for exporting of hatching eggs back to [Mexico],” he wrote.

“Our check of the data shows that this is indeed happening, and that US chicken supply growth in 2015 could be less than expected, as a result.”

From January to August 2014, for example, U.S. hatching egg exports to Mexico averaged 1.7 million dozen per month; however, they stepped up to an average level of 3.6 million dozen from September to November of last year.

If the movement of hatching eggs to Mexico continues for a year’s time, Hundley estimates that it could cut the growth expectations in half.

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