Source: MEATINGPLACE, 9/18/15

The chicken industry has produced 7 percent more ready-to-cook meat this year than a year ago, but the market is absorbing the increased production.

That’s the conclusion of Stephens Inc. analyst Farha Aslam, who finds retail demand for broilers is still strong due to the relative price of chicken to other proteins, wings are more popular than ever and not just in football season, and recovering export markets should support breast and leg quarter prices.

“We are constructive on the chicken sector given the crop looks ample, so grain prices should remain benign, improving U.S. economic conditions should support domestic demand, and production remains rational given egg sets have pulled back in recent weeks,” Aslam wrote this week in a note to clients.

Export markets remain a challenge after more than 40 countries banned U.S. chicken due to the spring avian influenza outbreak, Aslam said. Total exports are down about 10 percent from a year ago.

Yet, South Korea recently reopened its borders to U.S. chicken given the lack of new avian influenza cases.
“Given U.S. chicken is already banned from Russia and China, exports are unlikely to get worse and could get better,” she added.

Prices for breast meat are not great but are expected to remain stable into 2016, weakening a little in the first half of the year due to the extra dark meat in the market but improving in the second half as export markets recover, Aslam said.

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