Source: MEATINGPLACE, 11/5/15


Chicken supplies may not be as burdensome in 2016 as some industry watchers fear, in part because producers are choosing to break eggs due to deteriorating margins, according to BB&T Capital Markets analyst Heather Jones.

The analyst said she is aware of at least five sizeable producers that are breaking rather than placing eggs, and the trend may continue if demand does not improve. Trade bans on U.S. chicken exports following the spring avian influenza outbreaks have resulted in an oversupply of chicken, especially dark meat, on the domestic market.

Egg breakage explains why there has been a gap between egg sets and the size of the breeder flock for more than two months, Jones said.

Last month, the National Chicken Council (NCC), Grocery Manufacturers Association and the Association for Dressings and Sauces petitioned the Food and Drug Administration to modify a policy that forces broiler chicken producers to destroy shell eggs rather than allow the surplus eggs to be pasteurized and used in egg products.

NCC said the nation’s layer hen population has decreased by more than 25 percent due to culling from the avian flu outbreak, causing price spikes and supply disruptions in the shell egg and egg product industries. Pasteurized eggs are being imported from the Netherlands and Canada to meet demand.

Jones estimated the U.S. breeder flock will be up less than 1 percent for full-year 2016, and total pounds produced could increase by 2.5 to 3 percent. She expects either an improved export situation or continued egg breakage to offset higher pullet placements.

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