Source: MEATINGPLACE, 10/21/16

Analysts attempting to gauge the impact of increased chicken production on pricing in 2017 have mixed views, with exports of competing beef and pork seen as a critical factor.

Wall Street analyst Farha Aslam of Stephens Inc. summed up the outlook from Urner Barry as bearish on chicken prices after hosting a discussion with analysts from the protein market data publisher. Urner Barry’s view reflects increased supplies and potential competition from beef and pork, Aslam said in a report to her clients.

Aslam’s own forecast is less pessimistic.
“Exports of U.S. beef, pork and chicken are accelerating and will be a key factor on pricing,” she wrote. “We anticipate chicken prices will likely be flat year over year in 2017 compared to 2016 as improved dark meat prices offset lower white meat prices.”

Chicken supply
Aslam predicted chicken production would rise about 2 percent in 2017, driven by an increase in head.

Pullet placements are up 5.1 percent year to date, suggesting greater production capacity. But placements have moderated in recent months, and part of the pullet increase reflects the desire to bring down the age of the flock, conversion to a breed that lays fewer eggs, and increased fertile egg production for the export market, Aslam wrote.

She also forecast egg set growth would moderate in November, to 2 to 3 percent from the current 3 to 5 percent.

Pricing outlook
Boneless breast meat: Urner Barry expects the boneless, skinless breast meat price to test an all-time quoted low of $1.05 per pound, which implies a traded price of 85 to 90 cents per pound.

Leg quarters: Prices have rallied in 2016 and were double year-ago levels at 27 cents per pound in the most recent week, reflecting increased access to export markets. Prices have been supported by production cuts in Brazil. Aslam expects leg quarter prices to stabilize at current levels.

Wings: Prices are slightly below year-ago levels but should be well supported through football season and into March Madness, Aslam said.

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