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LIVESTOCK MARKETS: New Georgia poultry pricing tool to debut in 2017

Georgia Dock price index suspended indefinitely, while Georgia ag department anticipates introducing Georgia Premium Poultry Price Index the week of Jan. 4.

The Georgia Department of Agriculture (GDA) is introducing a new pricing index in the New Year after suspending the Georgia dock price index indefinitely, according to a spokesperson for the agency. The new pricing tool will replace the Georgia "Poultry Market News," which has been under scrutiny after concerns arose about price validity.

GDA had recently suspended the Georgia dock price index while it investigated concerns. Prior to the announcement of the indefinite suspension, however, the agency had tried to require the reporting companies to submit a signed affidavit and attestation. The attestation would have been required of each individual employee submitting information, and the affidavit would have been required of each company. After a poor response, though, the agency decided to suspend the price index.

“Due to lack of submissions of the new requirements, the Georgia 'Poultry Market News' has been suspended indefinitely,” GDA spokesperson Julie McPeake said. “To assure that the industry maintains a reliable pricing tool, the Georgia Department of Agriculture anticipates the introduction of the Georgia Premium Poultry Price Index (GPPPI) the week of Jan. 4, 2017.”

McPeake explained that the new pricing tool will include a summary of the new index posted on the website, followed by a webinar for all interested parties. Official reporting for this index is expected to begin Feb. 1, 2017.

Sanderson Farms, one of the companies that had contributed to the old price index, released a statement following the GDA announcement saying it had promptly notified its customers who were affected by the change. Additionally, it said it is committed to determining an appropriate pricing formula as quickly as possible.

“For the interim period until a new benchmark is established, Sanderson Farms and its customers have agreed on a pricing formula that is similar to what is already in place. As in the past, pricing formulas will be negotiated based on a customer's mix, location, volume and needs,” the company stated.

According to Sanderson Farms, it had priced a portion of production from its tray pack plants based on formulas that used the Georgia dock whole bird price as its base. “For fiscal 2016, 10.15% of the company's overall product mix was priced using these formulas. For the past 40 years and until recently, the Georgia dock price was seen as a fair reflection of the dynamics of the retail grocery store market for chicken,” the company said.

Sanderson Farms chairman and chief executive officer Joe F. Sanderson Jr. stated, “Retail grocery tray pack products are important to our overall business, and we value our customer relationships in this market segment. With the suspension of the Georgia dock, we are committed to working with these customers to find a new benchmark to use in beginning negotiations with our customers. It is important to note that, regardless of the benchmark used, our negotiations with customers ultimately determine the price, and we believe our prices fairly and accurately reflect supply and demand dynamics. We have had positive conversations with our customers and do not expect this recent action to affect our business.”

Additionally, Sanderson said the company believes GDA is going about determining a new system in the right way — by “being deliberate and getting input from every constituency group who is affected by the benchmark, including buyers, sellers, distributors, regulators and other interested parties.”

Market recap

The December fed cattle future market started the week lower but climbed throughout week. Nearby contracts closed lower Monday at $111.95/cwt. but then posted gains through Thursday’s close of $114.00/cwt.

January feeder cattle futures were mostly higher as well. Nearby contracts closed lower Tuesday at $130.00/cwt. but finished higher Thursday at $131.125/cwt.

For the beef cutouts this week, Choice and Select were higher at $197.61/cwt. and $186.17/cwt.

December lean hog futures were mixed. Nearby contracts closed higher Monday at $66.10/cwt. but closed lower Thursday at $64.725/cwt.

Pork cutout values were higher this week. The wholesale pork cutout was higher at $80.53/cwt. Loins were higher at $77.18/cwt., while hams were lower at $72.38/cwt. Bellies were also higher at $110.42/cwt.

Hogs delivered to the western Corn Belt were lower this week, closing at $52.86/cwt. on Thursday.

The U.S. Department of Agriculture reported the Eastern Region whole broiler/fryer weighted average price at 83.3 cents/lb. on Dec. 16.

According to USDA, egg prices have been steady, with a mostly higher undertone. Offerings have been light to moderate. Supplies have been light to moderate. Demand has been fairly good to very good.

Large eggs delivered to the Northeast were sharply higher at $1.26-1.30/doz. Prices in the Southeast and Midwest were also higher at $1.37-1.40 cents/doz. and $1.33-1.35/doz., respectively. Large eggs delivered to California increased to $1.83/doz.

For turkeys, USDA said the market was steady to weak, with light to moderate offerings. Demand has been light. Prices were lower at $1.04-1.10/lb. for hens and $1.11-1.12/lb. for toms.

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