broiler chickens Credit: buhanovskiy/iStock/Thinkstock.

Poultry demand unable to keep up with stocks

Amount of frozen chicken in cold storage remains 7% above 10-year average.

Lower prices in all subsectors of the poultry industry have been driven by supply growth that outstripped demand growth in 2016, according to Farmer Mac’s latest quarterly agriculture outlook called “The Feed.”

For broiler meat, production is expected to increase 1.6% this year, which is more than double the growth in domestic consumption per capita. While exports are rebuilding from nearly two years of avian influenza-fueled bird bans, the report noted that stocks of frozen chicken in cold storage remain 7% above the 10-year average.

According to the report, turkey producers can claim a similar story in which consumption cannot seem to keep up with the growing level of stocks. Exports also remain 26% below 2014 levels -- before the extensive outbreak of avian influenza.

Egg production has nearly returned to pre-2015 levels, which the report said has dramatically decreased egg prices, overshooting prices experienced in 2013 and 2014.

“The next year could hold some upside potential for producers as avian influenza outbreaks in the (European Union) and Asia in January may spur greater foreign demand. The USDA expects prices levels in 2017 to be roughly equal to those experienced in 2016, so improved profitability must come from reduced costs (e.g., lower feed costs) and good marketing plans,” the report said.

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