Poultry Market Update for the week of 10/24

Market update

· It will be the week of the two’s next week, and business seems to correspond with that time of the month.

· Breast meat is a little sluggish this week in anticipation of slower business sales next week. Trade levels are a little lower on breast meat.

· This market could be stuck in a rut for a month or two before we see clear direction and hopefully a pickup in demand, because the supply chain seems in better shape.

· Thigh meat now seems to be on the downward trend. More inventory is showing up in freezers as fresh sales slow. This could happen for a few more weeks, and then fresh sales should pick up again in late November and December as foot traffic in malls increases for the shopping season.

· The formal thigh meat market is off a little this week, but over next 2-3 weeks should come off another 12-17 cents.

· Tenders and wings are in decent shape, and most bone in dark meat is also holding steady.

· Producers will probably have to make additional cut backs into the winter to insure some kind of profitability next year, but let’s see if they are smart enough!

House of Raeford Farms Cuts Broiler Production

The following press release was issued this morning on the House of Raeford website:

House of Raeford Farms, Inc., one of the nation’s top 10 fully integrated poultry processors, announced a decrease in broiler production by 10%. Beginning in early February, the company began reducing the number of egg sets as well as making other adjustments to improve profits and cash flow.

The unprecedented cost of corn which is the primary ingredient in poultry feed as well as indicators from the U. S. Department of Agriculture (USDA) that corn supplies are at their tightest levels in 15 years has contributed significantly to this decision. Supported by federal subsidies, the ethanol industry is draining 40% of U. S. corn production (up from 7% in 2001). This has resulted in corn prices nearly doubling in a single year and expectations are that the costs will remain at elevated levels for the foreseeable future.

High unemployment continues to negatively influence foodservice sales. As a result, an oversupply of chicken has caused the market price to decrease dramatically.

“We decided that acting now was a responsible action for our company in light of continuing unstable economic conditions,” said Bob Johnson, CEO. “Hopefully the chicken prices will begin to increase later this year. In addition, if Congress will take action to cut unreasonable government support for the ethanol industry, then grain prices should decrease to a more manageable pricing level. “