Chicken Glut

Chicken farmers are saying the sky is falling on them due to doubling of feed costs from year ago, soft demand since Easter, and a glut of production, according to an article in the Wall Street Journal. US chicken production during the first quarter 2011 rose 6.4% to 9.29 billion pounds from year ago -- that's about 9 billion chickens per year. The devastating tornadoes that hit the South last month killed millions of chickens, but on a macro-economic scale, that's hardly enough to make a dent in supply or inventory. Prices fell from 82.2 cents a pound last year the current 77.9 cents a pound.

A glimmer of good news came from the US Department for Agriculture, which predicts record corn production for 2011/2012 of 13.5 billion bushels, up 1.1 billion bushels (up about 9%) from year ago, thanks in part to an extra 4 million acres being planted. Corn yield is projected at 158.7 bushels per acre, third highest on record. Likewise, corn supplies are expected to be 14.8 billion bushels, up 75 million bushels from last year.

That may be optimistic. Exceptionally rainy weather delayed corn plantings in Ohio, Indiana, and South Dakota. AgResource predicted corn planting will be about 2% lower than government's expected 92.2 million acres. Late-planted corn tends to offer reduced harvests.

The USDA expects corn use in 2011/2012 to be down 1% from last year, even though corn for ethanol is expected to rise by 50 million bushels. Still, it predicts season-average farm price at a record $5.50 to $6.50 per bushel compared with the 2010/11 forecast of $5.10 to $5.40 per bushel.

That may be optimistic, too. Current prices are in the $7 to $7.25 per bushel range for May corn futures. Add in a more bad weather -- flooding in Louisiana, ongoing drought in Kansas, sweeping rains in Ohio, and so on -- and that bushel price might be the kernel that breaks the chicken's back, not to mention the producer's bottom line and the shopper's wallet in the grocery store.