Thursday, February 29, 2024

Market Intelligence Forum: ‘Policy of proposition and not opposition’

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By Gillan Ritchie

Poultry Times staff

gritchie@poultrytimes.com

ATLANTA — During the Market Intelligence Forum at the 2016 IPPE, Dr. Paul Aho, founder and consultant of Poultry Perspectives, gave an overview of “Domestic and Global Drivers for 2016.” In the presentation, Aho focused on topics such as commodity prices, soybean and corn production, consumption of chicken and trends involving the consumption of chicken.

According to Aho, grain prices will “remain down for a while because we have increased production of corn and soybeans in the U.S. and in other countries like Brazil, Argentina and Paraguay.”  Aho added that the forecast of low prices should last for a few years, since ethanol production has leveled off.

Over the recent years, there has been a decline in chicken consumption in the United States. Why? Aho stated during his discussion that recession and lower median income played an important role in the decline.

However, the peak price of deboned chicken breast is lower than last year and the break even is lower as well. There is an upward trend for deboned chicken breast: the number of deboned chickens has increased, 0.4 billion in 1985 to 3.7 billion in 2015; the weight has increased from 5 pounds in 1985 to 8 pounds in 2015; and the yield of deboned chicken breast meat increase from 15 percent in 1985 to 23 percent in 2015.

Only a third of chicken leg quarters are consumed in the United States; the rest are exported to other countries. Countries, such as Saudi Arabia and Mexico, who export large amount of oil also import chicken from the United States, according to Aho. However, chicken leg quarters saw a drop in exports last year by about 1 billion pounds.

Aho also provided a forecast on the world economy, remarking that it continues to be weak. “We need to watch China’s economy carefully, because everything points to a possible recession. If a recession strikes China, there will be a world recession and in the U.S. for certain.”

Aho stated that the industry will see supply rising slowly, trade restrictions are starting to ease, the dollar continues to strengthen, the world economy continues to be weak and oil prices will continue to be low. Turkey and egg production will be on the rebound from the avian influenza in the Midwest.

The next speaker during the IPPE Market Intelligence Forum was Christian Richter, principal of The Policy Group in Washington D.C.

Richter’s discussion titled “Washington Review,” offered insight on the immigration reform, the Trans-Pacific Partnership (TPP) debate, Occupational Safety and Health Administration (OSHA) penalties and the Environmental Protection Agency’s focus for this upcoming year.

Richter opened the “Washington Review” with a quote from President Barack Obama: “Interesting stuff happens in the fourth quarter.”

“There is a new House Speaker who has new priorities for 2016, and the House is going to be very active in 2016, hopefully with a policy of proposition and not a policy of opposition,” said Richter.

According to Richter, the Democrats will focus on inequality while charting opposition and there is a chance that Republicans will be vulnerable in November. But Republicans will continue to face challenges to keep the majority.

Sen. Michael Bennett, D-CO, said “Republicans have not missed an opportunity to miss an opportunity.”

EPA’s top priorities include a clean power plan; the historic carbon standard could cut power plant emissions in half. The organization is also looking at the Waters of the U.S. Rule; the rule looks at bodies of water and wetlands should be under federal jurisdiction. The big question though – what makes a body of water eligible? EPA will also continue to focus on nutrient limits and the Watershed Rule will advance in 2016.

Related to OSHA penalties, Richter discussed the progress of the poultry processing industry regarding workplace safety, noting that poultry injuries and illnesses have declined dramatically since 1994 in the workplace. However, he cautioned that OSHA will increase penalties by 82 percent in 2016 for those who incur violations.

Michael Donohue, vice president of Agri Stats, Inc., concluded the Poultry Market Intelligence Forum with his presentation on “Performance Trends for the Poultry and Egg Industry.” During the discussion, he outlined trends in broiler production and processing; turkey production and processing; layer production and processing; “sustainability” and challenges over the next few years.

Donohue observed that since 2012 there has been a dip in broiler production. However, there has been significant performance in breeders, a higher percentage in hatchability and a steady improvement in livability.

“We’ve seen a slight decrease in broiler production, which may come from antibiotic-free production. Due to consumer trends and retail customers requesting birds free of antibiotics, the industry is using fewer tools and not gaining feed conversion. Broiler feed conversion in 1988 was 2.05, and in 2014 it has dropped down to 1.87,” commented Donohue.

The percentage of birds by live weight continues to grow. In 2008, only 18.1 percent of birds weighed more than 7.5 pounds and during the first half of 2015, 27.2 percent of birds weighed more than 7.5 pounds.

Donohue also remarked that turkey mortality has dropped, and the industry has done pretty well with turkey production increasing again. Whole bird yield is higher, and boneless turkey breast meat percentage has increased.

In regards to broiler feed, 49,435,474,408 live pounds were produced in the last 12 months. The feed conversion was 2.05 in 1988 and in 2014, it was 1.87. Last year, 46,222,169 tons of feed were required.

Donohue said the bird flu still poses a challenge in the future as well as the loss of export markets and the value of chicken leg quarters. He concluded the presentation by stating: “We are enjoying relief in feed ingredient costs but depend upon a bountiful harvest every year to maintain some predictability in production costs and returns. Ethanol isn’t going anywhere.”

U.S. Poultry & Egg Association contributed to this article. More information can be obtained at www.uspoultry.org.

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