U.S. poultry market: Production accelerating, but caution advised
U.S. poultry production is accelerating. Average production during the 12 months through November was up 2.8 percent compared with the year-ago level. General rise in the quarterly rate of change signals that further accelerating growth for U.S. poultry production is probable during at least the next quarter or two. Production is at a record high due, in part, to growing consumer demand for poultry products and producer profits from low feed prices.
Despite record levels of production, we caution you not to lose sight of the upcoming period of slowing growth expected in U.S. food production. Overall slowing growth in U.S. food production could hinder upward momentum in U.S. poultry production the farther we progress in 2018.
Additionally, there are some industry-specific concerns to be aware of moving deeper into 2018. Producers may run into some trouble with oversupply in response to the demand for chicken raised without antibiotics. Some industry participants say supply is outpacing demand, and that could have a negative impact on producers’ profits. There is also some uncertainty regarding the status of the North American Free Trade Agreement (NAFTA). Approximately 20 percent of U.S. poultry production is exported; thus, production is susceptible to changes based on currency shifts and trade negotiations. Any changes to NAFTA could pose a risk to poultry exports.
Beware of linear budgeting during this part of the business cycle as production will likely end 2018 in a slowing growth trend. NP