Your Buffalo Wings may cost you more. As this week's chart portrays, the cash price of broilers appears ready for a breakout to the upside. Broilers are younger chickens bred for meat consumption, like that used for the popular chicken wrap sandwiches every fast food restaurant seems to be offering. Consumption of chi cken has been generally strong due to the shift from red meats and rising preferences for chicken in a variety of forms.

Broiler prices had weakened in second half of last year in response first to falling grain prices in the first part of year which had encouraged producers to expand flocks. Then with rising grain prices, feeding costs rose. Response of breeders to subsequently lower profitability was to reduce flocks. Birds are sold into market which initially acts as increased supply depressing prices. After that flock liquidation effect, prices recover due to reduced supply of birds.

The pricing picture suggests that the adjustment process may have been largely completed. Broiler prices have been rising for several months as grain prices moved higher. The supply of broilers seems to have been brought into balance with the costs of raising the birds. Broiler prices now are rising along with grain prices. Such is the environment of the future for Agri-Food.

Prices are going to rise in order to keep the producers in the chain profitability. Without profits supply will decline, pushing prices back up to profitable levels. The entire Agri-Food production chain has entered into a new era of sustained profitability that will benefit companies all along that chain. Is your portfolio participating in the new world of Agri-Foods, or is it still suffering from the continued losses at banks?

By Ned W Schmidt CFA, CEBS

AGRI-FOOD THOUGHTS are from Ned W. Schmidt,CFA,CEBS, publisher of Agri-Food Value View , a monthly exploration of the Agri-Food grand cycle being created by China, India, and Eco-energy. To review the most recent issue go to http://home.att.net/~nwschmidt/READFOOD.html

Ned W Schmidt Archive

Only logged in users are allowed to post comments. Register/ Log in

The Market Oracle is a FREE Financial Markets Forecasting & Analysis web-site.
(c) 2005-2024 MarketOracle.co.uk (Market Oracle Ltd) - Market Oracle Ltd asserts copyright on all articles authored by our editorial team and all comments posted. Any and all information provided within the web-site, is for general information purposes only and Market Oracle Ltd do not warrant the accuracy, timeliness or suitability of any information provided on this site. nor is or shall be deemed to constitute, financial or any other advice or recommendation by us. and are also not meant to be investment advice or solicitation or recommendation to establish market positions. We do not give investment advice and our comments are an expression of opinion only and should not be construed in any manner whatsoever as recommendations to enter into a market position either stock, option, futures contract, bonds, commodity or any other financial instrument at any time. We recommend that independent professional advice is obtained before you make any investment or trading decisions. By using this site you agree to this sites Terms of Use. From time to time we promote or endorse certain products / services that we believe are worthy of your time and attention. In return for that endorsement and only in the cases where you purchase directly though us may we be compensated by the producers of those products.