WASHINGTON — In response to high, volatile feed prices, many poultry producers have been negotiating shorter retail contracts or contracts tied to feed prices, according to a Wall Street Journal report.
National Chicken Council Senior Vice President Bill Roenigk agreed that the industry has been seeing shorter, feed-price dependent contracts. He told SN that the shorter contracts also now involve “a somewhat wider” range in prices than in the past, including a higher ceiling for wholesale prices due to supplier concerns about the coming year’s corn crop condition.
Suppliers will likely continue these shorter contracts with price protections for at least the next two years and perhaps longer.
“If during the next couple, three years we do get good corn crops, [and] inventories are rebuilt, companies will be stepping up their production of chicken, and they will be more inclined to negotiate contracts that are longer and have less volatility,” Roenigk said, later adding that most producers have lost money on poultry for the past year.
Analysts forecast a 5% increase in chicken prices for the first quarter, and Roenigk thinks the price increase for the second and third quarter will be even greater, as demand for chicken increases due to comparatively high pork and beef prices.