USDA's Cold Storage and March Chicken and Eggs Reports released on Tuesday, show that the trend line for chicken supplies is headed lower. Of course, it reflects the poultry producers' and processors' attempt to bring profitability back to that sector.

According to the Cold Storage Report, total stocks of frozen chicken on March 31 were down 2 percent from February's levels, and down 17 percent from March 2008. Chicken breast supplies in the freezer dropped 9.9 percent from last year's levels, and leg quarters fell 29.2 percent.

A larger turkey supply has pushed total poultry stocks up 3 percent from February's levels, but compared to 2008, stocks were still down 4 percent. Total pounds of frozen turkey supplies increased 10 percent from February and 19 percent more than on March 31, 2008.

There are fewer total pullet (young breeder hens) reflected in the March Chicken and Eggs report released on Tuesday. It reported that the inventory fell by 1.8 percent year-on-year. While the decline in these young hens has slowed, the total number remains low.  The number of pullets hatched fell by 5.8 percent year-on-year, the steepest decline in four months.

"We are encouraged that long-term industry discipline seems largely intact," Ken Goldman, J.P. Morgan analyst notes. "The data are modestly positive for Sanderson Farms, Pilgrim's Pride and Tyson Foods. All else equal, fewer pullets translate into less meat, higher chicken prices and better margins for chicken processors."

Source: Meatingplace.com