The chicken industry is not one to cutback production, but once it does, it appears to stay committed. According to USDA's Chicken and Egg Report, broiler-type pullets hatched in March were down   2.4 percent from 2009’s level.

USDA also revised its February figure to a 3.1 percent decline from last   year; it had estimated that pullets hatched rose by 2 percent.

"We cannot recall such a revision of this size in the past," J.P.Morgan analyst Ken Goldman said.   He also predicted that year-on-year increases in total layers will eventually diminish or turn negative, based on the small number of pullet hatchings.

The U.S. inventory of broiler-type layers this March rose by 2.1 percent. However, at 55.4 million pullets, the number was down 2.6 percent from the March average from 2004 to 2008, Goldman noted.

Meanwhile, the number of eggs per layer dropped 1.3 percent from March 2009. That was due in part to poor weather and older hens, Goldman reported. That marked the sixth drop in seven months and the steepest year-on-year decline since February 2009.

"The longer that the chicken industry stays disciplined with production, the more sustainable today's industry margins can be," he said.

This comes at a time when domestic demand is starting to strengthen as the U.S. economy shows signs of recovery and strength. On the export side there remains some uncertainty from both Russia and China. The latter recently stating it would reduce  U.S. chicken imports by half this year.

Source: Meatingplace.com