Chicken industry may face $8 corn: Pilgrim CEO

By Bob Burgdorfer

CHICAGO (Reuters) - The U.S. chicken industry, which has been cutting production in reaction to higher feed costs, may have to contend with even higher feed prices this year, Pilgrim's Pride Corp Chief Executive Clint Rivers said during a webcast presentation on Thursday.

"I think today the industry is thinking in terms of placing (chickens) for $6 corn when I think we should realize the potential for $8 corn is certainly there and I think we should be in a position to deal with that," Rivers told analysts at the BMO Capital Markets agriculture and protein conference in New York City.

Pilgrim's Pride (PPC.N: Quote, Profile, Research, Stock Buzz) is the largest U.S. chicken producer and recently announced it was cutting production about 5 percent, largely in reaction to higher feed costs.

The price of corn, an important livestock and poultry feed, hit a record $6 per bushel this year, due to strong demand from exporters, livestock feeders and makers of the biofuel ethanol.

Livestock producers have been worried that corn prices could go even higher if there is any disruption to this year's U.S. corn crop.

To cope with higher feed costs, Rivers said he would like to see a 3 to 4 percent reduction in U.S. chicken production.

Recently the industry has reduced by 2 to 3 percent the number of eggs and young chicks placed in the production cycle, but it will be early this summer before that reduced supply reaches grocery stores.

"In the summertime we usually have our strongest demand for chicken, so typically you would not expect to be seeing egg sets drop this time of year. So I think it is pretty significant," said Rivers.