According to the Federal Ministry of Agriculture around 45 million male chicks are slaughtered in Germany each year.
The killings are highly controversial and opposed by Agriculture Minister Julia Klöckner in Angela Merkel's government.
"Chick killing is ethically unacceptable and must be stopped as soon as possible," Klöckner told daily Rheinische Post, adding that €8 million had been allocated to help find alternatives.
Several methods for the testing of a chick embryo's sex -- which would allow the destruction of eggs before hatching -- are being tested, but not yet ready for use on an industrial scale.
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On Thursday, Leipzig's Federal Administrative court decided the killing of male chicks is in accordance with the first article of the Animal Protection Act, which stipulates "no one is entitled to inflict pain, suffering or damage on animals without reasonable cause".
Judge Renate Philipp said there were "reasonable grounds" for the current practise to continue "until methods to determine sex in the egg" are ready.
Young male hatchlings are usually condemned to a violent end simply because of their sex, as roosters are deemed largely useless in the world of livestock farming.
In many cases, they are mechanically shredded, gassed or crushed to death and used as animal feed.
Just as in the two previous cases, the court in Leipzig ruled that the economic interests of the egg industry took precedent in the immediate future.
The dispute dates back to 2013 when the state of North Rhine-Westphalia outlawed the killing of male chicks under the Animal Protection Act.
However, two hatcheries challenged the decision at district level, which took the matter up to federal court.
The Central Association of the German Poultry Industry (ZDG) has warned against hastily banning the killing of male chicks.
The industry also wants to end the unethical killings, said association president Friedrich-Otto Ripke, but a mass method of identifying sex in the egg had to be found first.
The German Animal Welfare Association reacted with disappointment to Thursday's decision.
"We would have wished for an immediate ban," said president Thomas Schröder, who criticized the court for not setting a deadline for when the killing should be banned.
Consumer organization Foodwatch said the basic problem remains "that the chickens are either bred for egg producing or fattening up on a massive scale".
The industry wants to "get out of chick killing today rather than tomorrow, but without practical alternatives this would not work," he said.