Poultry:

With continued smaller chick placements, broiler production estimates for fourth-quarter 2006 and first-quarter 2007 were reduced. As production has fallen, prices for most broiler products have strengthened. With slower production growth and higher exports expected in 2007, per capita broiler consumption is expected to decline slightly. After near-record prices in the pre-Thanksgiving period, prices for whole turkeys fell heavily and by early January were below those of the previous year. Stocks of whole turkeys at the end of November were higher than a year earlier, but still at relatively low levels.

Poultry Trade:

Sales of U.S. broiler meat were up, while shipments of U.S. turkey were down, in November 2006. Broiler exports totaled 548 million pounds, an increase of 22 percent, while turkey exports totaled 48 million pounds, a decline of 3.4 percent from a year ago.

Broiler Production Expected To Go Up Only Slightly in 2007

During the fourth quarter of 2006, the number of eggs set in incubators per week averaged 206 million, down 1.8 percent from the same period a year earlier. The number of chicks placed for growout per week averaged 166 million, a decrease of 1.8 percent from the same period in 2005. The result has been a slightly smaller number of birds available for slaughter and lower broiler meat production. The expected broiler meat production for fourth-quarter 2006 has been reduced by 50 million pounds to 8.85 billion, down 0.6 percent from fourth-quarter 2005.

This slowdown in production is expected to continue into first-quarter 2007, with a production estimate reduced by 25 million pounds to 8.88 billion, again lower (down 0.7 percent) than for the same period the previous year. In 2007, broiler meat production is expected to be lower than in the previous year in the first two quarters, but rising prices are expected to provide an incentive to increase production in the second half of the year. Overall broiler meat production in 2007 is expected to be 1.1 percent higher than in 2006.

Broiler meat production in November was 2.88 billion pounds, a decrease of 2.1 percent from a year earlier. The decrease reflects a 1.1-percent decline in the number of birds slaughtered and a 1-percent decrease in the average meat production per bird. Broiler meat production in December is expected to be lower than the previous year, as December 2006 has 1 less slaughter day than in 2005.

Broiler stocks at the end of November totaled 686 million pounds, 23 million pounds lower than the previous month and 22 percent lower than the high levels seen the previous year. While stocks of whole birds are down significantly, most of the change has come from lower cold storage holdings of broiler parts, which represent the bulk of cold storage holdings. Lower cold storage holdings of leg quarters were the major cause of the decline as stocks fell from 157 million pounds to 50 million, a decrease of 68 percent. Stocks of leg products also declined significantly, down 41 percent. Estimated ending stocks for fourth-quarter 2006 were reduced by 25 million pounds to 675 million, and ending stocks for firstquarter 2007 are now estimated at 700 million pounds.

With the slowdown in broiler production, prices for broiler products, which had been falling for several months, turned higher in December. After reaching a high of 68.3 cents per pound in August, the 12-City average price for whole birds fell to 65.9 cents per pound by November. However, as the broiler supply tightened, prices started moving higher in December, with the average monthly 12–City whole bird price at 66.5 cents per pound. Recent weekly prices point towards even higher prices in January. This pattern has been repeated for a number of broiler parts. Prices in the Northeast market for leg quarters were 2.5 cents per pound higher in December compared with their November average and prices for boneless/skinless breast meat rose by 19.6 cents per pound.

Turkey Prices Higher

After rising to a near-record of 99.5 cents per pound in November, the price for whole hen turkeys in the Eastern region fell to 74.2 cents per pound in December, down 25.3 cents per pound and 10 percent lower than in December 2005. Prices for fourth-quarter 2006 averaged 89.8 cents per pound, up 7 percent from a year earlier. Even with increasing production, prices for whole hens are expected to be higher during the first half of 2007, but they may not have the same price strength in the second half of the 2007 as they did in 2006.

Turkey production in November was 502 million pounds, 4 percent higher than in November 2005. The overall turkey meat production reflects a number of increases. The number of turkeys slaughtered in November was up 3.3 percent from the previous year, and the average weight at slaughter rose 1.2 percent to 27.1 pounds. In addition, the average meat production per bird rose by 0.7 percent.

With 1 less slaughter day, turkey meat production in December 2007 is expected to be down slightly from the previous year. The estimate for turkey meat production in fourth-quarter 2006 was increased by 20 million pounds to 1.48 billion, up 5 percent from fourth-quarter 2005. The production estimate for first-quarter 2007 was also increased by 20 million pounds to 1.41 billion pounds, pushing the estimate for 2007 to 5.78 billion, up 1.6 percent from 2006.

Ending stocks for turkey products in fourth-quarter 2006 are estimated at 225 million pounds, up 9 percent from the same period in 2005. At the end of November, cold storage holdings for turkey totaled 209 million pounds, up 7.5 percent from a year earlier. The increase was due to a combination of higher cold storage holdings for whole birds and turkey parts.

Over the first 10 months of 2006, stocks of whole birds were lower than the previous year, often by as much as 20-30 percent, which helped fuel the increases in whole bird prices. However, in November stocks of whole birds totaled 61.4 million pounds, up 9 percent from the previous year. This change in the stocks situation is a major factor in the strong decline in whole bird prices in December 2006.

Broiler Shipments Expand in November

Broiler exports for the second month of the fourth quarter totaled 548 million pounds, up 22 percent from a year earlier. Broiler shipments surged due to lower leg-quarter prices coupled with a weaker U.S. dollar. Bulk leg-quarter prices in October for the Northeast region averaged 29.2 cents per pound, 13 percent lower than average prices for September. In the Southern region, bulk leg-quarter prices in October averaged 23.8 cents per pound, 17.5 percent lower than average prices for September. Due to growing demands for U.S. broiler meat, broiler export projections for fourth-quarter 2006 were increased by 35 million pounds to 1.4 billion pounds.

Turkey Shipments Are Down in November

Turkey exports totaled 48 million pounds in October 2006, down 3.4 percent from a year earlier. The fall in turkey shipments was due to an increase in whole turkey prices. In October, for the Eastern region hen prices averaged 95.8 cents per pound, 14 percent higher than the average prices for September. Turkey prices follow a seasonal pattern that peaks in November. Broiler exports are expected to reach 150 million pounds for the fourth quarter.

Further Information

For more information view the full Livestock, Dairy and Poultry Outlook - January 2007 (pdf)

January 2007