Summary

Broilers - strong exports have partially countered increasing production, and stocks have remained below year-earlier levels. Continued large gains in chick placements are expected to translate to higher broiler meat production, especially compared with last year’s declines. This will eventually begin to place downward pressure on most broiler prices.

Turkey - higher production through October held whole turkey prices to somewhat lower levels than the previous year and has boosted cold storage holdings above those for the same period in 2006. Prices for whole birds are expected to decline seasonally in December and into the first half of January 2008, but not as much as in 2006.

Eggs - wholesale prices at the beginning of December were at record levels, on a nominal basis. With a smaller number of hens in the table egg flock and lower production expected in the fourth quarter, prices are expected to remain strong through the end of 2007 and into 2008.

October broiler exports increased above a year ago, while turkey exports were year-over-year lower. Broiler exports totaled 589 million pounds, an increase of 35 percent. Turkey exports totaled 53.5 million pounds, a decline of 1 percent from a year ago.

Broiler Meat Production Up 5 Percent in October

Broiler meat production totaled 3.4 billion pounds in October, up 5.4 percent from the previous year, but slightly lower than anticipated, considering that October 2007 had an additional slaughter day compared with October 2006. Over the first 10 months of 2007, broiler meat production has totaled 30 billion pounds, about 0.3 percent lower than for the same period in 2006. The increased meat production in October was the result of both an increase in the number of birds slaughtered, up 4.6 percent, and a small increase in the average live weight of birds at slaughter, up 0.5 percent to 5.61 pounds. So far in 2007, the average live weight at slaughter for broilers has been 5.49 pounds, also 0.5 percent higher than in the same period in 2006. The increase in production in October coupled with strong chick placements this fall, led to an increased estimate for broiler meat production of 9.18 billion pounds, up 50 million pounds.

Although there continues to be some growth in average bird weights, it is the recent surge in chicks being placed for growout that points toward significant growth in the amount of broiler meat that will be produced near the end of fourth-quarter 2007 and into first-quarter 2008. Over the last 5 weeks (Nov. 10 to Dec. 8, 2007), the number of chicks placed for growout has averaged 4.7 percent higher than during the same period in 2006. However, a comparison with the previous year tends to overstate the growth in the number of birds being placed for growout as chick placements at this point in 2006 were declining. If the comparison is made to the same period in 2005, the increase is only 1.7 percent.

Cold storage holdings of total broiler products at the end of third-quarter 2007 were revised slightly upwards, to 626 million pounds. This is only marginally higher then at the end of the second quarter and down 11 percent from the third-quarter 2006 level of 699 million pounds. With the exception of whole birds, stocks of most broiler products are significantly lower than in the previous year. Stocks of leg quarters were 66 million pounds at the end of September, down 17 percent, and stocks of thighs and thigh meat were 22 percent lower than a year earlier at 19 million pounds. Expectations of stronger fourth-quarter broiler meat production and slightly slower exports are expected to lead to a broiler stock expansion to 675 million pounds by the end of the fourth quarter, a level that is still 9 percent lower than a year earlier.

In fourth-quarter 2007, the domestic broiler industry is expected to face larger production, slightly declining foreign demand, and increasing stocks. These factors are expected to combine to place downward pressure on prices. For most of 2007, prices for broiler products have been above year-earlier levels, as production was down in the first half of the year. In the fourth quarter of 2007, broiler prices are expected to remain well above year-earlier levels, but to be trending downward. By the middle of first-quarter 2008, prices are expected to be close to their year-earlier levels. In November, prices for whole birds averaged 71.7 cents per pound, 9 percent higher than a year earlier. Prices in the Northeast market for boneless/skinless breast meat and leg quarters were 124.5 and 42 cents per pound, up 31 and 44 percent from 2006, respectively, but down considerably from earlier in 2007.

October Turkey Meat Production Up 7 Percent

Turkey meat production in October was reported at 579 million pounds, up 7 percent from October 2006. The increase is the result of a 5.5-percent increase in the number of birds being slaughtered and an increase in the average live weight of turkeys at slaughter of 1.1 percent to 27.7 pounds. With the increase in October, turkey meat production over the first 10 months of 2007 has totaled 4.95 billion pounds, 4.1 percent higher than in the same period in 2006 and 8 percent higher than in the first 10 months of 2005.

Despite the growth in turkey meat production, a combination of a strong export market and higher demand kept turkey cold storage holdings (especially for whole birds) below a year earlier through the first half of 2007. However, during the third quarter, overall turkey stocks began to expand and prices for turkeys and turkey products started to move closer to their year-earlier levels. Cold storage stocks of whole turkeys and turkey products at the end of third-quarter 2007 have been revised upward to 505 million pounds, 9 percent higher than the previous year. Most of the higher stocks were in the form of whole birds, as turkey-part stocks were only up 1 percent. Cold storage holdings declined seasonally in October to 412 million pounds, only 2 percent above the previous year. With turkey production expected to be higher in fourth-quarter 2007, cold storage holdings are expected to remain above year-earlier levels at the end of the fourth quarter and into 2008.

Prices for turkeys and most turkey products were moving in the opposite direction from broiler products prices. Prices for whole hens in the Eastern market averaged 94.7 cents per pound in November, down 5 percent from the previous year. Aside from January, whole turkey prices in 2007 had been above year-earlier levels until the last 2 months. Even with slightly lower prices, whole-bird prices are expected to average slightly higher in fourth-quarter 2007 than the previous year. Barring an extreme price drop in December, the annual average price for whole turkeys in 2007 will mark the fourth consecutive year that whole bird prices have increased. Prices for a number of turkey parts have also been strong, with prices for boneless/skinless breast meat averaging $2.57 per pound in October, up 14 percent from a year earlier. Prices in October were also higher for drumsticks, up 48 percent. However, there can be considerable difference in the price changes from year to year, depending on whether the parts are coming from toms or hens, with stock levels for whole toms having grown faster than those for hens.

Over the first 10 months of 2007, the number of turkey poults placed for growout has totaled 260 million, up 4 percent from the same period in 2006. This is expected to result in continued growth in turkey meat supplies for the rest of 2007 and into the first half of 2008.

Egg Production Continues Lower, Prices High

The table-egg laying flock in October was estimated at 283 million hens, lower by 1.9 percent than at the same time in 2006. For almost all of 2007, the monthly number of hens in the table-egg laying flock has been smaller than in the same month of the previous year, and overall the flock size has averaged 1.5 percent lower.

This trend is expected to continue through the end of 2007 as the flock size at the beginning of November was 284 million birds, down 1.7 percent from the beginning of the previous November. The number of birds in the table-egg flock is expected to gradually expand in first-quarter 2008 as producers respond to the strong prices for table eggs over the last several months.

Table-egg production in October was reported at 547 million dozen, down 0.5 percent from the previous year. Table-egg production for fourth-quarter 2007 is now estimated at 1.645 billion dozen, which would be a slight decline from the previous year. If realized, this would be the fourth consecutive quarter with declining table-egg production.

Although production of table eggs has been lower, production of eggs for hatching has been increasing in response to broiler producers’ needs for greater chick production. Hatching-egg production is expected to total 280 million dozen in fourth-quarter 2007, up 4.5 percent from the previous year and the fourth consecutive quarter with higher production on a year-over-year basis.

The lower production of table eggs has resulted in very strong prices over the last several months. In the third quarter of 2007, wholesale prices in the New York market averaged $1.19 per dozen, a 29-percent jump from the previous quarter and 86 percent higher than third-quarter 2006. Prices in the New York market declined slightly to $1.14 per dozen in October, but then rose sharply to average $1.49 in November. With these high prices, table eggs are now expected to average between $1.34 and $1.37 per dozen in the fourth quarter of 2007. This is the highest quarterly nominal average price for eggs over the last 47 years (wholesale price per dozen in the New York market).

Broiler Shipments Continue Strong in October

Broiler exports for the month of October totaled 589 million pounds, up 35 percent from a year ago. The principal reason for the boost in broiler shipments was a strong demand that stemmed mainly from a weakening U.S. dollar. Because of the U.S. declining dollar value, some foreign consumers have not been responsive to increases in August and September leg-quarter prices in 2007. In August 2007, the average leg-quarter price for the Northeastern market was almost 28 percent higher than the average price reported in August 2006. September average leg-quarter price for 2007 was 41 percent higher than the price reported in the same month of 2006. Broiler shipments for October were among the highest recorded in several years. One explanation for the surge in broiler shipments is that the declines in the value of the U.S. dollar exceeded the increase in leg-quarter prices, causing the purchasing power of some foreign consumers to increase. Increases in incomes driven by higher oil revenues may be supporting purchases by oil exporting countries such as Russia and Mideast countries.

Broiler shipments for the fourth quarter were increased by 50 million pounds due to a strong demand for broiler meat, raising expected total shipments for the fourth quarter to 1.450 billion pounds. Positive growth in broiler production is expected throughout the fourth quarter, which is likely to put downward pressure on legquarter prices.

Turkey Shipments Fall in October

Turkey exports totaled 53.5 million pounds in October, down 1 percent from a year ago. Mexico, Canada, and Russia were the largest foreign destinations for U.S. turkey in October. In comparison with October 2006, shipments to Mexico and Canada dropped 8 and 15 percent in October 2007, respectively, while shipments to Russia rose by 8 percent during the same period. While turkey shipments for the fourth quarter are expected to reach 155 million pounds, total turkey shipment for 2007 is on course to becoming one of the largest shipments recorded in recent years.

Further Reading

- You can view the full outlook report by clicking here.

December 2007