converting website visitors - news, features, articles and disease information for the poultry industry

Poultry News

CME: Have Rising Feed Costs Affected Turkey Production?

20 December 2012

US - As is the case for virtually every other US agricultural enterprise, the US turkey business is a picture of growing productivity, writes Steve Meyer and Len Steiner.

More product from fewer animals applies to this sector just as it does to beef, pork and chicken. But the business is in a bit of a defensive mode these days as placements of both eggs and poultry moderate from last year in response to high feed costs and challenging operating margins. The turkey business is also very akin to the chicken and pork sectors in another manner: Declining seasonality.

It is clear from the charts at right that, though still extremely seasonal given the place of honor turkey holds at U.S. Thanksgiving Day (and, to a lesser degree, Christmas) celebrations, the within-year variation of egg placements, poultry placements and production has been reduced dramatically.

This reduction is, of course, a testament to aggressive product development which has seen turkey become a major player in the processed meats sector and improved turkey usage in the traditional “offseason.” Once non-existent, turkey versions of virtually every lunch meat and processed product are now widely available. We’re still not sure about calling any turkey product “ham” or “bacon” but it’s good business if you can do it and the courts have said turkey companies can.

At first glace, it appears that October turkey production grew substantially — and, in fact, it did. The monthly output of 579 million pounds was the third largest on record and was over 10 per cent larger than last year. But the October data (and, in fact all three of those huge months dating back to 2007) contains a trap: It involved 23 slaughter days.

When we adjust this year’s October output for the 2 extra slaughter days versus one year ago, output was up only 0.9 per cent.

So what should we expect from the turkey business in 2013? USDA, in last month’s World Agricultural Supply and Demand Estimates, expects U.S. turkey output to decline by just over 3 per cent next year. That is very close to our expectation and quite logical given this year’s cost increases. September’s egg sets of 26.366 million were the smallest since the 26.223 million of October 2010 and only 1.3 per cent larger than the 26.010 million set in November 2009 — and that was the lowest monthly total since 1989.

September poultry placements of 20.848 million were the smallest since November 2008 and the second smallest monthly total since the fall of 1990. All of this, of course, is driven by higher feed costs and a portion of the reduction in numbers will be made up for, we believe, by ever-increasing bird weights. It is difficult to change the size of whole birds sold for holiday usage but the size of the bird that producers processing product is strictly a matter of efficiency and more pounds spreads fixed and quasi-fixed costs at both the farm and processing plant level.

Daily Livestock Report - Copyright © 2008 CME. All rights reserved.

ThePoultrySite News Desk

Related News

Our Sponsors


Seasonal Picks

Poultry Breeds and Management