Poultry Outlook Report - January 2004

Poultry Outlook Report - January 2004 - By U.S.D.A., Economic Research Service - This article is an extract from the January 2004: Livestock, Dairy and Poultry Outlook Report, highlighting Global Poultry Industry data. The report indicates that Broiler production is expected to be higher in 2004.

Poultry Trade Outlook Stronger

The outlook for poultry meat trade in 2004 is stronger than in 2003. Early in 2003 there were a number of uncertainties stemming from new trade policies that were going into effect with Russia and Mexico. At the beginning of 2004, many of the trade policy questions with these two countries (our two largest markets) have been resolved. With a designated amount of overall poultry import quantity, shipments to Russia are expected to be more stable than in the past. With the U.S. economy expanding strongly, the Mexican economy is also expected to strengthen, resulting in a higher demand for both broiler and turkey products in 2004.

Retail Turkey Price Percent change from previous month

Additional factors boosting poultry exports are the restrictions on exports of U.S. beef products and the weakness of the U.S. dollar against a number of currencies. While it is uncertain as to the extent that foreign consumers will substitute poultry for beef, the absence of the two largest high-quality beef exporters (U.S. and Canada) on the world markets is expected to be a positive factor for the poultry industry. The weakness of the dollar against some currencies is also expected to be a positive for poultry exports by making them relatively less expensive and more cost competitive with other major poultry exporting countries.

U.S. broiler exports in November 2003 were 466 million pounds, up 7 percent from the previous year. This leaves exports over the first 11 months of 2003 at 4.6 billion pounds, up 2 percent from a year ago. As usual, leg quarter exports to Russia made up the largest single portion of the shipments. In November, shipments of leg quarters to Russia totaled 126 million pounds, 39 percent of all leg quarter exports and 27 percent of all broiler exports, on a quantity basis.

Broiler Production Expected Higher in 2004

Composite Broiler Price Percent change from previous month

Weekly broiler hatchery reports continue to show increases in both the numbers of eggs being placed in hatcheries and the number of broiler chicks being placed for growout. During the fourth quarter of 2003, (10/4 – 12/27), the number of eggs being placed per week in hatcheries averaged 200 million, up 2.3 percent from the same period a year earlier. The number of broiler chicks placed for growout per week averaged 161 million, 2.6 percent higher than a year earlier. With stronger prices for almost all broiler products and expected strength in the export market, this pattern of higher egg and chick placement is expected to continue into the first quarter of 2004. Coupled with continued gains in average weight at slaughter, this expansion implies that broiler production during the first 6 months of 2004 could reach 16.5 billion pounds, up 3.4 percent from the same period in 2003. Partially offsetting the positive demand factors of a growing economy and a strong export market will be the effects of an increase in beef products in the U.S. market as products normally exported are forced into the domestic market.

Weekly Broiler Slaughter Percent change from last year

Broiler production in November was 2.42 billion pounds, a decrease of 1.6 percent from a year earlier. However, this is due chiefly to one less slaughter day in November 2003 than the previous year. Slaughter in December is expected to be up a couple of percents from the previous year’s level.

Broiler stocks declined in November, totaling 580 million pounds at the end of the month. This is 16- million-pounds lower than the previous month and 27-percent lower than at the same time in 2002. Strong exports and lower stock levels have led to continued increases for most broiler prices. The December 12-city average for whole broilers was 65.7 cents a pound, up 20 percent from the previous year. The wholesale composite price for whole broilers and broiler parts was 70.5 cents a pound in December, 39 percent higher than in December 2002. Movements in domestic broiler prices during the first quarter of 2004 will depend heavily on the extent discovery of BSE leads consumers to substitute poultry products for beef.

Turkey Production Down in November

Weekly Turkey Slaughter Percent change from last year

In December, the price for whole hen turkeys in the Eastern market averaged 69.3 cents a pound, about 3 percent higher than the previous year. Wholesale prices for whole birds and parts are expected to remain relatively stable over the next several months, as turkey stocks (whole birds and parts) are still higher (up 5.7 percent) than the previous year. In November, turkey production fell by 6.5 percent due to a combination of a smaller number of birds slaughtered and a slightly lower average weight. From September through November, the number of poults being placed for growout was down almost 5 percent from a year earlier.

In November, U.S. turkey exports totaled 45 million pounds, up 28 percent from the previous year. With this surge in exports, turkey shipments over the first 11 months of 2003 are 19 percent higher than the previous year. While exports to Mexico were down strongly at the beginning of 2003, their strengthening over the last several months is the prime reason for the increase in shipments. Partially offsetting these increases have been weak exports to both Hong Kong and Russia.

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For more information view the full Livestock, Dairy and Poultry Outlook - January 2004 (pdf)

Source: Livestock, Dairy and Poultry Outlook - U.S. Department of Agriculture, Economic Research Service - January 2004