Poultry Outlook Report - March 2004 - By U.S.D.A., Economic Research Service - This article is an extract from the March 2004: Livestock, Dairy and Poultry Outlook Report, highlighting Global Poultry Industry data. The report indicates that the Avian Influenza outbreaks have reduced broiler export expectations.

The U.S. poultry industry continues to be rocked by Avian Influenza (AI). There now have been outbreaks in Delaware, New Jersey, Pennsylvania, Texas, and most recently in Maryland. Due to the export bans or restrictions by other countries, the forecast for broiler exports was lowered to 4.955 billion pounds.

Based on previous AI outbreaks, it is assumed that their national bans will be regionalized to specific States, provided there are no further outbreaks of AI. Mexico has already announced that exports from some States can resume. Despite expected lower exports and increased production in 2004, broiler prices are forecast record high. Prices are expected to average 69-73 cents per pound this year, compared with 62 cents last year.

Avian Influenza Outbreaks Cloud Trade Outlook

The U.S. poultry industry continues to be rocked by outbreaks of Avian Influenza (AI) in various States. There have been outbreaks in Delaware, New Jersey, Pennsylvania, Texas, and most recently in Maryland. The outbreak in Maryland was at a commercial broiler operation and located where there are a large number of other operations within a relatively short distance. The current assumption is that the countries currently banning all U.S. poultry shipments will, over time, eventually target specific States, provided there are no further outbreaks of AI.

The timetable for this regionalization process will vary from country to country. Mexico recently announced that some exports from the United States can resume. There are restrictions on what products specified States can export to Mexico and on the storage of poultry products in Texas before entering Mexico. Due to the number of bans or restrictions placed on the export of broiler products, the forecast for broiler exports was lowered to 4.96 billion pounds from the previous forecast of 5.28 billion pounds.

Broiler Production Rises in January, Production Expected Higher in 2003

Composite Broiler Price Percent change from previous month

Broiler production for January 2004 was reported at 2.84 billion pounds, up 2.3 percent from the previous year. Weekly chick placements are continuing to average about 1.5 percent higher than the previous year, and the forecast for broiler production in the first quarter of 2004 is now almost 8.1 billion pounds, 3.6 percent higher than a year ago.

Along with the increase in the number of chicks being placed for growout, the average weight of birds at slaughter has been running over 2 percent higher than the previous year. The overall broiler production estimate for 2004 is now 33.93 billion pounds, up 3.6 percent from 2003. Revisions in broiler production contained in the Poultry Slaughter-Annual Summary for 2003 increased total broiler production for 2003, to 32.75 billion pounds, up 1.6 percent from 2002. The increase is due to an increase in the average weight at slaughter, as total broiler slaughter declined slightly.

Weekly Broiler Slaughter Percent change from last year

A strong domestic economy and relatively small growth in broiler production has pushed prices for broiler products well above year-earlier levels. Over the first 2 months of 2004, the 12-city whole broiler price has averaged 71.8 cents a pound, 19 percent higher than during the same time in 2003. Prices have also risen for other broiler products. Prices for boneless-skinless breast meat in the Northeast market averaged $1.69 per pound during January and February, 24 percent higher than the previous year. Prices for rib-on breasts averaged 96.4 cents per pound, up 15 percent from the same time in 2003. Prices of these products, which are mostly sold on the domestic market, have risen due to the combination of a strengthening economy, strong prices for other protein products, the effects of consumer reaction to the BSE situation, and high-protein diets increasing broiler demand.

Prices for other broiler products, more dependent on the exports market, have also moved significantly higher. Leg quarter prices in January and February averaged 34.6 cents per pound, up 73 percent from the same period in 2003. The same pattern can be seen for wings, up 72 percent and thighs, up 32 percent. Even with a forecast of higher production in 2004, domestic broiler prices are expected to remain strong. How strong will depend on both the domestic economy and how quickly other countries relax bans and restrictions on imports of U.S. poultry products.

Turkey Production Seen Down in 2004

Retail Turkey Price Percent change from previous month

Turkey production in 2004 is forecast at 5.63 billion pounds, down about 25 million pounds from the previous year. Over the last 13 months, the number of poults being placed for growout has only been above its year-earlier level once. While prices for turkey products have begun to strengthen, they have not shown the price strength that broiler products have.

The lower poult placements are expected to result in lower turkey production over the first half of 2004. Turkey stocks at the end of January were down 9 percent from the previous year, a wide departure from the beginning of 2003 when they were up over 30 percent. Smaller stocks of both whole birds and parts, along with lower production is expected to gradually strengthen prices over 2004. The outlook for turkey production and prices has been helped by Mexico’s announcement that poultry exports from the United States can resume, under certain restrictions. While no turkey production operations have tested positive for AI they have been under the same trade bans as broilers. Also, Mexico accounts for about 50 percent of all U.S. turkey exports.

Revisions in turkey production slightly raised 2003 production to 5.65 billion pounds, still down 1 percent from 2002. The decrease in turkey production was the result of a lower number of birds being slaughtered, as the average weight was unrevised.

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

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