Poultry Outlook Report - November 2004 - By U.S.D.A., Economic Research Service - This article is an extract from the November 2004: Livestock, Dairy and Poultry Outlook Report, highlighting Global Poultry Industry data. The report indicates that the Broiler Q4 production forecast is higher than expected and turkey prices are also expected to remain higher.

Composite Broiler Price Percent change from previous month

Larger supplies of red meat and poultry are expected to result in record-high per capita meat consumption in 2005. Poultry meat production is expected increase to around 3 percent while pork production will likely increase about 1 percent.

Broiler production in fourth-quarter 2004 is forecast at 8.6 billion pounds, 4.4 percent higher than a year ago. Higher production is expected to come from an increase in the number of birds slaughtered and higher average weights. U.S. broiler exports for the third quarter of 2004 were 1.25 billion pounds, up 6 percent from a year ago. The export estimate for fourth-quarter 2004 was increased to 1.23 billion pounds, due to lower prices for most broiler parts, growing exports to major markets, and the reopening of shipments to China. For the same reasons, the export estimate for 2005 was raised to 4.96 billion pounds, an increase of over 300 million pounds from the previous estimate.

Wholesale table egg prices (NY grade A large) are expected to average 63-67 cents per dozen in 2005, the lowest price since 1999. The rapid fall of egg prices is due mainly to the quick rise of the U.S. layer flocks and consequently, to increased egg production. As a result, the supply of table eggs rose to a record high, causing prices to tumble. The quick rise in layer numbers was due to the repopulation of laying flocks after a breakout of Exotic Newcastle Disease in the first half of 2003 and favorable producer returns in the second half of 2003 as egg prices rose.

Broiler Production Forecast Higher in Fourth Quarter

Wholesale monthly prices (NY grade A large) and egg-type layers during the month

U.S. broiler production in the third quarter of 2004 was 8.83 billion pounds, 4.6 percent above a year earlier. The higher meat production was due to a 2.3-percent increase in the number of birds slaughtered and a 2.4-percent increase in average weights to 5.27 pounds. Federally inspected slaughter in fourth-quarter 2004 is forecast at 8.6 billion pounds, an increase of 4.4 percent from a year earlier. The fourth quarter production gain is again expected to come from increases in the number of birds slaughtered and higher average weights. The weekly broiler hatchery report shows that over the last 5 weeks (Oct. 9 through Nov. 6), the number of broiler chicks placed for grow out has averaged 3.7 percent higher than the same period in 2003. The data for eggs placed in incubators over the last 5 weeks point toward continued growth in chick placements. The number of eggs placed in incubators over the last 5 weeks has averaged 2.4 percent higher than the same period a year earlier. Broiler production for 2005 is forecast at 35.2 billion pounds.

Broiler Exports Raised

Retail Turkey Price Percent change from previous month

Due to a combination of lower parts prices, larger shipments to major markets, and the reopening of the Chinese market, the export forecast for 2005 was increased to 4.96 billion pounds, up 355 million pounds from the previous forecast. China has recently announced that U.S. poultry products produced on or after November 9 will be allowed into China. In February of this year, China had restricted imports of U.S. poultry products due to Avian Influenza outbreaks in the United States. U.S. broiler exports in third-quarter 2004 were 1.25 billion pounds, up 6 percent from a year earlier. The increase in the third quarter was chiefly the result of larger shipments to Russia, Mexico, and the CIS countries. Expected growth in these markets has caused the export forecast for fourth-quarter 2004 to be increased to nearly 1.23 billion pounds. The quantity of broiler exports over the last several months has expanded in response to falling prices for most broiler parts.

Third-Quarter Broiler Ending Stocks Higher

Higher broiler production has pushed stocks of broiler products higher during the third quarter. Broiler stocks held in cold storage at the end of September were 763 million pounds, 27 percent higher than a year earlier. Most of the broiler stocks are parts and were up 30 percent from the same period in 2003. However, cold storage holdings of whole broilers were down by 22 percent, which has allowed whole broiler prices to remain above their year-earlier levels.

The combination of higher production and growing stocks pushed October 2004 prices for most broiler parts below a year earlier. Northeast boneless/skinless breast meat prices were down 17 percent from a year earlier. Since June, prices for breast meat products have declined by around 50 percent. However, while their prices have also declined since June, prices for leg quarters and wings were still 4 and 23 percent higher than a year earlier. With lower stocks available, prices for whole broilers have been above a year earlier and are expected to remain that way for the remainder of 2004.

Turkey Production Declines Again

U.S. turkey production in the third quarter of 2004 was 1.39 billion pounds, down 1.6 percent from the same period in 2003. Production decreased as a result of a lower number of birds being slaughtered (down 3.3 percent) offseting an increase in average bird weight to 26.5 pounds. Federally inspected slaughter in the fourth quarter of 2004 is forecast at 1.4 billion pounds, again lower than during the same period in 2003. Turkey production is expected to increase slightly in 2005 in response to higher prices throughout most of 2004.

Turkey Exports for 2005 Increased

The forecast for 2005 turkey exports is now 510 million pounds, up 55 million from the previous estimate. Expected higher shipments to Mexico and Canada and the reopening of the Chinese market are the main reasons for the increase. U.S. turkey exports for third-quarter 2004 were 134 million pounds, up slightly from the previous year, as larger exports to Mexico offset smaller Asian shipments. This places the estimate for annual 2004 exports at 450 million pounds, an increase from earlier estimates but still below the 484 million pounds exported in 2003. The larger shipments to Mexico and some other countries have been the chief reasons for an increase in the export estimate for the fourth quarter to 140 million pounds.

Third-Quarter Ending Stocks Lower

Weekly Broiler Slaughter Percent change from last year

Lower third-quarter production together with a modest gain in exports pulled thirdquarter ending stocks down. Cold storage holdings of whole turkeys at the end of September were estimated at 293 million pounds, down 23 percent from the same period last year.

Holdings of turkey parts were also down. Stocks of turkey parts at the end of September were estimated at 237 million pounds, down 12 percent from a year earlier. Total third-quarter ending stocks for turkey were 530 million pounds, a decrease of 118 million pounds (18 percent) from a year earlier.

Turkey Prices Expected to Remain Higher

Lower domestic production and falling stock levels have combined to push whole turkey prices higher over the last 6 months. The price for whole hens in the Eastern region was 76.9 cents per pound in October, up 16 percent (about a dime) from a year earlier. Prices for whole birds and turkey parts are expected to remain strong through the Thanksgiving holiday period and then decline seasonally, but remain above their year-earlier levels. With continued slow production growth and higher exports forecast, turkey prices are expected to remain strong through the first half of 2005.

Egg Prices Continue To Decline

Wholesale egg prices (NY grade A large) 2003, 2004, and 1999-2003 average

Wholesale table egg prices (NY grade A large) are expected to average 63-67 cents per dozen in 2005, likely the lowest since 1999. In 2003 egg prices averaged 88 cents per dozen. Monthly egg prices in 2003 rose to a high of 123 cents per dozen in November 2003 and again in March 2004. However, since March prices have steadily declined to 58 cents a dozen in October 2004. Prices in November and December are expected to move upwards due to seasonal holiday demand. For all 2004, prices are expected to average around 81 cents a dozen or about 7 percent lower than in 2003.

The rapid fall of egg prices was due mainly to the quick rise of U.S. layer flocks and consequently, increased egg production. As a result, table egg production rose to a record high, causing prices to tumble, due to the relatively inelastic price demand for eggs. The quick rise in layer numbers was due to the repopulation of laying flocks after a breakout of Exotic Newcastle Disease in the first half of 2003 and economic incentives from rapidly rising producer returns in the second half of 2003 driven by rapidly rising egg prices. From June 2003 to September 2004, U.S. egg-type layers rose by 9.6 million birds, from 275.1 to 284.7 million egg-type layers. The rapid buildup of the laying flocks brought the U.S. egg-type layers to the largest inventory since 1980 when reporting of separate table egg and hatching flock data began. Table egg production in 2004 is expected to be up nearly 2 percent from 2003. In 2005, table egg production is expected to increase to about 6,400 million dozen, up over 1 percent from 2004.

Turkey Production and Stocks Down, Prices Higher

Weekly Turkey Slaughter Percent change from last year

Total U.S. egg production in 2004, table and hatching, is expected to rise to nearly 7.4 billion dozen, or 1.8 percent, over 2003. Table eggs are expected to account for about 85 percent of total production in 2004. Hatching egg production in 2004 is expected to rise fractionally, reflecting higher broiler production. Eggs broken in 2004 are expected to increase about 6 percent over a year ago as lower wholesale egg prices encourage higher breaking than in 2003.

Retail egg prices dropped to $1.23 in the third quarter of 2004 from $1.42 per dozen in the previous quarter. For all of 2004, retail egg prices are expected to average around $1.35 to 1.37 per dozen, which would be a record high.

In the third quarter of 2004, U.S. egg exports are expected to reach 48 million dozen, up substantially from the first quarter’s 23.2 million. The increase is mainly due to recovery of most U.S. flocks from outbreaks of Avian Influenza in early 2004 and many countries lifting restrictions on U.S. eggs and egg products. For example, U.S. exports of eggs and egg products (in-shell egg equivalents) to the United Kingdom rose from 224,000 dozen to 3.3 million dozen between January and August 2004. Likewise, U.S. exports to Hong Kong rose from 464,000 dozen to 1.9 million dozen and those to China from 27,000 dozen to 927,000 dozen.

The U.S. export market for shell eggs and egg products looks promising in the future, due to competitive U.S. prices, high quality, and several restrictive measures imposed on layer flocks in the European Union due to contaminated feed. Egg exports in 2005 are expected to be about 10 percent higher than in 2004.

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