Poultry Outlook Report - September 2007

By U.S.D.A., Economic Research Service - This article is an extract from the September 2007: Livestock, Dairy and Poultry Outlook Report, highlighting Global Poultry Industry data.
calendar icon 21 September 2007
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Broiler meat production continues to slowly expand. The slow expansion and strengthening exports have allowed prices for most broiler products to remain considerably higher than in the previous year. The generally higher prices are expected to continue through the second half of 2007 and into 2008. Although turkey production and stocks of whole birds have been above a year earlier, prices for whole turkeys are expected to remain higher than the previous year through the third quarter. With a small laying flock and a strong export market, egg prices are expected to range from $1.14 to $1.15 per dozen at the wholesale level in the third quarter and to continue higher than the previous year in the fourth quarter.

Third-Quarter Broiler Meat Production Up Slightly

The U.S. broiler meat production estimate for third-quarter 2005 is 9.05 billion pounds, up 1.9 percent from third-quarter 2006. Most of the increase is expected to come from a higher number of birds slaughtered, as average weights at slaughter are expected to increase only modestly. High prices for most broiler products over the last 3 to 4 months has led broiler companies to expand the number of eggs placed in incubators and the number of chicks placed for growout. However, through July year-to-date broiler meat production is still below the previous year. One factor in the lower broiler meat production so far this year has been the lower average amount of meat yield per bird.

Broiler meat production in July was 3.04 billion pounds, up 6.3 percent from a year earlier. However much of this gain is due to 1 additional slaughter day in 2007, compared with 2006. The number of birds slaughtered in July was 756 million, 5.5 percent higher than the previous year, while the average live weight at slaughter was 5.47 pounds, up 1.7 percent from July 2006.

For the week ending September 8, the National Agricultural Statistics Service estimated that 177 million broiler chicks were placed for growout. This is a 1.7-percent increase from a year earlier and continues a pattern seen over the last several months of higher numbers of chicks being placed for growout. Strong prices for almost all broiler products are expected to exert some pressure to continue or increase the pace of chick placements in the future, as long as feed costs remain relatively stable.

Stock levels for broiler products continue to be below those of the previous year. Ending stocks for the second quarter were revised downward to 622 million pounds, which is about 150 million pounds less than at the end of June 2006. Stocks for most products were lower, but one of the major factors in the overall decline was a 38-percent decline in cold storage holding of leg quarters. Stocks at the end of July were slightly higher at 639 million pounds, but this is still down 11 percent from the same period in 2006.

Lower year-to-date broiler meat production and gains in exports, have lowered stocks and kept prices for most broiler products well above a year earlier. The 12-City wholesale price for whole birds averaged about 79 cents a pound in August, down slightly from July, but still 15 percent higher than in August 2006. Prices for almost all broiler products were higher in August, with most being at least 20 percent above the previous year.

Turkey Production Up 10 Percent in July

Turkey meat production in July was about 505 million pounds, up 10.1 percent from a year earlier. The increase was mostly the result of 1 additional slaughter day increasing the number of birds being slaughtered, as the average weight rose modestly. In July the number of turkeys slaughtered was 22.6 million, an increase of 8.5 percent from July 2006. The average live weight at slaughter was 28.2 pounds, up about 1.5 percent from a year earlier.

Over the first half of 2007, U.S. turkey meat production totaled 2.88 billion pounds, up 3.2 percent from the same period in 2006. The forecast for the third quarter of 2007 is for meat production of 1.47 billion pounds, an increase of 46 million pounds (3.2 percent) from a year earlier.

Although turkey meat production has been higher in the first half of 2007 and turkey exports have increased only modestly, overall turkey stocks are down slightly from a year earlier. Ending stocks for the first half of 2007 were revised slightly to 448 million pounds, down about 50 million pounds from the same point in 2006 and down considerably from second-quarter ending stocks in recent years.

Turkey stocks at the beginning of August were 502 million pounds, down 1.9 percent from a year earlier, but there is a wide difference in the stocks situation between whole birds and turkey meat parts. Stocks of whole turkeys at the beginning of August were 269 million pounds, 9 percent higher than at the beginning of August 2006, reflecting strong production, especially in July. Stocks of turkey parts at the beginning of August were 233 million pounds, 12 percent lower than the previous year. This decrease is probably the result of an increase in turkey exports in the last several months.

The increase in cold storage holdings for whole birds has not placed any downward pressure on whole-bird prices. In August, the average price for whole hen turkeys in the Eastern market was 89.7 cents per pound, up 14 percent from the previous year. Prices for whole hens in the third quarter are forecast to average between 88 to 89 cents per pound (up about 8 cents per pound from the same period in 2006). Prices in the fourth quarter are forecast to be between 90 and 94 cents per pound, up somewhat from the almost 90 cents per pound they averaged in fourth-quarter 2006.

Egg Prices Climbing in Third Quarter

In July, table egg production was reported at 536 million dozen, down 1.7 percent from a year earlier. This is the eighth consecutive month that table egg production has declined on a year-over-year basis. Most of the reduction in table egg production has come from a reduced number of birds in the table egg production flock. In July, the overall number of laying birds was 339 million, with about 280 of those birds in the table egg production flock. The remaining birds produce eggs for hatching. The 280 million birds in the table egg flock is 1.4 percent lower than in July 2006, and the table egg flock numbers have been continuously below the previous year (on a year-over-year basis) since December 2006.

An additional factor pushing egg prices higher has been the strong export market for shell eggs and egg products. With the major exception of Canada, total egg and egg product exports have been higher to most countries. Over the first 7 months of 2007, egg and egg product exports have totaled 149 million dozen, up 43 percent from the same period in the previous year. The three major areas where exports have increased significantly are the EU-27, the Hong Kong/China market, and Mexico. Shipments to the EU-27 have totaled 29.7 million dozen so far in 2007, up over 250 percent from the same period in 2006. The exports to the EU-27 have been split between shell egg exports and egg products. However, our shell egg exports to the EU-27 are likely going into the EU breaking-egg market.

The increased EU-27 demand has been fueled to some extent by the appreciation of the Euro versus the U.S. dollar.

Lower production and strong export markets have put strong upward pressure on prices. Wholesale shell eggs for consumption in the New York market in the third quarter of 2007 are expected to average between $1.14 and $1.15 per dozen, up from only 64 cents per dozen in third-quarter 2006. Egg prices are expected to remain strong in fourth-quarter 2007, with the average forecast between $1.02 and $1.08 per dozen, an increase of between 13 and 19 cents per dozen from the previous year.

Further Information

For more information view the full Livestock, Dairy and Poultry Outlook - September 2007 (pdf)

September 2007
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