Summary

Poultry: Broiler meat production in 2010 was 36.9 billion pounds, up 3.9 per cent from the previous year. The outlook for 2011 is for moderate increases in production during the first half of the year, with declining production in the second half. Turkey meat production in 2011 is forecast at 5.63 billion pounds, down fractionally from 2010. As with broilers, turkey production is expected to be higher in the first half of 2011 but to decline in the second half. In response to considerably higher whole bird prices in 2010, the number of poults placed in fourth-quarter 2010 rose by three per cent. Table egg production is expected to increase slightly in 2011, reaching 6.6 billion dozen.

Poultry Trade: December broiler and turkey shipments were both up from a year earlier. Broiler shipments totalled 619 million pounds, an eight per cent jump from last December’s shipments. Turkey shipments totalled 60.8 million pounds, an increase of 31 per cent from a year ago. The 2010 fourth-quarter broiler shipments registered as the largest ever, while turkey shipments ranked third largest quarter shipments on record.

POULTRY PRODUCTION

Broiler Meat Production Forecast at 37.3 Billion Pounds in 2011

The outlook for broiler meat production in 2011 is for a small increase in year-over-year production during the first half of the year, followed by a slight decline in production in the second half compared with the previous year. The estimate for broiler meat production in 2011 is 37.3 billion pounds, up about one per cent from 2010. The broiler industry is expected to face conflicting pressures during 2011. Broiler product demand is expected to gradually increase as domestic consumption growth is supported by an improving economy and gradually falling unemployment rates. However, broiler producers seem to have scaled back expansion plans due to rising costs resulting from sharp increases in feed prices.

In December 2010, broiler meat production was reported at 3.17 billion pounds, up 6.9 per cent from a year earlier. The number of birds slaughtered increased year-over-year by three per cent, and additionally, the average liveweight at slaughter rose to 5.85 pounds, 3.5 per cent higher than in December 2009. Broiler meat production in fourth-quarter 2010 totalled 9.48 billion pounds, up sharply (7.4 per cent) from fourth-quarter 2009. The growth was again due to both an increase in the number of broilers being slaughtered (up 3.5 per cent) and a strong increase in the average liveweight at slaughter (up 3.6 per cent). The average liveweight per bird at slaughter in fourth-quarter 2010 was a record 5.87 pounds.

Broiler meat in cold storage at the end of December 2010 totalled 760 million pounds, up 23 per cent from the previous year and 82 million pounds higher than at the end of the third quarter. With a sharp expansion in production during the fourth quarter that has extended into the first quarter of 2011, ending stocks are expected to remain well above year-earlier levels through the first half of 2011, then to move below year-earlier levels in the second half of the year. The increase in cold storage holdings for almost all broiler products during fourth-quarter 2010 was the result of a large jump in production. The lone exception was leg quarters. From the end of the third quarter to the end of the year, cold storage holdings of leg quarters fell by 13 million pounds (down 11 per cent) to 110 million pounds. The reduction in leg quarter holdings was the result of very large fourth-quarter exports. Frozen leg quarters are the primary US export product, and broiler exports for fourth-quarter 2010 were 1.95 billion pounds, the largest ever quarterly exports.

In January 2011, prices for boneless/skinless breast meat in the Northeast market averaged $1.12 per pound, down 11 per cent from the previous year and two cents per pound lower than in December 2010. Over the first half of 2011, breast meat prices are expected to benefit from improving economic conditions, especially if restaurant sales strengthen, and with high prices for competing meats. Leg quarter prices in the Northeast market were also lower, averaging 35.4 cents per pound in January 2011 compared with 36.6 cents per pound the previous year. Leg quarter prices were steady through most of 2010 as a strong export market counterbalanced weaker demand in the domestic market. Broiler meat exports are forecast to remain close to the large shipments seen in 2010. If exports remain relatively strong, there is likely to be some upward pressure on leg quarter prices in the second half of 2011, as production levels fall slightly below the previous year. This may be partially countered by somewhat higher stock levels at the beginning of second half of 2011.

Turkey Meat Production Forecast for 2011 Increased

Turkey meat production in 2011 is forecast to total 5.62 billion pounds, down slightly from 2010. The current forecast is an increase of 65 million pounds from the January forecasts. If realised, this would be the third year in a row with declining turkey meat production. Turkey meat production is expected to show slightly higher production output in the first half of 2011 but these gains are expected to be more than offset by lower production in the second half of 2011. The lower meat production is expected to arise from a smaller number of birds slaughtered, as the average liveweight at slaughter is expected to remain relatively close to year-earlier levels. Turkey producers, like other livestock producers, will be faced with sharply higher feed costs and the uncertainty over whether wholesale prices will be high enough to maintain positive margins.

The number of turkeys slaughtered in 2010 was 243 million birds, just over one per cent less than the previous year. In 2009, the number of turkeys slaughtered had declined by 9.4 per cent. In 2010, turkey meat production fell marginally (down 0.3 per cent) to 5.6 billion pounds. The lower number of turkeys slaughtered was the reason for the decline, as the annual average liveweight for turkey at slaughter in 2010 was 29.1 pounds, a small increase (0.7 per cent) from the previous year.

Turkey meat production in fourth-quarter 2010 was 1.51 billion pounds, up 4.5 per cent from the previous year after being lower on a year-over-year basis in the first three quarters of 2010. The production declines during the first three quarters of 2010 were a continuation of the strong production declines seen throughout 2009. The increase in meat production in fourth-quarter 2010 was due to a combination of a higher number of turkeys being slaughtered (up 3.5 per cent) and a less than 1 per cent increase in the average liveweight of those birds at slaughter.

The sharp 2009 turkey production decline, followed by the small decline in 2010, has led cold storage holdings for whole turkeys and turkey parts to decline to very low levels. At the end of December 2010, turkey cold storage holdings totalled 188 million pounds, down 28 per cent from a year earlier. The 188 million pounds in cold storage holdings was the lowest year-ending level since 1986. Stocks of whole birds declined the most, falling to 42 million pounds by the end of 2010, down 45 per cent from the previous year. Stocks of other turkey meat products also decreased markedly, falling to 146 million pounds, a 21 per cent decrease from the previous year. With turkey production in the first half of 2011 expected to be slightly higher than the previous year, turkey ending stocks are expected to gradually come closer to year-earlier levels in the first half of 2011 and to move slightly higher than the previous year in the second half, as strong prices reduce exports.

The national prices for frozen whole hens averaged 88.1 cents per pound in January 2011, an increase of 21 per cent from January 2010 but 10 per cent lower than in December 2010, as prices traditionally decline in the first part of the year. With only slightly higher production expected during the first half of 2011 and much lower beginning stocks of whole birds and other turkey meat, national prices for frozen hens are expected to remain above year-earlier levels at least through the first half of 2011.

Table Egg Production Forecast at 6.6 Billion Dozen in 2011

Table egg production is expected to increase only slightly in 2011, reaching 6.6 billion dozen, up from the 6.5 billion dozen produced in 2010. The increase in production is expected to be spread out fairly evenly throughout the year and is expected to come from small increases in the number of hens in the table egg flock, combined with relatively little change in the rate of eggs produced per bird. The number of birds in the table egg flock was higher in four of the six months in the second half of 2010, and the flock is expected to remain above year-earlier levels through the first several months of 2011. While the prices for almost all feed components have risen rapidly in the last several months, egg prices are expected to get some support from higher prices for beef and pork.

Hatching egg production for 2011 is forecast at 1.07 billion dozen, basically unchanged from 2010, reflecting slowing growth in broiler production as large increases in grain prices pressure integrator margins. The reduction in production is expected to be in the second through the fourth quarters, with production in the first quarter of 2011 being slightly higher than the previous year.

Table egg production reached 1.66 billion dozen in fourth-quarter 2010, giving a total for the year of 6.52 billion dozen, up less than one per cent from the previous year. Table egg production was higher in nine months in 2010 and only fell in October and November. Production of hatching eggs totalled 1.07 billion dozen in 2010, as production was slightly higher in all four quarters. The increase in hatching egg production was due primarily to higher production of meat-type eggs and the number of hens in the broiler-breeder flock averaging over two per cent higher in 2010 than the previous year. The size of the-broiler-breeder flock was higher throughout 2010 than in the previous year, in contrast to 2009, where the flock size was lower through most of the year than in 2008.

With only a small increase in egg production and a strong gain in exports, domestic wholesale table egg prices averaged just over $1.06 per dozen in 2010, up three per cent from the previous year. Prices in fourth-quarter 2010 averaged $1.23 per dozen, a gain of 4.7 per cent from fourth-quarter 2009. In January 2011, table egg prices declined to around $1.03 per dozen in the New York market, partially due to seasonal drops in demand after the New Year. However, by early February 2011, prices had strengthened somewhat, to just over $1.10 per dozen. With some growth forecast in production and an expected less robust export trade, wholesale table egg prices are expected to average $0.98 to $1.04 per dozen in 2011.

Egg Exports Forecast at 247 Million Dozen for 2011

After increasing by seven per cent to 258 million dozen in 2010, a result of strong demand for table eggs and egg products, total egg exports are expected to decline by four per cent in 2011 to 247 million dozen.

Although domestic prices are expected to decline some in 2011, the decline in egg exports is expected to come from smaller shipments of egg products to EU countries. Higher shipments of egg products to EU countries had been a major factor in higher egg exports in 2010.

POULTRY TRADE

Broiler Shipments Rose in December

December completed a year that began with some market uncertainty and challenges surrounding unresolved trade issues between the United States, Russia and China. These issues brought about great fluctuations in broiler shipments but the resumption of trade with Russia contributed to large shipment volumes toward the year’s end. In December, broiler shipments totalled 619 million pounds, an eight per cent increase from last December. Most of the increase in December 2010 broiler shipments came from Russia, Mexico, Hong Kong and Angola, four of the US top seven broiler markets. Broiler shipments to Russia rose by 63 per cent from a year ago, while shipments to Mexico, Hong Kong and Angola rose by 22 per cent, 143 per cent and 345 per cent, respectively. The volume of broiler shipments in December was the third largest in 2010. In December 2009, lower exports to Georgia, Lithuania and Ukraine accounted for seven per cent of the US broiler shipments but a year later, their combined share dwindled to less than one per cent.

Broiler Shipments Set New Record in Fourth Quarter

Broiler shipments finished the 2010 year with large volumes of broiler meat shipped during the last four months. In the fourth quarter, broiler shipments totalled 1.954 billion pounds, which surpassed the previous record set in the third quarter of 2008. Major contributors included Mexico, Russia and Hong Kong. Mexico accounted for 13 per cent of the total volume shipped in the fourth quarter, while Russia and Hong Kong accounted for 29 per cent and 6 per cent, respectively.

Turkey Shipments Finished Strong in December

Turkey shipments in December 2010 were up 31 per cent from the previous year. A total of 60.8 million pounds of turkey meat was shipped abroad, with over half (56 per cent) going to Mexico. In addition to Mexico, other major contributors to US export trade included China and Canada. Fourteen per cent of the US total turkey shipments went to China, which saw a 155 per cent increase over the volume shipped the previous December. Turkey shipments to Canada accounted for only eight per cent of the US total December 2010 volume; compared with the previous December’s shipments, 182 per cent more turkey meat was shipped to the Canadian coast this December.

Fourth-Quarter Turkey Shipments Rose Substantially

The last six months of turkey shipments have been the largest volumes recorded in the year 2010. Shipments sent out in the months of October, November and December totalled over 174 million pounds, the third largest volume ever recorded. Three of the US primary turkey markets – Mexico, China and Canada – accounted for over 72 per cent of the total turkey shipment for the fourth quarter. Of the three major markets, Mexico has been the largest destination for US turkey meat.

Further Reading

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February 2011