Summary

Broiler production is expected to increase about two per cent in 2012, after an increase of 1.4 per cent in 2011. With expected economic conditions gradually improving, a forecast of continued high feed costs, and strong beef and pork prices, broiler integrators are expected to have an incentive to expand production.

Turkey production in 2012 is also expected to be higher, up 1.5 per cent. This is the second consecutive year of production increases after declines in 2009 and 2010.

Egg production is expected to be mixed in 2012, with table egg production declining slightly and hatching egg production higher.

Broiler Production Higher in 2012

US broiler meat production is expected to total 38.1 billion pounds in 2012, up two per cent from 2011, with the expansion concentrated mostly in the second half of the year. Gains in broiler meat production are expected to come from a combination of more birds slaughtered and continuing increases in average bird weights at slaughter. Average bird weights, which rose rapidly at the end of 2010, have continued higher through first-quarter 2011 and are expected to continue rising through the rest of 2011 and into 2012. However, the year-to-year growth in bird weights is expected to be considerably lower in 2012 than in 2011. One factor needed for expanded broiler meat production in 2012 is the continued strengthening of the general economy, including a gradual decline in the unemployment rate. A second factor likely to influence any decision by integrators to expand is the corn and soybean meal price forecast for 2011/2012. Feed prices are expected to continue at very high levels.

Broiler meat production for first-quarter 2011 was reported at 9.3 billion pounds, up 6.4 per cent from the same period in 2010. The number of broilers slaughtered rose three per cent to 2.1 billion birds. Equally important to the increase was the 2.8 per cent gain in the average weight of broilers at slaughter (5.79 pounds). A substantial portion of the broiler meat production increase in first-quarter 2011 is attributable to the fact that first-quarter 2011 had an additional processing day compared with the first quarter of 2010.

The meat production estimate for second-quarter 2011 was reduced by 45 million pounds, as increases in weights in the later part of the first quarter were lower than expected. The broiler meat production forecast was also reduced slightly, due in part to the destruction of a number of grow-out barns by tornadoes in late April, especially in Alabama. The tornadoes also created short-term disruptions at a number of processing plants.

Over the last five weeks (9 April to 7 May), the number of chicks being placed for grow-out has averaged 1.3 per cent more than in the same period in 2010. In addition, the number of eggs placed in incubators has also been unchanged from the same period in 2010. These estimates point toward an expected increase in meat production in second-quarter 2011 that will come mostly from higher bird weights, with only a small increase in the number of birds grown.

Broiler cold storage stocks totalled 660 million pounds at the end of first-quarter 2011, up 11 per cent from a year earlier. Most of the increase is attributable to the strong increase in broiler meat production in the first quarter. With broiler meat production forecast to be higher in second-quarter 2011, stocks of broiler products are expected to expand again through the middle of the year. Although lower than first-quarter levels, in the second half of 2011, stocks are expected to be higher on a year-over-year basis as lower exports are partially offset by lower production.

Since the end of 2010, cold storage holdings of broiler products have fallen by 15 per cent. Most of the decline was due to smaller cold storage holdings of leg meat products. Holdings of drumsticks, leg quarters, legs, thighs and thigh meat were all down at least 11 per cent, and stocks of thighs and thigh meat were down 32 and 48 per cent, respectively. These changes in stocks of leg meat products have been reflected in upward price movements for these products at the wholesale level in first-quarter 2011.

The 12-city wholesale price for whole broilers is expected to average 82 and 86 cents per pound for 2011, slightly higher than in 2010, but an increase of about nine per cent from 2009, when it averaged 77.6 cents per pound. Prices in 2011 are expected to be lower than the previous year through the first half of the year but to move higher in the second half. With expected higher production in 2012, prices are expected to be stronger in the first half of the year, but moderate in the second half of the year, leaving the annual price only slightly higher than a year earlier.

Broiler exports in 2012 are expected to total 6.7 billion pounds, up 4.7 per cent from the 2011 forecast, and are expected to be spread relatively evenly throughout the year. Broiler exports are expected to benefit from strong prices for beef and pork products as consumers look for the lowest priced proteins. The expansion will depend on economic growth rates in various areas of the world. With generally expanding economic conditions, US broiler exports are expected to increase to a number of regions.

In first-quarter 2011, broiler exports totalled 1.53 billion pounds, three per cent higher than in the same period in 2010. Much of the growth was from higher shipments to Asian countries such as Korea, Hong Kong and Japan. While exports were higher to many Asian countries, smaller shipments to both Russia and China partially offset them. The lower shipments to Russia were expected, as over the last several years Russia has been lowering the quota on the amount of imported poultry meat allowed into the country as an incentive for domestic poultry production expansion.

Other Chicken

Other chicken meat production is expected to reach 515 million pounds in 2012, up about four per cent from the previous year. Production is expected to increase during much of the year before declining toward the end of the year. Other chicken exports are expected to total 90 million pounds in 2012, only slightly higher than the previous year. Other chicken meat production in 2012 will be dependent on decisions by broiler integrators and egg producers to expand or contract production. With small increases expected in both production and exports, per-capita other chicken disappearance is estimated at 1.4 pounds, up from 2011 but about the same as 2010.

Turkey

Turkey meat production is expected to increase in 2012 to 5.8 billion pounds, up about two per cent from the previous year. The increase is expected to be a combination of both an increase in the number of birds slaughtered and higher average live weights of these birds at slaughter. Turkey meat production is expected to show some increase throughout the year.

With higher prices throughout 2010 and also expected in 2011, turkey producers should have considerable incentive to increase production in 2012 as long as the general economic indicators remain positive.

In first-quarter 2011, turkey meat production was 1.4 billion pounds, up 4.7 per cent from the first quarter of 2010. After being below a year earlier for seven consecutive quarters between first-quarter 2009 and third-quarter 2010, turkey production has now risen for two quarters in a row on a year-over-year basis. The production increase was the result of more birds slaughtered – up 3.6 per cent – and higher average weights at slaughter (up 1.1 per cent). Higher turkey prices throughout 2010 provided turkey producers an incentive to increase production. The production estimates for the third and fourth quarters of 2011 were both increased by 25 million pounds. Even with the increase, fourth-quarter 2011 production is expected to be down somewhat from the previous year.

Turkey Stocks Lower

Even with higher production in fourth-quarter 2010 and first-quarter 2011, turkey stocks at the end of first-quarter 2011 were still considerably lower than the previous year, down 13 per cent to 331 million pounds. This decline was a combination of lower stocks of both whole birds, down nine per cent and turkey parts and products down 15 per cent. Stocks of whole birds and parts have now been below previous-year quantities for 19 consecutive months. Stocks in 2011 are expected to remain lower than the previous year through the end of the second quarter, but gains in production are expected to move stock levels higher in the second half of 2011. Higher prices for whole birds and turkey parts are expected to reduce demand in the export market and ending stocks in 2012 are expected to be somewhat higher, although domestic demand is expected to remain strong due to higher prices for most red meat products.

Wholesale prices for whole hen turkeys are expected to average $0.97 and $1.01 per pound for 2011, up about 10 per cent from a year earlier. With low beginning stocks and only a small increase in production expected in 2011, whole bird prices are expected to remain above the previous year throughout 2011, although the gap on a year-over-year basis is expected to narrow considerably as the year progresses. In 2012, any upward pressure on prices from an improving domestic economy and higher export demand is expected to be offset by higher production and increasing stock levels in the second half of the year.

After increasing strongly in 2011, turkey exports in 2012 are forecast to total 600 million pounds in 2012, down two per cent from the previous year. The export reduction is expected to be due to continued strength in turkey prices, brought on by relatively low stock levels. The strength of the Mexican economy and relative prices between beef and pork and lower-priced alternatives will be a major determinant of turkey exports in 2012.

In first-quarter 2011, turkey exports were 160 million pounds, up 41 per cent from a year earlier. The majority of the increase came from a 42 per cent increase in shipments to Mexico, from 24 million pounds in 2010 to 32 million pounds in 2011. Shipments of turkey products also rose sharply to China and Hong Kong.

Egg Production Down Slightly in 2012

Table egg production is expected to total 6.6 billion dozen in 2012, down slightly (less than one per cent) from 2011. While 2012 is expected to have improving economic conditions and higher prices for many red meat products, egg producers – after production increases in 2010 and 2011 – are not expected to have the consistently higher prices they need as an incentive to expand production until late in the year. While the rate of lay is expected to increase very gradually, the decrease in production is expected to come from a reduction in the size of the laying flock.

Hatching egg production is expected to total 1.1 billion dozen in 2012, an increase of 4.5 per cent from 2011. The expansion in hatching egg production is dependent on the growth in broiler production, as the majority of hatching egg output is for broiler chick production.

Egg Production Higher in First Quarter 2011

Table egg production totalled just over 1.6 billion dozen in first-quarter 2011, up about one per cent from the previous year. The average number of birds in the table egg flock in first-quarter 2011 was marginally lower than the previous year but the rate of lay for table egg hens in first-quarter 2011 was up one per cent. Table egg production for the rest of 2011 is expected to continue slightly higher than the previous year. Production of hatching eggs in first-quarter 2011 was 262 million dozen, down two million dozen, or almost one per cent, from the previous year. Hatching egg production is expected to remain below the previous year during the remaining three quarters of 2011, as broiler production is expected to be lower in the second half of the year.

Egg Prices Higher in 2012

Improved overall economic conditions in 2012 are expected to generate greater demand for shell eggs and egg products, especially from the food service sector. However, higher production is expected to offset the demand and leave overall wholesale egg prices in 2012 at $1.00 to $1.08 per dozen, only slightly higher than in 2011.

During first-quarter 2011, the wholesale price in the New York market averaged $1.06 per dozen for Grade A large eggs, down 16 per cent from the same period in 2010. Part of the sharp drop in prices is due to the fact that the Easter holiday was not until late in April, so the normal run-up in prices did not occur until second quarter 2011. Although shell egg prices have fallen seasonally since the Easter holiday, the higher prices in April are expected to push the second-quarter price in the New York market to $0.97 and $0.99 per dozen, up 16 per cent from the previous year.

Exports Up to 250 Million Dozen in 2012

Egg exports are expected to expand by three per cent in 2012. As with broiler products, higher shipments in 2012 are primarily expected to be generated by stronger demand from a number of Asian countries.

Egg exports are expected to contract in 2011, with smaller shipments to Mexico and Canada and less demand for processed egg products by a number of European Community (EU) countries. In first-quarter 2011, egg and egg product exports totaled 67 million dozen, up 17 per cent from the previous year. Much of the growth occurred in March, when shipments were up 26 per cent from the previous year. Strong egg prices, especially early in the year, helped to hold down shipments. While exports in all categories increased, shipments of hatching eggs and table eggs were especially strong, rising 26 and 25 per cent compared with a year earlier. Most hatching eggs go to countries in the Western Hemisphere, and the largest markets for shell eggs for consumption were Hong Kong and Canada.

Further Reading

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May 2011