Summary

Poultry: Broiler production is expected to be higher at the end of third-quarter 2010 and moving into the fourth quarter due to gains in the numbers of chicks being placed for grow-out and higher average weights at slaughter. Broiler cold storage holdings are higher than those for the previous year, but prices – even with higher production and stocks – were still mainly higher through September. Year-to-date turkey production continues to be lower than a year earlier, although August production was higher. The lower production through the first eight months of 2010 has been reflected in lower stock levels and upward pressure on prices. Wholesale whole turkey prices have increased considerably, with third-quarter prices averaging 98 cents per pound, up about 20 cents, or 25 per cent, from the previous year.

Poultry Trade: August broiler shipments fell from those of a year ago, while turkey shipments rose. Broiler shipments totalled 508.8 million pounds, a 12 per cent drop from last August’s shipments. Turkey shipments totalled 56.1 million pounds, an increase of three per cent from a year ago.

Poultry

Broiler meat production up six per cent in August

Broiler meat production in August was 3.2 billion pounds, up 5.8 per cent from the previous year. The increase in production was due to a higher number of birds slaughtered (766 million, up 5.5 per cent) and higher average weights. The total live weight of broilers at slaughter was up 5.7 per cent, as the average live weight for broilers at slaughter was 5.57 pounds, up fractionally from the previous year.

Broiler meat production in July and August was slightly higher than expected, and the estimate for third-quarter 2010 broiler meat production was increased slightly to 9.4 billion pounds, 2.5 per cent higher than in third-quarter 2009.

With the number of chicks being placed for grow-out and average weights both climbing, the broiler meat production forecast for fourth-quarter 2010 was also increased slightly to 9.1 billion pounds, 3.1 per cent higher than in fourth-quarter 2009. Average live weights at slaughter in fourth-quarter 2010 are expected to be higher than a year earlier.

Broiler meat production for 2011 is expected to total 37.1 billion pounds, up about 645 million pounds from 2010 but down 250 million pounds from last month’s estimate. The reduction is the result of expected higher feed grain prices in 2011. The higher prices are expected to cause integrators to scale back expansion plans in 2011 although the reduction is not expected to begin to take effect until second quarter 2011. In 2011, broiler integrators are expected to face overall grain prices, especially for corn, that are considerably higher than in 2010. While broiler integrators are expected to lower the pace of expansion in 2011, the impact of higher grain prices will depend on a number of factors. Any improvements in overall economic conditions and consumer confidence or in foreign demand will help to moderate the downward pressure on production normally seen with higher grain prices.

Over the five-week period (18 September to 10 October 2009), the number of chicks placed for grow-out has been 3.3 per cent higher than in the same period in 2009. Over the last several months, the number of chicks placed for grow-out has been slowly expanding compared with the previous year. This trend is expected to continue into the fourth quarter but then begin to level out in first-quarter 2011. Chicks placed for grow-out through the beginning of November will be expected to be slaughtered in fourth-quarter 2010.

At the end of August, cold storage holdings of broiler meat products totalled 656 million pounds, up five per cent from a year earlier. The amount of undifferentiated products included in the ‘Other’ category accounts for a large percentage of total broiler stocks. At the end of August, ‘Other’ stocks totalled 302 million pounds, or 46 per cent of the total. Although not included in the supply and utilisation calculations, stocks of broiler feet rose over 100 per cent from the previous year. This increase is the result of trade disputes with China, which is the destination for almost 100 per cent of US broiler feet exports.

Higher broiler meat production and somewhat larger stocks normally would put downward pressure on broiler prices but prices for most broiler products, especially breast meat products, were relatively strong through September. However, in late September and continuing into October, prices of most breast meat products have declined sharply. In the North-east market, the September average wholesale price for boneless/skinless breast meat was $1.67 per pound, 39 per cent higher than a year earlier. Recently, prices have also declined for a number of other breast meat broiler products. Prices for leg quarters were 40 cents per pound in September, up two per cent from the previous year. Unlike prices for breast meat products, leg quarter prices are expected to remain close to their current levels, especially with the gradual reopening of exports to Russia. While breast meat prices were strong in the third quarter, prices for boneless/skinless thighs were only $1.01 per pound in September, six per cent lower than the previous year.

Overall turkey meat production lower, whole bird prices higher

With rising grain prices projected for 2011, turkey producers are expected to scale back increases in production. Turkey meat production in the first half of 2011 is still expected to be somewhat larger than the previous year but the higher feed prices are expected to have a greater impact on production in the second half of 2011, causing production to be slightly lower than in the second half of 2010.

Turkey meat production over the first eight months of 2010 totalled 3.67 billion pounds, down 2.2 per cent from the same period in 2009, which was, in turn, down sharply from production in the first eight months of 2008. The decline in meat production has been the result of lower bird slaughter, as the number of turkeys slaughtered over the first eight months of 2010 was 157 million, down 3.4 per cent from the same period in 2009. Partially offsetting this decline has been a one-per cent increase in average weights at slaughter.

Turkey meat production in August 2010 was 481 million pounds, up 3.8 per cent from a year earlier. This increase was the result of one more slaughter day in August 2010 than in August 2009. The number of turkeys slaughtered (21.6 million) was five per cent higher, and the average live weight at slaughter was just under 28 pounds, down one per cent from a year earlier.

At the end of August, cold storage holdings of turkey products totalled 496 million pounds, down 24 per cent from the previous year. The decrease was due to sharply lower cold storage holdings of whole birds and turkey parts. At the end of August, cold storage holdings of whole birds were 295 million pounds, down 22 per cent from August 2009, and cold storage holdings of turkey parts totalled 201 million pounds, down 27 per cent from a year earlier.

With lower production and continued strong exports, the forecast for third-quarter ending stocks was reduced to 500 million pounds, 114 million pounds below those of the previous year. The estimate for fourth-quarter 2010 ending stocks was also lowered. At 210 million pounds, fourth-quarter 2010 ending stocks are down almost 20 per cent from the previous year, the lowest fourth-quarter ending stocks since 2005.

Lower production, strong exports, and lower stock levels have all combined to place upward pressure on whole turkey prices. The average price for whole hen turkeys (8-16 pounds in the Eastern market) was 97.9 cents per pound in third-quarter 2010, almost 20 cents higher than a year earlier (up 25 per cent). The wholesale price for Eastern market whole hens in fourth-quarter 2010 is expected to be $1.00 to $1.04 per pound, up from 81 cents per pound a year earlier. Prices for many turkey parts have also been trending upward over the last several months. Prices for turkey wings (v-cut) in August were 88 cents per pound, up 12 per cent from a year earlier, and boneless/skinless turkey breasts averaged $1.90 per pound, 92 per cent higher than in August 2009.

Table egg and hatching egg production higher

In August, table egg production was 554 million dozen, up 1.9 per cent from the previous year. The gain in production was due almost exclusively to a larger number of hens in the laying flock. In August, the number of hens in the table egg laying flock was 282 million, up 1.8 per cent from a year earlier. Over the first eight months of 2010, table egg production has totalled 4.3 billion dozen, just under one per cent more than in the same period in 2009. Table egg production was lower than the previous year during the first five months of 2010 but since then has shown positive growth. This trend of higher production is expected to continue through the remainder of the third quarter and into the fourth quarter.

The number of eggs laid for hatching continued higher than the previous year in August. Over the first eight months of 2010, the number of hatching eggs produced has totalled 719 million dozen, 1.3 per cent higher than during the same period in 2009. While production has been higher for both broiler-type and egg-type hatching eggs, most of the increase has come from steady increases in production of broiler-type hatching eggs. Production of broiler-type hatching eggs is expected to continue to expand through the fourth quarter of 2010, but higher grain prices may place downward pressure on production in 2011.

In August, wholesale prices for a dozen large eggs in the New York market averaged $1.07, up 11 per cent from a year earlier. After rising strongly to a weekly high of just over $1.40 per dozen, wholesale egg prices then declined sharply to around 70 cents per dozen by mid-September. However, by early October, weekly prices had begun to strengthen somewhat as seasonal demand began to increase. Prices in the fourth quarter of 2010 are expected to continue to strengthen and to average between $1.00—$1.04 per dozen.

In general, egg exports during the first eight months of 2010 have continued to be strong, as shipments to a number of Asian and European Union (EU) countries are considerably higher than during the same period in 2009. These gains have more than offset declines in egg and egg product exports to Canada and Mexico, two countries traditionally among the largest markets for the US. Although shipments have been higher over the first eight months of 2010, exports in fourth-quarter 2010 are expected to be down from the record 2009 fourth-quarter shipments.

In August, egg and egg product exports were the equivalent of 24.2 million dozen eggs, over eight per cent higher than a year earlier. As in almost all the preceding months, the export expansion was due to higher shipments to Asian countries (primarily Japan and Hong Kong) and a number of EU countries (such as Germany, the Netherlands and France).

Poultry Trade

Broiler shipments fall in August

During July and August, broiler shipments fell. August broiler shipments totalled 508.8 million pounds, a 12 per cent drop from last August. Unresolved trade issues between the United States and China continued to create a level of market uncertainty and challenges to find alternatives for what has been one of the largest US broiler meat markets. Shipments to China dropped tremendously in February and have continued to fluctuate, dropping as low as 3.7 million pounds and increasing to a high of 12 million pounds, which accounts for only one quarter of last August’s total broiler shipments. With the resumption of broiler meat trade with Russia in August, shipments to Russia totalled 5.7 million pounds, the highest amount exported to Russia in six months but accounting for only 3.3 per cent of the volume shipped in August 2009.

Whereas uncertainty existed about markets in Russia and China, broiler shipments to other markets greatly increased. Eight of the existing US markets – namely Mexico, Angola, Lithuania, Hong Kong, Taiwan, South Korea, Georgia and Japan – helped offset declines in exports to Russia and China. The largest increases in broiler meat shipments from January to August over the last year were to South Korea (171.6 per cent) and Hong Kong (170.3 per cent). In addition to increased shipments to South Korea and Hong Kong, Mexico increased its volume of US broiler meat by almost 100 million pounds between January and August from year-earlier levels. These increases in broiler shipments to existing markets have helped the US recover some of the lost shipments, although this year’s shipments through August lagged behinds last year’s over the same period by 7.3 per cent.

Turkey shipments continue to climb in August

Turkey shipments in August were up three per cent from those of August 2009. Over 56.1 million pounds of turkey meat were shipped abroad, with over half (53 per cent) going to Mexico. Mainland China, the second largest US turkey market, accounted for 9.2 per cent of the total turkey shipment in August 2010. Smaller US turkey markets, particularly the Dominican Republic and Angola, also contributed to the growth in turkey shipments over the last eight months. Shipments this year to the Dominican Republic rose by 32 per cent between January and August compared with a year ago. The volume of turkey meat shipped to Angola increased by 81 per cent between January and August 2010 compared with a year ago.

Further Reading

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October 2010