Summary

Broiler production is expected to decline at the end of third-quarter 2011 and moving into the fourth quarter as reductions in the number of chicks placed for grow-out more than offset higher average weights. Broiler cold storage holdings are expected to end 2011 at 660 million pounds, down considerably from the previous year. Lower production and lower stock levels are expected to eventually place upward pressure on prices but this effect will be partially offset by a sluggish domestic economy.

Turkey production was higher in August but is expected to decline in fourth-quarter 2011. Lower stock levels for whole turkeys have placed upward price pressure on whole birds. Wholesale whole-hen turkey prices have increased, with third-quarter prices averaging $1.06 per pound, up nine per cent from the previous year.

Poultry

Broiler meat production up 2.5 per cent in August

Broiler meat production in August was 3.3 billion pounds, up 2.5 per cent from the previous year. The production increase was primarily due to higher live weights as the number of birds slaughtered, at 757 million, was down 1.5 per cent from August 2010 despite one additional slaughter day in August 2011. The average liveweight at slaughter rose to 5.77 pounds, up 3.6 per cent, which pushed total liveweight at slaughter to 4.4 million pounds, two per cent higher than a year earlier. Total broiler meat production was boosted by the heavier average carcass weights, which caused the average amount of meat produced per bird to expand by 4.1 per cent compared with a year earlier.

Broiler meat production in July and August was slightly higher than expected, mostly due to higher bird weights. The production estimate for third-quarter 2011 was increased by 50 million pounds to 9.45 billion pounds, still down slightly from third-quarter 2010.

With the number of chicks being placed weekly for grow-out falling sharply compared with the previous year, the broiler meat production estimate for fourth quarter 2011 was lowered to 9.1 billion pounds, four per cent lower than in fourth quarter 2010. Average live weights at slaughter in fourth-quarter 2011 are expected to continue to be higher than a year earlier but fewer birds are expected to be slaughtered.

Broiler meat production for 2012 is expected to total 37 billion pounds, down 475 million pounds from earlier estimates and just under one per cent less than the revised 2011 forecast. The reduction is the result of expected relatively high feed grain prices in 2012 and a sluggish US economy, which will pressure demand. The higher feed prices are expected to lead integrators to scale back production plans. While broiler integrators are expected to lower production in 2012, the magnitude of the decline will depend on a number of factors. Any improvements in overall economic conditions and consumer confidence will help moderate downward pressure on production from the higher grain prices.

Over the last five weeks (10 September to 8 October 2011), the number of chicks placed for grow-out has been six per cent lower than in the same period in 2011. Over the last several months, the number of chicks placed has been declining compared with the previous year. This trend is expected to continue through the fourth quarter and into 2012. Chicks placed for grow-out through the beginning of November likely will be slaughtered in fourth-quarter 2011.

At the end of August, cold storage holdings of broiler meat products totalled 666 million pounds, almost identical to a year earlier. The quantity of undifferentiated products included in the ‘other’ category accounts for a large percentage of total broiler stocks. ‘Other’ stocks totalled 296 million pounds, or 44 per cent of the total at the end of August. The volume of stocks in this category was down two per cent from the previous year. Stock changes were strongly divided between higher stocks for breast meat and wings and lower stocks of most leg meat products. Breast meat stocks were up 46 per cent from the previous year and wing stocks were 25 per cent higher. These increases were offset by declines in stocks for leg quarters (down 24 per cent), thighs (down 22 per cent), and drumsticks (down 32 per cent).

The changes in stock levels have been reflected in wholesale price changes. In the Northeast market, the wholesale price for boneless/skinless breast meat averaged $1.31 per pound during September, down 22 per cent from a year earlier and the price for breast meat with ribs was down 17 per cent. Rising stocks for wings also put downward pressure on prices, with whole wing prices averaging $1.09 per pound, down 15 per cent from September 2010. The falling stocks for most leg meat products were also reflected in their prices. Prices for bulk leg quarters, boneless/skinless thigh meat and drumsticks were 31, 32, and 24 per cent higher than the previous year. With meat production and ending stock levels both expected to be lower in fourth-quarter 2011, many broiler products prices are expected to gradually strengthen, but much will depend on the health of the US economy.

Broiler exports rise by 36 per cent in August

Boosted by a dollar that has been weak compared with a number of other currencies, broiler exports continue to be much higher than year-earlier levels. In August, broiler exports totalled 693 million pounds, up 36 per cent from the previous year. With the higher exports in August, the year-to-date export total is 4.48 billion pounds, seven per cent higher than for the same period in 2010. Shipments in August were higher to a number of markets. The largest gains in August in terms of total shipments were to Hong Kong, Russia, Angola, Georgia and Mexico. The increase to Russia (up 782 per cent) was especially large because broiler shipment to Russia in August 2010 had only totalled 5.7 million pounds. Shipments to Hong Kong totalled 62 million pounds, while those to Angola, Georgia and Mexico were 55, 48 and 88 million pounds, respectively. These large increases boosted overall exports despite lower shipments to countries like the Ukraine, Korea and Cuba.

Overall turkey meat production lower; whole-bird prices higher

With relatively high grain prices projected for the remainder of 2011 and into 2012, turkey producers are expected to scale back production beginning in fourth-quarter 2011. Turkey meat production for all of 2011 is still expected to be larger than the previous year but the higher feed prices are expected to have a greater impact on production at the end of 2011 and into 2012. Turkey production is expected to be lower in the first half of 2012 and slightly lower for all of 2012 than 2011.

Turkey meat production in August 2011 was 501 million pounds, up 4.2 per cent from a year earlier. A portion of this increase was the result of August 2011 having one additional slaughter day compared with the previous year. The number of turkeys slaughtered (22.1 million) was two per cent higher, and the average live weight at slaughter was 28.5 pounds, or 2.1 per cent higher than a year earlier.

In August, the number of net poult placements for grow-out totalled 23.7 million birds, up 3.3 per cent from the previous year. In the previous four months, net poult placements had been lower than the previous year. On a year-to-date basis, net poult placements have totalled 188.1 million birds, up less than one per cent from the same period in 2010.

At the end of August, cold storage holdings of turkey products totaled 524 million pounds, 4.3 per cent more than the previous year. Strong growth in production during the first two quarters of 2011 has led to a build-up in stocks. Overall turkey stocks had been below the previous year between November 2009 and May 2011. The increase in turkey stocks over the last three months was due to growing cold storage holdings of turkey parts. At the end of August, cold storage holdings of whole birds were 290 million pounds, down 3.4 per cent from August 2010 but cold storage holdings of turkey parts totalled 234 million pounds, 15.8 per cent more than the previous year.

Even with very little production growth in the third quarter and a small decline forecast for the fourth quarter, the estimates for third- and fourth-quarter ending stocks were raised slightly. The third-quarter ending stocks estimate was increased to 500 million pounds, 26 million pounds more than the previous year. The estimate for fourth-quarter 2011 ending stocks was raised by 15 million pounds from last month to 215 million pounds. This is about 12 per cent higher than the previous year.

Lower stock levels for whole turkeys have placed upward pressure on whole-bird prices. The average price for whole-hen turkeys (8-16 lbs. in the Eastern market) was $1.06 per pound in third-quarter 2011, more than eight cents per pound higher than a year earlier (up 8.6 per cent). The wholesale price for Eastern market whole hens in fourth-quarter 2011 is forecast at $1.07-$1.11 per pound, up from $1.04 per pound in fourth-quarter 2010. Prices for many turkey parts have also been trending upward over the last several months. Prices for turkey wings (v-cut) in August were $0.98 per pound, up 12 per cent from a year earlier; turkey thighs averaged $1.32 per pound, 15 per cent higher than in August 2010.

Turkey exports higher in August

Turkey exports totalled 62 million pounds in August, 10 per cent higher than the previous year. This boosted year-to-date exports to 445 million pounds, 24 per cent above the same period in 2010. Continued strong exports to Mexico was the chief factor in the gain in exports in August. Shipments to Mexico totalled 32 million pounds in August, up seven per cent from the previous year, and accounted for 52 per cent of all exports. Higher shipments in August to Canada, Hong Kong and South Africa also helped to boost overall exports and helped offset lower shipments to China and the Dominican Republic.

Table egg production steady; hatching eggs down

In August, table egg production was 556 million dozen, almost identical to the previous year. The number of hens in the table egg laying flock was 281 million, down 0.7 per cent from a year earlier but the number of eggs per laying hen was higher. During the first eight months of 2011, table egg production has totalled 4.4 billion dozen, less than one per cent higher than over the same period in 2010. Table egg production has had positive growth through the first eight months of 2011 and this trend is expected to continue through the remainder of the third quarter. In fourth quarter 2011, table egg production is expected to be only about even with the previous year.

In 2012, the impact of relatively high feed prices and a sluggish economy are expected to keep table egg production slightly lower than in 2011. The number of eggs laid for hatching continued to be lower than the previous year in August. Over the first eight months of 2011, the number of hatching eggs produced has totalled 711 million dozen, 1.1 per cent lower than during the same period in 2010. While production has been lower for both broiler-type and egg-type hatching eggs, most of the decrease has come from steady declines in broiler-type eggs. Production of broiler-type hatching eggs is expected to continue to fall through the fourth quarter of 2011 and to remain below the previous year through much of 2012.

In September, wholesale prices for a dozen large eggs in the New York market averaged $1.17, up 35 per cent from year earlier. In early October, weekly prices began to strengthen somewhat, to approximately $1.24 per dozen, as demand began to increase. Prices in fourth-quarter 2011 are expected to remain relatively strong and average $1.23-$1.27 per dozen.

Shipments of egg and egg product during the first eight months of 2011 have been robust – 184 million dozen, up nine per cent – as shipments to a number of Asian countries and Mexico are considerably higher than during the same period in 2010. These gains have more than offset lower egg and egg product exports to Canada and many of the EU countries, countries that over the past several years have been among our largest markets. Exports are expected to remain strong through fourth-quarter 2011 but decline somewhat in 2012 due to slowing exports to some Asian countries.

Even with relatively strong domestic egg prices in August, egg and egg product exports were the equivalent of 24.3 million dozen eggs, about even with the previous year. Exports in August balanced stronger shipments to Japan, Hong Kong and Mexico with falling exports to Canada and several EU countries, notably Germany.

Further Reading

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October 2011