US Poultry Outlook Report - April 2006 - By U.S.D.A., Economic Research Service - This article is an extract from the April 2006: Livestock, Dairy and Poultry Outlook Report, highlighting Global Poultry Industry data.

Poultry Trade

U.S. broiler exports are expected to grow by 3 percent in 2006, to 5.3 billion pounds. First-quarter exports are expected to fall 2 percent below first-quarter 2005, largely on consumer concerns about Avian Influenza (AI). Turkey exports are expected to grow by more than 5 percent this year, with Mexico accounting for most of the increase.

Poultry

U.S. broiler production is expected to grow by more than 2 percent in 2006 to 36.2 billion pounds. Taking expected export increases into account, product available for consumption is expected to increase by almost 2 pounds, to over 87.7 pounds per capita on a retail-weight basis. After falling steeply in fourthquarter 2005 and into first-quarter 2006, broiler prices are expected to gradually strengthen as production growth slows and stocks are gradually reduced. Turkey supplies are expected to be relatively tight in 2006, given expectations for little production growth and higher exports. However, prices for turkey parts will be pressured by lower broiler meat prices.

Shipments to Russia, the largest importer of U.S. broiler meat, totaled 283 million pounds in January-February 2006, up 99 percent from the same period in 2005. Mexico’s consumption of U.S. broiler meat has also been on the rise. So far in 2006, shipments to Mexico, the second largest U.S. market, increased from 73 million pounds in January-February 2005 to 87 million pounds, an increase of 19 percent.

In the first 2 months of 2006, one of the largest reductions in broiler meat shipments has occurred in the CIS countries. Broiler meat shipments to the CIS region dropped from 107 million pounds in January-February 2005 to 66 million pounds in the first 2 months of 2006, a 38-percent decrease. A large percent of this decline in shipments is attributed to AI concerns within the region. The combined demand of ChinaHong Kong for U.S. broiler meat has strengthened over the past year. Ranking third among U.S. top broiler meat importers, shipments to China/Hong Kong totaled 82 million pounds in January-February 2006, up 49 percent from the same period last year.

The Caribbean is the fifth largest export market for U.S. broiler products. Exports to the Caribbean totaled 47 million pounds so far this year, down 44 percent from last year.

Turkey Exports Hold Strong

Turkey exports in February 2006 were 38 million pounds, down 3 percent from February 2005. The decline could be due to lower broiler meat prices. The United States is expected to export 130 million pounds of turkey products in the first quarter, an increase of 3.4 percent from a year ago. Most of the increase is expected from strong demand by Mexico. Turkey exports are expected to grow by more than 5 percent in 2006, with most of the expansion likely to occur in Mexico. In the first 2 months of 2005, shipments to Mexico accounted for 70 percent of U.S. turkey exports. So far in 2006, 67 percent of U.S. turkey exports have gone to Mexico.

Broiler Production Higher and Exports Down

Broiler production in the first quarter of 2006 is estimated at 8.9 billion pounds, up 3.6 percent from the previous year. Expected increases in both the number of birds slaughtered and the average liveweight of birds are behind the increase. Broiler meat production is expected to slow in the second and third quarters in response to the low prices seen for almost all broiler products. The number of chicks being placed for growout over the last 5 weeks (March 11 to April 8) has averaged slightly lower than the previous year. While a lower number of chicks being placed for growout will help reduce the number of birds, total broiler meat production is still expected to be higher year-over-year for the next several quarters due to increases in the average bird weight at slaughter. In 2005, the average liveweight of broilers at slaughter was almost 5.4 pounds, up 2 percent from a year earlier. This rate of gain in average liveweight is expected to continue in 2006.

A reduction in exports in fourth-quarter 2005 and first-quarter 2006, due to falling demand in foreign markets in response to Avian Influenza (AI), came just as broiler production was increasing due to earlier high prices. It was only 6 or 7 months ago that leg quarters were selling for over 45 cents-a-pound. This convergence of positive and negative factors has severely depressed prices for almost all broiler products and greatly increased cold storage holdings.

Broiler cold storage holdings at the end of March are estimated at 925 million pounds, a 38-percent increase from the end of first-quarter 2005. Much of the increase can be attributed to higher stocks of leg quarters and other dark meat products, but holdings of breast meat products were also higher.

In March, the 12–city price for whole broilers averaged 61.8 cents per pound, down 15 percent from the previous year. Over the last 6 months, the most volatile broiler product price has been prices for leg quarters. Leg quarter shipments accounted for 66 percent of all U.S. broiler exports in 2005 on a quantity basis. So their price is the most affected by declines in foreign demand. After reaching a high in the Southern market of 45.7 cents per pound in September 2005, leg quarter prices have fallen steeply over the last 6 months. In March the average price was only 13.7 cents per pound, down 54 percent from a year earlier and 70 percent lower than the high in September 2005.

With only moderate increases in production expected and growth in exports forecast for the second half of 2006, stock levels are forecast to decline and prices of broiler products are expected to gradually strengthen. Prices for whole birds averaged 62.7 cents per pound in the first quarter, down nearly 13 percent from 2005, but are expected to strengthen to 64 cents a pound by fourth-quarter 2006.

Turkey Markets Tighten

The U.S. turkey industry is in almost the opposite situation from the broiler industry. The estimate for turkey production in 2006 is about 5.6 billion pounds, only 1.3 percent higher than in 2005. Also, turkey exports are expected to increase in 2006 and beginning stocks in 2006 were much lower than the last several years.

Over the first 2 months of 2006, turkey production has totaled 862 million pounds, down slightly from the same period in 2005. During the first 2 months the number of turkeys slaughtered was down 2 percent, but this has been mostly offset by a nearly 2 percent increase in average live bird weights to almost 30 pounds per bird. Turkey production is expected to grow throughout the rest of 2006 as the number of birds going to slaughter is expected to increase based on the number of poults that growers say they are placing for growout.

Prices for whole turkeys have remained strong through first-quarter 2006 although they have declined seasonally from their fourth-quarter 2005 high. Prices for whole hens in the Eastern market averaged 67.3 cents per pound in first-quarter 2006, up 2.1 percent from the previous year. With only small increases in production forecasted and low cold storage holdings of whole birds, prices for whole turkeys are expected to average slightly higher than the previous year through the first two-quarters of 2006.

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For more information view the full Livestock, Dairy and Poultry Outlook - April 2006 (pdf)

Source: Livestock, Dairy and Poultry Outlook - U.S. Department of Agriculture, Economic Research Service - April 2006