US Poultry Outlook Report - August 2005 - By U.S.D.A., Economic Research Service - This article is an extract from the August 2005: Livestock, Dairy and Poultry Outlook Report, highlighting Global Poultry Industry data.

Poultry:

Large gains in exports have been the major change in the broiler and turkey markets in the first half of 2005. The growth in exports has been due primarily to the dropping of export restrictions from most areas in the United States compared with the first half of 2004. Broiler exports were up 25 percent from the same period in 2004, and turkey exports were 56 percent higher.

Broiler Production Increases by Almost 5 Percent

Broiler meat production during the first half of 2005 was 17.5 billion pounds, up 4.9 percent from the same period in 2004. Production during the second quarter of 2005 was 8.9 billion pounds, 5.3 percent higher than the previous year. The increase in broiler meat production came from a combination of a higher number of birds going to slaughter and an increase in their average liveweight. Over the first half of 2005 the number of broilers slaughtered was 4.4 billion, up 1.9 percent from a year earlier. The average broiler liveweight at slaughter during the first 6 months of 2005 was 5.34 pounds, up 2.1 percent from last year. The growth rate for broiler meat production is expected to slow somewhat during the second half of 2005, but is still expected to be 3 to 4 percent higher than during the same period in 2004.

Much of the growth is expected to come from higher liveweights as the number of birds being placed for growout over the last several weeks has only been slightly higher than a year earlier. Gradually strengthening prices for a number of broiler products are expected to provide some incentive for producers to expand production, and while grain prices have been increasing they are not expected to be any higher than a year earlier and below where they were in the second half of 2003.

The number of chicks being placed weekly for growout has averaged approximately 175 million over the last 5 weeks (July 9 to August 6). This is down less than 1 percent from the same weekly period in 2004. Broiler meat production estimates for the third and fourth quarters are 9.2 and 8.9 billion pounds, respectively. These production levels are 3.8 and 3.7 percent higher than the previous year.

Broiler Exports Surge in 2005

Over the first 6 months of 2005, broiler exports were 2.55 billion pounds, up 25 percent from a year earlier. The major reason for the much higher shipments was that the export restrictions due to U.S. avian influenza (AI) outbreaks that had been in place in the first half of 2004 are now gone. This has resulted in stronger exports to Russia, the CIS countries, and a number of Asian markets (Hong Kong/China, Korea, and Japan). In addition there has been continued expansion of shipments to Mexico.

Exports to Russia were 707 million pounds in the first half of 2005, up 14 percent from a year earlier. The increase has come almost entirely in the form of higher shipments of leg quarters as they make up 96 percent of our exports to Russia on a quantity basis. During the first 6 months of 2005, leg quarter exports have accounted for 67 percent of our total broiler exports on a quantity basis. Even with broiler production increasing 4.9 percent over the first half of 2005, leg quarter prices have continued to strengthen. During July, leg quarter prices have continued to increase, reaching over 45 cents per pound by the end of the month. These rising prices combined with the strong production increases in the second quarter of 2005 and falling cold storage holdings indicate a continued strong export demand for leg quarters.

With a strong demand for broiler products even in the face of rising prices, the forecast for U.S. broiler exports over the second half of 2004 has been revised upward. The forecast for the third and fourth quarters are for shipments of 1.4 and 1.5 billion pounds, an increase of 7 percent in the third quarter and 3 percent lower in the fourth quarter than the record 1.49 million pounds exported in the fourth quarter of 2004. One reason for the expected slow down in exports in fourthquarter 2005 is exports to Russia were restricted over the first half of 2004 and in the second half of the year there was a rush to fill as much of the Russian import quota as possible. As a result, fourth-quarter exports were a record 1.49 billion pounds. This is not expected to be the case in 2005. The export forecast for 2006 is also increased to 5.5 billion pounds, slightly higher than in 2005 and close to the record exports of 2001.

Turkey Production Increases in First-Half 2005

Turkey production during the first 6 months of 2005 was 2.7 billion pounds, a 1.4- percent gain compared with a year earlier. The increase in turkey meat production was due to an increase in the average liveweight of birds at slaughter as the number of birds slaughtered in the first 6 months of 2005 was actually down 3.5 percent from a year earlier. The average liveweight for turkeys at slaughter during the first 6 months of 2005 was nearly 29 pounds, an increase from the previous year of 4.9 percent. The forecast for meat production in the second half of 2005 is for a slight decrease compared with the previous year. The decline in production is expected to be moderate by growers producing larger birds, as the number of birds slaughtered is expected to be lower. The number of poults placed for growout during the first 7 months of 2005 totaled 163 million, down 2.6 percent from the same period in 2004. With higher turkey meat production in the second quarter of 2005, turkey production has risen in the last two quarters after having fallen in the previous seven quarters.

The relatively small increase in production combined with higher exports has resulted in prices at or above their year-earlier levels. In July, the price of 8-16 pound whole hens in the Eastern market was 72.6 cents a pound, up 2 percent from a year earlier, but 25 percent higher than the July 2003 price. With basically no growth in production forecast for the remainder of 2005 and with lower stocks as of the end of June, wholesale prices for whole turkeys are expected to remain close to or slightly higher than their year-earlier levels through the remainder of 2005.

Turkey Exports Jump by 56 Percent

Over the first 6 months of 2005, U.S. turkey exports totaled 273 million pounds, up 56 percent compared with the previous year. As with broiler exports, much of the increase has come from the lifting of export restrictions in place in the first half of 2004. The increase in exports has been to a number of countries in Asia along with a strong increase in shipments to Mexico, the largest market. Shipments to Mexico in the first half of 2005 totaled 171 million pounds, up 68 percent from last year. With larger exports and strengthening prices, the value of turkey exports rose strongly to $177 million during the first 6 months of 2005, an increase of 48 percent from a year earlier.

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Source: Livestock, Dairy and Poultry Outlook - U.S. Department of Agriculture, Economic Research Service - August 2005