Broiler Production Falls by One Per Cent in June

Broiler meat production in June totalled 3 billion pounds, down one per cent from the previous year. The relatively small decline was chiefly the result of one more slaughter day in June 209 than in June 2008. The decline in production in June left total production for second-quarter 2009 at 8.9 billion pounds, 5.3 per cent below second-quarter 2008. This is the third consecutive quarter of strong year-over-year declines in broiler meat production. In first-half 2009, broiler meat production was 17.5 billion pounds, down 5.8 per cent from a year earlier.

Over the first half of 2009, the number of broilers slaughtered was 4.2 billion, a decline of 6.2 per cent from the same period in 2008. The average broiler liveweight at slaughter during the first 6 months of 2009 was 5.56 pounds, down fractionally from the first half of 2008. The number of broilers slaughtered is expected to remain below the previous year through third-quarter 2009, but then to become slightly higher on a year-over-year basis during the fourth quarter. During the second half of 2009, average bird liveweight at slaughter is expected to remain similar to the previous year.

The number of chicks being placed weekly for grow-out has averaged approximately 168 million over the last five weeks (1 July to 8 August). This is down 2.9 per cent from the same weekly period in 2008. Weekly chick placements have been below a year earlier for over a year now, but over the last several weeks the number of chicks placed for grow-out has been much closer to the previous year. Chicks placed for grow-out in the middle of August will likely go to slaughter in the middle to the end of September.

With only a small decline in production expected during the second half of 2009 and decreased exports, the forecasts for ending stocks for the third and fourth quarters of 2009 were increased to 650 million pounds at the end of the third quarter and 660 million at the end of the fourth. The estimates for ending stocks in the first two quarters of 2010 were also increased.

So far in 2009, wholesale prices for broiler products have fluctuated wildly. Prices for broiler leg quarters have probably shown the most change, beginning at approximately 35 cents per pound in January, which was 17 per cent below the previous year. However, with lower production and a strong export market, prices for leg quarters rose to over 50 cents per pound in June, despite weak domestic demand.

However, starting in July prices began moving downward, with weekly prices in early August falling to around 38 to 39 cents per pound.

Prices for a number of other broiler products have followed the same pattern. Prices for boneless/skinless breast meat and boneless/skinless thigh meat started 2009 at relatively low levels and then gradually strengthened over the first six months of 2009.

Since June, prices for both these products have fallen considerably. A weakening in both boneless/skinless breast and thigh meat prices is assumed to be the result of a slight increase in broiler meat production in the second quarter compared with first-quarter 2009 and lower demand, especially through restaurants. However, leg quarter prices are also impacted by export demand, and the reduction in these prices is expected to be a reflection of the uncertain export outlooks for the Russian, Chinese, and Mexican markets (the three largest) due to the impact of the worldwide economic downturn and possible changes in trade regulations.

Broiler Exports Continue Lower than Previous Year

June broiler exports totalled 532 million pounds, down 4.6 per cent from a year earlier. This continues the pattern set over the prior two months of smaller exports after being much higher in first-quarter 2009. Shipments during the first six months of 2009 totalled 3.4 billion pounds, still 3.5 per cent above the same period in 2008.

The broiler export data for 2008 has been revised, with the total for 2008 changing only fractionally at 6.96 billion pounds, but there were some changes in the quarterly totals. The new quarterly totals were 1.53, 1.77, 1.93, and 1.74 billion pounds in the first through the fourth quarters, respectively.

Much of the decrease in June broiler exports was the result of smaller shipments to China, the Ukraine, Turkey, and Vietnam. These lower exports were partially offset by larger shipments to Russia and Mexico. The large shipments to Russia in June were a change in the pattern seen during most of the first five months of 2009, but total shipments to Russia so far in 2009 are only 746 million pounds, down 22 per cent from the previous year. Even with Mexico’s weak economy, larger broiler shipments to Mexico have been a strong portion of the export market in 2009.

Including 68 million pounds in June, total shipments to Mexico in the first half of 2009 have totalled 404 million pounds, 37 per cent higher than the previous year.

Broiler exports are expected to remain below a year earlier through July and August, with the falling prices for leg quarters pointing toward declining foreign demand. Third-quarter broiler exports are expected to total 1.48 billion pounds, well below last year’s 1.93 billion, the highest quarterly export total on record.

Turkey Production Falls Sharply in First-Half 2009

Turkey meat production during the first six months of 2009 was 2.8 billion pounds, down 9.4 per cent from the same period in 2008. This reduced production was primarily due to a decline in the number of birds slaughtered. Over the first half of 2009, the number of turkeys slaughtered was down 9.5 per cent compared with the previous year. Adding to this was a small reduction in the average weight of birds going to slaughter compared with a year earlier.

The forecast for turkey meat production in the second half of 2009 is 2.94 billion pounds, down 6.7 per cent from the same period in 2008 and 35 million pounds less than the previous forecast. The decrease in turkey meat production is again expected to come chiefly from a smaller number of birds slaughtered, as the average weights at slaughter are not expected to be significantly different from the previous year. Over the first 6 months of 2009, the number of turkey poults placed for grow-out totalled only 141 million, down 9.6 per cent from the same period in 2008 and 9.7 per cent lower than the number placed for grow-out in the first six months of 2007.

With a smaller number of birds slaughtered and lower turkey meat production, the growth in turkey stocks has been slower than normal.

Turkey stocks at the end of June were 596 million pounds, higher than the previous year but significantly lower than had been anticipated. With lower production expected to continue in the second half of 2009, the ending stocks forecast for third and fourth quarters were both reduced. The estimate for ending stocks in the third quarter was reduced by 50 million pounds to 635 million, and the ending fourth-quarter stocks estimate was lowered by 10 million pounds to 375 million.

Turkey Exports Decline

Over the first six months of 2008, US turkey exports totalled 238 million pounds, down 23 per cent from the previous year. Exports have been lower to almost all major markets. The largest decline in terms of volume was to Mexico. While broiler exports to Mexico have been expanding, turkey shipments have fallen sharply. In the first half of 2009, shipments to Mexico have only totalled 128 million pounds, down 19 per cent from the same period in 2008.

Even with wholesale prices for whole turkeys in the US running about 14 to 15 per cent below the previous year, turkey exports are expected to remain well below year-earlier levels. Shipments in the second half of 2009 are expected to total 255 million pounds, down from 367 million in 2008.

Egg Production Increases in First-Half 2009

After falling on a year-over-year basis in all four quarters of 2008, table egg production has risen in the last two quarters. In the first half of 2009, production of table eggs was 3.2 billion dozen, up one per cent from first-half 2008. While table egg production was rising, production of hatching eggs was below the previous year, reflecting the decline in broiler production. Hatching egg production in the first half of 2009 was 530 million dozen, down six per cent from same period in 2008. The decline in hatching egg production would have even larger, but production of eggs for egg-type replacement hens was up by seven per cent.

The wide range in prices over the last several months is not providing producers any incentive to expand production, and the estimates for table egg production in the third and fourth quarters were each reduced by 10 million dozen. Table egg production is expected to total about 3.3 million dozen in the second half of 2009, an increase of less than one per cent from second-half 2008. Although feed and energy prices are somewhat lower than they were a year earlier, egg prices have not remained consistently high enough to give producers much incentive to increase production.

Increased table egg production over the first half of 2009 resulted in sharp changes in the wholesale prices for eggs during the second quarter and during the first half of the third quarter. Prices in the New York market in early June had been as high as $1.31 per dozen, but then fell during most of the remainder of the second quarter and declined to about 70 cents per dozen by the beginning of July. However, as supplies tightened, egg prices rose rapidly and ended July at $1.07 per dozen.

Overall, the average wholesale price in the New York market for a dozen Grade A large eggs in the second quarter was $0.90, down 20 cents from the first quarter and 24 per cent less than during the second quarter of 2008. The forecast prices for the third and fourth quarters are $0.93-$0.95 and $0.95-$1.01 per dozen, respectively.

Egg Exports

Egg exports in the first half of 2009 totalled 100 million dozen (these are shell eggs and egg products), down 4.6 per cent from the same period in 2008. The decline in shipments came in the first five months, as exports in June were almost identical to the previous year.

Much of the decrease in cumulative shipments has come from smaller shipments to Japan (down 39 per cent). The smaller exports have been only partially offset by larger exports to Canada, Mexico and Hong Kong, the other major markets. Even with domestic egg prices forecast to remain below the previous year during the second half of 2009, egg exports are expected to be six per cent below the same period in 2008 as weak economic conditions reduce overall foreign demand.

Further Reading

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August 2009