Highlights

Poultry: Broiler meat production increased modestly during the first six months of 2010 (up two per cent) and is expected to continue expanding at only a slightly faster pace in the second half of 2010 as higher feed costs and slow growth in the domestic economy combine to place restraints on expansion. Turkey meat production is also expected to slowly expand in the second half of 2010 but is still expected to remain slightly lower than the previous year. Pullet placements on a year-over-year basis have turned positive only in the last several months after declining in almost all of 2009.

Poultry Trade: June broiler shipments rose from a year ago but fell short of last year's second-quarter total broiler volume. Broiler shipment totalled 609.4 million pounds, a 14.6-per cent increase from a year ago. Turkey shipments fell by three per cent in June, while the total turkey shipments for the second quarter exceeded last year's volume by 16 million pounds.

* "With only a slight growth in the number of broilers slaughtered, higher average broiler weights at slaughter have generated the meat production increase."

Broiler Meat Production Up Two Per Cent in June

Broiler meat production in June totalled 3.1 billion pounds, up two per cent from the previous year. The June production increase pushed total production for second quarter 2010 to 9.2 billion pounds, 2.7 per cent higher than in second-quarter 2009. This is the second consecutive quarter of year-over-year increases in broiler meat production. Broiler meat production had declined in fourth quarter 2008 and in all four quarters of 2009. In first-half 2010, broiler meat production was 17.9 billion pounds, 2.3 per cent higher than a year earlier. Broiler meat production in the second half of 2010 is expected to continue to expand, with production 3.2 per cent higher than the previous year.

Over the first half of 2010, the number of broilers slaughtered was 4.2 billion, an increase of only 0.1 per cent from a year earlier. With only a slight growth in the number of broilers slaughtered, higher average broiler weights at slaughter have generated the meat production increase. During the first six months of 2010, the average liveweight at slaughter was 5.65 pounds, up 1.6 per cent from first-half 2009. In second-half 2010, the number of broilers slaughtered is also expected to be only slightly higher than a year earlier. However, average bird weights at slaughter are expected to remain above the previous year to the end of the year.

The number of chicks being placed weekly for grow-out has averaged approximately 172 million over the last five weeks (10 July to 7 August). This is up two per cent from the same weekly period in 2009. Weekly chick placements have been relatively steady at around two per cent higher for a number of weeks now.

Even with an increase in broiler meat production expected during second-half 2010 and fairly strong exports, stock levels during the remainder of 2010 are expected to remain above year-earlier levels, due chiefly to the sluggish recovery of the domestic economy. Ending stocks for 2010 are forecast at 670 million pounds, up nine per cent from the previous year. In June, broiler stocks totaled 640 million pounds. This is just over one per cent higher than the previous year, but down 23 million pounds from the end of May.

In 2010, wholesale prices for broiler products have generally declined compared with a year earlier. The exceptions have been prices for whole birds and breast meat products. Prices for whole birds may have benefited from higher demand for rotisserie chickens as consumers increased purchases for at-home consumption rather than going out for restaurant meals. Whole broiler prices in the third and fourth quarters are expected to average 83 to 85 and 80 to 84 cents per pound, respectively.

Prices for leg meat products are generally down as reduced exports to Russia have impacted demand for leg quarters. Prices for leg quarters in the Northeast market averaged 37.4 cents per pound in July, down 16 per cent from a year earlier, but about even with earlier months this year. Prices for boneless/skinless thigh meat averaged 94.6 cents per pound, a decline of 22 per cent from the previous year.

Increasing broiler meat production in second-half 2010 is expected to place some downward pressure on broiler prices in general, especially with only a slowly growing economy. However, demand for broiler products is expected to benefit from strong prices in the beef and pork sectors.

Turkey Production Falls Again in First-Half 2010

Turkey meat production during the first six months of 2010 was 2.7 billion pounds, down 2.9 per cent from the same period in 2009. This reduced production was due to a decline in the number of birds slaughtered. Over the first half of 2010, the number of turkeys slaughtered was down 4.5 per cent compared with the previous year. Partially offsetting this was an increase of 1.3 per cent in the average weight of turkeys going to slaughter compared with a year earlier.

The forecast for turkey meat production in the second half of 2010 is 2.83 billion pounds, down 1.2 per cent from the same period in 2009. 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 expected to be similar to those of the previous year. Over the first six months of 2010, the number of turkey poults placed for grow-out totalled only 139 million, down two per cent from the same period in 2009. However, on a year-over-year basis poult placements were higher in April and May, with June being only fractionally lower.

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 504 million pounds, down over 15 per cent from the previous year. Stocks of both whole birds and turkey products declined. With lower production expected to continue in the second half of 2010, ending stocks for 2010 are forecast at 250 million pounds, down five per cent from 2009 and 37 per cent lower than at the end of 2008.

Egg Production Rises in First-Half 2010

In the first half of 2010, production of table eggs was 3.2 billion dozen, up one per cent from first-half 2009. Production of hatching eggs was also increasing compared with the previous year, chiefly reflecting the gradual increase in broiler production. Hatching egg production in the first half of 2010 was 535 million dozen, up just less than one per cent from the same period in 2009. Production of both table eggs and hatching eggs is expected to continue to expand in the second half of 2010 and into 2011.

Increased table egg production over the first half of 2010 resulted in a sharp decline 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 for the second quarter averaged $0.83 per dozen, and through July prices have been only slightly higher. With table egg production expected to be higher in both the third and fourth quarters of 2010 compared with a year earlier, prices are expected to continue below year-earlier levels through the end of 2010. Wholesale prices in the New York market for a dozen Grade A large eggs are forecast at $0.84 to $0.86 in third-quarter 2010 and $1.02 to $1.08 in the fourth quarter.

Egg Exports

Egg exports in the first half of 2010 totalled 124 million dozen (the combined total of shell eggs and egg product exports), up 24 per cent from the same period in 2009. The increase in shipments has come from rising demand from a wide variety of countries, chiefly in Asia and Europe. These gains more than offset a decline in exports over the first half of 2010 to the main Western Hemisphere markets of Canada and Mexico.

A large portion of the export increase in first-half 2010 has come from larger shipments to Asian countries, with exports to Japan, Hong Kong, China and Korea all significantly higher. Another area of export growth has been the continued strength of shipments to European Union (EU) countries. While shipments have not increased to all EU countries, the large increases to countries such as Germany and the Netherlands – both more than 160 per cent higher than the previous year – have pushed overall shipments higher. Even with domestic wholesale egg prices forecast to be lower than the previous year in second-half 2010, egg exports are not expected to be able to match the very strong exports seen in the second half of 2009.

Broiler Shipments Up in June but Down in Second Quarter of 2010

Broiler shipments in June totalled 609.4 million pounds, a 14.7-per cent increase from last June. Several countries contributed toward the largest US monthly broiler shipment in almost two years (20 months). While Russia, the US leading market last year, banned imports from the US, increases in shipments to Mexico (26 per cent), the Baltic States (60 per cent), Newly Independent States (including Belarus, Ukraine, Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Tajikistan, Turkmenistan and Uzbekistan; 155 per cent), Philippines (310 per cent), Korea and Hong Kong (174 per cent) and Japan (181 per cent) all rose beyond last June's shipment volumes. The value of US broiler meat shipments also increased. The dollar value of June 2010 broiler shipments totalled about $271.4 million, up less than one per cent from a year ago.

While unsettled trade issues with Russia and China's anti-dumping suit against the US have affected US broiler shipments, there have been some sporadic surges in shipments. One of the largest surges this year came from Ukraine, whose import shipments increased from one million pounds to almost 30 million pounds within one month. Broiler shipments in the second quarter of 2010 totalled 1.683 billion pounds, about a two-per cent increase from a year ago. The three leading broiler markets for the second quarter were Mexico, Hong Kong and Cuba.

Turkey Shipments Down in June, but Up in Second Quarter of 2010

Turkey shipments in June were down from a year ago. Over 46 million pounds of turkey meat were shipped in June, about three per cent less than the 47 million pounds shipped a year ago. Most of the decline in shipments can be attributed to low imports from Taiwan and trade restrictions imposed by Russia. In June 2009, Taiwan and Russia were two of the strong US turkey markets but since then, they have become less viable and uncertain. Since September 2009, the Dominican Republic has become a large player and has helped recover a portion of turkey shipments that have been lost due to the Russian trade conflict.

Although turkey shipments were down in June, the total volume shipped during the second quarter exceeded last year's volume by 14 million pounds. The second-quarter shipments totalled 136 million pounds compared with 122 million pounds shipped during second quarter last year. Shipments to the leading US market, Mexico, were strong during the second quarter of 2010. Other US markets such as China and Hong Kong also had an increase in shipments during the second quarter of 2010, accounting for a major portion of the total volume shipped.

Further Reading

-

You can view the full report by clicking here.

August 2010