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

Poultry

An uncertain export market situation, rising stocks, and an increase in production in October has placed downward pressure on most broiler prices. Cold storage holdings for the end of the third quarter were revised upward by 18 million pounds, and broiler meat production was 5 percent higher in October. Prices for breast meat products and leg quarters in November were down 18 and 2 percent from last year. Turkey supplies and prices are the exact opposite, with tight supplies from little growth in production and a strong export market, pushing most turkey prices higher.

Eggs

Wholesale table egg prices (NY grade A large) in the third quarter of 2005 averaged 66.6 cents a dozen, compared with 55.9 cents a dozen, or 19 percent higher than the second quarter. For all of 2005, wholesale table egg prices (NY grade A large) are expected to average 64.6 cents per dozen, substantially less than last year’s close of 82.2 cents per dozen. For 2006, wholesale egg prices are expected to average between 63 and 68 cents per dozen.

Broiler Meat Production Up 5 Percent in October

Broiler meat production totaled 3.04 billion pounds in October, up 4.7 percent from October 2004. Over the first ten months of 2005 broiler production has totaled 29.5 billion pounds, 3.7 percent higher than the previous year. The increased meat production in October was the result of both an increase in the number of birds slaughtered, up 1.9 percent, and an increase in the average live weight of birds at slaughter, up 2 percent to 5.5 pounds. So far in 2005, the average weight at slaughter for broilers has been 5.35 pounds, which is 1.7 percent higher than in the same period in 2004. The growth in live weight at slaughter combined with gains in the number of chicks being placed for growout, points towards continued increases in broiler meat production through December and into 2006. Over the last five weeks (October 29 to November 26, 2005), the number of chicks being placed for growout has averaged 167 million per week, an increase of 2 percent over the same period the previous year.

Cold storage holding of broiler products at the end of the third quarter was revised upward to 753 million pounds. This is a 9.6 percent from the end of the second quarter, but still 21 million pounds less that at the end of the third quarter 2004. Stocks of most broiler products have risen over the last quarter, but stocks of breast meat and leg quarters have accounted for most of the increase. Stocks continued to grow in October with breast meat totaling 145 million pounds, up 7 percent from the previous year. Stocks of leg quarters had reached as low as 54 million pounds earlier in the year, but by the end of October had grown to 113 million pounds, however this is still 3 percent lower than at the same time in 2004.

Larger production and growing stocks have put downward pressure on most broiler prices. The two most dramatic declines have been for boneless/skinless breast meat and leg quarters. Boneless/skinless breast meat prices in the Northeast market averaged $1.03 per pound in November, down 18 percent from last year and down from a high of $1.53 per pound in February. Leg quarter prices in the Northeast market averaged 29 cents per pound in November, only 2 percent lower that last year, but through most of 2005 leg quarter prices had been very strong, averaging over 40 cents per pound from June to October. Prices for leg quarters have fallen chiefly due to uncertainties in export markets. The price of whole broilers was also lower in November at 67 cents a pound, down 2 percent from the previous year and 2 cents lower than the October price.

In the weekly AMS Broiler Market News Report, there is a breakout of the total number of broilers being slaughtered into three different size classes. Since the end of September the number of broilers with a live weight of over 5.25 pounds (the heaviest size class) has averaged a double digit growth rate compared with the same period in the previous year. This growth in the percentage of all broilers being slaughtered that fall into the biggest size class has driven up the average live weight at slaughter and since most broilers of this size are cut up for parts, it has placed more parts meat on the market placing downward pressure on prices.

October Turkey Meat Production Up 4 Percent

Turkey meat production in October was reported at 483 million pounds, up 3.6 percent. A 3.6-percent increase in the number of birds being slaughter accounted for the increase as the average live weight of birds at slaughter was 26.9 pounds, down slightly from last year. Even with the increase in October, turkey meat production so far in 2005 is up less than 1 percent from the same period in 2004.

Although a higher number of birds were slaughtered in October, this is the opposite of what was happening in the turkey industry at the beginning of 2005. In the first quarter of 2005, the number of birds being slaughtered was down 6 percent from the previous year, but total meat production was up 1 percent because the average live weight of turkeys at slaughter was 29.3 pounds, 6.5 percent higher that the previous year. For most of 2005 the average live weight of turkeys at slaughter has gradually been declining. As supplies have tighten in 2005, turkeys are being slaughtered at slightly lighter weights to keep supplies moving to consumers.

With little overall growth in turkey meat production and a strong export market, stocks of turkey products have gradually fallen and prices for almost all turkey products have increased. Cold storage levels for turkey products at the end of the third quarter were revised downward to 478 million pounds, down 9.4 percent from the same period in 2004. The decline was due to a mixture of lower stocks of whole turkeys and turkey products.

Prices for turkeys and most turkey products were moving in the opposite direction from broiler products. Prices for whole hens in the Eastern market averaged 87.8 cents per pound in November, up 9.5 percent from the previous year. Throughout 2005, prices for whole birds have been at or above the previous year. Prices for turkey parts have also been strong, with prices for breast meat averaging $1.18 per pound in October, up 21 percent from a year earlier. Prices for drumsticks and fresh mechanically separated meat were also higher, 7 and 16 percent above the previous year.

Over the first 10 months of 2005, the number of turkey poults being hatched for growout has averaged 23 million per month, down slightly from the same period in 2004. This indicates that turkey meat supplies are expected to remain tight through the remainder of 2005 and through at least the first quarter of 2006.

Broiler Exports Down From Previous Year but Recover From September

Broiler exports at 520 million pounds for October are down 9 percent from October of last year. Lower shipments to Commonwealth of Independent States countries (-38 percent), Eastern Europe (-38 percent), the Baltic States (-61 percent), and the Caribbean (-41 percent), accounted for most of the decline. Lower exports to these and other smaller markets may have been due to high leg quarter prices. Leg quarter prices were as high as $0.46 per pound in October before declining in November to $0.29 per pound (Northeast Market Prices). Lower export demand may also reflect importer concerns about consumers’ reactions to recent Avian Influenza discoveries in Asia and Europe.

Exports in October were almost balanced by very large exports to Russia. Shipments to Russia totaled 216 million pounds, the largest monthly export of U.S. broiler meat in 3 years. Shipments to Russia increased by 193 percent from September’s 74 million pounds, likely due to recovery of exports following Gulf Port disruptions.

October Turkey Exports Continue Strong

Total U.S. turkey exports in the first 10 months of 2005 were 470 million pounds, 33 percent higher than the same period last year. Exports this year are clearly being driven by Mexican demand for imported turkey meat. So far this year, Mexico has accounted for about 63 percent of U.S. turkey exports. A favorable exchange rate-- the peso has appreciated more than 6 percent against the U.S. dollar in the last 12 months--continued strong macro economic growth in Mexico supported by oil prices, in addition to population increases are likely contributing factors to strong demand for U.S. turkey products.

In addition to the factors mentioned above, Mexico’s consumption growth of U.S. turkey may have come at the expense of higher U.S. pork prices and slower increases in pork imports from the United.States. The average monthly shipment of pork to Mexico in 2005 was 42,831 million pounds, 4 percent (44,651) less than 2004 shipments. A similar story could be told for beef and veal given the tight U.S. supplies and high prices of both commodities.

U.S. Egg Prices Rebound in the Third Quarter

Wholesale table egg prices (NY grade A large) in the third quarter of 2005 averaged 66.6 cents a dozen, 19 percent higher than the 55.9 cents a dozen reported in the second quarter. For all of 2005, wholesale table egg prices (NY grade A large) are expected to average 64.6 cents per dozen, substantially less than last year’s close of 82.2 cents per dozen. For 2006, wholesale egg prices are expected to average between 63 and 68 cents per dozen.

Retail egg prices averaged $1.20 cents per dozen in the third quarter, 3.4 percent higher than the second quarter. But for all of 2005, retail egg prices are expected to average in the low $1.20s per dozen, a price much lower than the 2004 record high of $1.34 per dozen. Retail egg prices in 2006 are forecast to be about unchanged from 2005.

During the third quarter of 2005, the total number of U.S. table egg layers declined by a total of 1.2 million birds, compared with the second quarter. However, the monthly average eggs produced per 100 layers rose from 2,231 to 2,267 over the same period. Consequently, U.S. table egg production increased from 1,580 million dozen in the second quarter to 1,603 million dozen in the third quarter. Total U.S. egg production in 2005, table and hatching, is expected to rise to 7.5 billion dozen, less than 1 percent over 2004. Table eggs are expected to account for about 85 percent of total production in 2005, and likely will stay at this same percentage in 2006. Hatching egg production in 2005 is expected to rise by a little over 1 percent, reflecting higher egg and broiler production.

U.S. Eggs and Egg Products Strongly Up

During the first 10 months of 2005, U.S. eggs and egg product exports (in-shell egg equivalent), rose substantially from 133 to 173 million dozen, 30 percent higher than the same 10-month period in 2004. Exports of processed egg products were the front runner, showing a substantial increase of 67 percent in volume terms, followed by table eggs at 22 percent higher than the same period a year ago. U.S. table egg export shares reversed direction during the first 10-months of 2005. U.S. export share to East Asia (Japan, China, and Hong Kong) more than doubled from 24.5 to over 50 percent, while the share to Mexico and Canada declined from 67 to 41 percent. Hong Kong and China were the largest export markets for U.S. table eggs, receiving 19.5 million dozen, compared with only 10.7 million dozen during the same period last year.

For all of 2005, total U.S. exports of eggs and egg products are expected to reach 200 million dozen, up 19 percent from last year. This increase in U.S. exports of egg and egg products is mainly due to the lifting of all restrictions imposed by many countries following outbreaks of low pathogenic Avian Influenza in early 2004. For 2006, U.S. exports are estimated to be unchanged at about 200 million dozen.

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For more information view the full Livestock, Dairy and Poultry Outlook - December 2005 (pdf)

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