Continued declines in chick placements are expected be reflected in lower yearover- year broiler meat production through the first three quarters of 2009. Even with slowing production, falling export demand has resulted in a sharp decline in leg quarter prices. However, over time lower broiler meat production is expected to place upward pressure on most broiler prices. Strong turkey production through the first 10 months of 2008 has resulted in higher cold storage holdings and, over the last several weeks, in lower prices for whole turkeys. The number of hens in the table egg flock continues to be lower than the previous year. With lower production, egg prices are expected to be relatively strong in fourth-quarter 2008 and into 2009.

Broiler Meat Production Falls in October

Broiler meat production totaled 3.27 billion pounds in October, down 2.8 per cent from the previous year. This is expected to be the beginning of a slowdown in broiler meat production. Over the first 10 months of 2008, broiler meat production increased strongly, totaling 31.3 billion pounds, up 3.5 per cent from the same period in 2007. The October decrease in meat production was the result of a sharp decline in the number of birds slaughtered, down 4.2 per cent from the previous year. This decrease was partially offset by a small increase—0.7 per cent—in the average live weight of birds at slaughter to 5.65 pounds. So far in 2008, the average live weight at slaughter for broilers has been 5.58 pounds, which is 1.6 per cent higher than in the same period in 2007. In recent weeks there have been sharp declines in chick placements, which are expected to translate into lower broiler production in November and December, and production is now forecast to be lower than the previous year through the first three quarters of 2009.

Over the last 5 weeks (8 November to 6 December, 2008), the number of chicks placed for growout averaged 7.4 per cent lower than for the same period in 2007. With uncertainties about the domestic and world economies, the trend of year-over-year declines in chick placement is expected to continue well into 2009.

With smaller chick placements forecast, the estimates of broiler meat production have been adjusted downward in fourth-quarter 2008 and in the first three quarters of 2009. The revised estimate for fourth-quarter 2008 is now 9 billion pounds, down 3.2 per cent from the previous year. The annual estimate for 2009 is now 36.5 billion pounds, down 1.3 billion pounds from the previous year. The quarterly estimates for 2009 now show a decline in production in the first three quarters on a year-over-year basis.

Cold storage holdings of broiler meat products at the end of third-quarter 2008 were revised slightly to 728 million pounds. This is down slightly from the end of the second quarter, but it is up 16 per cent from the third-quarter 2007 level of 629 million pounds. Stocks are expected to gradually decline over the next several months as declines in production reduce overall supplies. At the end of thirdquarter 2008 stock levels were higher for almost all broiler products, which put downward pressure on prices. The lower meat production in 2009 is expected to result in lower stock levels through all four quarters of 2009.

In fourth-quarter 2008, the domestic broiler industry is expected to have smaller production, declining exports, and a small decline in stocks. As production slows and stock levels gradually decline, there is expected to be a slow increase in most broiler prices, although they are expected to average well below year-earlier levels. In November, prices for whole birds averaged 78.5 cents per pound, 9 per cent higher than a year earlier. However, this was about the only broiler price that was above the previous year. Prices in the Northeast market for boneless/skinless breast meat and leg quarters were 100.5 and 30 cents per pound, down 19 and 29 per cent, respectively.

All the uncertainties in the global economy have combined to sharply reduce the demand for broiler exports. After rising to a quarterly record of 1.91 billion pounds in third-quarter 2008, an increase of almost 25 per cent from the previous year, broiler exports are expected to fall to 1.53 billion pounds in fourth-quarter 2008. This is a decline of 6 per cent from the previous year and down 20 per cent from third-quarter 2008. The decline is expected to come from sharply lower exports in November and December from October’s record 669 million pounds. The largest impact of the decline in broiler export demand has been in falling leg quarter prices. After rising to a peak of 55.5 cents per pound in August, prices started to fall in October and averaged only 30 cents per pound in November.

The quarterly export estimates were also lowered for all four quarters of 2009, with the revised estimate for 2009 now 6.15 billion pounds, down 8.6 per cent from 2008. Much of the reduction is expected to come in the largest markets, but declining exports may be slightly mitigated by lower prices for leg quarters, the primary export product.

October Turkey Production Down Slightly

Turkey meat production in October was reported at 584 million pounds, down less than 1 per cent from October 2007. The decrease is the result of a 4.6-per cent decrease in the number of birds being slaughtered. This decline was partially offset by an increase in the average live weight of turkeys at slaughter of 4 per cent to 28.8 pounds. Even with the decrease in October, turkey meat production over the first 10 months of 2008 has totaled 5.3 billion pounds, 5.9 per cent above the same period in 2007 and 11 percent higher than in the first 10 months of 2006.

Despite strong exports, the higher turkey meat production resulted in sharp increases in turkey in cold storage throughout 2008. Cold storage stocks of whole turkeys and turkey products at the end of third-quarter 2008 have been revised upward to 621 million pounds, 23 per cent higher than the previous year. Stocks were higher for both whole birds and turkey parts. Cold storage holdings declined seasonally by the end of October to 571 million pounds, still up 37 per cent from the previous year. Turkey production is expected to be 1.58 billion pounds in fourthquarter 2008, about the same as in fourth-quarter 2007. Cold storage holdings are expected to remain above year-earlier levels until the end of second-quarter 2009.

After being higher than a year earlier over the first 10 months of 2008, prices for whole hens in the Eastern market averaged 88.9 cents per pound in November, down 6 per cent from the previous year. With high stock levels, prices for whole turkeys are expected to average 88-89 cents per pound in fourth-quarter 2008, down 2.5 per cent from the previous year. Even with this price decline, whole hen prices for 2008 are expected to average between 87.8 cents per pound, up 7 per cent from 2007 and the fifth consecutive year of annual price increases.

Over the first 10 months of 2008, the number of turkey poults placed for growout has totaled 252 million, down 3 per cent from the same period in 2007. Additionally, the declines in poult placements have been even stronger over the last 3 months, a situation expected to result in smaller turkey meat production supplies throughout 2009.

Turkey exports remained very strong in October, totaling 71.8 million pounds, up 36 per cent from the previous year. Shipments of turkey products are expected to slow considerably in November and December due to the effects of slowing economic growth. Much of the increase in October’s turkey exports was due to higher shipments to the largest markets — exports to Mexico, Canada, and the combined China/Hong Kong markets were all up considerably from the previous year.

Table Egg Production Continues Lower

The table egg laying flock in October was estimated at 278 million hens, down 1.9 per cent from the previous year. Year-over-year table egg flock numbers have been lower for the last 22 months. This trend is expected to continue through the end of 2008 and into 2009 as the flock size at the beginning of November was reported at 280 million birds, down 5 million from the previous year. The number of birds in the table egg flock is expected to only gradually expand in 2009, as lower energy costs and feed prices provide producers some incentive to expand. But the incentives brought on by lower costs will be countered by expected lower demand for eggs.

With the decline in the number of birds in the table egg flock, table egg production has also declined, falling on a year-over-year basis for the last seven quarters. This lower table egg production has resulted in relatively strong prices on a historical basis. In the third quarter of 2008 wholesale prices in the New York market averaged nearly $1.15 per dozen, down about 3 cents from the previous quarter and nearly 5 cents lower than third-quarter 2007. Prices in the New York market are expected to average $1.19 to $1.22 per dozen in fourth-quarter 2008. Prices in 2007 had been especially strong, reaching as high as $1.63 per dozen and averaging $1.41 per dozen in the fourth quarter.

Egg exports continue to be lower than the previous year. Over the first 10 months of 2008 egg exports have totaled 175.7 million dozen, down almost 35 million (17 per cent) from the same period in 2007. Much of the decline is due to generally stronger domestic egg prices in 2008. Shipments of all shell eggs and egg products in October totaled 17.9 million dozen, down 13 per cent from the previous year. Much of the decline in total egg exports is due to lower shipments to Mexico and Hong Kong.

Further Reading

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December 2008