US Poultry Outlook Report - February 2008

By U.S.D.A, Economic Research Service - This article is an extract from the February 2008: Livestock, Dairy and Poultry Outlook Report.
calendar icon 15 February 2008
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Broiler Production Forecast at 37 Billion Pounds in 2008

The outlook for broiler production in 2008 is for strong growth in the first half of the year. However, year-over-year growth is expected to slow in second-half 2008 as gradually falling prices dampen production increases. The first-and second quarter production estimates for 2008 were increased, as the pace of chicks being placed for growout continued to be well above the previous year. While the estimate for first-quarter 2008 is up considerably from the same period in 2007, it should be noted that the estimate is only slightly higher than production in firstquarter 2006. The revised estimate for broiler meat production in 2008 is 37 billion pounds, up about 3 percent from 2007. In 2008, the broiler industry is expected to be pressured by increasing production costs, primarily higher feed costs and energy prices.

Broiler meat production in fourth-quarter 2007 totaled 9.25 billion pounds, up 5.1 percent from fourth-quarter 2006. The increase was the result of a combination of higher numbers of broilers being slaughtered (up 3.1 percent), an increase in the average weights at slaughter, and higher meat yields per bird. The average liveweight per bird at slaughter in fourth-quarter 2007 was 5.61 pounds, up 1.6 percent from the previous year. After declining in three of the previous four quarters, the average meat yield per bird was 2 percent higher in fourth-quarter 2007 than a year earlier.

U.S. broiler meat production in December 2007 was estimated at 2.88 billion pounds, up 5.8 percent from the previous year. The monthly increase is also due to the combination of factors that echoes the changes in fourth-quarter 2007. First, the number of birds being slaughtered rose by 3.1 percent. Second, the average liveweight at slaughter was higher, up 2 percent. Third, the average yield per bird rose strongly, moving up by 2.7 percent from the previous year.

Cold storage holdings of broiler meat products at the end of December 2007 totaled 741 million pounds. This is down less than 1 percent from a year earlier, but up 115 million pounds (18 percent) from the end of the third quarter. Much of the increase in cold storage holdings during fourth-quarter 2007 was the result of increased stocks of breast meat, leg quarters, and other products. Holdings of breast meat rose by about 40 million pounds (41 percent) from end of the third to end of the fourth quarter. However, breast meat cold storage holdings at the end of fourth-quarter 2007 were still at their level at the end of 2006. From the end of third-quarter 2007 through fourth-quarter 2007, cold storage holdings of leg quarters rose by 38 percent, or about 23 million pounds. Even with very strong exports in fourth-quarter 2007, cold storage holdings of leg quarters ended 2007 up 12 percent from a year earlier. With higher growth in broiler meat production forecast for first-half 2008, end stocks are projected to be above their year-earlier levels during the first three quarters of 2008.

The increase in broiler meat production in fourth-quarter 2007 and the growth in cold storage holdings has not yet had the expected impact on broiler meat prices. In January 2008, prices for boneless/skinless breast meat averaged $1.28 per pound in the Northeast market, up 1 percent from the previous year and 5 cents per pound higher than in December 2007.

Leg quarter prices have also risen, from 34 cents per pound in January 2007 to 42 cents per pound in January 2008. With higher broiler meat production expected, prices for most broiler products are expected to gradually move lower during much of the year.

Turkey Meat Production Forecast Higher in 2008

Turkey meat production in 2008 is forecast to total 6.09 billion pounds, up 2.6 percent from 2007. The production increase follows 3 years of relatively strong prices for whole turkeys and most turkey products. Most of the increased production is expected to come in the first three quarters of 2008, with production growth slowing in the fourth quarter. The higher meat production is expected to come from a larger number of birds slaughtered, with only a modest increase in average liveweight at slaughter. Turkey producers, like other livestock producers, will face large increases in their feed and energy costs in 2008, which are expected to narrow margins even if turkey prices remain strong.

The number of turkeys slaughtered in 2007 reached 264 million, up 3.5 percent from the previous year, and meat production rose by 4.4 percent to 5.94 billion pounds. The reason turkey meat production was not higher was that average turkey weights were up only 0.6 percent, to 28.4 pounds. Average weights had been higher in first-half 2007, but fell seasonally as the Thanksgiving period approached. Turkey meat production in fourth-quarter 2007 was 1.56 billion pounds, 6.2 percent higher than the previous year and close to earlier forecasts. The total number of birds slaughtered was 70.2 million, up 3.6 percent from the previous year, and the average liveweight in fourth-quarter 2007 was 28.1 pounds, 2 percent higher than in fourth-quarter 2006.

Cold storage holdings of whole turkeys and turkey parts were 239 million pounds at the end of December 2007, up 9 percent from the same time in 2006. Stocks of whole birds totaled 65 million pounds, up slightly from the previous year (1.3 percent). Stocks of whole birds had been down considerably in November compared with the same period the previous year. This was a reversal from the previous 5 months, when whole bird stocks were well above their year-earlier levels. Turkey ending stocks during 2008 are forecast to be at slightly higher levels than in 2007. Turkey production is expected to increase in 2008, but turkey exports are expected to remain strong, absorbing some of the higher production. Average prices for whole hens in the Eastern market were reported at 73.7 cents per pound in January 2008, up 9 percent from 67.6 cents per pound in January 2007 and 7.3 percent higher than the whole bird price in January 2006. Weekly prices so far in February 2008 indicate that whole bird prices are likely to continue to move higher. Hen prices for first-quarter 2008 are forecast at between 74 and 76 cents per pound, up from just under the 70 cents per pound in first-quarter 2007.

Table Egg Production Estimated at 6.5 Billion Dozen in 2008

Table egg production is expected to gradually increase in 2008, reaching 6.5 billion dozen, up only 1.2 percent, with most of the increase coming in the second half of the year.

Hatching egg production for 2008 is forecast at 1.13 billion dozen, up 2 percent from the previous year, as higher production will be needed to support the expected growth in broiler production.

Table-egg production reached 1.635 billion dozen in fourth-quarter 2007, giving a total for the year of 6.41 billion dozen, down 1.3 percent from the previous year.

Table-egg production fell on a year-over-year basis in all four quarters of 2007.

Hatching-egg production totaled 279 million dozen in fourth-quarter 2007 and totaled 1.11 billion dozen for all of 2007. Hatching-egg production moved in the opposite direction from table-egg production, with production of hatching eggs higher on a year-over-year basis in all four quarters of 2007.

The primary reason for lower table-egg production in 2007 was a smaller number of birds in the table-egg laying flock, with monthly bird numbers below year-earlier levels in every month in 2007. The estimate for the number of birds in the tableegg laying flock for the beginning of January 2008 shows a continuation of that trend, with bird numbers down 1.5 percent. The numbers of birds in the hatchingegg flock have shown the opposite pattern, with flock numbers higher than a year earlier in all but 2 months in 2007. This appears to be carrying through into 2008, with the number of birds in the hatching flock at the beginning of January 2008 up 3.4 percent over the same time the previous year.

With the lower egg production for the table-egg market, egg prices were extremely strong throughout 2007 and have continued strong into January 2008. The average wholesale price for a dozen large eggs was $1.41 in fourth-quarter 2007 and will likely average in the mid $1.50’s in January 2008. For 2008, wholesale egg prices are expected to remain above their year-earlier levels during the first half of the year and then gradually decline as producers respond to the higher prices by increasing production.

Further Reading

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February 2008
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