Summary

Broiler meat production in 2008 was 36.9 billion pounds, up 2 per cent from the previous year. The outlook for 2009 is for relatively strong declines in production in the first three quarters of the year, with some growth in production in the fourth quarter, as weak economic conditions prevail both domestically and worldwide. Turkey meat production in 2009 is forecast at 6.0 billion pounds, down 3.6 per cent from 2008. Even with relatively strong whole bird prices in 2008, the number of poults placed was down considerably in 2008.

Broiler Production Forecast at 36 Billion Pounds in 2009

Broiler production in 2009 is expected to show a strong decline during the first three quarters of the year. However, growth in fourth-quarter 2009 is expected to be up from the previous year. Reduced broiler production that resulted in a strong decline in fourth-quarter 2008 was at first a reaction to the large jumps in grain prices and energy costs seen through the first three quarters of 2008. As the economic outlook has worsened, production reductions have grown and the expected duration of the decline has lengthened. The revised estimate for broiler meat production in 2009 is 36.2 billion pounds, down 1.9 per cent from 2008. In 2009, the broiler industry is expected face lower demand brought on by a weaker economy and higher unemployment.

Broiler meat production in fourth-quarter 2008 totaled 8.9 billion pounds, down 4.5 per cent from fourth-quarter 2007. The decrease was the result of a combination of a strong decrease in the number of broilers being slaughtered (down 5.0 per cent) and a small decrease in the average weights at slaughter. The average liveweight per bird at slaughter in fourth-quarter 2008 was 5.61 pounds, down 0.1 per cent from the previous year.

US broiler meat production in December 2008 was estimated at 2.9 billion pounds, up 1.1 per cent from the previous year. The increase in production was due solely to the two additional slaughter days in December 2008 compared with December 2007. Normally two additional slaughter days would result in a strong increase in production on a year-over-year basis. The number of birds slaughtered rose by 1.1 per cent, and the average liveweight at slaughter was down slightly to 5.56 pounds, a decrease of 0.5 per cent.

Broiler meat in cold storage at the end of December 2008 totalled 743 million pounds, up 3.3 per cent from the previous year, but down 46 million pounds from the previous month. In addition, the ending stocks level for 2008 was down from earlier expectations as fourth-quarter 2008 production declines had already begun to impact stocks. Compared with those of a year earlier, cold storage holdings of most leg meat products were higher. This increase was reflected in the decrease in the prices of leg meat products at the end of 2008 compared with a year earlier. With lower broiler meat production expected for the next three quarters, cold storage holdings are projected to gradually decline through most of 2009.

With falling production and declining cold storage holdings expected, prices for most broiler products are expected to gradually increase. Prices for breast meat products are expected to increase at a slightly faster rate then prices for leg meat products, which are expected to be adversely impacted by lower exports. In January 2009, prices for boneless/skinless breast meat averaged $1.25 per pound in the Northeast market, down 2 per cent from the previous year but up 15 cents per pound from December 2008. Leg quarter prices also have risen, averaging 35 cents per pound in January 2009 compared with 28 cents per pound in December 2008. Like breast meat, leg meat prices are down from a year earlier and are not expected to match their year-earlier levels until late 2009.

While the strong declines in production expected in the first three quarters of 2009 would normally push prices rapidly higher, the impact of the production declines is expected to be largely offset by the economic downturn and lower exports.

Broiler Exports Reach a Record 6.96 Billion Pounds

Shipments in December were 516 million pounds, up 24 per cent from the previous year, which is considerably higher than anticipated as the strong decline in the leg quarter prices seemed to imply smaller export demand. Exports to Russia fell 23 per cent, but shipments to Mexico were almost double the previous year and shipments to a wide range of smaller markets also increased sharply.

With stronger than expected exports in fourth-quarter 2008, broiler shipments totaled nearly 7 billion pounds in 2008, up 18 percent from 2007. Although it remains by far the largest market for broiler exports, shipments to Russia declined 4 percent to just over 1.8 billion pounds. The decline in shipments to Russia was more than made up by strong exports to a wide number of countries. The combined China/Hong Kong market was the second largest accounting, for 865 million pounds, 19 per cent above the previous year. Shipments to Mexico rose by 27 per cent and exports to Cuba by 50 per cent. Together exports to these two markets totaled almost 1 billion pounds. What makes the large export increase in 2008 unusual is that, over the first 9 months of 2008, the price for frozen leg quarters, our primary export product, was very strong.

Broiler exports for 2009 are expected to decline sharply as a weaker worldwide economy lowers the demand for meat products in a number of countries. Currently, the forecast is for broiler shipments of 6.1 billion pounds, a reduction of 13 per cent from 2008.

Turkey Meat Production Forecast Lower in 2009

Turkey meat production in 2009 is forecast to total just over 6 billion pounds, down 3.6 per cent from 2008. The decrease in production follows a year with a strong increase in production and relatively strong prices for whole turkeys. While prices for whole birds remained strong in 2008, prices for most turkey parts declined and stocks of whole birds and other turkey products were much higher by the end of 2008. The largest declines in production are expected to come in the first half of 2009, with year-over-year declines in production slowing somewhat in the third and fourth quarters. The lower meat production is expected chiefly because of a smaller number of birds slaughtered, as average live weights at slaughter are expected to remain relatively close to year-earlier levels. Turkey producers, like other livestock producers, will face a very uncertain market in 2009 in terms of declining domestic demand and likely smaller exports as worldwide economic problems reduce demand in other countries.

The number of turkeys slaughtered in 2008 was 272 million, up 2.5 per cent from the previous year and meat production rose by 5.1 percent to 6.3 billion pounds. Much of the reason for the strong increase in turkey meat production was a strong increase in average turkey weights, up 2.1 percent to 29 pounds. Bird weights at slaughter had averaged 29.8 pounds during the first half of 2008 but dropped somewhat during the third and fourth quarters.

Turkey meat production in fourth-quarter 2008 was almost 1.6 billion pounds, only 0.7 per cent higher than the previous year. This rapid lowering in the rate of production growth compared with previous quarters in 2008 was a reaction to both the increase in energy prices and grain costs earlier in 2008 and the declining economic conditions toward the end of the year. The total number of birds slaughtered was 69.3 million, down 1.7 per cent from the previous year, but this decline was offset by higher average live weights, rising by 2 per cent to 28.7 pounds, in fourth-quarter 2008.

With the strong increases in turkey meat production during the first three quarters of 2008, cold storage holdings for whole turkeys and turkey parts expanded to well above their year-earlier levels. At the end of December 2008, turkey stocks totaled 398 million pounds, up 53 per cent from a year earlier. Stocks of whole birds rose even faster, reaching 139 million pounds by the end of 2008, 84 per cent higher than the previous year. Stocks of other turkey meat products have also increased strongly, rising to 259 million pounds by the end of 2008, a 40 per cent increase from a year earlier. With turkey production expected to decrease sharply in 2009, cold storage holdings of turkey meat are expected to remain above year-earlier levels through the first quarter and then decline. However, this decline will be heavily influenced by domestic economic conditions and the strength of foreign demand.

Prices for whole hens in the Eastern market were reported at 71.7 cents per pound in January 2009, a decline of 3 per cent from January 2008 and down 4 cents per pound from December 2008. Even with much higher stocks of whole birds and other turkey meat throughout all of 2008, hen prices in the Eastern market averaged 87.5 cents per pound in 2008, an increase of 7 per cent from the previous year. Hen prices for first-quarter 2009 are forecast at between 75 and 77 cents per pound, down slightly from the 77 cents per pound they averaged in first-quarter 2008.

Turkey Exports a Record 676 Million Pounds

With exports of almost 52 million pounds in December, total turkey exports reached a record 676 million pounds in 2008, up 24 per cent from 2007. As in the broiler market, shipments made strong gains to a wide number of countries. Mexico was by far the chief market for turkey exports, accounting for 358 million pounds, up 19 per cent from the previous year. Although much smaller in size, exports to China increased 78 per cent from those of 2007 to 86 million pounds and shipments to Hong Kong rose by 33 per cent.

Turkey exports are expected to decline to 600 million pounds in 2009, with much of the decline coming from lower shipments to Mexico. Demand in Mexico is expected to be weak due to lower revenues from oil, declining general economic conditions, and smaller remunerations from workers in the United States.

Table Egg Production Estimated at 6.4 Billion Dozen in 2009

Table egg production is expected to increase very slightly in 2009, reaching 6.4 billion dozen, marginally higher than in 2008. The increase in production is expected to come mostly in the second half of the year. Hatching egg production for 2009 is forecast at 1.1 billion dozen, down slightly from 2008, with less production needed as broiler production is expected to decline.

Table egg production reached 1.64 billion dozen in fourth-quarter 2008, totaling 6.42 billion dozen for the year, down slightly from 2007. Although table egg production was higher in fourth-quarter 2008 it was below 2007 in the first three quarters of the year. Hatching egg production totalled 1.1 billion dozen in 2008, down 1.3 per cent. The decline in hatching egg production was due to lower production of broiler-type bird eggs, especially in the third and fourth quarters of 2008. This reduction came as broiler processors rapidly reduced the number of broiler breeders in the parent flocks as they began to cut production. By the end of 2008, the number of birds in the broiler breeder flock was down 6 per cent from the previous year.

With the lower egg production in the table egg market, egg prices were strong throughout much of 2008 but fell below those of the previous year’s levels toward the end of the year. The average wholesale price for a dozen large eggs was $1.23 in fourth-quarter 2008, down 13 per cent from the very strong $1.41 average in fourth-quarter 2007. However, egg prices for all of 2008 averaged $1.28 per dozen, an increase of 12 per cent from 2007. In 2009, egg prices are expected to begin the year well below the very strong prices seen in first-quarter 2008 and then increase to slightly higher than the previous year for the rest of 2009. Overall egg prices in 2009 are expected to average $1.19 to $1.26 per dozen compared with $1.28 in 2008.

Egg Exports Decline to 206 Million Dozen

Shipments of eggs and egg products fell to 206 million dozen in 2008, down 18 per cent from a year earlier. Shipments to a number of the largest markets fell, with Japan down 18 per cent, Hong Kong 33 per cent, and Mexico 37 per cent. Much of the decline can be attributed to very strong domestic prices for eggs especially in the first 3 to 4 months of 2008. However, shipments to Canada, our largest market, rose 1 per cent to 47 million dozen.

The decline in overall egg exports was due to lower shipments of eggs for hatching and egg products as exports of eggs for consumption increased somewhat. Shell egg exports totaled approximately 113 million dozen, with the shipments almost evenly split between shell eggs for hatching and shell eggs for consumption. Egg product shipments totalled the equivalent of 93 million dozen in 2008, down 17 per cent from the previous year.

Further Reading

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