Summary

With continued strong exports in October and November, the export estimate for fourth-quarter 2009 was increased by 75 million pounds to 1.68 billion pounds. However, uncertainties about exports in 2010 resulted in a reduction of 275 million pounds in yearly exports to just over six billion pounds. With the reduction in exports, the estimates for ending stocks in all quarters of 2010 were increased. The estimate for turkey meat production in fourth-quarter 2009 was lowered by 50 million pounds to 1.425 billion pounds. Even with continuing year-over-year growth in monthly production, egg prices have strengthened in the fourth quarter of 2009. One factor boosting prices has been strong gains in exports of shell eggs for consumption and egg products.

Broiler Production Expected Down in Fourth-Quarter 2009, Higher in 2010

During the fourth quarter of 2009, broiler meat production is forecast at 8.85 billion pounds, down fractionally from a year earlier. The number of broiler eggs being set in incubators during fourth-quarter 2009 and the number of chicks being placed for grow-out has steadily moved closer to the level seen in fourth-quarter 2008. During 2010 the number of chicks being placed for grow-out is expected to reach or slightly exceed the previous year’s level and, combined with a small increase in the average weights, is expected to push broiler meat production to 35.9 billion pounds, one per cent higher than in 2009. The production increase is expected to be restrained by both continuing uncertainties in the domestic economy.

Broiler meat production in November 2009 was 2.77 billion pounds, an increase of four per cent from a year earlier, compared with declines on a year-over-year basis for the previous seven consecutive months. A large portion of the increase is the result of November 2009 having one additional slaughter day compared with November 2008. The number of birds slaughtered in November was 2.2 per cent higher than the previous year, and this increase was compounded by a small rise (one per cent) in the average liveweight for birds at slaughter to 5.67 pounds. Broiler meat production in December is expected to show a small increase due chiefly to higher average weights at slaughter, but there may also be a slight rise in the number of birds slaughtered compared with the previous year.

Broiler stocks at the end of November totalled 642 million pounds, up 29 million pounds from the end of October, but down 19 per cent from the end of November 2008. Lower broiler meat production in 2009 has resulted in broiler stocks on a year-over-year basis being lower through the first 11 months of 2009. Stocks of whole birds totalled 19 million pounds, a decrease of six million pounds (24 per cent) from the same time a year earlier. Stock levels for almost all broiler products were significantly lower than the previous year, the only exception being thigh meat. However, stocks of most products increased between the end of October and the end of November, with breast meat (up 16 million pounds) accounting for a major portion of the increase. Broiler stocks are expected to total 640 million pounds at the end of 2009, down 14 per cent from the previous year. In 2010, ending stocks are expected to be higher due to a large decline in exports and a small increase in meat production.

During November and December of 2009, with exports remaining strong and production only up modestly, there was a general upward movement in most broiler prices. Over the first three quarters of 2009, the price supportive aspect of the decline in broiler production was basically offset by poor economic conditions domestically and worldwide, with many broiler prices peaking in May or June and then declining until October. At that point, the lower levels of broiler cold storage holdings finally began to place upward pressure on prices.

Prices for boneless/skinless breast meat in the Northeast market averaged $1.30 per pound in 2009, up one per cent from 2008. Prices in 2009 peaked in May at $1.48 per pound and then generally declined until October, when they were $1.13 per pound, and have strengthened since then. Prices for leg quarters in the Northeast market averaged $0.39 per pound in 2009, a decline of 14 per cent from 2008. The movement of leg quarter prices followed a somewhat similar pattern to breast meat, with prices that peaked in June at $0.51 per pound and then declined through October, but have strengthened in the last two months. Due to the popularity of broiler wings and their placement on menus of a number of large fast-food chains, wing prices remained strong throughout 2009. After averaging $1.05 per pound in 2008, the average wholesale price for whole wings in the Northeast market jumped to $1.47 in 2009, an increase of 39 per cent. In the past, wing prices peaked at the end of the professional football season and then declined. In 2009 prices fell, but only slightly, and they gradually strengthened to end the year at $1.65 per pound, up 38 per cent from December 2008.

Broiler Exports Higher in November, but 2010 Forecast Lowered

Due to a lower quota and trade uncertainties with Russia, as well as trade uncertainties involving several other countries and continuing economic problems in a number of countries, the export forecast for broiler shipments in 2010 was lowered by 275 million pounds to just over six billion pounds, down 11 per cent from the expected volume in 2009. The decline in exports to Russia and other countries may be partially countered by improvements in trade with countries whose currencies have risen in relation to the dollar.

In November, broiler exports totalled 532 million pounds, down seven per cent from last year’s 570 million. Much of the decline was due to smaller shipments to Russia (down 24 per cent) but exports to the Ukraine, Lithuania and Georgia were also down significantly. These export reductions were partially counterbalanced by higher exports to Cuba, Taiwan, Guatemala, and some smaller markets. Based on strong exports in October and November, the export forecast for fourth-quarter 2009 was increased by 75 million pounds to 1.68 billion pounds, a quantity still four per cent lower than the fourth-quarter 2008 level.

Turkey Prices Down in Fourth-Quarter 2009

In 2009, prices for whole hen turkeys followed a path different from their normal seasonal pattern. Prices had reached 82.7 cents per pound by July, but instead of the normal seasonal strengthening, prices fell in August and September. Prices hit 82.5 cents per pound in October and unlike other years, when prices tended to peak toward the beginning of November, prices for whole hens continued to gain strength in November (85 cents) and December (88 cents). These price movements resulted in a fourth-quarter price of 85.1 cents per pound, down three per cent from the previous year, but five per cent higher than in third-quarter 2009.

With turkey meat production expected to be lower in the first half of 2010 and turkey stocks at the end of 2009 expected to be down significantly from the previous year, whole hen prices are forecast to be higher throughout 2010. The average price for whole hens in the Eastern market in 2009 was 80 cents per pound, nine per cent below the previous year. The average price for 2010 is forecast at 79 to 85 cents per pound, about three per cent higher than in 2009.

Turkey production in November was 476 million pounds, six per cent lower than in November 2008, even though there was one additional slaughter day in November 2009. The number of turkeys slaughtered in November was down 5.9 per cent from the previous year and the average weight at slaughter fell slightly to 27.7 pounds. Turkey meat production in December 2009 is also expected to be lower than the previous year, as turkey poult placements have been smaller than in 2008 during almost all of 2009. The estimate for turkey meat production in fourth-quarter 2009 was lowered by 50 million pounds to 1.43 billion, down 10 per cent from the previous year. The turkey meat production estimate for 2010 is 5.68 billion pounds, little changed from 2009, with lower production in the first half of the year offset by higher production in the second half.

Ending stocks for all turkey products in fourth-quarter 2009 are expected to be 260 million pounds, down 136 million pounds or 34 per cent from the same period in 2008. At the end of November, cold storage holdings for turkey totalled 228 million pounds, 37 per cent lower than a year earlier. The decrease was due to smaller cold storage holdings for both whole birds and turkey parts. With lower turkey production expected in the first half of 2010 and lower beginning stocks, turkey cold storage levels in 2010 are expected to be lower than the previous year during the first three quarters.

Turkey exports in November totalled 49 million pounds, down 17 per cent from November 2008’s very strong 59 million pounds. The bulk of the November decline was due to smaller shipments to Mexico, down 27 per cent from the previous year. Turkey exports for fourth-quarter 2009 are expected to total 145 million pounds, a 20 per cent decline from the same period in 2008. Turkey exports are expected to increase in 2010 to 545 million pounds, up 1.8 per cent from 2009. Although exports are expected to rise to a number of countries, much of the gain is expected to come from a resumption of larger shipments to Mexico, our major export market, as economic conditions gradually improve.

Eggs Prices Down in Fourth-Quarter 2009

Even with table egg production continuing to be above year-earlier levels, wholesale egg prices strengthened in the July to November period, although remaining below the previous year. Wholesale prices for a dozen grade A large eggs in the New York market are expected to average $1.18 in fourth-quarter 2009, down four per cent from the same period in 2008, but up over 20 cents per dozen from the third quarter. During 2009, prices averaged $1.03 per dozen, down about 25 cents from 2008. The strongest declines came in the first half of 2009 when prices averaged just under $1.00 per dozen, sharply lower than the $1.38 they averaged in the first half of 2008. Table egg production is expected to continue to expand in 2010 to about 6.5 billion dozen, but this growth is less than a one per cent increase from 2009.

With broiler production still expected to be lower in fourth-quarter 2009 compared with the previous year, the fourth-quarter 2009 estimate for hatching egg production is also lower. Hatching egg production in fourth-quarter 2009 is forecast at 260 million dozen, down seven million dozen or three per cent from a year earlier. Hatching egg production in 2010 is expected to increase, roughly in line with expected growth in broiler production. The estimate for 2010 is 1.07 billion dozen, just over one per cent higher, with most of the increase coming in the second half of the year.

Even with relatively strong prices in the United States, egg and egg product exports in November totalled 22.3 million dozen on a shell egg equivalent basis, 40 per cent higher than the previous year. Total egg exports for all of 2009 are expected to total 240 million dozen, up 16 per cent from the previous year. Over the first 11 months of 2009, shipments of table eggs for consumption totalled 67.4 million dozen, a 31 per cent increase compared with the same period in 2008. The major markets for eggs for consumption are Canada and Hong Kong. These two countries imported 46.4 million dozen eggs from the United States, or 72 per cent of our total shipments. Exports of shell eggs for hatching have totalled 46.6 million dozen over the first 11 months of 2009, down 11 per cent from the same period in 2008 as broiler production declined in other countries. The major destinations for these products have been Canada and Mexico. After totalling 87.6 million dozen in January to November 2008, shipments of egg products in the same period in 2009 have been 19 per cent higher (104.4 million dozen). Strong growth in egg product exports to a number of EU countries, especially Germany, has been the major factor in the increase.

Further Reading

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January 2010