US Poultry Outlook Report - July 2006 - By U.S.D.A., Economic Research Service - This article is an extract from the July 2006: Livestock, Dairy and Poultry Outlook Report, highlighting Global Poultry Industry data.

Poultry

In response to earlier low prices, broiler processors have lowered the number of chicks being placed for growout. Due to this slowdown, the production estimates for the third and fourth quarters have been reduced. Production in the second half of 2006 is now expected to be only slightly higher than the previous year. As production growth slows, broiler prices are expected to gradually strengthen.

Poultry Trade

U.S. broiler and turkey exports were down in May compared with last year. U.S. broiler shipments for May 2006 totaled 442 million pounds, down 9 percent from May 2005 due to lower shipments to Russia and increasing leg-quarter prices. U.S. turkey shipments totaled 42 million pounds, down 13 percent from May 2005 due to low shipments to Mexico.

Broiler Meat Production Estimates for Third and Fourth Quarters Decreased

U.S. broiler meat production was up 4.1 percent in first-quarter 2006, and the estimate for the second quarter is 9.1 billion pounds, a 1.9-percent increase from last year. With the current pace of chicks being placed for growout being below a year earlier for the last several months, and a reduction in the number of replacement pullets being placed in the hatching flock, the production estimates for the third and fourth quarters of 2006 were lowered by 100 million pounds each. This makes the production total for the second half of 2006 at just under 18 billion pounds, which would be less than 1 percent higher than in the second half of 2005. The production estimate for 2007 was also reduced a total of 250 million pounds to 36.6 billion pounds, 1.6 percent higher than in 2005.

Over the last 5 weeks (June 10 to July 8) the average weekly number of chicks being placed for growout was 174 million, down 2.1 percent from the same period in 2005. Chicks being placed for growout at the beginning of July would likely be going to slaughter in the second half of August.

Broiler meat production in May totaled 3.2 billion pounds, up 6 percent from a year earlier. A large portion of this increase was due to May 2006 having one more slaughter day than May 2005. The increase in meat production was due to a combination of a larger number of birds slaughtered (up 4 percent) and an increase in the average weight of those birds at slaughter (up 2 percent). Preliminary data point towards only a small increase in total broiler meat production in June, as an increase in the average weight at slaughter is expected to just offset a decline in the number of birds being slaughtered.

With growth in broiler production expected to slow in the second half of 2006, prices for most broiler products are projected to gradually strengthen compared with the first half of 2006. Prices for whole birds have averaged 61.9 cents per pound over the first half of 2006. This is about 14 percent lower than in the same period in 2005, which was down 5 percent from the first half of 2004. However, whole bird prices have been rising in the last several weeks, and the average price for June was 64.4 cents per pound, the highest this year, but still 11 percent below the price in June 2005. Prices for many other broiler parts have also increased, but like whole birds, prices for most broiler parts are still lower than a year earlier.

With a forecasted increase in broiler meat production of less than 2 percent in the second quarter and a strong export demand, the estimate for 2006 ending stocks was lowered. The estimate for the yearend ending stocks is now 750 million pounds, down 50 million pounds from the previous estimate.

Turkey Production Rises in May

Domestic turkey production totaled 495 million pounds in May, up 7 percent from the previous year. Again a large proportion of the production increase stemmed from May having an additional slaughter day compared with a year earlier. The number of turkeys slaughtered was up 6 percent and the average weight at slaughter was 28.6 pounds, up 1 percent from the previous year. Even with the increase in May, turkey meat production for the first 5 months has increased only 2 percent from the same period in 2005. All that increase has come from an increase in the number of birds slaughtered, as the average weights over the first 5 months of 2006 are about even with the same period in the previous year.

Turkey meat production in the second half of 2006 is estimated at 2.85 billion pounds, up 2.7 percent from second-half 2005. The most recent turkey hatchery report showed that the number of poults being placed for growout in June was 6.1 percent higher than the previous year. Over the first half of 2006, the total number of poults placed for growout was 147 million, up 7 percent from the same period in 2005.

Relatively small increases in turkey meat production, along with lower ending stock levels, have meant that whole turkey prices have remained slightly higher than yearearlier levels. Prices for whole turkeys averaged 71.3 cents per pound in the second quarter, up about 5 percent from the previous year. With only a small increase in production expected for second-half 2006, whole bird prices are expected to remain somewhat higher than those of a year earlier through the third quarter, but are expected to fall below their year-earlier level in the fourth quarter. Prices for other turkey products have not increased much due to some weakness in the export market. The export market for turkey products is expected to strengthen somewhat as broiler prices continue to increase.

At the end of May cold storage holdings of turkey products totaled 466 million pounds, about the same as the previous year. However, there was a large difference in the cold storage holdings for whole turkeys and turkey parts. Cold storage holdings for whole turkeys totaled 218 million pounds, down 10 percent from the same period in 2005. For turkey parts, cold storage holdings totaled 248 million pounds, up 11 percent from the same period in 2005.

Poultry Trade: Broiler Exports Are Down in May

May broiler exports were 442 million pounds, down 9 percent from May 2005, although above May averages for recent years. The primary reasons for the decline in U.S. broiler exports were lower shipments to Russia, as there were early-month trader concerns about Russia’s new import permit regime. Russia is the largest U.S. broiler export market, but shipments to its ports fluctuate greatly in size from month-to-month.

Lower May broiler exports may also be partially explained by increases in legquarter prices. Leg-quarter prices rose from April to May by 9.6 cents, an increase of 58 percent. U.S. broiler shipments to Hong Kong/China, the Caribbean, and Mexico declined by a total of 46 million pounds from April to May, which indicate that these countries may be reducing imports in response to price increases.

Turkey Exports Continue To Decline

Turkey exports totaled 42 million pounds in May 2006, down almost 13 percent from a year ago. Although below last year, May exports increased from April, maintaining Mexico’s strong demand for low-priced animal protein products. Rising leg-quarter prices relative to turkey prices are likely the driving force behind Mexico’s substitution of turkey meat for broiler meat.

Further Information

For more information view the full Livestock, Dairy and Poultry Outlook - July 2006 (pdf)

Source: Livestock, Dairy and Poultry Outlook - U.S. Department of Agriculture, Economic Research Service - July 2006