Highlights

Broiler production estimates for the second and third quarters were increased due to somewhat higher numbers of birds being slaughtered and a steady number of chicks being placed for grow-out. Broiler meat production is now expected to be down two per cent in the second half of 2009 and to be down four per cent for the year. Even with much lower production, whole turkey prices continue to be pressured by high stock levels.

2009 Quarterly Broiler Meat Production Estimates Increased

US broiler meat production over the first five months of 2009 was 14.5 billion pounds, down seven per cent from the same period in 2008. The decline has been due to a lower number of birds available for slaughter than a year earlier. Average weights at slaughter have also contributed to the decline, being slightly lower than the previous year during most of the first five months of 2009.

At the beginning of June, the number of birds in the broiler breeder flock was down six per cent to 54 million birds. However, if the size of the broiler breeder flock remains steady over the next several months, the difference in the number of eggs placed in incubators and chicks hatched compared with the previous year should narrow. Based of the pace of slaughter to date and with size of the broiler breeder flock declining less than anticipated, broiler meat production estimates for the second and third quarters were increased. The estimate for the second quarter was raised to 8.93 billion pounds (up 60 million pounds from last month) and the estimate for the third quarter was raised to 9.05 billion pounds (up by 25 million).

This brings the revised total estimate for 2009 to just over 35.5 billion pounds, 3.8 per cent below 2008 production. Production later in 2009 could be boosted by the forecast price reductions for corn and soybean meal in the second half of 2009. Corn prices in 2009/10 are expected to average lower than in 2008/09, and soybean meal prices are expected to decline somewhat. However, these forecast declines in the prices for the major feed components may be partially offset by the effects of continuing weakness in the domestic economy.

Over the five weeks from 6 June to 4 July, the average weekly number of chicks placed for grow-out was 170.4 million, down five per cent from the same period in 2008. With a typical grow-out period of seven to eight weeks, chicks being placed for grow-out during this period would likely go to slaughter during the second half of July to the middle of August. Over the last several weeks, the number of chicks placed for grow-out has been steady at around 170 to 171 million per week. If this rate of chick placements continues to hold steady or even declines slightly, the year-over-year gap with 2008 should narrow rapidly starting in late August. It was at that time in 2008 that the combined effects of higher grain and energy costs caused broiler integrators to begin to sharply lower broiler chick placements.

Broiler meat production in May 2009 totaled 2.9 billion pounds, down nine per cent from a year earlier. The decrease in meat production was due primarily to a smaller number of birds slaughtered in May, also down nine per cent from the previous year. The large decrease in the number of birds slaughtered was partially because May 2009 had one less slaughter day than May 2008. Additionally, the average weight of birds going to slaughter declined slightly compared with a year earlier. Preliminary data point toward total broiler meat production in June being close to that of a year earlier. This is due primarily to June 2009 having one additional slaughter day than June 2008. Average bird weights at slaughter in June are expected to be down slightly compared with a year earlier.

With broiler production expected to be down over five per cent in second quarter 2009 compared to last year and stock levels also lower, there has been some support for prices. Prices for whole birds averaged 82 cents per pound during second-quarter 2009, two per cent higher than a year earlier. Price changes for broiler parts have been mixed. Boneless/skinless breast meat prices in the Northeast market were around $1.47 per pound in June, up slightly from the previous year, while wing prices were around $1.40 per pound, sharply higher than in June 2008. Price changes for leg meat products varied, with prices in June for leg quarters up somewhat from the previous year, but prices for thigh meat and drumsticks somewhat lower.

Broiler stocks at the end of May totaled 624 million pounds, down 14 per cent from a year earlier. Cold storage stock levels were lower in almost all categories as the strong export market (so far) in 2009 and declines in production combined to draw down overall stock levels and place upward pressure on prices. The estimate for second-quarter ending stocks is 600 million pounds. The estimate for third-quarter 2009 was increased by 20 million pounds to 600 million as higher production and poor economic conditions are expected to keep stocks higher than anticipated.

Broiler Exports Total 578 Million Pounds in May

Broiler meat exports totaled 578 million pounds in May, down nine per cent from the previous year, but in line with shipments over the last several months. Although shipments to Russia at 135 million pounds were down sharply (37 per cent) from last May's very large total, the amount was well above the previous month. Exports to Mexico continue to be very strong with at least some of this gain coming at the expense of turkey shipments. Two items to note were shipments to the Ukraine and the Middle East. After exports of almost no broiler meat to the Ukraine during the previous three months, shipments in May were 56 million pounds. US broiler shipments to the Middle East continue to expand. In May, combined shipments to Iraq and the United Arab Emirates totaled 29 million pounds, up from only seven million pounds in May 2008. Broiler meat exports are expected to remain strong through June as leg quarter prices gained slightly during the month, approaching the 50 cents per pound level in the Southern market.

Turkey Production Falls Sharply in May

Turkey meat production totaled 451 million pounds in May, down 13 per cent from the previous year. As with broilers, the decline in turkey meat production is primarily the result of a decrease in the number of turkeys slaughtered – down 13 per cent – although the average weight at slaughter was also down slightly. Another reason for the large size of the decline was also that May 2009 had one fewer slaughter day than May 2008.

Although turkey meat production in the second half of 2009 is expected to strengthen somewhat, second-half 2009 production is estimated at 2.98 billion pounds, down six per cent from second-half 2008. The most recent turkey hatchery report showed that net placement of poults for grow-out in May was 22.8 million, a decline of 16 per cent from a year earlier. Over the first five months of 2009, net poult placements averaged 23.4 million, a 10-per-cent decrease from the same period in 2008. Poult placements on a year-over-year basis have fallen for the last 15 consecutive months.

Turkey meat production is expected to remain below the previous year through the rest of 2009; and when it turns positive, as expected, in first-quarter 2010, production is likely to be well below the first-quarter 2008 level.

Even with relatively strong decreases in turkey meat production over the first five months of 2009, whole turkey prices are considerably below year-earlier levels, as large supplies of whole birds in cold storage have put downward pressure on prices. Prices for whole hen turkeys in the Eastern market averaged 79.1 cents per pound in second-quarter 2009, down 11 per cent from the previous year. Whole turkey prices are expected to remain below year-earlier levels through the remainder of 2009.

At the end of May, cold storage holdings of turkey products totaled 586 million pounds, 12 per cent higher than in May 2008. The increase came from larger stocks of whole birds, as stocks of turkey parts are down slightly. Cold storage holdings of whole turkeys totaled 298 million pounds, 28 per cent higher than a year earlier. Holdings of turkey parts were 288 million pounds at the end of May, down just under one per cent from the same period in 2008. The growth of whole turkeys in cold storage has developed as export demand has slowed because of poor economic conditions in Mexico, the primary export market for US turkey meat. The estimates for ending stocks for second-quarter 2009 was increased to 630 million pounds and estimates for the third and fourth quarters in 2009 were increased to 685 and 385 million pounds, respectively. The estimates for ending stocks in each quarter of 2010 were also increased.

Turkey Exports Down 23 per cent

Exports of turkey products totaled 38 million pounds in May, down 23 per cent from the previous year but very similar to shipment in the previous four months of 2009. The major source of the decline from the previous year was lower shipments to Mexico. Some turkey exports to Mexico are likely being replaced by broiler shipments and some of the decline is likely due to the downturn in the Mexican economy. Exports to the other major markets repeated the export pattern seen over the first four months of 2009, with shipments declining compared to the previous year. With a weak economy in Mexico and softer demand in other major markets, the export forecast for second quarter 2009 was reduced by 10 million pounds to 120 million. The export forecasts for the third and fourth quarters of 2009 were also reduced, making the yearly total for 2009 now 507 million pounds, down 25 per cent from 2008.

Egg Production Higher, Prices Down in May

US table egg production totaled 542 million dozen in May, up 1.5 per cent from the same period the previous year. Egg production has been higher on a year-over-year basis in five of the last six months. This is a complete turnaround from 2007 and 2008, when egg production was lower than the previous year in 23 of 24 consecutive months. Higher table egg production in May was the result of a combination of a higher number of hens in the table egg laying flock and a small increase in the rate of lay in May compared with the previous year. During May 2009, the number of hens in the table egg laying flock averaged just less than 280 million, up fractionally from May 2008.

The number of birds in the table egg laying flock is expected to continue to expand in the coming months as the number of egg-type chick pullets placed in the hatchery supply flock has been sharply higher than the previous year in four out of five months in 2009. Table egg production in second-half 2009 is expected to be 3.28 billion dozen, a one-per-cent increase from second-half 2008.

The larger production of table eggs in most of the first five months of 2009 has translated into falling egg prices at the wholesale level, especially after the Easter holiday. In first-quarter 2009, the average wholesale price for a dozen grade A large eggs in the New York market was $1.10, sharply lower that the $1.59 per dozen in first quarter 208. After rising to over $1.30 per dozen in the runup to the Easter holiday, egg prices then fell sharply, averaging only 89 cents per dozen in the second quarter. With no declines in the size of the table egg flock expected, the price forecasts for the remainder of 2009 were reduced. Wholesale prices for the third quarter are now expected to average 92 to 96 cents per dozen and the forecast for fourth-quarter 2009 is for prices to average $0.95 to $1.01 per dozen.

Egg Shipments Rise to 21 Million Dozen

With egg prices falling sharply after the Easter holiday, egg exports rose to 21 million dozen in May, 17 per cent higher that a year earlier and up 4.7 million dozen from the previous month. Compared to April, exports of shell eggs were up about 3.7 million dozen and shipments of egg products rose by the equivalent of around one million dozen. While shell egg exports rose in the two largest markets – Canada and Hong Kong – a primary reason that shipments were higher was a large increase in exports to the United Arab Emirates. Shell egg exports to the United Arab Emirates over the first four months of 2009 had been small, but rose to 1.3 million dozen in May. Shell egg shipments to Mexico were also higher in May compared to a month earlier, rising to 1.1 million dozen, 110 per cent higher than in April. The decline in table egg prices during the second quarter is expected to provide a boost to egg and egg product exports. The estimate for all egg exports in the second quarter of 2009 was increased to 50 million dozen, an increase of five million dozen from last month's forecast.

Further Reading

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July 2009