Summary

Broiler production continues to expand at a moderate pace. After declining in 2009, production over the first five months of 2010 is only two per cent higher than the previous year. Turkey production so far in 2010 is below the previous year, and with lower cold-storage holdings, prices for whole turkeys and a number of other turkey products are above year-earlier levels.

May broiler shipments fell short of last year's volume, while turkey shipments have been on the rise. Broiler exports totalled 535.5 million pounds, a seven per cent drop, and turkey exports totalled 47 million pounds, an increase of 19 per cent from a year ago.

2010 Broiler Meat Production Expanding Slowly

US broiler meat production over the first five months of 2010 was 14.8 billion pounds, up two per cent from the same period in 2009, but five per cent lower than production in the first five months of 2008. The increase in 2010 is the result higher average weights at slaughter as the number of birds being slaughtered was slightly lower. Judging from weekly chick placements and slaughter data, these trends of moderate growth in the number of birds slaughtered and higher average weights will continue through the end of the second quarter and into the third.

At the beginning of June, the number of birds in the broiler breeder flock was up just under two per cent to 55.3 million birds. If the size of the broiler breeder flock remains steady over the next several months, the number of eggs placed in incubators and chicks hatched compared with the previous year is expected to continue to expand so that the number of broilers produced will average between 2.0 and 2.5 per cent higher than the previous year.

Also affecting the broiler industry's pace of expansion will be the expected slow recovery in the domestic economy and mixed changes in grain prices. Corn prices for 2010/11 are forecast higher, while soybean meal prices are expected to be lower. From June 12 to July 10, the average number of chicks placed weekly for grow-out was 175 million, about two per cent higher than the same period in 2009. With a typical grow-out period of seven to eight weeks, chicks placed for grow-out during this period would likely go to slaughter during the second half of July to late August. Broiler meat production in May 2010 totalled three billion pounds, 4.3 per cent higher than the previous year. The increase in meat production was due to a combination of more birds slaughtered in May, up 1.7 per cent from the previous year, and higher average weights at slaughter. In May, the average liveweight at slaughter was 5.71 pounds, 2.2 per cent higher than the previous year. Weekly data from USDA's Agricultural Marketing Service point toward continued higher average liveweight at slaughter in June, as most of the increase in the weekly number of birds being slaughtered during June has been in heavier birds (6.25 pounds and higher).

Broiler meat production is expected to be up 2.6 per cent in the second quarter 2010 compared with the previous year, but with almost all of the growth in production coming from higher production of large birds, this increase has a mixed impact on wholesale prices. Prices for whole birds averaged 85 cents per pound during the second quarter of 2010, almost four per cent higher than a year earlier. Prices for whole birds have moved higher due to lower stock levels and fewer lighter weight birds being slaughtered. Lighter weight birds are normally the source of whole birds for the rotisserie market.

Demand has also been strong for boneless/skinless breast meat, with prices in the Northeast market averaging $1.52 per pound in June, up four per cent from the previous year. With higher stock levels, prices for almost all leg meat products and wings were down considerably from the previous year. Wing prices were around $1.16 per pound, down 17 per cent from the very strong prices seen in June 2009.

The growth in the number of large broilers going to slaughter, along with a smaller export volume, has raised the quantity of leg meat available on the domestic market, putting downward pressure on prices and increasing stocks. Prices for leg quarters in June were $0.39 per pound – down 25 per cent from the previous year – and prices for drumsticks and thigh meat were also much lower.

Broiler stocks at the end of May totalled 670 million pounds, up eight per cent from a year earlier. The year-over-year changes in cold-storage stock levels were mixed, with stocks of whole birds and breast meat products lower and leg meat/other products higher. Stocks for whole birds were 19.3 million pounds, a decrease of three per cent from the previous year. With relatively strong domestic demand for broiler breast meat products and a brighter export situation expected, ending stocks are expected to be pulled downward by the end of the second quarter. Over the course of the second half of 2010, with production gradually increasing, broiler stocks are expected to slowly increase, ending the year at 670 million pounds.

Broiler Shipments Dropped in May

May broiler shipments totalled 535.5 million pounds, a seven per cent decline from the same period in 2009. The main reasons for the drop in broiler shipments are (1) unsettled trade issues with Russia and (2) China's anti-dumping suit against the US. Shipments to Russia have declined from 112.7 million pounds in November 2009 to zero during the months of March and April and are only 220,000 pounds for the month of May. Shipments to China have declined about 85 per cent since the beginning of 2010. Russia accounted for almost 20 per cent of US total broiler shipments from January 2009 to May 2009, while China accounted for over 12 per cent.

During the months of unsettled trade issues with Russia and China, US broiler shipments have remained over 500 million pounds. Increased shipments to other countries (particularly Turkey and Angola) are among the reasons the US has maintained this level of exports. Other countries' broiler meat demands increased 40 per cent from January 2010 to May 2010.

The value of US broiler meat shipments also suffered. The dollar value of May 2010 broiler shipments totaled $250.4 million, down 14 per cent from a year ago. Most of the loss in value is due to low or no shipments to Russia and China, which together accounted for 33 per cent of the US total broiler shipment value in May 2009.

Turkey Production Declines in May

Turkey meat production totaled 437 million pounds in May, down three per cent from May 2009. Over the first five months of 2010, turkey meat production has totalled 2.2 billion pounds, 3.4 per cent below the same period in 2009. The decrease in turkey meat production in May was the result of a lower number of turkeys slaughtered, 18.4 million, down six per cent from a year earlier. This decline was partially offset by an increase in the average liveweight of turkeys at slaughter. In May, the average liveweight for turkeys at slaughter was 29.7 pounds, three per cent higher than a year earlier. Over the first five months of 2010, the average liveweight for turkeys at slaughter has been 29.9 pounds, an increase of 1.2 per cent from the same period in 2009.

Although turkey meat production in the second half of 2010, at 2.8 billion pounds, is expected to be larger than in the first half, it is still down slightly (one per cent) compared with the second half of 2009. The turkey hatchery report showed that net placement of poults for grow-out in June were 24.1 million, unchanged from the previous year and over the first six months of 2010, net poult placements have totalled 138.6 million, a decline of 1.8 per cent from the same period in 2009. Turkey meat production is expected to remain below the previous year through the rest of 2010 and then turn to positive growth in the first half of 2011. However, even when it turns positive, production will be below that of the first half of 2007 and 2008.

With lower turkey meat production during the first five months of 2010 and smaller stocks of whole turkeys to start the year, whole turkey prices are considerably higher than the previous year. National prices for whole hen turkeys averaged 84.4 cents per pound in second-quarter 2010, up 11 per cent from the previous year. Whole turkey prices are expected to remain above year-earlier levels through the remainder of 2010 and into early 2011.

At the end of May, cold-storage holdings of all turkey products totalled 470 million pounds, down almost 20 per cent from a year earlier. The decrease has come from declines in stocks of whole birds and stocks of turkey parts. Cold-storage holdings of whole turkeys totalled 249 million pounds, 17 per cent lower than a year earlier.

Holdings of turkey parts were 222 million pounds at the end of May, down 23 per cent from the same period in 2009. The decline in turkey products in cold storage has developed as export demand has increased. Stocks of turkey products (whole birds and parts) are expected to follow the normal seasonal pattern of increasing through the third quarter and then declining during the peak demand period in the fourth quarter. With slightly lower production expected for the second half of 2010, turkey stocks are expected to remain below year-earlier levels through the second half of 2010.

Turkey Shipments Continue to Grow in May

Turkey shipments totalled 47 million pounds in May, up 23 per cent from a year ago, have experienced continual growth since February. Shipments to two of the US major markets, Mexico and China, increased by 31 per cent and 69 per cent, respectively, since May 2009, which has helped total turkey shipments exceed last year's volume in spite of Russia's import restrictions. Turkey shipments to Russia have declined from 1.7 million pounds in November 2009 to zero for the months of March through May of 2010, while shipments to Mexico, the leading importer of US turkey meat, have continued to increase since February 2010, as have shipments to mainland China. The value of US turkey meat for May 2010 totalled $36.9 million, up almost 28 per cent from a year ago.

Egg Production Higher, Prices Down in May

US table egg production totaled 548 million dozen in May, up one per cent from the same period the previous year. Egg production has been higher on a year-over-year basis in the first five months of 2010. Higher table egg production in May was the result of an increase in the rate of lay in May compared with the previous year, as the number of hens in the table egg laying flock was actually slightly lower (at 279 million) than in May 2009. It is expected that the number of birds in the table egg laying flock for the rest of the year, will continue to be slightly lower than the previous year, as current prices are not supplying any incentive to expand production. Also, the number of egg-type pullets placed in the hatchery supply flock has been lower than the previous year in four out of the first five months in 2010. Table egg production in second-half 2010 is expected to total 3.3 billion dozen, slightly higher than in the second half of 2009.

Even with only a small increase in production, prices of table eggs have fallen sharply at the wholesale level since the Easter holiday. In first quarter of 2010, the average wholesale price for a dozen grade A large eggs in the New York market was $1.26, sharply higher than the $1.10 per dozen in the first quarter of 2009. After rising to almost $1.35 per dozen in the run-up to the Easter holiday, egg prices fell sharply, with the average wholesale price for the second quarter in the New York market only $0.83 per dozen. With no large declines in the size of the table egg flock expected, the price forecasts for the remainder of 2010 were reduced. Wholesale prices for a dozen large eggs in the third quarter are now expected to average $0.83 to $0.87, and the forecast for fourth-quarter 2010 is for prices to average $1.01 to $1.09 per dozen.

Egg Exports Up 11 Per Cent in May

Egg exports in May totalled 23.2 million dozen eggs (shipments of egg products are converted to shell-egg equivalent), up 11 per cent from a year earlier. Over the first five months of 2010, egg exports were 25 per cent higher than during the same period in 2009.

In May, the increase in exports was the result of larger shipments of egg products. Shipments of various types of egg products were up 38 per cent from a year earlier to the equivalent of 12.4 million dozen eggs. The strongest market has been Japan, with shipment of four million dozen eggs in May. Over the first five months of 2010, US exports of egg products to Japan have totalled 13.8 million dozen, 44 per cent higher than in the same period in 2009. The EU has also been a growth market for US egg products, with Germany being the single largest destination.

Contrary to the growth in egg product shipments, US exports of shell eggs fell to 10.8 million dozen in May, down almost 10 per cent from a year earlier.

Further Reading

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July 2010