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Poultry: Broiler meat production is expected to total 9.38 billion pounds in second quarter 2008, up 3.2 percent from a year earlier. However, production in the second half of 2008 is expected to be about even with the previous year as the number of birds available for slaughter falls. Turkey production is expected to show strong growth in second-quarter 2008, but as with broilers, production growth in the second half of 2008 is expected to slow considerably. Broiler and turkey shipments were up considerably from a year ago. Broiler exports rose 40 percent compared to a year earlier and turkey exports were almost 30 percent higher. Egg prices have fallen sharply in the last 2 months, but table-egg flock numbers are still below prices in the same period in 2007 and egg prices are expected to remain above year earlier levels through the third quarter.

Poultry Trade: A weak U.S. dollar pushed poultry exports higher in April. Broiler shipments in April totaled 591 million pounds, exceeding April 2007 shipments by 40 percent. Turkey shipments totaled 55 million pounds in April, up about 30 percent from a year ago.

Poultry

Broiler Meat Production Rises in April

Total broiler meat production in April 2008 was 3.18 billion pounds, up 10.2 percent from the previous year. A major reason for the strong production increase was that April 2008 had 1 more slaughter day than the previous year. Compared to a year earlier, processors reported that they slaughtered 769 million broilers in April 2008, an increase of 7.8 percent from the previous year. In addition, the average liveweight of those broilers at slaughter was 5.59 pounds, 1.5 percent higher than in April 2007. The increase in the number of birds slaughtered and in average liveweights was also boosted increases in the average meat yield per bird. This increase is mostly the result of a decrease in average yields the previous year, and the average yield per bird in April 2008 was more in line with the long-term average.

With smaller numbers of chicks placed for growout over the past several weeks, the total number of birds slaughtered in the second quarter is expected to be only slightly higher than in second-quarter 2007. Total broiler meat production is estimated at 9.38 billion pounds in second-quarter 2007, up 3.2 percent from the previous year. Meat production in third-quarter 2008 is now expected to total 9.2 billion pounds, less than 1 percent higher than for the same period in 2007. Fourth quarter 2008 production is estimated at 9.18 billion pounds, down about 100 million pounds from the previous year.

While the number of broilers available for slaughter is expected to decline later in the second quarter and into the third, average weights are expected to remain above the previous year. Over the last 13 weeks, (March 8 through May 31), the Agricultural Marketing Service (AMS) has reported that the number of broilers slaughtered weekly in the 7.76 pounds-and-over class has averaged 45 percent higher than in the same period last year. The increases in large broilers have driven up the average weight, and these increases are expected to continue through the end of the second quarter and into the third.

Leg Quarter Prices Continue To Strengthen

Over the last several months, prices for some broiler products have begun to strengthen as production growth has slowed and stock levels have declined. In May, the 12-City wholesale price for whole broilers averaged 81.6 cents per pound. While this is up almost 4 cents a pound from the previous month, it is less than 1 percent higher than in May 2007. Prices for some other broiler parts have strengthened to a greater extent. Prices in May for leg quarters in the Northeast averaged 48 cents per pound, up about 10 percent from the previous year, and the prices for whole or boneless/skinless thigh products rose by approximately 17 percent. On the other hand, the May price for boneless/skinless breast meat in the Northeast market was $1.51 per pound, down 11 percent from the previous year. Breast meat products may have been more heavily impacted by a sluggish domestic economy, and they are not heavily impacted by the strong demand for exported broiler products.

With broiler production expected to be basically flat in the second half of 2008 compared with the previous year, there is expected to be some upward price pressure on most broiler products, especially if export demand remains high. The impact on broiler prices will depend on the health of the U.S. economy (this is especially important for breast meat products) and the prices of competing beef and pork products.

Turkey Production Climbs in April

Turkey meat production in April was 520 million pounds, up 12.4 percent from a year earlier. Again, an additional slaughter day in April 2008 compared with the previous year contributed to the increase. The number of turkeys slaughtered in April 2008 rose by 8.9 percent to 22.3 million birds, and there was a 2.8-percent increase in their average liveweight at slaughter to 29.4 pounds. Overall turkey meat production for second-quarter 2008 is expected to be 1.55 billion pounds, up 4.6 percent from the same period in 2007.

Even with turkey meat production expected to be about 7 percent higher in the first half of 2008 compared with a year ago, wholesale prices for a number of turkey products have remained strong. May prices for whole hen turkeys in the Eastern region were 89 cents per pound, an increase of 16 percent from May 2007. In April, prices for some turkey parts were only slightly higher than a year earlier, but items like wings were between 14 and 27 percent higher than the previous year.

Egg Production Lower in April, Production Estimates Reduced

During the January to April period, the number of hens in the U.S. table-egg flock averaged 282 million, down 2 percent from the same period in 2007. With the lower number of birds, table-egg production though April has totaled 2.1 billion dozen, down slightly less than 1 percent from the same period in 2007. This lower production is expected to continue in the second quarter, and production for the second half of 2008 is estimated at 3.17 billion dozen, up fractionally from second half 2007.

With the lower production over the first 4 months of 2008, egg prices were considerably higher than during the previous year through the Easter period. After Easter, prices fell back sharply, with wholesale prices in the New York market falling from just over $1.60 per dozen to approximately $1.10 per dozen in mid-May. Prices are expected to average between 111 and 114 cents per dozen in second-quarter 2008 (about 24 percent higher that second-quarter 2007). Prices in the second half of 2008 are expected to fall below year-earlier levels during the third quarter and remain lower through the rest of the year.

Egg and Egg Product Exports Drop in First-Quarter 2008

After expanding strongly in most of 2007, egg and egg product exports fell by 23 percent in first-quarter 2008 compared with the same period in 2007. While some of the decline was to traditional markets such as Mexico and China, there were also declining shipments to the EU, shipments which had been especially strong in the first half of 2007. Exports from the United States have been impacted by exceptionally strong domestic prices for eggs in first-quarter 2008, which made exports less competitive on the world market.

Poultry Trade

Broiler Shipments Gain Strength in April

Broiler shipments in April totaled 591 million pounds, exceeding April 2007 shipments by 40 percent. Strong demand stemming from a weak U.S. dollar continues to be the primary reason for the surge in broiler shipments. Most of April’s increase was due to relatively large shipments to Mexico, Russia, China, Korea, and several other importing countries. By volume, the greatest year-over-year increase in broiler shipments was to Russia, an increase of almost 53 million pounds. Percentage-wise, South Korea had the largest increase (246 percent), followed by Mexico (83 percent) and China (82 percent). Many importers of U.S. broiler meat are capitalizing on trade opportunities by maximizing the value of their currency in the U.S. marketplace.

Over the first 4 months of 2008, broiler meat exports to Russia have totaled 426 million pounds, up 36 percent or 113 million pounds from the same period in 2007. However, total U.S. broiler shipments to Russia may have not expanded at this fast pace, because shipments to the Baltic countries were down sharply (66 percent). Most broiler exports going to the Baltic countries are then transshipped to Russia. So, the gain net total of U.S. broiler exports to Russia in the first 4 months of 2008 is somewhat smaller than what is implied by looking solely at the Russian import statistics.

Turkey Shipments Remained Strong in April

Turkey shipments totaled 55 million pounds in April, up about 30 percent from a year ago. The chief reason for the increase in turkey shipments was a strong demand driven by a weak U.S. dollar. Larger volumes of turkey meat were shipped in April 2008 to Mexico, China, and Hong Kong than were recorded in April 2007. Shipments to China increased by 4.23 million pounds in April 2008, while turkey meat shipments going to Mexico, and Hong Kong rose by 3.63 and 1.56 million pounds, respectively, from a year ago. In April, shipments to Mexico accounted for 51 percent of total U.S. turkey exports.

Further Reading

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June 2008