US Poultry Outlook Report - March 2008

By U.S.D.A, Economic Research Service - This article is an extract from the March 2008: Livestock, Dairy and Poultry Outlook Report.
calendar icon 20 March 2008
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Poultry: With table egg production continuing to be lower on a year-over-year basis, wholesale egg prices are forecast at $1.50 to $1.56 per dozen in first-quarter 2008, up over 40 percent from the previous year. With a strong increase in broiler meat production in January 2008, the estimates for first-quarter 2008 production was raised by 125 million pounds to 9.08 billion and the estimate for the second quarter was increased by 50 million pounds, bringing the second quarter estimate to 9.4 billion and the 2008 yearly estimate to 37.1 billion. Turkey meat production in first-quarter 2008 is estimated at 1.5 billion pounds, up 6 percent from a year earlier. Even with the higher production and increased stock levels, prices for whole turkeys were considerably higher then during the start of 2007.

Poultry Trade: Broiler exports in 2007 were a record 5.772 billion pounds, an increase of 4 percent from the old record (5.555 billion pounds in 2001) and 11 percent higher than in 2006. Shipments of turkey products totaled 554 million pounds in 2007, up 1 percent from the previous year. Egg exports (shell egg and egg products) were 251 million dozen, up 24 percent from a year earlier. Broiler shipments for January 2008 totaled 456 million pounds, an increase of 15 percent from a year ago, while turkey exports totaled 47 million pounds, up 13 percent from the previous year. Egg exports in January totaled 16-million dozen, even with very strong domestic prices.


Table-Egg Production Continues Lower

After averaging below a year earlier through all of 2007, table-egg production in January was 544 million dozen, down less than 1 percent from a year earlier. With table-egg flock numbers still below a year earlier, table-egg production is forecast to be slightly lower in first-half 2008, compared with a year earlier. However, table-egg production is forecast to rise slightly in second-half 2008 as farmers respond to the incentive of the high market prices for their products over the last several months. During the past 6 months (September 2007 to February 2008), wholesale table-egg prices in the New York market have averaged approximately $1.45 per dozen, 58 percent higher than in the same period the previous year.

Over the last several quarters hatching-egg production has been higher than a year earlier, primarily to meet the demands of an expanding broiler industry. With broiler production forecast to expand in 2008, especially in the first half of the year, hatching-egg production is also forecast to increase. However, the rate of expansion should fall towards the end of the year with the expected slowdown in broiler expansion.

The NASS Chicken and Eggs 2007 Summary provided revisions to both table- and hatching-egg production for 2006 and 2007. In most cases the changes in quarterly production estimates were minor. The annual production estimate for table eggs was revised upward by 29-million dozen in 2006 to a total of 6.523-billion dozen. The total for 2007 was revised upward by 25-million dozen to 6.434 billion, so the percentage drop in production in 2007 remains basically the same. The changes to hatching-egg production were also relatively small, with the revised totals for 2006 and 2007 at 1.088 and 1.112-billion dozen.

Wholesale table-egg prices continued at a very high level in January 2008 ($1.57 per dozen large eggs), and judging by weekly prices, the monthly average in February is expected to be slightly higher. Even with the large increases in grain prices in the last 6 months, this still gives a strong incentive to egg producers to expand production. However, given the current size of the table-egg flock and the number of birds available to add to the flock, no significant expansion in production is expected before second-half 2008. Wholesale table-egg prices (New York area) are forecast to average approximately $1.50 to $1.56 per dozen in first-quarter 2008, up 48 percent from the previous year. Since Easter falls in March this year and egg prices normally show a seasonal decline after Easter, prices in second quarter are forecast to average $1.17 to $1.23 per dozen. This is down considerably from the first quarter, but still 30 percent higher than the previous year. Prices are then expected to gradually move downward in second-half 2008 as production rises.

Broiler Production Higher in January, 2008 Estimate Revised Upward

Broiler meat production for January 2008 was reported at 3.22 billion pounds, up 6.4 percent from the previous year. The source of the increase came from both a higher number of birds slaughtered and a higher average weight. The total number of birds slaughtered was 784 million, up by 4.5 percent from January 2007. The total liveweight of broilers at slaughter was up 5.8 percent from the previous year, with the average liveweight up 1.2 percent to 5.56 pounds.

With the strong increase in broiler meat production in January 2008, estimates for first-quarter 2008 broiler production were raised by 125 million pounds to 9.08 billion. This is 5.2 percent higher than in the same period in 2007. In first-quarter 2008 the higher production is again expected to come from a mixture of a greater number of birds slaughtered and a higher average weight. With weekly chick placement numbers continuing to be about 3 percent higher than during the same period in 2007, the broiler meat production estimate for second-quarter 2008 was increased by 50 million pounds to 9.4 billion, and these changes bring the total estimate for 2008 to 37.1 billion.

Higher broiler meat production is expected to continue well into the second quarter, as weekly chick placements over the last 5 weeks (February 9 to March 8) have averaged 178 million, 3 percent higher than during the same period the previous year. Chicks placed for growout in early March will likely be ready for slaughter in late April. Over the last several months most of the growth in broiler production has come from higher production of large birds. According to Agricultural Market Service data on the breakout of broiler slaughter by weight, since December 1, the average weekly increase in the number of birds slaughtered in the 6.26 to 7.75 pound weight category has been 23 percent, compared with the same weeks a year earlier. This pattern of the most gain in slaughter numbers occurring in the higher weight categories, if maintained, means that average weights at slaughter should continue to be up from the previous year over the next several months.

Data in the NASS Poultry Slaughter 2007 Annual Summary report contained revisions in broiler meat production for both 2006 and 2007. In 2006, the end result of the revisions was a drop of just over 250 million pounds, to 35.5 billion. The revisions for 2007 had the opposite impact, with the meat production estimate rising to 36.1 billion pounds, up 177 million from the previous estimate. With the downward revision in 2006 and an upward revision in 2007, the increase in production in 2007, while only 1.8 percent, was considerably higher than originally estimated. Again, the increased broiler meat production in 2007 was from a combination of a larger number of birds slaughtered and higher average weights.

Over the first 2 months of 2008, the 12-city whole broiler price averaged 77 cents per pound, up 6 percent from the same period in 2007. The year-over-year price changes for other broiler products are mixed. Prices for most breast meat products are about even with the previous year or have fallen. In the Northeast market, wholesale prices for boneless/skinless breast meat were just slightly higher in the first 2 months of 2008, compared with the same period in 2007, while prices for ribon breasts had fallen by over 10 percent. Prices for wings have also remained about even with the previous year. However, prices for leg meat products have strengthened considerably compared with a year earlier. Prices for leg meat products have benefited from the strong export market, which was record high in fourth-quarter 2007 (in 2007 leg quarters accounted for about two-thirds of total broiler meat exports). Over the first 2 months of 2008, wholesale prices for leg quarters averaged 43 cents per pound, up 18 percent over January-February 2007. During this same period, prices for thigh meat rose about 22 percent and drumstick prices jumped 35 percent.

The NASS Cold Storage 2007 Summary reported revisions to the 2007 ending stocks for broiler meat. Revisions in most quarters were relatively minor, but the ending stocks estimate for the third quarter was increased to 648 million pounds, higher by 22 million or about 4 percent. The ending stock estimate for fourthquarter 2007 was lowered slightly to 739 million pounds, about the same level as the previous year. Both 2007 and 2008 began with close to the same level of stocks, but lower broiler meat production in first-quarter 2007 put upward pressure on prices and lowered stock levels by the end of the first quarter. The opposite effect is expected in first-quarter 2008, where higher production is expected to gradually put downward pressure on prices and result in slightly higher stocks levels by the end of the first quarter, compared with a year earlier.

Turkey Production Forecast Up Again in 2008

U.S. turkey meat production in January 2008 was 546 million pounds, a jump of 12.6 percent compared with the previous year. The large increase in production was the result of 9 percent more birds being slaughtered and a 3-percent increase in their average weight at slaughter. There were only minor revisions to 2006 and 2007 turkey meat production in the NASS Poultry Slaughter 2007 Annual Summary, with 2006 production moving down slightly to 5.68 billion pounds and 2007 production adding about 20 million pounds to boost the total to 5.96 billion. In both cases the revisions changed the totals by less that 1 percent.

According the NASS Cold Storage 2007 Summary, ending stocks for turkey in the first three quarters of 2007 did not have any changes, but the estimate for fourthquarter ending stocks was revised to 261 million pounds, an increase of 22 million or about 9 percent higher than the previous estimate. This means ending stocks for 2007 were about 19 percent higher than the previous year. The increase in stocks has come from higher cold storage holdings of both whole birds and turkey meat products. Stocks of whole birds at the end of 2007 were 76 million pounds, an 18- percent increase from the previous year. Stocks of turkey products at the end of 2007 totaled 185 million pounds, up 20 percent from the end of 2006. With higher production expected for turkey in 2008 and strong production growth in the first half of the year for broilers, turkey stocks are forecast to remain above their 2007 levels throughout 2008.

Even with the higher production and stock levels, prices for many turkey products are still above their year-earlier levels. These factors would normally be expected to put downward pressure on prices, but prices for whole hens in the Eastern market averaged 75.1 cents per pound in January and February 2008. This is a 9-percent price increase over the same period in 2007, which in turn was 2 percent higher than the previous year. Turkey prices are expected to gradually weaken during first-half 2008, with downward pressure coming from higher production, higher broiler supplies, and strong supplies of other meat products.

Poultry Trade

Broiler Shipments Hit a Record in 2007 and Remained Strong in January 2008

Broiler exports in 2007 totaled 5.772 billion pounds, up 11 percent from 2006 and 4 percent above the previous record of 5.55 billion pounds set in 2001. In 2007, domestic wholesale leg-quarter prices remained strong, averaging 44 cents per pound. However, even with the relatively strong prices, exports were record-high, due in large part to the depreciation of the U.S. dollar against a number of other currencies. Major importers of U.S. broiler meat benefited from the lower U.S. dollar to purchase broiler meat at a deflated value. The importing countries that contributed the most toward the surge in broiler shipments in 2007 were Russia, China, the Commonwealth of Independent States (excluding Russia), and Cuba. Broiler shipments to China, up 24 percent, were boosted in part because of disease issues in China’s hog industry.

Broiler shipments totaled 456 million pounds in January, a 15-percent increase from a year ago. The jump in exports is due to a large increase (up 71 percent) in shipments to Russia, but exports to Cuba were also higher (up 178 percent). The primary reason for the increase in total broiler shipments has been a strong demand driven by a weakened U.S. dollar. Broiler exports are forecast at 6 billion pounds which would be another record as exports to Russia and China, the two largest markets, are expected to remain strong. Shipments in first-quarter 2008 are estimated to reach 1.4 billion pounds, a 9.8 percent increase from first-quarter 2007.

Turkey Exports Were Up Slightly in 2007 and in January 2008

Turkey exports for 2007 totaled 554 million pounds, up 1.3 percent from a year ago. While there was strong growth in shipments to China (up 36 percent) and Russia (up 22 percent), it was partially offset by a decline in exports to Mexico. Mexico is by far the largest export market for turkey products. Turkey exports in 2007 were fairly concentrated, with the top four export markets (Mexico, China, Russia, and Canada) accounting for almost 75 percent of total shipments.

Turkey exports in January 2008 totaled 47 million pounds, an increase of 13 percent from the previous year. Again, higher shipments to Russia were the primary reason for the increase. However, shipments to Mexico and China were also slightly higher. Turkey shipments in the first quarter of 2008 are forecast at 135 million pounds, a 9-percent increase from first-quarter 2007.

Egg Exports Reach 251-Million Dozen in 2007

Even with very strong U.S. prices, egg and egg product exports reached 251-million dozen on an egg equivalent basis in 2007. Total egg exports are made up of shell eggs for consumption, shell eggs for hatching, and egg products, often used in the baking industry and prepared foods. There was strong growth in shipments to Japan and Hong Kong, traditionally two of the larger markets for U.S. egg exports, but much of the growth in exports in 2007 can be attributed to shipments going to EU- 27 countries.

With strong prices for internally produced shell eggs and a strong Euro vs. the US dollar, there was a high demand in many EU-27 countries for imported eggs and egg products for the internal egg-breaking and egg products industries. In total, the EU-27 countries imported the equivalent of 42-million dozen eggs and were the second largest market for U.S. egg exports in 2007.

High domestic egg prices seem finally to have had an impact on egg exports, as shipments in January 2008 totaled only 16-million dozen, down over 20 percent from a year earlier. Many of the shipments were in the egg products market, which accounted for 54 percent of total egg exports on an egg equivalent basis. Exports of shell egg for consumption accounted for 10 percent, and shell eggs for hatching accounted for the remaining 36 percent. Shipments were smaller to all four of the largest traditional markets, Canada, Mexico, Hong Kong, and Japan.

Further Reading

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March 2008

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