Summary

With broiler meat production down sharply in 2009 and chick placements continuing to be below year-earlier levels, the quarterly estimates for 2009 were revised downward. The broiler production estimate for 2009 is now 35.8 billion pounds, down 3.1 per cent from 2008. First-quarter 2009 turkey meat production is estimated at 1.46 billion pounds, down almost 5 per cent from a year earlier. Ending stocks for January showed a doubling in whole turkey stocks. Table egg production rose for the second consecutive month after declining in 22 of the previous 23 months.

Broiler Production Falls in January, 2009 Estimates Revised Downward

Broiler meat production for January 2009 was reported at 2.87 billion pounds, down 11.3 per cent from the previous year. The decrease was the result of fewer birds being slaughtered on a daily basis and the fact that January 2009 had one less slaughter day than January 2008. The total number of birds slaughtered was 695 million, down 11.7 per cent from January 2008, and the total liveweight of broilers at slaughter fell by 11.8 per cent from a year earlier as the average liveweight at slaughter, 5.56 pounds, was down slightly from the previous year.

With January's large decrease in broiler meat production and lower production expected for February and March, estimates for first-quarter 2009 production were lowered by 75 million pounds to 8.63 billion. This is 5.7 per cent below the same period in 2008. The reduction is expected to come almost totally from fewer birds being slaughtered, as average weights are expected to change very little. With weekly chick placement numbers in 2009 continuing to be well below the previous year and continued reductions in the hatchery flock, the broiler meat production estimates for the second through fourth quarters were also reduced. The second quarter estimate is lowered to 9 billion pounds, the third-quarter to 9.1 billion pounds, and the fourth-quarter estimate was lowered to 9.05 billion pounds. The forecast for fourth-quarter still represents an increase in production from the previous year, but the rate of growth is now only 2.1 per cent. Overall, these reductions bring the total broiler meat estimate for 2009 to 35.78 billion pounds, down 3.1 per cent from 2008.

Revisions in broiler meat production data for both 2007 and 2008 were made in the NASS Poultry Slaughter 2008 Annual Summary. For 2007, the revisions were very minor, with annual production rising by only 33 million pounds to 36.2 billion. The revisions for 2008 were also quite small, an addition of only 42 million pounds to broiler meat production, increasing the total for 2008 to 36.9 billion pounds, up about 2 per cent from a year earlier.

Weekly estimates of broiler eggs in incubators and chick placements from the NASS Broiler Hatchery Report point toward continued declines in the number of birds available for slaughter, which is expected to result in lower broiler meat production. Over the last 5 weeks (February 7 to March 7), chick placements have averaged 167 million, 6.4 per cent lower than during the same period the previous year. Chicks placed for grow-out in early to mid-March will likely be ready for slaughter in late April to early May based on an average 7- to 8-week grow-out period.

Even with the reduced production in January and the expected smaller production in February, falling demand has resulted in lower prices for most broiler products. Over the first 2 months of 2009, the 12–city whole broiler price averaged 81 cents per pound, up about 4 per cent from the same period in 2008. However, since the middle of February the average weekly 12-city price has been trending downward. This is likely an indicator of lower demand for meat products, as broiler meat production is well below the previous year's level. Year-over-year price changes for other broiler products are mixed. Prices for most breast meat products are down from the previous year.

In the Northeast market, wholesale prices for boneless/skinless breast meat in the first two months of 2009 averaged $1.25 per pound, down more than 8 per cent from the previous year, and prices for rib-on breasts had fallen more than 4 per cent. Prices for leg quarters averaged 36 cents per pound in January and February, down 17 per cent from the same period in 2008. One of the few items showing price strength since last year is wings. Prices for wings in the first 2 months of 2009 averaged $1.48 per pound, 18 per cent higher than the previous year.

The decline in broiler meat production over the last several months has rapidly been reflected in cold storage stocks. Broiler stocks were up considerably through much of 2008 but at the end of January 2009, stocks of broiler products were reported at 669 million pounds, down over 11 per cent from the previous year. Stocks of many individual broiler products were considerably lower than the previous year. The ending stocks estimate for first-quarter 2009 is 690 million pounds, a decline of 7.6 per cent from the previous year. The reduction in the stocks forecast reflects the large declines in production projected for the first quarter, but the reduction is expected to be partially offset by smaller exports and declining demand due to the uncertain economic conditions.

Per Capita Broiler Meat Consumption at Lowest Level Since 2003

With broiler meat production lower, exports at near record levels, and stocks in cold storage relatively high, the amount of broiler meat available for domestic consumption at the end of 2008 was reduced. In fourth-quarter 2008, per capita broiler consumption declined to 19.7 pounds, the lowest quarterly per capita consumption level since the first quarter of 2003.

Broiler Exports Total 608 Million Pounds in January 2009

Broiler shipments totaled 608 million pounds in January, up 33 per cent from January 2008. Much of the increase was due to higher shipments to Russia, China and Mexico, the three largest markets for US broiler exports. The higher broiler exports were a major factor keeping wholesale prices for leg quarters around 35 cents per pound (the primary export product). The strength in broiler exports, even with a worldwide economic downturn, may be due to chicken's relatively low prices compared with beef and pork products.

Broiler exports for first-quarter 2009 are estimated at 1.45 billion pounds, down 3.8 per cent from the previous year. The lower forecast is based on a weaker worldwide demand for meat products due to the economic downturn and a reduction in the Russian import quota. The annual 2009 forecast for US broiler exports is 6.05 billion pounds, down 13 per cent from the record 6.96 billion pounds exported in 2008.

Turkey Production Forecast for 2009 Reduced

Turkey hatchery data has shown significant declines over the last several months, and combined with the uncertainty surrounding the domestic economy, leads to a reduced forecast for US turkey meat production for 2009. The estimate for the first quarter was lowered to 1.46 billion pounds, down 15 million pounds from the previous forecast.

The estimates for the second and third quarters were also lowered. These changes bring the estimate for 2009 to 5.99 billion pounds, down over 4 per cent from the previous year. The reduction is expected to come in the first three quarters of the year, with the forecast for fourth-quarter 2009 unchanged since last month and less than 2 per cent below a year earlier.

Turkey production in January 2009 was 470 million pounds, down 14 per cent from a year earlier. The decline in production was the result of a lower number of birds being slaughtered (down 14.3 per cent), as the average weight of birds at slaughter was up slightly to 30.5 pounds. The reduction in the number of birds slaughtered was partially due to one less slaughter day in January 2009 compared with a year earlier. First-quarter 2009 turkey production is expected to be down almost 5 per cent from the previous year.

Turkey Stocks Up by Over a Third

The estimate for turkey stocks at the end of January 2009 was 454 million pounds, up 38.6 per cent from the previous year. Most of the increase in cold storage holdings is the result of large holdings of whole turkeys. At the end of January, whole-bird stocks were estimated at almost 196 million pounds, approximately double the estimate for the same time in 2008. The growth in stocks of turkey parts was much less, increasing only 12 per cent from the previous year to 258 million pounds. The lower increase in turkey parts stocks is likely due to the strong market for turkey exports during most of 2008, as almost all exports are parts rather than whole birds.

With the increase in turkey stocks seen in January, the estimates for turkey stocks at the end of each of the four quarters in 2009 were increased. The estimate for the end of first-quarter 2009 is now 550 million pounds, up almost 29 per cent from a year earlier. The estimate for the end of the second quarter was increased to 600 million pounds. The third- and fourth-quarter estimates were also increased but by then, lower turkey production is expected to be impacting stock levels, so that stock levels at the end of the third and fourth quarters are expected to be below the previous year.

The large increase in stocks of whole birds has had an impact on whole-bird prices, even with production expected to decline sharply in the first quarter. In January and February, whole-hen prices in the Eastern market averaged 73 cents per pound, down 3 per cent from the same period in 2008. Prices for whole birds are expected to be under downward pressure until the level of whole birds in cold storage can be reduced, even with reduced production.

After expanding by 24 per cent in 2008, turkey exports are expected to contract by 11 per cent in 2009 to 605 million pounds, chiefly due to the global economic downturn, especially in the major market of Mexico. In January 2009, total turkey exports were 39 million pounds, down 17 per cent from the previous year. Much of the decline was due to lower shipments to China, Russia and Canada. Shipments to Mexico, the largest market for US turkey products, were up slightly in January.

Table Egg Production Higher in January

After being below the previous year for the first 11 months of 2008, table egg production was higher in December and January and the number of birds in the table egg flock also stopped falling in January 2009. The increase in the table egg flock is expected to result in slightly higher table egg production for 2009. The estimate for first-quarter 2009 was increased to 1.595 billion dozen, up less than one per cent from a year earlier. The Chicken and Eggs 2008 Summary report contained revisions for table egg production in both 2007 and 2008. Table egg production in 2007 was revised upward by 30 million dozen to 6.47 billion and production in 2008 was revised downward slightly to 6.4 billion, a reduction of 14 million dozen. While table egg production has been rising slightly, hatching egg production (specifically broiler egg production) has declined. In January 2009, broiler-type hatching egg production was approximately 84 million dozen, down 7 per cent from the previous year. With the revision in broiler production, the hatching egg production estimate for 2009 was lowered by 20 million dozen, to 1.07 billion dozen, a reduction of 5 million dozen in each quarter.

Wholesale table egg prices continued at a relatively high level in January 2009 ($1.27 per dozen large, Grade A). However this is down about 31 cents per dozen from a year earlier, and with the increase in table egg production in January and a deepening economic downturn, egg prices declined through February and in the first half of March have been averaging around 95 cents per dozen. With some expansion in the table egg flock, egg prices are forecast to remain somewhat below the previous year throughout 2009. However, the price gap between 2008 and 2009 prices is expected to narrow in the second half of 2009.

Egg exports are forecast at 221 million dozen in 2009, up about 15 million dozen from 2008. Much of the increase in egg exports is expected to come in the fourth quarter with better economic conditions. Most of the gains are expected to be concentrated in the top four markets (Canada, Japan, Hong Kong and Mexico). Any advantage gained from lower prices, especially during the first half of 2009, will be mostly offset by adverse economic conditions in many countries. In January 2009, egg exports totaled 12.2 million dozen, down 26 per cent from the previous year. Shipments of shell eggs and egg products were both lower. Shipments to Japan totaled 2.2 million dozen, making it the largest single market in January.

Further Reading

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March 2009