Executive Summary

For broilers, lower stock levels and little production growth have resulted in product prices slowly trending upward. Broiler meat production continued lower in January but broiler hatchery numbers point to gradually expanding production in the coming months. Quarterly broiler production for 2010 is estimated to be slightly higher throughout the year.

First-quarter 2010 turkey meat production is estimated at 1.295 billion pounds, down almost 10 per cent from a year earlier. Ending stocks for January showed whole turkey inventories down 43 per cent.

Table egg production rose in January but strong exports are expected to keep wholesale prices above those of the previous year through the first three quarters of 2010.

Broiler Production Falls in January, First-Quarter Estimate Revised Upward

Broiler meat production for January 2010 was reported at 2.83 billion pounds, down one per cent from the previous year. The decrease was the result of fewer birds slaughtered, mostly owing to the fact that January 2010 had one slaughter day fewer than January 2009. The total number of birds slaughtered was 672 million, down three per cent from January 2009, and the total liveweight of broilers at slaughter fell by two per cent from a year earlier. The average liveweight at slaughter, 5.64 pounds, was up one per cent from the previous year.

With January’s small decrease in broiler meat production and production for February and March expected to show year-over-year gains, the estimate for first quarter 2010 broiler meat production was increased by 75 million pounds to 8.68 billion pounds, an increase of 1.2 per cent from a year earlier. The gain in production is expected to come from slightly higher average weights and an increase in the number of birds slaughtered in both February and March.

Weekly estimates of broiler eggs in incubators and chick placements from the NASS Broiler Hatchery Report point toward gradual increases in the number of birds available for slaughter, which is expected to result in higher broiler meat production. Over the last five weeks (February 6 to March 6), the number of eggs placed in incubators has averaged 206 million, 1.2 per cent higher than during the same period the previous year. The incubation period for broiler eggs is three weeks, and then chicks are placed for grow-out. Chicks placed for grow-out in mid- to late March will likely be ready for slaughter in early to mid-May, based on an average seven- to eight-week grow-out period.

With the year-over-year reduction in broiler meat production in January and only a small increase expected in February, along with lower stock levels, prices for most broiler products have been slowly trending upward. Over the first two months of 2010, the 12-city whole broiler price averaged 81 cents per pound, up a fraction from the same period in 2009. Year-over-year price changes for other broiler products are mixed. Prices for boneless/skinless breast meat in the first two months of 2010 averaged $1.31 per pound, up five per cent from the previous year, and prices for rib-on breasts averaged almost 10 per cent higher. Even with lower exports, prices for leg quarters averaged 36 cents per pound in the first two months, up about two per cent from the same period in 2009. After very strong prices through January, prices for wings declined seasonally in February. Still, over the first two months of 2010, wing prices averaged 1.70 per pound, 15 per cent higher than the previous year.

Lower broiler meat production in 2009 has resulted in lower cold storage inventories for most broiler products. Overall broiler stocks were consistently lower than a year earlier throughout 2009 and have continued lower in January 2010. Stocks of broiler products at the end of January 2010 were reported at 607 million pounds, down 10 per cent from the previous year, which in turn was 10 per cent lower than at the end of January 2008. Stocks of many individual broiler products were down from the previous year but stocks of thigh meat and wings were higher.

The ending stocks estimate for first-quarter 2010 is forecast at 660 million pounds, an increase of 6.5 per cent from the previous year. This increase in stocks is expected to reflect the impacts of gradually rising production and lower exports.

Broiler Exports Total 460 Million Pounds in January 2010

At 460 million pounds in January 2010, broiler exports were down 24 per cent from the previous year. A large portion of the decrease was due to much smaller shipments to Russia, China and Cuba, three of the five largest export markets for US broilers in 2009. These declines were partially offset by larger shipments to both Mexico and Canada. Even with the large decline in exports in January, the wholesale prices for leg quarters (the primary export product) averaged 36 cents per pound over the first two months of 2010, only slightly lower than a year earlier. This strength in leg quarter prices despite a worldwide economic downturn may be due to chicken’s relatively low prices compared with beef and pork products.

Broiler exports for first-quarter 2010 are estimated at 1.4 billion pounds, down 20 per cent from the previous year. The lower forecast is based on unsettled economic conditions in many countries, trade disputes with both Russia and China, and a reduction in the Russian import quota. The annual 2010 forecast for US broiler exports is 5.83 billion pounds, down 15 per cent from the 6.84 billion pounds exported in 2009.

Turkey Production Forecast for 2009 Reduced

Turkey hatchery data had shown significant year-over-year declines throughout 2009 until November, which was slightly higher than the previous year. However, placements moved below-year earlier levels in December and in January 2010, net poult placements were again sharply lower (down 11.6 per cent) compared with January 2009. The estimate for first-quarter turkey meat production is 1.28 billion pounds, down 100 million pounds from a year earlier. The second quarter is forecast at 1.32 billion pounds, down 6.7 per cent. The declines in production are expected to become much smaller in the second half of 2010, averaging just over one per cent lower than in the second half of 2009.

Turkey meat production in January 2010 was 424 million pounds, down nine per cent from a year earlier. The decline in production was the result of a lower number of birds being slaughtered – down 10 per cent – as the average weight of birds at slaughter was basically unchanged from the previous year. The reduction in the number of birds slaughtered was partially due to one slaughter day fewer in January 2010 compared with a year earlier. The year-over-year declines in production are expected to be smaller in both February and March, with first-quarter 2010 turkey production expected to be down about seven per cent from the previous year.

New Break-out in Turkey Cold Storage Holdings

The National Agricultural Statistics Service (NASS) has expanded its coverage of turkey cold storage holdings beginning with the data for 31 January 2010. The expanded details of turkey cold storage holding were reported monthly for 2009 in the 2009 Cold Storage Annual Report, so 13 months of data for the new break-out are now available. While the whole bird break-out remains the same, the break-out for turkey products is now made up of five categories: breast meat, legs, Mechanically Deboned Meat (MDM), an ‘other’ category, and an unclassified category.

Turkey Stocks 33 Per Cent Lower

The estimate for turkey stocks at the end of January 2010 was 300 million pounds, down 33 per cent from the previous year. The decrease in cold storage holding stems from sharply lower holdings in almost all of the six categories reported for turkey. At the end of January 2010, whole birds stocks were estimated at 110 million pounds, down 43 per cent from the same period in 2009. Stock level estimates for most turkey products declined between 24 and 37 per cent, the only exception being stocks of MDM, which were down seven per cent. Turkey stocks are forecast to remain below the previous year through the first three quarters of 2010, as production is expected to be below a year earlier.

The large decrease in stocks of whole birds at the end of 2009 and into 2010 has pushed whole bird prices higher even with economic conditions that would normally place downward pressure on prices. Whole bird prices were below the previous year throughout most of 2009, turning higher at the end of the year. Prices have continued above year-earlier levels through the first two months of 2010, averaging 77.6 cents per pound for hens in the Eastern market, 6.3 per cent higher than in the same period in 2009. With lower production, whole bird prices are expected to remain above earlier levels throughout 2010.

Turkey Exports Continue to Decline

After falling by 21 per cent in 2009, turkey exports are forecast to increase by two per cent in 2010 to 545 million pounds. However, shipments in January were only 32 million pounds, down 18 per cent from the previous year, which in turn was 17 per cent lower than exports in January 2008. Much of the decline in January 2010 was due to lower shipments to Mexico, the dominant market for US turkey products, which totalled 19.2 million pounds, down 28 per cent from the previous year. During 2009, exports of turkey products to Mexico were down 28 per cent, while broiler shipments rose 20 per cent. In trying economic conditions, Mexican consumers seem to be switching to broiler products, which likely have a price advantage over turkey products. A large portion of US turkey exports to Mexico are used for prepared turkey products.

Table Egg Production up Fractionally in January

Table egg production in January was 551 million dozen, up fractionally from the previous year. This continues a series of small year-over-year increases in table egg production, which was higher in every month in 2009 except February. The number of birds in the table egg flock was slightly lower in January 2010 than the previous year. The number of hens in the table egg flock is expected to continue at about the same as the previous year for most of 2010 but a small increase in the rate of lay is expected to result in slightly higher table egg production. Table egg production is forecast to be above the previous year through the first three quarters of 2010, with production in the fourth quarter about even with the previous year.

While table egg production rose in 2009, hatching egg production fell as production of eggs from meat-type birds was down. In January 2010, hatching egg production was 90 million dozen, an increase of less than one per cent. The increase was the result of small production increases from egg-type birds and meat-type birds. In both cases, production rose less than 0.5 million dozen. Hatching egg production is expected to increase about one per cent as broiler egg production, which makes up the majority of eggs in this category, is expected to have only a small increase.

Wholesale table egg prices were relatively high in January 2010, at $1.27 per dozen, for Grade A large. Prices declined somewhat in February but in early March, prices began to strengthen in advance of the Easter holiday, with weekly prices in the New York market moving up to around $1.30 per dozen, up from around $0.95 per dozen a year earlier. With only a small expansion expected in table egg production, egg prices are forecast to average significantly higher than the previous year during the first half of 2010 but only slightly higher than the previous year during the second half of 2010.

Egg Exports Continue to Expand

Egg exports are forecast at 240 million dozen in 2010, down slightly from the 242 million dozen exported in 2009. However, exports are expected to be up strongly in the first half of the year and then to decline below the large volume of exports in the second-half of 2009.

Even with relatively strong prices in the end of 2009 and into January 2010, egg exports in January totalled 17.6 million dozen, up 45 per cent from the previous year. Shipments of shell eggs and egg products were much larger than the previous year, with exports of shell eggs up 25 per cent and exports of egg products up 66 per cent from January 2009. Increased exports to Canada, Hong Kong, Germany and Denmark accounted for most of the increase. Shipments to Canada and Hong Kong are mostly shell egg products, while a large percentage of shipments to European Union countries are egg products. Egg product exports to European Union countries were especially strong in the second half of 2009 and are continuing strong thus far in 2010.

Further Reading

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March 2010