Poultry Outlook Report - May 2005 - By U.S.D.A., Economic Research Service - This article is an extract from the April 2005: Livestock, Dairy and Poultry Outlook Report, highlighting Global Poultry Industry data. The report indicates that US broiler production is expected to total 36.3 billion pounds in 2006, up 3.3 percent from the previous year.

Broiler, Other Chicken, and Turkey Production Expected Higher in 2006

Broiler production is expected to benefit from stable grain prices, a growing domestic economy and moderate gains in beef and pork production. The gains in broiler production are expected to be relatively stable throughout the year. As in past years, the higher production will be the result of both a larger number of birds being slaughtered and a slightly higher average weight.

Broiler exports are expected to total 5.1 billion pounds in 2006, a 2.8-percent increase from the previous year and the second highest total since 2001. Based on continued outbreaks of avian influenza (AI) in parts of Asia it is assumed that current bans on fresh and frozen poultry will remain in force, increasing the opportunity for larger gains in U.S. shipments to Asian countries.

While the gains in broiler production will be slightly offset by larger exports and an expected increase in ending stocks, domestic consumption is expected to rise to 30.8 billion pounds, 3 percent higher than in 2005. This will push the estimated per capita broiler consumption (retail weight basis) to 88.3 pounds, up 1.8 pounds from 2005. If this gain is achieved, per capita broiler consumption on a retail weight basis will have increased by 11.4 pounds between 2000 and 2006. The 12-city price for whole broilers in 2006 is expected to range from 71-77 cents per pound. This is a small increase over 2005.

Broiler Production and Exports Higher in First-Quarter 2005

Broiler production in first-quarter 2005 totaled 8.45 billion pounds, up 3.1 percent from the previous year. The increase in production came from a combination of a 1.6-percent increase in the number of birds going to slaughter and a 1.3-percent increase in the average liveweight of slaughtered birds.

Broiler production for second-quarter 2005 is forecast at 8.78 billion pounds, an increase of about 3 percent from last year. During April, the number of broilers slaughtered daily, reported by the Agricultural Marketing Service (AMS), averaged around 4-percent higher than during the same period a year earlier. Another indicator pointing to higher future production is weekly increases in the number of chicks placed for growout. Over the last 5 weeks (April 9 through May 7) the number of chicks being placed for growout has averaged slightly less than 2 percent higher than in the same period the previous year.

Broiler exports in the first quarter of 2005 totaled 1.2 billion pounds, a 17-percent increase from the same period in 2004. The large increase in exports is due to two factors. First, exports in the first quarter of 2004 were depressed due to the restrictions many countries placed on U.S. exports due to domestic outbreaks of avian influenza. Second, prices for most poultry products have been lower in the first quarter of 2005 than during the same period in 2004. The largest increases in exports were to Mexico, the CIS countries, Hong Kong/China, and Japan.

Turkey Production Expected Higher in 2006

After no expected growth in 2005, turkey production is expected to rise slightly (1.5 percent) to 5.5 billion pounds in 2006. The growth is expected to come from a slightly higher number of birds slaughtered and heavier weights. Turkey exports are estimated at 525 million pounds in 2006, up less than 2 percent from 2005. Most of the growth will continue to be from higher exports to Mexico, which is the dominant U.S. turkey market. However, growth is also expected to come from higher shipments to Asian markets.

Over the last several years, turkey production has grown slightly, but it has not kept pace with population growth. Since 2000, per capita turkey consumption on a retail-weight basis has declined from 17.4 pounds to an expected 16.3 pounds in 2006.

Prices for whole hen turkeys are expected to range from 66-71 cents per pound in 2006, down about 3 percent from 2005. A small increase in turkey production and continued increases in broiler production are expected to put downward pressure on turkey prices, especially following the strong prices expected for 2005. Overall poultry consumption on a retail-weight basis is expected to total 105.8 pounds in 2006, 1.5 pounds higher than in 2005. Broiler meat consumption accounts for 83 percent of the total. Per capita poultry consumption between 2000 and 2006 is expected to increase 10.4 pounds, up 11 percent. For the same period, per capita total red meat consumption, chiefly beef and pork, is expected to decline from 120.8 pounds to 119.6 pounds.

First-Quarter 2005 Turkey Production Down, Exports Rise

Turkey production totaled 1.3 billion pounds in first-quarter 2005, down marginally from the previous year (1.309 billion pounds in first-quarter 2004). While the number of turkeys going to slaughter was down nearly 6 percent, the average slaughter weight rose to 29 pounds, up more than 5 percent from first-quarter 2004. Turkey production in the second quarter is expected to reach 1.38 billion pounds, a small increase from second-quarter 2004.

Turkey exports in the first quarter were 126 million pounds, up 52 percent from the previous year. The large jump in turkey exports was due to the same factors as for broilers, an absence of restrictions on exports due to disease problems and lower prices for a number of turkey parts. Mexico is the dominant export market for turkey, 83 million pounds in the first quarter, up 66 percent from the previous year. Exports were also higher to Hong Kong and Taiwan.

Other Chicken Production Higher in 2006

The growth in the broiler industry is expected to slowly expand other chicken meat production as the number of broiler-breeder hens expands over time. Other chicken meat production is expected to reach 515 million pounds in 2006, up 10 million pounds from 2005. However, other chicken exports are also expected to increase, especially if prices for broiler products increase. The estimate for 2006 per capita consumption of other chicken meat is 1.3 pounds on a retail-weight basis, the same as in 2005.

Egg Prices Dropped Sharply in April 2005

Wholesale table egg prices (NY grade A large) closed the first quarter of 2005 at 64.5 cents a dozen, nearly 44 percent lower than last year, and 5 percent lower than the last quarter of 2004. Wholesale prices dropped in the first quarter with egg production remaining high as layer flocks in the first quarter averaged almost 3 percent above 2004. Prices settled to 56.17 cents per dozen in April 2005, the lowest since May 2002, and less than half the historical record level just a year ago.

Profit margins rose substantially as egg prices increased from August 2003 to March 2004, attracting egg growers to rapidly expand the U.S. egg layer flock. Close to 12 million layers were added between August 2003 and February 2005, when the flock stood at 289.4 million. The result of those added layers brought table egg production to 1,585 million dozen in the first quarter of 2005, nearly 29 million dozen more than a year ago. However, the number of U.S. egg layers has decreased by nearly 3.9 million layers during March 2005. For all of 2005, table egg production is forecast to grow 1.4 percent over last year.

In 2006, production is expected to stabilize as wholesale prices (NY grade A) will most likely average between 68 and 73 cents a dozen. For 2006, prices are forecast higher than 2005, as prices rebound from their low half first levels. Price gains likely will be supported by moderate early-year production growth in the face of a smaller U.S. egg laying flock.

Retail egg prices averaged 98.8 cents per dozen in the first quarter of 2005, but will follow wholesale prices as they begin to stabilize. For all of 2005, retail egg prices are expected to average between 98 cents and $1.02 per dozen, nearly 23 percent lower than 2004. As the supply adjusts to demand, prices are expected to increase by 4-6 percent in 2006.

Lower shell egg prices will probably boost the amount of federally inspected eggs that go to the breaking market by nearly 6 percent in 2005 compared with last year. As prices for shell eggs improve in 2006, the egg breaking market will likely decelerate to just around 1 percent growth over the 2005 level.

With increased supplies in 2005, U.S. exports of eggs and egg products (in shell egg equivalents) are expected about 20 percent higher than in 2004. The increase is mainly due to the lifting of restrictions imposed by many countries on U.S. eggs and egg products after outbreaks of avian influenza in early 2004. If supplies remain high, the U.S. export market for shell eggs and egg products looks promising, due to low prices, high quality, and restrictive production measures imposed on layer flocks in the European Union. U.S. egg exports in 2006 are expected to remain at the same level as 2005.

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Source: Livestock, Dairy and Poultry Outlook - U.S. Department of Agriculture, Economic Research Service - May 2005