Summary

Broiler production is expected to increase modestly in 2010, after an expected decrease of 4 per cent in 2009. With economic conditions expected to improve and relatively stable feed costs forecast, broiler integrators will have some incentive to expand production. Broiler production is expected to turn positive in fourth-quarter 2009 and continue positive through 2010, although the growth will be relatively small. Turkey production in 2010 is expected to be higher, rebounding after sharp declines in 2009.

Broiler Production Slightly Higher in 2010

US broiler meat production is expected to total 36.1 billion pounds in 2010, up 1.6 per cent from 2009, a year of an expected meat production decrease of almost four per cent. The 2010 broiler production expansion is expected to be kept relatively small due to uncertainties about future economic growth and high feed prices. On a year-over-year basis, broiler meat production is expected to increase at a slightly faster pace in the second half of 2010 in response to rising broiler product prices. The small increase in production and slight decline in exports is expected to be balanced by population growth, leaving domestic per capita disappearance levels in 2010 about the same as in 2009.

Gains in broiler meat production are expected to come chiefly from a higher number of birds slaughtered. Average bird weights at slaughter in 2010 are expected to be similar to those in 2009. Cold storage holdings of broiler products are expected to decline through much of 2009, but to gradually expand in 2010, especially in the second half of the year as production increases.

Broiler exports in 2010 are expected to decline slightly to 6.3 billion pounds. The reduction is expected to come in the first half of the year as higher prices make broiler exports less competitive. Exports are expected to grow in the second half of 2010 as higher production and some growth in cold storage holding puts downward pressure on prices.

The 12-city wholesale price for whole broilers is expected to average between 78 and 85 cents per pound in 2010, an increase of about two per cent from 2009. Prices are expected to show some increase through 2009 and into 2010 as earlier production declines and as falling cold storage levels and an expected improvement in economic conditions place upward pressure on broiler prices.

Other Chicken

Other chicken meat production is expected to reach 480 million pounds in 2010, about the same as the previous year. Other chicken exports are expected to rebound to 140 million pounds in 2010, an increase of 12 per cent, after falling sharply 127 million in 2009. Other chicken production is expected to be impacted in 2010 by an increase in the broiler breeder flock. The small increase in other chicken meat production is expected to be more than offset by higher exports, putting per capita other chicken disappearance at 1.1 pounds, down one-tenth of a pound from 2009.

Turkey

After falling to a forecast 5.8 billion pounds in 2009, turkey production is expected to increase in 2010 to 5.9 billion pounds (up two per cent). The production increase is expected to come primarily from a larger number of birds slaughtered, as average weights are expected to remain basically unchanged. While production is expected to increase in 2010 compared with 2009, it will still be well below the 6.2 billion pounds produced in 2008. The incentive to increase production is expected to come from higher prices in 2010, as stock levels decline in response to the sharp decrease in production in 2009.

Most of the gain in turkey meat production will be offset by increases in exports, leaving per capita consumption in 2010 only slightly higher than in 2009. Turkey exports are expected to expand as higher broiler prices make turkey products more competitive and higher demand is expected from Mexico – the largest export market – as its economy begins to recover from the impacts of the global economic downturn.

Wholesale prices for whole hen turkeys are expected to average between 79 and 86 cents per pound in 2010, up about three per cent from a year earlier. The increase is the result of upward pressure on prices due to the sharp production decrease in 2009, the reduction in cold storage stocks at the end of 2009, higher export demand, and an improving domestic economy. Even with the increases, prices in 2010 are expected to average less than in 2008.

Table Egg Production Up Slightly in 2010, Hatching Eggs Higher

Table egg production is expected to total 6.5 billion dozen in 2010, up slightly from 2009. Over the previous two years, table egg production has basically been stagnant, as the laying rate has increased slightly but the number of hens in the table egg laying flock has been lower. Hatching egg production is expected to total 1.1 billion dozen in 2010, an increase of three per cent from 2009. Changes in egg production for hatching are expected to closely parallel changes in broiler production, as the majority of eggs produced for hatching are broiler chicks that will be grown out for meat.

Ending stocks (egg products only) in 2009 and 2010 are expected to remain relatively stable, at approximately 17 million dozen eggs. Egg exports are expected to expand by 11 per cent in 2010 to 200 million dozen as weak egg prices make egg and egg product exports more competitive. Egg exports are a combination of both shell eggs (for consumption and hatching) and processed egg products.

Broiler Meat Production Falls Six Per Cent in First-Quarter 2009

Broiler meat production in first-quarter 2009 totaled 8.6 billion pounds, down 6.3 per cent from the previous year. The decline in first-quarter 2009 broiler meat production was due to a lower number of birds going to slaughter and one fewer slaughter day compared with first-quarter 2008. The average liveweight of birds going to slaughter was 5.55 pounds, unchanged from first-quarter 2008.

Broiler meat production for second-quarter 2009 is forecast at 8.9 billion pounds, a decrease of six per cent from the previous year. However, the year-over-year decreases in broiler meat production are expected to become smaller in the third quarter and change to a small increase in production in fourth-quarter 2009. The average weight of birds at slaughter is expected to remain very close to a year earlier.

Over the last five weeks, (11 April through 9 May), the number of chicks being placed for growout has averaged 5.4 per cent lower than in the same period the previous year. In addition, the number of eggs placed in incubators has also continued to be well below the previous year, pointing toward declines in chick placements into third-quarter 2009.

Broiler cold storage stocks totaled 619 million pounds at the end of first-quarter 2009, down 17 per cent from a year earlier. This is opposite to the first quarter of 2008, when ending stocks were up 31 per cent from the previous year. The decline in cold storage holdings was due to large production declines and continued strength in broiler exports. Cold storage holdings of almost all broiler products were lower than the previous year.

Broiler Exports Jump 16 Per Cent in First Quarter 2009

Although shipments to Russia, the largest market, were down 14 per cent, total broiler shipments in the first quarter of 2009 rose to 1.8 billion pounds, 16 per cent higher than the previous year. Higher exports to Mexico (up 40 per cent), China/ Hong Kong (up 11 per cent) and a number of smaller markets such as Angola, Iraq, Vietnam and Hong Kong, combined to increase exports. In Mexico, some of the gain may have been a substitution of broiler products for turkey products, as turkey exports to Mexico declined. Exports to Russia (down 27 per cent) and China/Hong Kong (down six per cent) were both lower in March compared with a year earlier. However, shipments to all destinations in March totaled 585 million pounds, seven per cent higher than the previous year.

Turkey Meat Production Down Sharply

Turkey meat production totaled 1.39 billion pounds in the first quarter of 2009, down 9.8 per cent from the previous year. The decline in meat production came from a lower number of birds slaughtered (down 10 per cent).

The average liveweight of turkeys slaughtered in first-quarter 2009 was basically unchanged from the previous year at 29.9 pounds. Turkey meat production in second-quarter 2009 is expected to total 1.43 billion pounds, down 9 per cent, as the number of turkeys slaughtered is again expected to decline markedly. Average liveweight at slaughter is expected to be close to that of a year earlier.

Cold storage holdings of turkey products expanded rapidly in the first quarter of 2009, jumping to 508 million pounds, a 19-per cent increase from first-quarter 2008. There was a wide difference between the stock levels for whole turkeys and those for turkey products. Cold storage holdings of whole turkeys at the end of first quarter of 2009 totaled 253 million pounds, up 40 per cent from the same period in 2008. On the other hand, stocks of turkey products were 255 million pounds, only three per cent higher than a year earlier. Cold storage holdings of whole birds and turkey products in 2009 are expected to grow seasonally over the next two quarters and continue above the previous year. However, with lower turkey meat production, turkey stocks are expected to fall to 375 million pounds by the end of 2009, five per cent below a year earlier.

Turkey Exports Down 22 Per Cent

Shipments of turkey products fell to almost all major markets during the first quarter of 2009. Exports to Mexico, China, Russia, Canada and Hong Kong – traditionally the five largest markets – all declined. In many cases, the declines were substantial; shipments to Russia, for example, fell 94 per cent.

The only major market that showed expansion was the Dominican Republic, where shipments were 215 per cent higher. Some of the decline in exports may be due to the relatively high prices for MDM turkey meat, brought about by much lower domestic meat production in fourth-quarter 2008 and first-quarter 2009.

Egg Production Higher in First Quarter, Prices Fall After Easter

Table egg production totaled almost 1.6 billion dozen in first-quarter 2009, up slightly from the previous year. The average number of birds in the table egg flock in first-quarter 2009 was also slightly higher. Table egg production for the rest of 2009 is forecast higher than the previous year on a quarter-over-quarter basis. With the declines in broiler production, production of eggs for hatching in first-quarter 2009 was 263 million dozen, down seven per cent from a year earlier. Hatching egg production is expected to remain below the previous year in both the second and third quarters, but to turn slightly higher in fourth-quarter 2009 as broiler production begins to expand.

The big change for table eggs was the sharp drop in prices after the Easter holiday period, which is the normal seasonal pattern. During first-quarter 2009, the wholesale price for one dozen large eggs was $1.10 in the New York market. After the Easter holiday, shell egg prices began to drop very sharply. Prices in the New York market are expected to average between $0.94 and $0.96 per dozen in the second quarter and to increase only slightly in the third quarter, as the increase in table egg production places downward pressure on prices.

Egg Shipments Fall by 15 Per Cent

The two major markets that contributed to the decline in egg exports were Japan and the overall EU countries. With Japan’s economy under pressure, shipments of eggs and egg products fell to 5.9 million dozen in first-quarter 2009, down 42 per cent from the previous year. Overall shipments to the EU were also lower, as smaller shipments to Germany, the Netherlands, the UK and France more than offset higher shipments to Denmark. Canada and Hong Kong provided the real strength for the export market with shipments to Canada up nine per cent and shipments to Hong Kong rising sharply to 5.4 million dozen, an increase of 84 per cent. Both Canada and Hong Kong are large markets for shell eggs for consumption and egg products. Shipments of these products have gained as shell egg prices in first quarter 2009 were down significantly from the previous year.

Further Reading

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May 2009