Summary

Broiler production is expected to increase three per cent in 2011, after a forecast increase of almost that much in 2010. With economic conditions expected to gradually improve, a forecast of lower feed costs and strong beef and pork prices, broiler integrators will have an incentive to expand production. After declining on year-on-year basis for five consecutive quarters, broiler production showed positive growth in first-quarter 2010, and it is expected to continue positive in 2010 and through 2011. Turkey production in 2011 is expected to be somewhat higher than in 2010, rebounding from a production decline in 2009 and an expected decline in 2010.

Broiler Production Higher in 2011

US broiler meat production is expected to total 37.5 billion pounds in 2011, up 3.1 per cent from 2010, with the expansion expected to be spread relatively evenly throughout the four quarters. Gains in broiler meat production are expected to come chiefly from a higher number of birds slaughtered. Average bird weights at slaughter in 2011 are expected to be only slightly higher than those in 2010. Broiler production is expected to strengthen as demand improves with the general economy and as unemployment slowly declines. Another factor in the decision by integrators to expand is the expectation of lower corn and soybean meal prices in 2010 and 2011.

Broiler meat production in the first quarter of 2010 was reported at 8.7 billion pounds, up 1.8 per cent from a year earlier, which follows five consecutive quarters of year-over-year declines in broiler meat production. The increase was the result of higher average weights at slaughter, up 1.4 per cent to 5.63 pounds. The number of broilers slaughtered actually fell 0.3 per cent to 2.1 billion birds.

Over the last five weeks, (10 April to 8 May), the number of chicks placed for growout has averaged 1.3 per cent higher than in the same period the previous year. In addition, the number of eggs placed in incubators has continued to be well above the previous year, pointing toward increasing chick placements and higher numbers of broilers available for slaughter into third-quarter 2010.

With higher broiler meat production forecast, stocks of broiler products are expected to begin to expand and quarterly ending stocks beginning in June and into early 2011 are expected to be higher than the previous year on a year-on-year basis. Broiler cold storage stocks totalled 600 million pounds at the end of first quarter 2010, down 3.2 per cent from a year earlier. Monthly broiler meat stocks have been below the previous year for the last 15 months. The decline in cold storage holdings at the end of first-quarter 2010 was due chiefly to smaller stocks of whole birds and breast meat products, both down between 17 and 20 per cent. Cold storage holdings of almost all leg meat products were higher and stocks of other items, such as wings, also rose.

The 12-city wholesale price for whole broilers is expected to average 80 to 87 cents per pound in 2011, about the same as in 2010, but up about seven per cent from 2009, when it averaged 77.6 cents per pound. Prices in 2010 are expected to show some increase through the first three quarters, but then to decline seasonally in the fourth quarter. Prices in 2011 are expected to follow the same pattern. The source of the price strength in 2010 is a mixture of expected improvements in economic conditions and support from higher prices for other meats, partially offset by higher production and stock levels.

Broiler Exports

Broiler exports in 2011 are expected to increase to six billion pounds after declining sharply in 2010. The increase in export shipments is expected to be relatively constant throughout the year as a growing world economy and strong prices for beef and pork products make broiler products more competitive.

In the first quarter of 2010, broiler exports totaled 1.49 billion pounds, down 15 per cent from the previous year. Shipments to Russia were down 79 per cent, and there were no shipments to Russia in March. Exports to China were 77 per cent lower, with only five million pounds being shipped in March, as trade disputes with these two countries heavily impacted trade. With trade down sharply to these two markets – formerly our largest – trade to other countries was relatively strong. Partially offsetting the declines to Russia and China during the first quarter have been larger exports to such countries as Mexico, Canada, Hong Kong, Taiwan and Korea, all of which showed strong increases in broiler imports from the United States.

Other Chicken

Other chicken meat production is expected to reach 500 million pounds in 2011, up less than two per cent from the previous year. The growth in production is expected to come later in the year, with production in the first quarter being slightly lower than in 2010. Other chicken production is expected to be impacted in 2011 by an increase in the broiler breeder flock. The increase in other chicken meat production is expected to be partially offset by higher exports. Per capita consumption is expected to be unchanged at 1.3 pounds, the same as in 2010. Exports of other chicken are expected to rebound to 110 million pounds in 2011, an increase of 10 per cent, after falling sharply in 2009 and having no growth in shipments expected in 2010.

Turkey

Turkey production is expected to increase in 2011 to 5.6 billion pounds, up one per cent from the previous year. The production increase is expected to be due primarily to a larger number of birds slaughtered, as average live weights at slaughter are expected to remain close to year-earlier levels. However, production in first-quarter 2011 will remain below a year-earlier. The incentive to increase production is expected to come from gradually rising prices during 2010 and the expectation of lower feed prices.

In the first quarter of 2010, turkey meat production was 1.3 billion pounds, down 3.3 per cent from the first quarter of 2009. This is the fifth consecutive quarter with a year-on-year production decline. The decrease in turkey meat production was the result of a decline in the number of birds slaughtered (down 4.2 per cent), as the average weight of the turkeys at slaughter was up slightly from the previous year. Turkey meat production in 2010 is forecast at 5.5 billion pounds, down 2.2 per cent from a year earlier. Production is expected to remain negative on a year-over-year basis through the end of the year.

Turkey Exports

Per capita turkey consumption in 2011 is expected to be about the same as in 2010, as much of the increase in turkey meat production will be offset by increases in exports. Turkey exports in 2011 are expected to expand as higher broiler prices make turkey products more competitive. In addition, good demand is expected from Mexico (the largest US export market) as its economy continues to recover from the impact of the global economic downturn.

Total turkey exports in first-quarter of 2010 were 114 million pounds, down three per cent from the previous year. While turkey exports were down for the quarter, shipments in March totaled 42 million pounds, 11 per cent higher than a year earlier. While broiler exports to Mexico were expanding, turkey shipments were contracting. Shipments to Mexico in the first quarter of 2010 totalled 64 million pounds, down eight per cent from the previous year, but the 24 million pounds shipped in March was 24 per cent higher than the previous year. Shipments to Hong Kong and the Philippines were much higher than the previous year, but these were some of the few markets that had year-on-year increases.

Turkey Stocks Lower

With continued lower production on a year-over-year basis, turkey stocks are considerably lower than the previous year. At the end of first-quarter 2010, turkey stocks were 379 million pounds, down 26 per cent from the previous year. This decline was from a combination of lower stocks of whole birds, down 33 per cent, and lower stocks of turkey parts and products, down 20 per cent. Some information is now available about the levels of stocks of a number of turkey parts. However, the unclassified category is by far the largest portion of turkey parts stocks, and these were 23 per cent lower than the previous year.

Wholesale prices for whole hen turkeys are expected to average 78 to 85 cents per pound in 2011, about the same as a year earlier. While about the same as in 2010, prices are up about five cents per pound from 2009, the result of upward pressure on prices due to production decreases in 2009 and 2010. In 2011 any upward pressure on prices from improving domestic and higher export demands are expected to be countered by rising production and stock levels.

Egg Production Expected Higher in 2011

Table egg production is expected to total 6.5 billion dozen in 2011, up less than one per cent from 2010. During 2009 and 2010, table egg production has basically been stagnant; although the laying rate has increased slightly, the number of hens in the table egg laying flock has been lower. Higher prices for many meat products and an improving economy in 2010 are expected to provide the incentive to increase the size of the laying flock. Hatching egg production is expected to total 1.1 billion dozen in 2011, an increase of two per cent from 2010. Changes in hatching egg production are expected to closely parallel changes in broiler production, as the majority of hatching egg output is for broiler chick production.

Exports Up Slightly in 2011

Egg exports are expected to expand by less than one per cent in 2011. Egg exports had expanded sharply in 2009, due primarily to increased demand from European Union (EU) countries for processed egg products. While exports are expected to continue to the EU, no additional sharp rise in demand is expected. Most of the growth in 2010 and 2011 is expected to come from improved economic conditions.

Egg Prices Higher in 2011

Better overall economic conditions in 2011 are expected to generate greater demand for shell eggs and egg products, especially from the food service sector. However, higher production is expected to offset the demand and leave overall wholesale egg prices in 2011 at $1.08 to $1.17 per dozen, about four per cent higher than in 2010.

Egg Production Higher

Table egg production totalled just over 1.6 billion dozen in first-quarter 2010, up less than one per cent from the previous year. The average number of birds in the table egg flock in first-quarter 2010 was slightly lower than the previous year, but the rate of lay in first quarter 2010 was up 1.1 per cent. Table egg production for the rest of 2010 is forecast higher in the second and third quarters on a year-over-year basis, but then is expected to be virtually unchanged in the fourth quarter. Production of hatching eggs in first-quarter 2010 was 264 million dozen, up slightly from the previous year. Hatching egg production is expected to remain above the previous year during the remaining three quarters of 2010 as broiler production continues to expand.

The big change for table eggs was the sharp drop in prices after the Easter holiday period. Although this is the normal seasonal pattern, the price declines at the wholesale level in 2010 were especially steep. During first-quarter 2010, the wholesale price in the New York market was $1.26 per dozen for Grade A large eggs. After the Easter holiday, shell egg prices began to drop very sharply and are expected to average $0.94 to $0.96 per dozen in the second quarter and to increase only slightly in the third quarter, as increases in table egg production place downward pressure on prices.

Egg exports rose sharply in first-quarter 2010, totalling 57 million dozen, up 33 per cent from the previous year. Exports of eggs and egg products rose to a large number of countries. Shipments to Canada and Japan, two of the largest traditional markets, were both up over 10 per cent in first-quarter 2010. Trade to EU countries continues to expand, with shipments to Germany, Denmark and the Netherlands all posting triple-digit increases over the same period in 2009.

Further Reading

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May 2010