Broiler production in fourth-quarter 2008 is forecast at 9.15 billion pounds, down 1.5 percent from the previous year. Lower meat production is expected to continue in 2009 as lower prices for most broiler products are not expected to provide any incentive for integrators to expand production. Turkey production rose 5.6 percent in third-quarter 2007 and cold storage holdings rose. Whole hen prices in the eastern market in fourth-quarter 2008 are expected to average slightly higher than the previous year.

Broiler Section

Broiler Meat Production Forecast To Fall in Fourth Quarter

Fourth-quarter 2008 broiler meat production is forecast at 9.15 billion pounds, 1.5 percent lower than a year earlier and a reduction of 50 million pounds from the previous forecast. This follows strong increases in production during the first three quarters of 2008. The lower production in fourth-quarter 2008 and into 2009 is expected to be driven by a smaller number of birds slaughtered, as average live weights are expected to be slightly higher. Production in third-quarter 2008 was 9.45 billion pounds, 3.5 percent above the same period in 2007. This increase was chiefly the result of heavier live weights (up 2.1 percent), as the number of birds slaughtered was up less than 1 percent from the previous year.

Earlier in 2008, facing higher costs brought on by increases in feed and energy costs, broiler integrators responded by cutting back production. The results of those decisions began to appear in lower year-over-year bird slaughter numbers beginning in September. Although the number of birds slaughtered in September was up 6.3 percent from the previous year, September 2008 had two more slaughter days than September 2007, which in most cases would have resulted in a slaughter increase of over 10 percent. Lower meat production is expected to continue into 2009, as lower prices for most broiler products are not expected to provide incentives for integrators to expand production.

The most recent weekly hatchery report showed that over the last 5 weeks (Oct. 11 through Nov. 8), the number of chicks placed for growout averaged 7.6 percent lower than in the same period in 2007. This 5-week moving average has fallen considerably over the last 2 months, moving from slightly higher than the previous year to down sharply. In addition, large declines in the number of eggs placed in incubators over the last several weeks indicates continuing lower chick placements and smaller weekly slaughter rates through the end of 2008.

Third-Quarter Ending Stocks Higher

With the strong broiler meat production in third-quarter 2008, ending cold storage holdings of broiler products totaled 729 million pounds, up 16 percent from the previous year, but down over 10 million pounds from the previous quarter. This is also 16 million pounds lower than the earlier estimate. Most of the increase in cold storage holdings over the previous year is the result of larger stocks of leg meat products. At the end of the third quarter, leg quarter holdings totaled 111 million pounds, up about 85 percent from the previous year. Stocks were also higher for most other leg meat products. One product with lower end-of-quarter stocks was wings. At 37.1 million pounds, these holdings were 15 percent lower than the previous year. With lower production forecast for 2009, overall stocks of broiler products are expected to be smaller in 2009.

Cold storage holdings of whole broilers at the end of third-quarter 2008 were 25.3 million pounds, up 26 percent from the previous year. This increase has not led to lower prices, as whole-bird prices in third-quarter 2008 were about 81 cents per pound, up slightly from the same period in 2007.

Prices for most poultry products have been under pressure over the last several months, and with the rising uncertainty in the economic outlook and export markets, these prices have fallen even farther. Boneless/skinless breast meat prices in the Northeast market fell to $1.09 per pound in October, down more than 41 cents per pound from this year’s peak in May. This is a similar to the decline seen in boneless/skinless breast meat prices in 2007. Last year boneless/skinless breast meat prices also peaked in May, and by October they had fallen by 39 cents. October 2008 leg-quarter prices averaged 51.6 cents per pound, but have dropped off sharply in the last several weeks, with prices in early November falling to around 30 cents per pound. The worldwide economic decline, increase in the value of the U.S. dollar against a number of currencies, and uncertainty about the future size of various exports markets have combined to place downward pressure on legquarter prices, our major export product. The lowering of leg-quarter prices has depressed the prices of other leg-meat products.

Third Quarter Broiler Exports at Record Level

Broiler meat exports in third-quarter 2008 totaled 1.91 billion pounds, up 25 percent from the same period in 2007 and a record for a single quarter. Over the first 9 months of 2008, total broiler meat exports have been 5.2 billion pounds, up 22 percent from the previous year. The growth in exports has come from higher shipments to a wide range of countries, mainly from larger exports to four major markets: Russia, the combined China/Hong Kong market, Mexico, and the Ukraine. Together, exports to these markets over the first 9 months of 2008 have totaled 2.8 billion pounds, or 54 percent of total shipments. This is 17 percent higher than the amount shipped to these markets in the first 9 months of 2007.

This strong growth in export shipments is not expected to continue into the fourth quarter or into 2009. The downturn in the world economy is expected to heavily impact broiler exports. The estimate for fourth-quarter 2008 broiler exports was lowered by 55 million pounds to 1.58 billion pounds, down 275 million from the previous quarter and 3 percent lower than the previous year. The export estimate for 2009 is 6.28 billion pounds, down over 444 million pounds from 2008, or 6.5 percent.

Turkey Section

Turkey Production Rises

U.S. turkey production in third-quarter 2008 was 1.57 billion pounds, up 5.6 percent from a year earlier. The production increase was the result of a higher number of birds slaughtered (up 3.2 percent) and an increase in the average liveweight at slaughter to 28.4 pounds. Turkey meat production in fourth-quarter 2008 is forecast at 1.59 billion pounds, again higher than during the same period in 2007, and an increase of 15 million pounds over the previous forecast. Turkey production in 2009 is forecast at 6.1 billion pounds, a decline of about 160 million pounds or 2.6 percent from 2008.

With higher third-quarter turkey production, ending stocks for the third quarter rose to 614 million pounds, up 22 percent from third-quarter 2007. Cold storage holdings of whole turkeys at the end of September were reported at 328 million pounds, up 20 percent from a year earlier. Cold storage holdings of turkey parts at 286 million pounds were also considerably higher than the previous year (by 23 percent).

Even with a strong increase in third-quarter production and higher stocks, prices for whole turkeys averaged higher in the third quarter compared with last year and are expected to average slightly higher in the fourth quarter. Prices for whole hens in the Eastern market averaged 96.5 cents per pound in the third quarter, up over 6 cents per pound from a year earlier. The fourth-quarter 2008 price is expected to average between 92 and 94 cents per pound, up slightly from the previous year, although prices are expected to decline seasonally after the Thanksgiving holiday.

Turkey Exports Up 23 Percent

During the first 9 months of 2008, turkey exports have totaled 494 million pounds, up 23 percent from the previous year. The growth in exports has come chiefly from the three largest markets, which combined have accounted for 73 percent of total shipments. Exports to Mexico were up 12 percent to 259 million pounds, shipments to the combined China/Hong Kong market totaled 80 million pounds, 82 percent higher than in the same period in 2007, and exports to Russia totaled 22 million pounds, up 10 percent from last year. Exports are expected to show a steep decline in 2009 due to the combination of a weak global economy, the stronger value of the U.S. dollar, and a smaller amount of money remitted to Mexico from the United States. Turkey meat exports are expected to total 605 million pounds in 2009, down 30 million pounds from earlier estimates and almost 6 percent lower than in 2008.

Egg Section

Egg Production Continues Lower

Table egg production in third-quarter 2008 was 1.6 billion dozen, fractionally lower than a year earlier. On a year-over-year basis, table egg production has fallen in each of the last seven quarters. Table egg production is forecast to again be slightly lower than the previous year in fourth-quarter 2008, but the production forecast for 2009 is slightly higher than in 2008. Hatching egg production in third-quarter 2007 was 273 million-dozen, down about 8 million-dozen from third-quarter 2007. Hatching egg production is expected to be lower in the fourth quarter compared with a year earlier, chiefly due to a smaller production of broiler chicks, and production is expected to continue lower than the previous year through the first half of 2009.

Wholesale egg prices in the New York market averaged $1.14 per dozen in the third quarter, down about 5 cents from the previous year. In October, wholesale egg prices strengthened somewhat, with prices in the New York market averaging around $1.20 per dozen. Nationally, retail prices in the third quarter were up considerably from the previous year, averaging $1.95 per dozen in third-quarter 2008, an increase of 30 cents per dozen from a year earlier.

Wholesale egg prices in fourth-quarter 2008 are forecast to average between $1.18 and $1.22 per dozen, up slightly from the third quarter, but about 20 cents per dozen lower than the previous year. Prices in 2009 are forecast to be down slightly from 2008, with most of the decline due to lower prices in first-quarter 2009.

Egg Exports Continue Lower

Third-quarter 2008 egg exports totaled 53 million dozen, down 9 percent from third-quarter 2007. Much of the decrease in exports in the third quarter was due to smaller shipments to Japan, Hong Kong, and Mexico. Over the first 9 months of 2008, total egg exports have been 158 million-dozen, with a value of $221 million. This is a decrease of 17 percent in quantity, but due to higher prices the value is about even with the previous year. One market that has run counter to the generally lower export picture has been Canada. Over the first 9 months of 2008, shipments to Canada have been the equivalent of 34 million-dozen eggs, up 19 percent from the same period in 2007.

Further Reading

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November 2008