Highlights

Broiler production in fourth-quarter 2009 is forecast at 8.95 billion pounds, up only one per cent from the previous year but the first year-over-year increase in production after four consecutive quarterly declines. Broiler meat production is expected to increase only slightly in 2010, as the positive impact of generally lower prices for corn and soybean meal are expected to be partially offset by little growth in real disposable income and continued high unemployment.

Turkey production in fourth-quarter 2009 is expected to total 1.48 billion pounds, down 6.8 per cent from the previous year. Production in 2010 is forecast at 5.73 billion pounds, up 0.5 per cent from 2009. Wholesale prices for whole hen turkeys in the Eastern market in fourth-quarter 2009 are expected to be 81 to 83 cents per pound, down five to seven per cent from 2008.

Table egg production in third-quarter 2009 was just over 1.6 billion dozen, almost one per cent higher than a year earlier.

Broiler Meat Production Forecast to Increase in Fourth Quarter

Fourth-quarter 2009 broiler meat production is forecast at 8.95 billion pounds, one per cent higher than a year earlier and the first year-over-year increase in the last five quarters. The higher production in fourth-quarter 2009 is expected to be driven by a small increase in the number of birds slaughtered and a slight increase in average live weights. Production in third-quarter 2009 was 9.17 billion pounds, 3 per cent below the same period in 2008. This decrease was almost entirely the result of a smaller number of birds being slaughtered, as the average weights were almost identical to the previous year.

Broiler meat production is expected to increase slightly in 2010 as the expansion incentives from generally lower prices for corn and soybean meal are expected to be mostly offset by little growth in real disposable income and continued high unemployment. Broiler meat production in 2010 is forecast at 36.1 billion pounds, 1.3 per cent higher than in 2009.

The most recent weekly hatchery report showed that over the last five weeks (10 October to 7 November), the number of chicks placed for grow-out averaged 1.8 per cent lower than in the same period in 2008. This five-week moving average has moved much closer to the previous year’s level over the last several months, going from over three per cent below a year earlier to now less than two per cent below. Any short-term expansion in the number of chicks placed will be limited by the fact that the number of eggs placed in incubators continues to be lower than the previous year. In addition, the number of meat-type hens in the hatching flock is still below year-earlier levels.

Third-Quarter Ending Stocks Lower

With lower broiler meat production in third-quarter 2009 and continued relatively strong exports, ending cold storage holdings of broiler products totaled 615 million pounds, down 16 per cent from the previous year and 17 million pounds lower than the previous quarter. Most of the decrease in cold storage holdings is the result of smaller stocks of leg meat products. At the end of third-quarter 2009, leg quarter holdings totalled 48 million pounds, down 57 per cent from high levels seen the previous year. Stocks were also lower for breast meat and drumsticks but the decreases for these items were partially offset by large holdings of thighs and thigh meat. Even with higher broiler meat production forecast for 2010, overall stocks of broiler products are expected to be only slightly higher.

Cold storage holdings of whole broilers at the end of third-quarter 2009 were 23 million pounds, down 11 per cent from the previous year. This decrease in stocks has not led to higher prices, as whole bird prices in third-quarter 2009 were 77 cents per pound, down five per cent from a year earlier.

Prices for most poultry products have been under pressure over the last several months, with uncertainties about the export market and continued weakness in the domestic economic outlook. Boneless/skinless breast meat prices in the Northeast market declined to $1.13 per pound in October, down almost 35 cents from this year’s peak in May. Even with this decline, the October price is still four per cent higher than the previous year. October 2009 leg-quarter prices averaged 32 cents per pound, down 38 per cent from last year when exports were at record levels.

Unfavourable economic conditions in many countries and uncertainty about the future size of various export markets have combined to place downward pressure on leg-quarter prices, our major export product, despite smaller stocks. Falling leg quarter prices have depressed the prices of other leg meat products, with prices for thighs and drumsticks down sharply from a year ago.

Third Quarter Broiler Exports Reach 1.72 Billion Pounds

Broiler exports in September totalled 580 million pounds. This is down considerably from the previous year but roughly similar to exports in July and August. Given the decline in leg quarter prices, exports had been expected to be lower in September. Much of the strength of exports in September was due to continued strong shipments to Mexico and the combined China/Hong Kong market.

During third-quarter 2009, broiler shipments totalled 1.719 billion pounds, down 11 per cent from last year’s record exports but up 64 million pounds from secondquarter 2009 and stronger than originally expected.

Turkey Production Rises

US turkey production in third-quarter 2009 was 1.42 billion pounds, down 9.7 per cent from a year earlier. The lower production was the result of a smaller number of birds slaughtered (down 10.1 per cent), as the average liveweight of turkeys at slaughter was 28.4 pounds, up slightly from the previous year. Turkey meat production in fourth-quarter 2009 is forecast at 1.48 billion pounds, again considerably lower (6.7 per cent) than a year earlier. With poult placements continuing to be lower than the previous year, the turkey meat production estimate for 2010 was lowered by 100 million pounds to 5.73 billion. This is still slightly higher than in 2009, with the increase expected to come in the second half of the year.

With lower turkey meat production in 2009, stocks of turkey products (whole birds and parts) have been gradually moving closer to their 2008 levels. By the end of September overall turkey cold storage holdings were 615 million pounds, down 1 per cent from the previous year. However, cold storage holdings of whole turkeys at the end of September were reported at 362 million pounds, still up eight per cent from a year earlier. The decline in turkey cold storage holdings was due to lower stocks of turkey parts. At 253 million pounds, stocks of turkey parts at the end of September were down 12 per cent from the previous year.

Even with sharply lower third-quarter production and gradually decreasing levels of whole bird stocks, prices for whole turkeys at the wholesale level averaged only 81 cents per pound in the third quarter and were down 16 per cent compared with a year earlier. Whole turkey prices are expected to average 81 to 83 cents per pound in fourth-quarter 2009, down about five cents per pound from fourth-quarter 2008. With slightly higher production expected in 2010, wholesale whole bird prices are expected to average 77 to 83 cents per pound.

Turkey Exports Down Again in September

Turkey exports totalled 49 million pounds in September 2009, down 23 per cent from the previous year. Shipments have been lower on a year-over-year basis throughout 2009. Turkey exports have been lower to almost all major markets, with lower shipments to Mexico (down 26 per cent) having the largest impact on the market. However, exports seem to be trending upward with shipments in third-quarter 2009 totaling 152 million pounds, much higher than in either the first or second quarters of 2009.

Egg Production Continues Higher

Table egg production in third-quarter 2009 was just over 1.6 billion dozen, almost one per cent higher than a year earlier. On a year-over-year basis, after falling in all four quarters of 2007 and 2008, table egg production has risen in the first three quarters of 2009 and is expected to increase slightly in fourth-quarter 2009. Table egg production is expected to again be higher in 2010, although the increase is forecast to be less than one per cent.

Hatching egg production in third-quarter 2009 was 266 million dozen, down 10 million dozen from third-quarter 2008, a decline of 3.6 per cent. Hatching egg production is also expected to be lower in fourth-quarter 2009. The reduction is due to lower demand for broiler chicks. However, production is expected to show a slight positive growth starting in first-quarter 2010 as the broiler industry very slowly begins to expand. Overall hatching egg production in 2010 is expected to total 1.07 billion dozen, an increase of slightly over one per cent from 2009.

Wholesale table egg prices in third-quarter 2009 averaged 95 cents per dozen, down 17 per cent from the previous year. Seasonally higher demand in fourth-quarter 2009 is expected to boost the average price per dozen by around 10 cents to $1.03 to $1.07.

With only a small increase in table egg production expected in 2010, egg prices are forecast to average $0.99 - $1.07 per dozen, up around three per cent from a year earlier. Prices in 2010 are forecast to be down slightly in the first quarter but to be higher through the remaining three quarters.

Egg Exports Continue Higher

With lower prices through most of 2009, exports of eggs and egg products have remained stronger than a year earlier. Shipments in third-quarter 2009 totaled 69.3 million dozen on a shell egg equivalent basis, 31 per cent higher than the previous year. As with turkey product exports, third-quarter egg exports were up considerably from the first two quarters of 2009. Much of the growth in exports has come from trade in North America with shipments to Canada and Mexico up 31 and 20 per cent, respectively, through the first nine months of 2009. Higher shipments to the China/ Hong Kong market were also a factor in the stronger exports, rising by 31 per cent over the first nine months of 2009.

Further Reading

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November 2009