Broiler production is expected to remain well above the previous year through third-quarter 2008, but then fall below year-earlier levels as the number of birds available for slaughter becomes sharply lower. Some of the decline in bird numbers is expected to be offset by higher weights. Turkey production is also expected to be up strongly in third-quarter 2008, but to slow in the fourth quarter and to be only about even with the previous year.

Broiler Production Higher

Broiler meat production in August was 3.1 billion pounds, down 3.2 percent from the previous year. The decrease was due to a smaller number of birds slaughtered, (744 million, down 7.0 percent), as August 2008 had 2 fewer working days than August 2007. The decline in bird numbers was partially offset by an increase in the average live weight at slaughter, up 3.3 percent to 5.57 pounds. Higher average live weights have been a major factor in the increase in broiler meat production during the first 8 months of 2008, as they have averaged 5.57 pounds, an increase of 1.7 percent from the same period in 2007.

Broiler meat production in July and August was slightly higher than expected, so the estimate for third-quarter 2008 meat production was increased by 125 million pounds to 9.425 billion. If this level of production is achieved, it will be a 3.2- percent increase from third-quarter 2007. However, broiler meat production in fourth-quarter 2008 is expected to fall to 9.2 billion pounds, down slightly from the previous year. Although average live weights are expected to continue higher than the previous year, they are expected to be more than offset by a lower number of birds slaughtered.

Over the last 5 weeks (September 13 to October 11), the number of chicks being placed for growout has been 4.2 percent lower than during the same period in 2007. The number of chicks placed for growout has been strongly lower than the previous year since the end of July and is expected to continue lower as least through the remainder of 2008 and likely into first-quarter 2009. With an average 7-week growout time, chicks placed through the beginning of November will be expected to be slaughtered in fourth-quarter 2008. Also, over the last several weeks the number of eggs set in incubators has been sharply lower than the previous year.

With the upward revision in the third-quarter 2008 broiler meat production estimate, the quarterly broiler meat ending stocks estimates for the third and fourth quarters of 2008 were raised to 745 and 700 million pounds. At the end of August, cold storage holdings of broiler meat products totaled 719 million pounds, up 15 percent from the same period in 2007. Higher amounts of cold storage for items like whole birds (up 67 percent) have resulted in lower prices; however, cold storage holdings of leg meat products (leg quarters, drumsticks, thighs, and thigh meat) are all substantially higher, but these are among the few broiler products with stronger prices over the last several months.

The higher-than-expected growth in third-quarter broiler meat production has resulted in downward pressure on prices for many broiler products, such as breast meat and wings. In the Northeast market, the September average price for boneless/skinless breast meat was $1.15 per pound and for wings 95 cents per pound, a decrease of 43 cents per pound (27 percent) for boneless/skinless breast meat and 37 cents per pound for wings (28 percent) compared with a year earlier. These declines were partially offset by higher prices for most leg meat products. With broiler production expected to decline slightly in fourth-quarter 2008, prices are expected to gradually strengthen. How much they strengthen, and how fast, will depend on a number of factors. First, while grain and energy prices have declined in the last several weeks, both remain at very high levels.

Second, broiler integrators are faced with a large degree of uncertainty about the economic strength of domestic and world economies in the coming year and about their impact on the demand for broiler products. Third, integrators, their suppliers, and their buyers all face an uncertain credit situation.

Broiler Exports up 18 Percent in August

Broiler exports in August remained sharply higher than in the previous year, totaling 639 million pounds, up 18 percent from the previous year. Over the first 8 months of 2008, broiler exports have totaled 4.58 billion pounds, up 22 percent from the same period in 2007. Much of the growth has come from larger shipments to traditionally large buyers such as Russia and Mexico. However, shipments have also been much higher to such nontraditional buyers as Vietnam, Taiwan, and Singapore. With stronger prices for leg meat products (the bulk of U.S. exports), the total value of broiler exports has risen even faster in 2008. Over the first 8 months of 2008 the value of broiler exports totaled $2.29 billion, up 35 percent from the same period in 2007.

Turkey Meat Production and Whole Bird Prices Continue Higher

Turkey meat production over the first 8 months of 2008 has totaled 4.2 billion pounds, 6.1 percent higher than during the same period in 2007. Even with the increase in turkey meat production, whole turkey prices have been higher than the previous year for almost all of the first 9 months of 2008. The price for whole hen turkeys (8-16 lbs. in the Eastern market) averaged 96.5 cents per pound in thirdquarter 2008, almost 7 cents higher than the previous year (up 7.3 percent). The increase in whole bird prices has come even as the amount of whole birds in cold storage has been higher than a year earlier. The wholesale price for Eastern market whole hens in fourth-quarter 2008 is expected to average between 94 and 98 cents per pound, up from 91 cents per pound in fourth-quarter 2007.

Turkey meat production in August was 508 million pounds, down 2.7 percent from a year earlier. The number of turkeys slaughtered was down 5.8 percent to 22.6 million, and the average live weight at slaughter was 28.1 pounds, 2.6 percent higher than a year earlier. The production estimate for fourth-quarter 2008 is 1.58 billion, the same as in fourth-quarter 2007.

At the end of August, cold storage holdings of turkey products totaled 626 million pounds, a 19-percent increase from the previous year. Most of the increase was due to a 37-percent increase in holdings of turkey parts. The quantity of turkey products in cold storage at the end of August were almost evenly split between turkey parts and whole birds. Stocks of whole birds were 316 million pounds, a 6-percent increase from the end of August 2007. Ending stocks are expected to total 540 million pounds in the third quarter. The reduction between August and September will come mostly from a decline in whole birds as they move out of cold storage facilities to retail stores. The estimate for fourth-quarter 2008 ending stocks is 300 million pounds, up from 261 million pounds in fourth-quarter 2007.

Turkey Exports Continue Higher in August

Turkey exports totaled 63 million pounds in August, up 30 percent from August 2007. Mexico continues to be the primary export market and shipments there were 33 million pounds, up 20 percent from the previous year and 52 percent of total U.S. exports. The Chinese and Russian markets also continued to show strong growth in August, with shipments of 7 and 2 million pounds. To date in 2008, these two countries have been the second- and-third largest markets for U.S. turkey products.

Egg Production Down, Egg Prices Variable

In August, table egg production was 537 million dozen, down 0.3 percent from the previous year. Over the first 8 months of 2008, table egg production has been 4.2 billion dozen, which is down 0.4 percent from the same period in 2007. This trend of lower production is expected to continue through the remainder of the third quarter and into the fourth quarter. The major reason is that the number of birds in the table egg laying flock and the number of pullets being added to the flock have been, with only some exceptions, lower than the previous year.

In August, wholesale prices for a dozen large eggs in the New York market averaged $1.12, about even with the price a year earlier. In late August and through September the weekly price was relatively variable, going from a high of $1.30 per dozen to a low of $1.05. The average price for third-quarter 2008 is expected to be approximately $1.15 per dozen. Prices are expected to increase to between $1.18 and $1.22 per dozen in fourth-quarter 2008, as eggs prices benefit from seasonally strong demand.

Unlike in 2007, the domestic egg market has not been boosted by a strong export market in 2008. Through August, shell egg and egg product exports have totaled the equivalent of 140 million dozen, down 17 percent from the same period in 2007. Much of the decline is due to a large drop in exports to Mexico and Hong Kong. These declines have been partially offset by increased shipments to Canada, normally our largest export market.

Further Reading

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October 2008