Highlights

Broiler production continues to be lower than the previous year, with August production down two per cent and third-quarter 2009 expected to be down three per cent from a year earlier. Broiler cold storage holdings are also lower than the previous year, but even with lower production and stocks, prices are mostly down from last year’s levels.

Turkey production continues to be down sharply from the previous year, with August production falling nine per cent from August 2008. Wholesale whole bird prices have not risen even with the lower production, and third-quarter prices were 81 cents per pound, down about 15 cents from the previous year.

Broiler Meat Production Down Two Per Cent in August

Broiler meat production in August was 3.0 billion pounds, down 2.4 per cent from the previous year. The decrease was due to a smaller number of birds slaughtered, (726 million, also down 2.4 per cent). The total liveweight of broilers at slaughter was down 2.6 per cent as the average live weight at slaughter was 5.56 pounds, down fractionally from the previous year.

Broiler meat production in July and August was slightly higher than expected, but even so, third-quarter 2009 broiler meat production is expected to total 9.15 billion pounds, down 3.2 per cent from third-quarter 2008. A decrease in production in third-quarter 2009 compared with third-quarter 2008 would make four consecutive quarters of declining production on a year-over-year basis.

Broiler meat production in fourth-quarter 2009 is expected to total 8.95 billion pounds, up one per cent from the previous year. Average live weights in the fourth quarter are expected to continue slightly lower than the previous year. Average weights at slaughter have been lower than the previous year in each of the first eight months this year. However, the slight decline in average weights is expected to be offset by an increase in the number of birds slaughtered, especially later in the fourth quarter.

Broiler meat production for 2010 is forecast at 36.15 billion pounds, an increase of 1.5 per cent from 2009, but still two per cent lower than in 2008. Broiler integrators are expected to face overall feed prices in 2010 that are slightly lower than in 2009. Prices for corn are expected to be down slightly, with lower prices mostly in the first half of the year, and soybean meal is forecast to have a relatively strong decline in price in 2010 from 2009. Broiler integrators are expected to gradually expand production in 2010, but the pace of the expansion will depend on the impact of lower grain prices, combined with any gains in domestic and foreign demand. Any strong improvements in overall economic conditions and consumer confidence are expected to translate into stronger broiler sales, especially in the food service sector, leading to more rapid production expansion by the end of 2010.

Over the last five weeks (5 September to 3 October 2009), the number of chicks placed for grow-out has been down 2.1 per cent from the same period in 2008. Over the last several months, the number of chicks placed for grow-out has been slowly moving closer to the numbers placed for grow-out in 2008. This trend is expected to continue and to eventually change over to positive growth during the fourth quarter. It was in the middle-to-end of fourth-quarter 2008 that chick placements turned sharply lower. With an average seven-week grow-out time, chicks placed through the beginning of November will be expected to be slaughtered in the fourth quarter of 2009.

Relatively strong exports in June and July led to third-quarter 2009 broiler meat ending stocks estimates being revised downward to 635 million pounds from the earlier estimate of 675 million pounds. At the end of August, cold storage holdings of broiler meat products totaled 622 million pounds, down 14 per cent from a year earlier.

Ending stocks were lower for most chicken cuts, with large drops in stocks for leg quarters (down 37 per cent), breast meat (down 11 per cent), drumsticks (down 46 per cent) and whole chickens (down 36 per cent). In examining cold storage holdings, it is important to note that the undifferentiated products in the 'Other' category account for over half of all stocks. At the end of August, other stocks totalled 360 million pounds, down eight per cent from the previous year. Somewhat surprising was the increase in stocks of wings. Several food service companies have introduced advertising campaigns specifically promoting their wing products. Their purchase of broiler wings to support these advertising campaigns helps to explain the strength in wholesale wing prices over the last several months.

Broiler meat production and stock levels are lower, yet unsettled economic conditions and high unemployment rates have forced spending cutbacks for a large portion of the population, which has in turn placed downward pressure on many broiler product prices. In the North-east market, the September average wholesale price for boneless/skinless breast meat was $1.21 per pound, down 27 cents per pound from its peak price in May, but actually up five per cent from a year earlier. Prices have also declined for a number of other broiler products. Prices for leg quarters reached 51 cents per pound in June but had fallen to 40 cents per pound by September. The decline was similar for boneless/skinless broiler thighs, falling from a peak price of $1.24 per pound in June to $1.08 per pound in September.

Broiler Exports Down 11 Per Cent in August

Broiler exports in August totaled 577 million pounds, down 11 per cent from a year earlier. This is up only slightly from the level of exports in June (562 million pounds) and is not surprising, given the decline in leg quarter prices. Over the first eight months of 2009, broiler exports have totaled 4.55 billion pounds, down less than one per cent from the same period in 2008. Exports over the remainder of 2009 are expected to be down considerably from the previous year, with the total for 2009 forecast at 6.6 billion pounds, five per cent below 2008. Strong growth in broiler exports to Mexico and a number of smaller markets such as Lithuania, Iraq and Guatemala have helped to balance out lower exports to Russia, the Ukraine and China. With lower domestic prices for most broiler products, the unit value of broiler exports has also declined. Over the first eight months of 2009, the value of broiler exports was down four per cent from the same period in 2008, to $2.2 billion.

Turkey Meat Production and Whole Bird Prices Continue Lower

Turkey meat production over the first eight months of 2009 has totaled 3.8 billion pounds, down 9.5 per cent from the same period in 2008. Even with this strong decrease in turkey meat production, whole turkey prices have been lower than the previous year throughout first nine months of 2009. The price for whole hen turkeys (8-16 lbs in the Eastern market) averaged 81.4 cents per pound in third-quarter 2009, 15 cents less than the previous year (down 16 per cent). The decrease in whole bird prices has come about even as the amount of whole birds in cold storage has been moving much closer to year-earlier levels. The wholesale price for Eastern market whole hens in fourth-quarter 2009 is expected to average 81 to 85 cents per pound, down from 87 cents per pound a year earlier. While the prices for most turkey parts have been lower than the previous year, prices for turkey wings have been just the opposite.

In August, prices for full-cut wings were 54 cents per pound, up 27 per cent from a year earlier. Thus for broilers and turkeys, wing products have been about the only parts with higher prices than the previous year.

Turkey meat production in August was 463 million pounds, down 8.7 per cent from a year earlier. The number of turkeys slaughtered was down 9.5 per cent to 20.5 million, and the average live weight at slaughter was 28.2 pounds, up marginally from a year earlier. The production estimate for fourth-quarter 2009 is 1.5 billion pounds, down 5.2 per cent from fourth-quarter 2008.

At the end of August, cold storage holdings of turkey products totaled 643 million pounds, only 2.1 per cent higher than the previous year. The increase was due to a 16-per-cent increase in holdings of whole turkeys. On a year-over-year basis, the weight of whole turkeys in cold storage has been higher than a year earlier during the first eight months of 2009. However, the gap between whole bird cold storage holdings in 2009 and a year earlier has narrowed considerably as the year has progressed. At the beginning of 2009, whole bird stocks were 98 per cent higher than the previous year. Stocks of turkey parts at the end of August were 272 million pounds, down 12 per cent from the end of August 2008. Third-quarter ending stocks are expected to total 635 million pounds. The estimate for fourthquarter 2009 ending stocks is 375 million pounds, down about five per cent from the previous year. This reduction in stocks is expected to come from continued lower turkey production.

Turkey Exports Continue Lower in August

Turkey exports in August were 55 million pounds, up seven million pounds from July, but still down 14 per cent from a year earlier. Turkey exports have totalled 341 million pounds during the first eight months of 2009, down 21 per cent from the same period in 2008. Exports have been lower to almost all markets, with shipments to Mexico and China, the two largest markets, both down 24 per cent over the first 8 months of 2009 compared with the same period in 2008. However, shipments to China in August were up somewhat from a year earlier and shipments to Hong Kong have been up four per cent so far this year. There has also been some growth in shipments to Caribbean markets, with exports to Cuba and Jamaica both having double digit growth so far in 2009. Unlike broiler shipments, the unit value of turkey exports has increased slightly so far in 2009. The total value of turkey exports has totaled $251 million, down 18 per cent from the previous year.

Shell Egg Production Higher, Hatching Eggs Down

In August, table egg production was 543 million dozen, up 1.2 per cent from the previous year. The gain in production was due to higher productivity, as the number of birds in the shell egg flock was 277 million, down slightly from a year earlier. Over the first eight months of 2009, table egg production totaled 4.3 billion dozen, which is up almost one per cent from the same period in 2008. This trend of higher production is expected to continue through the remainder of the third quarter and into the fourth quarter. The number of eggs from egg-type birds laid for hatching has been strongly higher than the previous year. Over the first 8 months of 2009, production of egg-type hatching eggs has totaled 572 million dozen, 7.5 per cent higher than during the same period in 2008.

In August, wholesale prices for a dozen large eggs in the New York market averaged $0.97, down 19 per cent from a year earlier. In September, weekly prices were relatively steady at about the same level as in August. The average price for third-quarter 2009 was approximately $0.95 per dozen, down 17 per cent from third-quarter 2008. Prices in fourth-quarter 2009 are expected to increase only slightly and average $0.96 to $1.00 per dozen as the normal seasonal strengthening in egg prices is dampened by the unsettled economic conditions.

In August, wholesale prices for a dozen large eggs in the New York market averaged $0.97, down 19 per cent from a year earlier. In September, weekly prices were relatively steady at about the same level as in August. The average price for third-quarter 2009 was approximately $0.95 per dozen, down 17 per cent from thirdquarter 2008. Prices in fourth-quarter 2009 are expected to increase only slightly and average $0.96 to $1.00 per dozen as the normal seasonal strengthening in egg prices is dampened by the unsettled economic conditions.

Further Reading

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October 2009