Highlights

The US broiler meat production estimate for third-quarter 2009 was increased by 100 million pounds to 9.15 billion pounds, down 3.2 per cent from third-quarter 2008. The estimate for 2010 was also increased, with the revised estimate at 36.15 billion pounds, up 1.5 per cent from a year earlier. With stronger exports in July, the third-quarter 2009 export forecast was increased to 1.6 billion pounds. Over the first seven months of 2009, US turkey meat production has totalled 3.29 billion pounds, a 9.7-per cent reduction from the same period in 2008. However, stocks of whole turkeys were 20 per cent higher at the end of July than a year earlier, putting downward pressure on prices.

Third-Quarter Broiler Meat Production Estimate Increased

The US broiler meat production estimate for third-quarter 2009 was increased by 100 million pounds to 9.15 billion pounds, down 3.2 per cent from third-quarter 2008. The estimate for fourth-quarter 2009 remained unchanged at 8.95 billion pounds. The estimate for 2010 was also revised upward to 36.15 billion pounds. While the number of broilers slaughtered was lower in July, the decrease was slightly less than had been anticipated and average bird weights did not have as strong a seasonal decline as expected. During the remainder of the third quarter, slaughter is expected to remain below the previous year, but the gap between production in third-quarter 2009 and the same period in 2008 is expected to narrow compared with the strong declines seen in the first two quarters of 2009. The revised production total for 2009 is now 35.6 billion pounds, 3.5 per cent lower than in 2008.

Broiler meat production in July was 3.1 billion pounds, down 4.2 per cent from a year earlier. The number of birds slaughtered in July was down five per cent to 746 million, and the average live weight of these birds was 5.54 pounds, the same as in July 2008. During August and September, the year-over-year difference in the number of eggs set in incubators and the number of chicks placed for grow-out is expected to continue to move closer to year-earlier levels. The number of chickens slaughtered is expected to be lower than the previous year but average live weights at slaughter are expected to be very close to year-earlier levels.

For the week ending 5 September, the National Agricultural Statistics Service estimated that 167 million broiler chicks were placed for grow-out. This is a two per cent decrease from a year earlier, continuing a pattern over the last several weeks of a narrowing between the level of current chick placements and placements the same week the previous year. Earlier in 2009, the year-over-year differences were over twice as great. This pattern of gradual shrinkage in the year-over-year difference in chick placements for grow-out is expected to continue through the end of the third quarter and into the fourth.

Broiler Stock Levels Down at End of July

Stock levels for broiler products continue to be below those of the previous year. At the end of July stocks were 658 million pounds, up 25 million pounds from the end of June, but still seven per cent lower than a year earlier. Stock levels for some broiler products seem to be running counter to recent wholesale price movements. Stocks of leg quarters were 22 per cent lower at the end of July 2008 than the previous July, yet wholesale leg quarter prices have fallen in the last two months. The same is true for whole-bird stocks, which were 23 per cent lower than the previous year but prices for whole birds at the wholesale level have fallen for the last several months.

Wing Prices Continue Strong in August

One major change in the broiler industry in 2009 has been the continued strength of wing prices. In 1999, wing prices in the Northeast market averaged 66 cents per pound and prices for boneless/skinless (B/S) breast meat averaged $1.57 per pound, so the price difference was about 90 cents per pound. Over the years, the price differential narrowed but even in 2008, prices for B/S breast meat averaged 23- cents per pound higher than wing prices. However, since the start of 2009, the average price of wings has strengthened significantly and has averaged $1.43 per pound, a six-cent per pound premium over the $1.37 per pound averaged by B/S breast meat. The difference between wing prices and B/S breast meat prices increased in August to 10 cents per pound.

A number of factors have come together to push up wing prices. First, the number of broilers slaughtered over the first half of 2009 is down six per cent from the previous year, thus reducing the supply. Second, reported wing exports during the first six months of 2009 were 13 per cent higher than in the first six months of 2008. These factors have combined to lower stock levels. At the end of June, reported stocks of wings were 31.8 million pounds, down 19 per cent from the previous year. The lower available supply, higher exports and an expansion in the demand for wings as more food service outlets offer them have combined to put upward pressure on prices.

July Broiler Exports Total 562 Million Pounds

Broiler exports in July totalled 562 million pounds, down 13 per cent from the previous year, but up six per cent from June 2009. This decrease in shipments from the previous year was reflected in lower domestic wholesale prices for leg quarters. Wholesale leg quarter prices in the Northeast market averaged just over 50 cents per pound in June 2009 but fell to 45 cents per pound in July and to 41 cents per pound in August. Although July exports were lower than the previous year, they were stronger than previously expected, so the forecast for third-quarter 2009 exports has been increased by 125 million pounds to 1.6 billion pounds.

Broiler meat exports over the first seven months of 2009 have totalled 3.97 billion pounds, almost one per cent higher than during the same period in 2008. While Russia continues to be the largest export market, shipments there in 2009 have so far been down over 20 per cent. Direct shipments to China have also been lower, down two per cent, although shipments to Hong Kong have jumped 55 per cent and many of the shipments to Hong Kong are re-exported to China. Markets that have shown strong growth have been Mexico, Iraq, Lithuania and Angola. The average unit value for broiler exports so far in 2009 has been slightly lower than the previous year. While the quantity of shipments has risen slightly, over the first seven months of 2009, the value of broiler exports was $1.9 billion, down two per cent from the same period in 2008.

Turkey Production Down 11 per cent in July

Turkey meat production in July was 486 million pounds, down 11 per cent from July 2008. The decrease was due to a lower number of turkeys slaughtered, as average weights were actually up slightly. In July, the number of turkeys slaughtered was 21.5 million, a decrease of 11.2 per cent from the previous year. The average live weight at slaughter was 28.4 pounds, marginally higher than the previous year.

Over the first seven months of 2009, US turkey meat production has totalled 3.29 billion pounds, a 9.7-per cent reduction from the same period in 2008. The forecasts for the third and fourth quarters of 2009 are unchanged from last month at 1.44 and 1.5 billion pounds. The forecast for the third quarter is down 8.2 per cent from a year earlier, and expected production in the fourth quarter is down 5.2 per cent. The estimate for 2009 production is 5.75 billion pounds, down eight per cent from 2008, due to reductions in the number of poults hatched, a result of the high feed and energy costs in the third and fourth quarters of 2008.

Even with the large decreases in turkey meat production over the first seven months of 2009, cold storage holdings have risen for whole birds. At the end of July, cold storage holdings of whole turkeys were 349 million pounds, up 20 per cent from the previous year. The increase in whole-bird cold storage holding is a result of fewer birds being cut up for parts as demand in both the export and domestic market has slowed. The decline in demand for turkey parts has not resulted in higher cold storage holdings for turkey parts. At the end of July, holdings of turkey parts totalled 291 million pounds, down 12 per cent from a year earlier and 24 per cent lower than at the end of July 2007.

Total cold storage holdings are expected to expand to 635 million pounds by the end of the third quarter, up two per cent from a year earlier. By the end of 2009, cold storage holdings of whole turkeys and turkey parts are forecast at 375 million pounds, down five per cent from the end of 2008. This change in stock levels compared with 2008 is due to both continued lower turkey production, which is expected to lower supplies, and the rapid build-up of stocks that occurred at the end of 2008 due to declining economic conditions.

The accumulation of cold storage holdings of whole turkeys has placed downward pressure on whole-bird prices. In August, the wholesale price for whole hen turkeys in the Eastern market was 81 cents per pound, down 16 per cent from August 2008 and down two per cent from a month earlier. Normally, whole turkey prices strengthen through the summer months and peak for the year in late October or early November in anticipation of the Thanksgiving holiday. Third-quarter 2009 prices for whole hens are forecast to average 83-84 cents per pound, down about 14 per cent from third-quarter 2008. Prices in the fourth quarter are forecast to average 83-87 cents per pound.

Turkey Exports Down 16 per cent in July

Turkey exports in July continued to be below year-earlier levels, totaling 48 million pounds, down 18 per cent from July 2008. Exports so far in 2009 have been weaker in most major markets. After increasing strongly in 2008, shipments this year to the top five largest markets (Mexico, China, Russia, Canada and Hong Kong) are significantly lower. During the first seven months of 2009, overall turkey exports totalled 286 million pounds, down 22 per cent. Some of these declines are likely related to adverse economic conditions in importing countries, and some may be due to lower prices for many broiler products in 2009. While the export unit value for broiler products has declined slightly, the unit value for turkey products has risen, with the overall value totaling $214 million, down 18.5 per cent over the first seven months of 2009 compared with the previous year.

Table Egg Flock Down Again in July

In July, the number of birds in the table egg flock was reported at 276.4 million, down fractionally from a year earlier. This is the second consecutive month that the size of the table egg flock has been below the previous year. However, table egg production in July was 542 million dozen, up slightly from the previous year due to a higher rate of lay. Over the first seven months of 2009, table egg production has totalled 3.7 billion dozen, up just under one per cent from the same period in 2008. The hatching flock for meat-type birds (broiler breeder flock) was reported as 53.3 million in July, down five per cent from the previous year. The size of the broiler hatching flock has been lower on a year-over-year basis for the last 14 months. This reflects the pull-back in production by the broiler industry as grain and energy prices started to move sharply higher in 2008.

In July 2009, the wholesale price for eggs in the New York market averaged 91 cents per dozen, up 10 cents from the 81 cents per dozen in both May and June. Even with a slightly higher egg production in July, egg prices strengthened further in August, with weekly prices pointing towards an average of around 94 cents per dozen in August and heading into September. In third-quarter 2009, egg prices are expected to average 95 to 96 cents per dozen, and prices are expected to strengthen slightly to 96 to 100 cents per dozen in fourth-quarter 2009 as demand increases seasonally. Even with this strengthening, prices will be significantly lower than the $1.23 per dozen that eggs averaged in fourth-quarter 2008.

Egg Exports Surge in July

Egg exports totalled 21.7 million dozen in July, up 25 per cent from the previous year. With the strong July shipments, exports for the first seven months of 2009 are about even with the previous year. The volume rose in the export market, as table egg prices in the previous two months (May and June) had been significantly lower than the previous year.

Much of the export increase between July 2009 and the previous year was due to higher shipments to Canada and Hong Kong. Exports to Canada were up 75 per cent and exports to Hong Kong were 59 per cent higher. Total egg exports in the second half of 2009 are forecast at 103 million dozen, 1.6 per cent higher than in second-half 2008.

Further Reading

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September 2009