Summary

The US broiler meat production forecast for third- and fourth-quarter 2010 were decreased a total of 125 million pounds from last month to 9.4 billion pounds in the third quarter and 9.1 billion pounds in the fourth quarter. The annual forecast for 2011 was also decreased, with the revised estimate at 37.3 billion pounds, up 2.6 per cent from a year earlier. Over the first seven months of 2010, US turkey meat production has totalled 3.19 billion pounds, a 3.1-per cent reduction from the same period in 2009. With lower production and a modest increase in exports, turkey stocks at the end of July had fallen to 502 million pounds, down 22 per cent from the previous year, putting upward pressure on prices.

On trade, broiler shipments declined from last year’s volume, while turkey shipments rose sharply. Broiler exports totalled 520.7 million pounds, a 7.1-per cent drop. Turkey exports totalled 52.7 million pounds, an increase of 10.2-per cent from a year ago.

Third- and Fourth-Quarter Broiler Estimates Lowered

The US broiler meat production forecast for the third and fourth quarters of 2010 were lowered by a total of 125 million pounds from last month. The forecast for the third quarter was lowered to 9.38 billion pounds, down 75 million pounds, and the fourth-quarter forecast was decreased by 50 million pounds. The reduction in the third-quarter forecast is the result of slightly lower-than-expected slaughter rates and expected declines in the average weights of broilers at slaughter. The reduction in the fourth-quarter production forecast stems from continued slow growth in the number of chicks being placed for grow-out. The new production forecast for 2010 is 36.4 billion pounds, an increase of 2.4 per cent from the previous year. This forecast also included a slight upward adjustment in the production estimate for second-quarter 2010. The production forecast for 2011 was also decreased by 250 million pounds due to expected higher grain prices and only limited growth in the domestic economy.

Broiler meat production in July was 3.0 billion pounds, down 2.3 per cent from a year earlier. This decline in production can be attributed chiefly to the fact that July 2010 had one slaughter day fewer than the previous year. The number of birds slaughtered in July was down 2.9 per cent to 726 million, and the average live weight of these birds was 5.57 pounds, up less than one per cent from the previous year. During August and September, the year-over-year difference in the number of chicks placed for grow-out is expected to remain around two per cent higher than the previous year. The higher average temperatures that have occurred in many areas of the country are expected to keep average live weights at slaughter close to year-earlier levels through the end of the third quarter.

For the five-week period ending 4 September, the National Agricultural Statistics Service estimated that 171 million broiler chicks on average were placed weekly for grow-out. This is a 2.2-per cent increase from a year earlier. Over the last several months, the year-over-year growth in the number of chicks placed has remained relatively steady at slightly over two per cent. This pattern of moderate growth in chick placements for grow-out is expected to continue through the end of the third quarter and into the fourth.

Broiler Meat Stock Levels Down at the End of July

Stock levels for broiler products at the end of July fell below those of a year earlier, totalling 639 million pounds, down 22 million pounds (3.4 per cent) from the previous year. Although the expected increases in broiler stocks through the end of 2010 are moderate, increases in broiler production and lower exports are expected to push broiler stocks to levels above the previous year for most of the remainder of 2010 and into 2011.

Breast Meat Prices Move Higher in August

While overall broiler prices remain below those of the previous year, there are some exceptions. Wholesale prices for boneless/skinless breast meat in the Northeast market averaged $1.65 in August. This is close to its high price for the year so far and is 27 per cent higher than in August 2009.

During July and August the severe heat reduced the percentage of broilers in the higher weight category. All these larger birds are normally cut into parts, and this reduction tended to lower the total amount of breast meat available. Breast meat prices have also benefited from relatively high prices for beef and pork products. One of the other items that has shown some price strength is the category of whole birds. Whole birds in August averaged 83 cents per pound, 12 per cent higher than the previous year. However, prices for leg quarters and most dark meat products continue to remain at considerably lower levels than the previous year. In the Northeast market, leg quarter prices averaged 40 cents per pound in August, down one per cent from a year earlier. Prices are also lower for broiler thighs: in August, they averaged 55 cents per pound, 11 per cent lower than in August 2009.

Turkey Production Down Four Per Cent in July

Turkey meat production in July was 467 million pounds, down four per cent from July 2009. Again, the decrease was chiefly due to the fact that July 2010 had one slaughter day fewer than July 2009. Although a lower number of turkeys were slaughtered, average weights were actually up slightly. In July, the number of turkeys slaughtered was 20.4 million, a decrease of five per cent from the previous year. The average live weight at slaughter was 28.6 pounds, up 0.5 per cent from the previous year.

US turkey meat production has been below year-earlier levels in six of the first seven months of 2010 and 18 of the last 19 months. So far in 2010, US turkey meat production has totalled 3.2 billion pounds, a 3.1 per cent reduction from the same period in 2009. The forecasts for the third and fourth quarters of 2010 are 1.40 and 1.43 billion pounds. respectively. The forecast for the third quarter is down 1.2 per cent from a year earlier, and expected production in the fourth quarter is down 1.1 per cent from the previous year. The estimate for 2010 production is 5.6 billion pounds, down two per cent from 2009. The reduction is due to a lower number of poults placed for grow-out as a sluggish domestic economy and a considerable drop in exports in 2009 led turkey producers to reduce production.

With continued decreases in turkey meat production over the first seven months of 2010, cold storage holdings have gradually fallen for whole birds and turkey parts. At the end of July, cold storage holdings of whole turkeys were 290 million pounds, down 17 per cent from the previous year. The decrease in cold storage holding of whole birds is a result of fewer birds produced and a modest increase in exports. At the end of July, holdings of turkey parts totalled 212 million pounds, down 27 per cent from a year earlier.

Total cold storage holdings are expected to expand to 525 million pounds by the end of the third quarter, up about 18 million pounds from the previous quarter but more than 14 per cent lower than a year earlier. By the end of 2010, cold storage holdings of whole turkeys and turkey parts are forecast at 230 million pounds, down 12 per cent from the end of 2009 and 42 per cent lower than at the end of 2008.

The decline in cold storage holdings of whole turkeys and turkey parts has placed upward pressure on prices. In August, the national wholesale price for whole hen turkeys was $0.97 per pound, 24 per cent higher than a year earlier and two US cents higher than the previous month. Third-quarter prices for hen turkeys are forecast at $0.96 to $0.97 per pound, and the forecast for fourth-quarter 2010 is $0.97 to $1.03 per pound.

The lower cold storage holdings of turkey products have placed upward pressure on a number of turkey parts prices. In July, prices for boneless/skinless turkey breasts were $2.32 per pound, 73 per cent higher than the previous year. Prices have also risen for drumsticks, which were $0.70 per pound in July, up 27 per cent from the previous year. Prices for turkey parts are expected to remain strong as stock levels are forecast to remain below year-earlier levels through the end of 2010.

Table Egg Flock Larger Again in July

In July, the number of birds in the table egg flock was reported at 280.4 million, up 1.5 per cent from a year earlier. This is the second consecutive month that the size of the table egg flock has been above the previous year, after being below a year earlier during the first five months of 2010. Table egg production in July was also higher, at 548 million dozen, up 1.1 per cent from the previous year. Over the first seven months of 2010, table egg production totaled 3.8 billion dozen, up about 1 per cent from the same period in 2009. For most of the first seven months of 2010, the increase in table egg production was chiefly due to a higher rate of eggs laid per hen, as the number of hens in the table egg flock was lower on a year-over-year basis.

The hatching flock for meat-type birds (broiler breeder flock) was reported at 55.3 million in July, up 3.2 per cent from the previous year. The number of hens in the broiler hatching flock has been higher on a year-over-year basis throughout 2010. These increases point toward a slow but steady growth in broiler meat production as integrators cautiously expand production.

In July 2010, the wholesale price for eggs in the New York market averaged 85 cents per dozen, up about eight US cents per dozen from the previous month. Prices remained in the mid-80s into the first half of August but with diversion of eggs from two major suppliers out of the shell egg market due to salmonella concerns, there was a short-term gap in shell egg supplies. This resulted in a spike in prices, with prices in New York market reaching $1.41 per dozen in late August. However, the price spike seems to be relatively short lived, with prices in early September already dropping back sharply.

With this short-term spike and then decline in egg prices, third-quarter 2010 egg prices are forecast to average $0.95 to $0.96 per dozen, close to the average price a year earlier. Prices in fourth-quarter 2010 are forecast at $1.02 to $1.08 per dozen. This strengthening in prices in the fourth quarter is expected to come from a normal seasonal increase in demand.

Egg Exports Decline in July

Egg exports totalled 19.4 million dozen in July, down 10 per cent from the previous year. Even with the decline in exports in July, total egg exports during the first seven months of 2010 have totalled 143.6 million dozen, up 18 per cent from the previous year. With domestic prices for table eggs generally strengthening in July, exports were down to a number of countries. Total egg exports to both Canada and Mexico continue to be lower than the previous year. In July, shipments to Canada totalled 3.3 million dozen, down 35 per cent from the previous year, and total exports to Mexico were 1.2 million dozen, 19 per cent lower.

Some of the declines to these markets were offset by larger shipments to the United Arab Emirates, Japan and Korea. Total egg exports in the second half of 2010 are forecast at 125 million dozen, down 12 per cent from the second half of 2009, with continued lower exports to Canada and Mexico and a decline in egg product shipments to the EU.

Poultry Trade

Broiler shipments fall from last July

Broiler shipments totalled 520.7 million pounds in July, a 7.1-per cent drop from a year ago. The drop in July’s broiler shipments marks the lowest shipment recorded in five months. Impediments to trade continue to be one of the chief reasons for a decline in broiler shipments to Russia and China, who together accounted for 37 per cent of the US total shipments in July 2009. In spite of the reductions in broiler shipments to Russia and China, countries such as South Korea, Lithuania, Mexico, Taiwan, Hong Kong, Georgia and Angola increased their import of US broiler meat from a year ago. Year-to-date, shipments to South Korea increased by 200-per cent from January to July 2009, while shipments to Mexico, Lithuania, Angola, Taiwan, Georgia and Hong Kong rose by 18.1, 30.7, 63.2, 107, 123.6, and 188.4-per cent, respectively, over the same period.

In addition to the relatively low quantity of US broiler shipments, the value of broiler shipments declined from a year ago. The dollar value of July 2010 broiler shipments totalled $238.7 million, down 18-per cent from a year ago. Most of the loss in value is due to low or no shipments to Russia and China.

Turkey shipments took a leap in July

July turkey shipments totalled 52.7 million pounds, an increase of 10.2-per cent from a year ago. The July increase in turkey exports was due to increased shipments to Mexico, China and the Dominican Republic. Shipments to Mexico, the leading market for US turkeys, rose by 20.4-per cent from July 2009, while shipments to China and the Dominican Republic, the second- and fourth-leading turkey markets, increased by 42.2 and 102 per cent, respectively, over the same period. The total value of turkey shipments rose by $7.36 million in July, a 22-per cent increase from a year ago. Of the $7.36 million increase in turkey shipments in July 2010, Mexico alone accounted for 84 per cent of that month’s increase in sales.

Further Reading

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September 2010