Summary

Poultry

The US broiler meat production estimate for third-quarter 2011 was increased by 25 million pounds to 9.4 billion pounds, down only one per cent from the previous year.

While the number of chicks being placed for grow-out is down significantly from a year earlier, average live bird weights at slaughter have continued to be much higher than during the same period in 2010.

Over the last five weeks, an average of 162 million broiler chicks were placed weekly for grow-out, down five per cent from a year earlier.

Turkey meat production in July was 448 million pounds, down four per cent from July 2010. This was the first monthly decline in US turkey meat production in 2011, and over the first seven months of 2011, turkey meat production was 4.1 per cent higher than during the same period in 2010.

Poultry trade

Broiler and turkey shipments rose in July from a year ago. Broiler shipments totalled 668 million pounds, an increase of 28.6 per cent from July 2010 shipments. Turkey shipments totalled 53 million pounds, a one per cent increase from last year.

Poultry

Third-quarter broiler estimate increased and fourth-quarter estimate lowered

The US broiler meat production estimate for third-quarter 2011 was increased by 25 million pounds to 9.4 billion pounds, down only one per cent from the previous year. While the number of chicks being placed for grow-out is down significantly from a year earlier, average live bird weights at slaughter have continued to be much higher than during the same period in 2010, almost completely negating the downturn in the number of broilers going to slaughter.

The broiler meat production estimate for the fourth quarter was lowered to 9.2 billion pounds, down 25 million pounds from the previous estimate. The reduction in fourth-quarter production stems chiefly from the impact of continued lower chick placement. However, unlike in third-quarter 2011, live bird weight at slaughter is expected to be much closer to that of the previous year. The new production estimate for 2012 is 37.5 billion pounds, only a slight increase from the previous year. This downward revision in the 2012 production estimate was due to expected continued high grain prices, along with only minor improvements in the domestic economy.

Broiler meat production in July was 3.0 billion pounds, down 1.5 per cent from a year earlier. This decline in production can be attributed chiefly to the fact that July 2011 had one fewer slaughter day than the previous year. The number of birds slaughtered in July was down 4.7 per cent to 696 million. Most of the decrease in the number of birds slaughtered was offset by a three per cent gain in average liveweight, to 5.76 pounds.

During August and September, the number of chicks placed for grow-out is expected to remain well below the level of the previous year, while higher average weights are also expected to continue. Average weights in the fourth quarter are expected to be only slightly higher than the previous year. For the five-week period ending 10 September, the National Agricultural Statistics Service estimated that an average of 162 million broiler chicks were placed weekly for grow-out. This is a five per cent decrease from the similar period in 2010. Since the middle of June, the year-over-year declines in the number of chicks placed have grown from only slightly lower to sharply lower. This pattern of strong declines in chick placements for grow-out is expected to continue through the remainder of the third quarter and into the fourth.

Stock levels up slightly at the end of July

After being unchanged in June, the quantity of broiler products in cold storage at the end of July rose by just under 10 million pounds to 726 million pounds, 14 per cent higher than the previous year. Although the stock levels rose for a number of the reported categories, most the increase was in the basket category of unidentified products, which saw an increase of 22 million pounds to 301 million pounds, or 41 per cent of all broiler holdings in cold storage. With slower growth in production in the third quarter, stock levels are expected to decline to 685 million by the end of the third quarter and are expected to be 700 million pounds at the end of 2011.

Breast meat prices move higher in August

While prices for most breast meat products increased in August compared with July levels, prices for these products continue to be well below their year-earlier levels. Wholesale prices for boneless/skinless breast meat in the Northeast market averaged $1.29 per pound in August.

Although up nine cents from the July price, it is 36 cents (22 per cent) lower than a year earlier. Prices for breasts with ribs and tenderloins have followed a similar pattern. Prices for leg meat products are stronger than the previous year. Prices for leg quarters averaged $0.50 per pound in August, up over five cents from the previous month and 23 per cent higher than in August 2010. Prices for other leg meat products have also had strong gains compared with the previous year. Prices for whole thighs and boneless/skinless thigh meat are both over 30 per cent higher than a year earlier.

Lower broiler meat production in fourth quarter 2011 would normally be expected to place upward pressure on most broiler product prices. However, with a weak economy and relatively high cold storage levels, it is likely to take some time before significant price increases are seen, especially for breast meat products.

Turkey production down four per cent in July

Turkey meat production in July was 448 million pounds, down four per cent from July 2010, which, in turn, was down four per cent from July 2009. The decrease was chiefly due to the fact that July 2011 had one fewer slaughter day than July 2010. The reduced number of slaughter days led to a lower number of turkeys slaughtered but average weights were actually up slightly.

In July, the number of turkeys slaughtered was 19.4 million, a decrease of just over five per cent from the previous year. The average live weight at slaughter was 29.1 pounds, up 1.8 per cent from the previous year. July was the first monthly decline in US turkey meat production in 2011. Over the first seven months of 2011, turkey meat production was 4.1 per cent higher than during the same period in 2010. The forecasts for the third and fourth quarters of 2011 are 1.42 and 1.49 billion pounds, respectively. The forecast for the third quarter is slightly higher than the previous year as higher average weights are expected to counterbalance any reductions in the number of birds slaughtered, and production in fourth-quarter 2011 is expected to be down over two per cent from the previous year, due to a lower number of birds slaughtered.

The estimate for 2012 turkey meat production is 5.7 billion pounds, a decline of slightly less than one per cent from production in 2011. The reduction is expected to arise from a lower number of poults placed for grow-out as higher grain prices and a weak domestic economy put downward pressure on production, although there may some increases in the later part of 2012. For 21 consecutive months between September 2009 and May 2011 cold storage holdings of turkey products were lower on a year-over-year basis.

This changed in June 2011, when cold storage holdings were up slightly, and even with a decline in turkey meat production, cold storage holdings in July rose to 525 million pounds, five per cent higher than the previous year. At the end of July, cold storage holdings of whole turkeys were 288 million pounds, still down one per cent from the previous year. The lower cold storage holdings for whole birds are the result of fewer whole toms in cold storage (151 million pounds, down seven per cent) as holdings for whole hens totalled 137 million pounds, up seven per cent from the previous year. At the end of July, holdings of turkey parts totalled 237 million pounds, 12 per cent higher than a year earlier. While the amount of whole birds and breast meat was down slightly from the previous year, cold storage holdings of other turkey products were all significantly higher, even with a strong export market.

Total cold storage holding are expected to fall to 485 million pounds by the end of third-quarter 2011, two per cent higher than the previous year. By the end of 2011, cold storage holdings of whole turkeys and turkey parts are forecast at 200 million pounds, up about four per cent from the very low ending stocks of 2010.

The divided nature of cold storage holdings of whole turkeys may have an uneven impact on whole bird prices through the rest of the third quarter and into the fourth quarter. In August, the national wholesale price for frozen whole hen turkeys was $1.05 per pound, eight per cent higher than a year earlier and one cent higher than the previous month. Prices for frozen tom turkeys were $1.07 per pound, a 10 per cent increase from the previous year. The national prices for both hens and toms have increased at similar amounts, although the stocks positions are very different for the two products.

Table egg flock down slightly in July

In July, the number of birds in the table egg flock was reported at 279.3 million, down just under one per cent from a year earlier. This is the third consecutive month that the size of the table egg flock has been below the previous year and the flock size was lower in five of the first seven months in 2011. But even with the small decline in the number of hens in the flock, table egg production in July was slightly higher at 554 million dozen, up 0.6 per cent from the previous year. Over the first seven months of 2011, table egg production totalled 3.82 billion dozen, up less than one per cent from the same period in 2010. Thus, for most of the first seven months of 2011, the increase in table egg production was due to a higher rate of eggs laid per hen.

The hatching flock for meat-type birds (broiler-breeder flock) was reported at 53.6 million in July, down almost three per cent from the previous year. The number of hens in the broiler hatchery flock has been lower on a year-over-year basis for the last six consecutive months. These decreases reflect the decrease in broiler chick demand as broiler integrators have faced large increases in production costs due to high grain prices and relatively weak domestic demand.

In August 2011, the wholesale price for eggs in the New York market averaged $1.32 per dozen, up about 28 cents per dozen from the previous month and up 25 cents from the previous year. However, this spike in prices seems to be a short-term phenomenon with prices in the early part of September having dropped to around $1.10 per dozen.

With this short-lived run-up in egg prices, the third-quarter 2011 average for New York egg prices is now expected to average $1.12-$1.13 per dozen, up almost $0.20 from third-quarter 2010. Prices in fourth-quarter 2011 are forecast at $1.15-$1.21 per dozen. This strengthening in prices in the fourth quarter is expected to come from both a continued smaller table egg flock and a normal seasonal demand increase.

Egg exports higher in July

US egg exports totalled 20.3 million dozen in July, up 4.6 per cent from a year earlier. During the first seven months of 2011, the shell egg equivalent of total egg exports totalled 159.6 million dozen, up 11 per cent from the previous year. Even with domestic prices for table egg prices strengthening slightly in July, exports were higher to a number of countries. A good percentage of the increase was from higher exports to Asian markets. Total egg exports to Japan, Hong Kong and Korea were all significantly higher than the previous year. However, these increases were partially counterbalanced by lower exports to Canada.

Total egg and egg equivalent exports in 2011 are forecast at 279 million dozen, down slightly from the previous forecast but up eight per cent from 2010. With a relatively weak US dollar, egg exports are expected to remain strong through the end of 2011, with much of the growth from shipments to Asian markets.

Poultry Trade

Broiler shipments up considerably in July

Broiler shipments in July 2011 totalled 668 million pounds, 28.6 per cent more than in July 2010. Countries that made major contributions to this increase include Russia, Hong Kong, Angola, Cuba and Georgia. Together, these five markets represented 33 per cent of the total broiler exports for July 2011 compared with 18 per cent a year ago.

One of the markets that will be essential to helping third-quarter broiler exports reach a level comparable to the 2010 fourth-quarter is Russia. Although the United States shares Russia’s import quota with Brazil, US leg quarter prices are more competitive than Brazil. Thus, as Russia increases its broiler imports and draws down its 2011 quota, broiler shipments in the third quarter could be 1.65 billion pounds, barring no unusual changes in broiler flows to the leading US broiler market, Mexico.

Turkey shipments rose slightly in July

Turkey shipments in July 2011 increased only one per cent from a year earlier. A total of 52.8 million pounds of turkey meat were shipped in July 2011. Most of the increase in turkey shipments went to Mexico, which imported four million pounds, or 15 per cent more turkey meat than it did in July 2010, and accounted for 58 per cent (30.4 million pounds) of the US total turkey shipments. Percentage-wise, Canada and Hong Kong saw the largest increases in turkey shipments in July 2011. Almost three million pounds, 60 per cent more turkey meat was exported to Hong Kong, the third-largest market for US turkey, than a year earlier. Canada also helped contribute to July’s increase with shipments more than doubling (a 107-per cent rise) from July 2010. Mexico, Hong Kong and Canada were responsible for almost all of July’s increase in turkey shipments. However, almost all increases in July’s broiler exports by Mexico, Hong Kong and Canada were offset by low shipments to the Dominican Republic, China and Taiwan.

Further Reading

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September 2011