However, estimates of broiler and turkey production were revised upward as the poultry sector appears to have weathered the feed price spike much better than many expected. USDA now estimates US broiler production for 2013 at 37.519 billion pounds, 618 million pounds (+1.7 per cent) higher than its estimate just a month ago and now 876 million pounds (+2.4 per cent) higher than in 2012. The chart below shows how the estimate for 2013 broiler supplies has change since last May.

The current forecast is about 1 billion pounds higher than what USDA expected it to be even back in December. The revisions in estimates of turkey production are even more significant although turkey has a relatively limited impact in the overall red meat and poultry balance sheet.

Total turkey production for 2013 is currently estimated at 6.094 billion pounds, 148 million pounds (+2.5 per cent) higher than the estimate put forth the previous month and now some 205 million pounds (+3.5 per cent) above year ago levels.

A number of factors likely have contributed to the steady gains in broiler and turkey production, factors that require a much more rigorous and detailed analysis than possible here.

One issue that we have noted in the past is the transition that took place in the poultry industry after the 2008 price spike and the eventual bankruptcy of the largest broiler producer in the country, Pilgrim’s Pride. The industry has become better at hedging its exposure to feed price risk both upstream and downstream in the marketing chain.

Gone are the times when suppliers would offer prices forward for multiple and prices are more closely linked to the grain market. This has likely made poultry industry demand for feed more inelastic. And then there is the normal stickiness in price adjustments, especially as feed costs drift lower. Significant production capacity was removed in the last few years.

Egg sets are currently running at a weekly pace of about 200 million eggs per week, about 1.3 per cent higher than a year ago but still well below the 220 million eggs set during the same time period in 2008. It is possible that in the short term some demand shifted to less expensive chicken following surge in beef and pork prices late in 2012.

The whole broiler price last week set all time record high despite broiler production being up 2.43 per cent from a year ago (see price summary at the bottom of this page). Broiler breast meat prices are still far from record levels but they still are about 9 per cent higher than last year.

The surge in poultry production could prove problematic for red meat pricing, at least in the short term. Last month, USDA projected per capita consumption of red meat and poultry at 201.9 pounds per person (retail weight basis), about steady compared to year ago levels (but higher that what USDA was projecting last fall).

The latest data now has per capita consumption at 203.9 pounds per person, 0.8 per cent higher than year ago levels. All of this increase is for the most part due to more chicken and turkey coming to market. Estimates of export demand for pork and chicken were lowered in this latest release, which also makes more product available in the domestic market.