CME: Turkey Price Environment Favourable for Consumers

US - Happy Thanksgiving to you and your family, write Steve Meyer and Len Steiner. What does it cost to make a traditional Thanksgiving meal for a group of 10 people?
calendar icon 26 November 2015
clock icon 4 minute read

According to the American Farm Bureau Federation, their 30th annual informal price survey indicates the average cost of this year’s family feast came in at $50.11.

That is a $0.70 increase from 2014, with the majority of the rise coming from higher prices for turkey, pumpkin pie mix, cubed bread stuffing, and pie shells (sorry Grandma). In 1986 when this survey was first conducted, the cost of Thanksgiving dinner for 10 people averaged $28.71.

Adjusting for inflation however, in today’s dollars that equals $62.30, so we continue to thank our farmers, ranchers, processors, and regulators involved in today’s agricultural production who provide safe, nutritious, and cost effective food to our population.

We will always be innovating and improving, to do more with less and to feed more people, but as the saying goes, “… once in your life you will need a doctor, a lawyer, a policeman, and a preacher, but every day, three times a day, you need a farmer.” – Brenda Schoepp.

Coming back to the world of supply and demand, last fall the turkey industry was disrupted by HPAI, which has decreased turkey production so far this year by 4 per cent compared to 2014’s.

With the HPAI incidents earlier this year, the industry headed into this holiday season with knowledge that supplies would be lower. They were able to pull more turkeys to processing facilities at lighter weights, to build inventories for Thanksgiving demand.

The combination of industry flexibility, use of turkey in cold storage, and a decrease in turkey exports due to closed markets, created a price environment that is favourable for the consumer even with decreased supplies this year.

Although retail whole turkey prices are up from last year, both fresh toms and hens are only about $0.07 per pound higher during the week before Thanksgiving compared to 2014, according to USDA-AMS Weekly Turkey Retail Report.

Frozen whole birds are actually $0.02 cheaper this year than 2014. USDA-National Agricultural Statistics Service (NASS) put out two monthly poultry reports this week, Chickens and Eggs, and Poultry Slaughter.

The first report showed that egg-type chicks hatched continue to ramp-up in response to HPAI losses in the Midwest, jumping 14 per cent year-over-year in October. Still, pullet chicks were in tight supply during October, but will finally begin to expand soon based on the egg-type chicks hatched.

In contrast, broiler-type chicks hatched were down 1 per cent compared to a year ago. Leading breeders only placed slightly more broiler-type pullets for future use in the hatchery supply frock.

The bottom line is that the rate of growth in US broiler output will moderate significantly in 2016 compared to 2015’s.

NASS reported that October’s young chicken (broiler) output (both slaughter and production) was down for the month compared to 2014’s. But regular readers of DLR know that the number of slaughter days in a month is important and October of 2015 had one less slaughter day than October 2014.

NASS listed at the top of the report that October of this year had one less weekday (non holiday full slaughter day) than a year ago. A daily or weekly comparison is appropriate when slaughter days are different, just look at the two broiler graphics provided here - broiler production was down 1.7 per cent for the month compared to 2014’s but on a weekly basis was up 2.8 per cent.

Weekly average turkey production was below a year earlier in October, dropping 2.2 per cent. Average young bird live weight declined from 2014’s, slipping .63 pounds or 2.1 per cent.

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