Poultry Outlook Report - October 2004 - By U.S.D.A., Economic Research Service - This article is an extract from the October 2004: Livestock, Dairy and Poultry Outlook Report, highlighting Global Poultry Industry data. The report indicates that the Broiler production forecast is higher than expected and with that, broiler prices are lower.

Broiler production forecasts for 2004 and 2005 are higher than earlier expected, as eggs in incubators and chicks placed are running above last year. With larger production, broiler prices have been declining. However, exports have increased as the declining prices have boosted sales in markets which had curtailed purchases when prices rose sharply earlier this year.

With production below a year earlier and higher exports expected, stocks of turkey products are likely to tighten, increasing prices. Wholesale prices for whole hen turkeys in the Eastern market averaged 73.1 cents per pound in the third quarter, 14 cents per pound higher than a year earlier. Wholesale prices for the fourth quarter are forecast at 75 to 79 cents per pound, compared with 67 cents a year ago. Whether much of the increase in wholesale prices translates into higher retail prices will depend on individual retailer pricing decisions.

Forecasts for Broiler Production and Exports Increased

Composite Broiler Price Percent change from previous month

The broiler production forecast for third-quarter 2004 was increased by 25 million pounds to 8.825 billion pounds, and the production estimate for fourth-quarter 2004 was also increased by 25 million pounds to 8.600 billion pounds. Over the last several weeks, the pace of broiler-type eggs being set in incubators and chicks being placed for growout has increased in comparison with 2003. Over the last five weeks (September 4 to October 2), the number of eggs placed in incubators has averaged 3.3 percent higher than last year. Over this same period, the number of chicks being placed for growout has been 4.2 percent higher than in the same period in 2003. Coupled with an increase in the hatchery supply flock, this points to future growth in broiler production, thus the forecast for production in the first quarter of 2005 was increased by 100 million pounds to 8.5 billion pounds.

Broiler slaughter in August was almost 3 billion pounds, up 9 percent from last year. The increase was attributable to both an increase in the number of broilers slaughtered (up 6 percent) and a 2-percent increase in average liveweight. The increase was also boosted by one additional slaughter day in August 2004 compared with the previous year.

Weekly Broiler Slaughter Percent change from last year

Broiler export estimates for the third and fourth quarters of 2004 were also increased. The estimate for the third quarter was moved up to 1.15 billion pounds, an increase of 100 million pounds from the previous estimate. The fourth quarter estimate was increased by 75 million pounds to 1.175 billion pounds. The steep drop in broiler parts prices since the end of May has boosted demand in a number of foreign markets. In August, broiler exports were 412 million pounds.

This was up 5 percent from the previous year and was the largest monthly export total so far in 2004. While exports to Asia remain well below their year earlier levels, shipments in August to Japan and Hong Kong have been the highest so far this year. On September 28, Japan reduced its ban on U.S. poultry products to include those from New Jersey, Connecticut, and Texas. Most of the increase in August was due to continued strong exports to Mexico and Canada and an upturn in exports to Russia.

Russia’s year-to-date imports from the U.S. are down by 6 percent, but some of that may have been offset by higher shipments to New Independent States (NIS). Combined, the NIS region has imported 317 million pounds of broiler products, up almost 90 percent compared with the same period in 2003.

Turkey Exports Forecasted Higher

Retail Turkey Price Percent change from previous month

Even with strengthening prices for turkey products, exports have continued to exceed earlier expectations. The export forecast for the third quarter of 2004 has been increased by 20 million pounds to 120 million and the forecast for the fourth quarter has been increased by 10 million pounds to 135 million. Exports in August totaled 47 million pounds, almost 5 percent from the previous year. So far this year, turkey exports are down 11 percent as higher shipments to Mexico (up 13 percent) and Russia (up 65 percent) have been offset by declining shipments to Asian markets.

Weekly Turkey Slaughter Percent change from last year

With production below a year earlier and increases in exports forecast, stocks of turkey products are likely to tighten and prices increase. Therefore, the forecasts for ending stocks in the third quarter of 2004 were lowered to 600 million pounds and fourth quarter ending stocks are now estimated at 275 million pounds, well below the previous 2 years. Wholesale prices for whole hen turkeys in the Eastern market averaged about 73 cents per pound in the third quarter, 14 cents per pound higher than a year earlier. Prices for the fourth quarter are expected to range between 75 and 79 cents per pound, compared with 67 cents per pound a year ago.

Whether much of the increase in wholesale prices is translated into higher retail prices will depend on individual retailer pricing decisions. Many whole turkeys are sold at large discounts during the period leading up to the Thanksgiving holiday. Most retail turkey discounts are on frozen whole birds, with prices for fresh whole birds more likely to reflect the increased prices at the wholesale level.

Links

For more information view the full Livestock, Dairy and Poultry Outlook - October 2004 (pdf)

Source: Livestock, Dairy and Poultry Outlook - U.S. Department of Agriculture, Economic Research Service - October 2004