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Poultry Outlook Report - October 2007

by 5m Editor
26 October 2007, at 12:00am

By U.S.D.A., Economic Research Service - This article is an extract from the October 2007: Livestock, Dairy and Poultry Outlook Report, highlighting Global Poultry Industry data.

The relatively slow growth in third-quarter broiler meat production has resulted in price strength for many broiler products. Turkey meat production over the first 8 months of 2007 has totaled 3.9 billion pounds, 4 percent higher than during the same period in 2006. Even with the increase in turkey meat production, fairly low stock levels have placed upward pressure on whole turkey prices for most of 2007. Over the first 8 months of 2007, table egg production has been 51 billion eggs, down 1.5 percent from the same period in 2006. This trend of lower production is expected to continue through the rest of third quarter and on into the fourth quarter.

Broiler Production Slightly Higher, Cold Storage Down

Broiler meat production in August (RTC basis) was 3.2 billion pounds, up 1 percent from the previous year. The increase was due to both a higher number of birds slaughtered (799 million, up 0.6 percent) and a small gain in the average live weight at slaughter, up 0.7 percent to 5.39 pounds. Although this liveweight is up from the previous year, it is the lightest monthly average so far in 2007, but weights are normally low in August due to heat stress.

Broiler meat production in July and August has been slightly lower than expected, so the overall estimate for the third quarter was reduced by 25 million pounds to 9.025 billion. If achieved, this would represent a 1.6 percent increase from thirdquarter 2006. The rate of growth for broiler meat production is expected to increase in the fourth quarter. The growth in broiler meat production in the third and fourth quarters of 2007 follows four consecutive quarters of falling production on a yearover- year basis.

Broiler meat production for fourth-quarter 2007 is estimated at 9.050 billion pounds, 2.8 percent higher than fourth-quarter 2006. Part of the increase can be attributed to the fact that fourth-quarter 2007 has 1 more slaughter day than the previous year, but most of the increase is expected to come from a continued larger number of chicks being placed for growout.

Over the last 5 weeks (September 15 to October 13), the number of chicks placed for growout has been 2.3 percent higher than during the same period in 2006. With an average 7-week growout time, chicks placed up until the beginning of November will be expected to go to slaughter in fourth-quarter 2007.

With the reduction in the third-quarter meat production estimate, the quarterly broiler meat ending stocks forecasts for the third and fourth quarters of 2007 were lowered by 25 million pounds each. The forecast for third-quarter 2007 ending stocks was lowered to 625 million pounds, down about 75 million pounds from the previous year. At the end of August, cold storage holdings of broiler meat products totaled 608 million pounds, down 13 percent from the same period in 2006. Stocks for a number of broiler products were lower, but lower overall stocks of leg meat products (leg quarters, drumsticks, and thighs) were major contributors to the decline. The forecast for fourth-quarter 2007 ending stocks was lowered to 650 million pounds. In addition, with the relatively slow growth in meat production expected to continue into 2008, the ending stocks forecasts for all four quarters of 2008 were reduced by 25 million pounds.

The relatively slow growth in third-quarter broiler meat production has resulted in price strength for many broiler products. In the third quarter of 2007, the 12–City whole bird price averaged 79.2 cents per pound, up over 11 cents per pound (17 percent) from a year earlier. Prices were also higher for a number of other broiler products. In the Northeast market the September average price for boneless/skinless breast meat was $1.58 per pound and leg quarters averaged 47.2 cents per pound. This is an increase of 29 cents per pound for breast meat (22 percent) and 13 cents per pound for leg quarters (40 percent) compared with a year earlier.

However, since the middle of September, prices of most broiler products have declined, with the largest declines in breast meat products. While some of this decline is seasonal, prices for most broiler products are expected to average lower in fourth-quarter 2007 due to higher fourth-quarter broiler meat production and competition from higher turkey and pork production.

Broiler Exports Surge

Over the last 2 months, (July and August) broiler meat exports have totaled 993 million pounds. This higher-than-expected total has resulted in revisions to the export forecast for third-quarter 2007 and to the export forecast for 2008. The export forecast for third-quarter 2007 was increased by 100 million pounds to 1.4 billion. Much of the increase in shipments in the last 2 months can be attributed to higher exports to Russia. In July and August, broiler meat exports to Russia have totaled 409 million pounds, over 40 percent of all broiler exports. Exports have also been much higher to the China/Hong Kong market in July and August at approximately 145 million pounds, up from 69 million in the same period in 2006. The broiler meat export forecast for 2008 was increased to 5.565 billion pounds. If this total is realized, it would be slightly higher that the previous record of 5.555 billion pounds exported in 2001.

Turkey Meat Production and Whole Bird Prices Continue Higher

Turkey meat production over the first 8 months of 2007 has totaled 3.9 billion pounds, 4 percent higher than during the same period in 2006. Even with the increase in turkey meat production, fairly low stock levels have placed upward pressure on whole turkey prices for most of 2007. The average price for whole hen turkeys (8-16 lbs. in the Eastern market) averaged 89.9 cents per pound in the third quarter, slightly over a dime higher than the previous year. The relatively tight supply conditions are expected to ease somewhat in the fourth quarter, but the wholesale price for Eastern market whole hens is still forecast between 90 and 94 cents per pound, up from the fourth-quarter 2006 average of 89.8 cents per pound.

Turkey meat production in August was 515 million pounds, up 3.2 percent from a year earlier. The number of turkeys slaughtered was up 1.4 percent to 23.7 million, and the average live weight at slaughter was 27.4 pounds, 1.7 percent higher than a year earlier. Turkey meat production in July and August was somewhat higher than expected earlier, and the forecasts for third and fourth quarter turkey meat production were increased slightly. The revised forecast for third-quarter 2007 is now 1.485 billion pounds, 20 million higher than the earlier estimate. The meat production forecast for the fourth quarter was increased by 10 million pounds to 1.51 billion, up 2.5 percent from fourth-quarter 2006. The quarterly forecasts for 2008 are also increased slightly, with the total forecast for 2008 now at 5.9 billion pounds.

With the upward revisions to turkey meat production in the third and fourth quarters, the third-quarter 2007 ending stocks forecast was increased to 470 million pounds, slightly higher than a year earlier. The forecast for fourth-quarter 2007 ending stocks remains at 230 million pounds, up from 218 million pounds in fourthquarter 2006.

Egg Prices Surge Higher in Third Quarter, Exports Strong

In August, table egg production was 537 million dozen, down 1.8 percent from the previous year. Over the first 8 months of 2007, table egg production has been 4.3 billion dozen, which is down 1.5 percent from the same period in 2006. This trend of lower production is expected to continue through the rest of third quarter and on into the fourth quarter. The major reason is that the number of birds in the table egg laying flock and the number of pullets being added to the table egg flock have been generally lower than the previous year.

The increase in wholesale egg prices in September implies that shell egg supplies have remained very tight through the end of the third quarter. In August, wholesale prices for a dozen large eggs in the New York market was $1.12. In September, the wholesale price climbed even higher to $1.30 per dozen, making the third-quarter 2007 average $1.19 per dozen, up 55 cents, or 86 percent, from the same period in 2006. Prices are expected to decline only slightly to $1.13 to $1.17 per dozen in fourth-quarter 2007, with the traditional strong demand for eggs in the holiday season keeping prices well above year-earlier levels.

Much higher egg exports through the first 8 months of 2007 have contributed to the strength in domestic egg prices. Through August, shell egg and egg product exports have totaled the equivalent of 169 million dozen, a 37-percent increase over the same period in 2006. While three of the top four traditionally large markets -- Japan, Mexico, and Hong Kong -- have had strong growth (Canada is the exception, falling by 8.5 percent), it is the continuing large shipments of eggs and egg products to European Union countries (EU) that have pushed up export totals. The major markets in the EU have been Germany, the Netherlands, and Denmark.

Further Reading

- View the full outlook report by clicking here. (pdf)

October 2007