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US Poultry Outlook - November 2010

by 5m Editor
19 November 2010, at 12:00am

For 2010, broiler meat production is forecast to be three per cent higher than last year, and it is estimated to increase a further 1.5 per cent in 2011, according to the latest <em>Livestock, Dairy, and Poultry Outlook</em> from the USDA's Economic Research Service. Turkey production is expected to be steady, while egg output will be up by one per cent this year compared to 2009.

Summary

Broiler meat production in fourth quarter 2010 is forecast at 9.2 billion pounds, up four per cent from the previous year. For 2010, broiler meat production is forecast at 36.6 billion pounds, three per cent higher than in 2009. Broiler meat production is expected to increase only 1.5 per cent in 2011 due to the impact of a slowly growing economy and higher prices for both corn and soybean meal.

Turkey meat production in fourth quarter 2010 is expected to total 1.45 billion pounds, slightly higher than the previous year. Turkey meat production in 2010 is forecast at 5.6 billion pounds, making it one per cent lower than 2009 and the second consecutive year of declining production. Wholesale prices for whole hen turkeys in the Eastern market in fourth quarter 2010 are expected to be $1.01 to $1.05 per pound, up over 20 cents per pound from fourth quarter 2009.

Poultry Trade: September 2010 broiler shipments were up, exceeding shipments last September by 6.7 per cent. Turkey shipments were also up slightly (1.3 per cent) in September from a year ago. Total broiler shipments for the third quarter were down four per cent from a year ago, while third quarter turkey shipments were up five per cent from a year ago.

Poultry Production

Broiler meat production forecast to increase in fourth quarter

Fourth quarter 2010 broiler meat production is forecast at 9.2 billion pounds, 4.2 per cent higher than a year earlier. The higher production is expected to be driven by both an increase in the number of birds slaughtered and in average live weights. Over the last several weeks, preliminary slaughter numbers indicate that almost all the gain in bird slaughter has come from heavier birds, pointing toward higher average weights.

Broiler meat production in third quarter 2010 was 9.48 billion pounds, 3.4 per cent above the same period in 2009. This increase was the result of a 2.2-per cent rise in the number of birds slaughtered and a one-per cent increase in live weights to 5.63 pounds.

Broiler meat production in 2011 is forecast at 37.2 billion pounds, an increase of only 1.5 per cent over 2010. In 2011, broiler production growth is expected to be dampened by higher prices for corn and soybean meal and only modest increases in broiler prices, which would reduce any incentive to expand production. Price increases are expected to be dampened by higher production and stocks as well as relatively high unemployment and a slowly expanding economy, dampening demand increases.

The most recent weekly hatchery report showed that over the last five weeks (9 October to 6 November), the number of chicks placed for grow-out averaged 5.2 per cent higher than in the same period in 2010. This five-week moving average has rapidly grown over the last few months, as the average through the end of September was less than half the current rate. The continued expansion in the number of chicks placed for grow-out is expected to be impacted over the next several months by both high grain prices and falling prices for most broiler meat products.

Third quarter ending stocks lower

With higher broiler meat production in third quarter 2010, ending cold storage holdings of broiler products totalled 680 million pounds, up 11 per cent from the previous year and 45 million pounds higher than at the end of the second quarter. Although the large percentage of stocks in the ‘other’ category does not allow for a definitive analysis of changes in stocks of various parts, stock levels for both leg products and paws have grow steadily from earlier this year. This is logical given the trade disruptions that have occurred with Russia and China, our largest markets for these products. Even with higher broiler meat production forecast for fourth quarter 2010, overall stocks of broiler products are expected to expand only slightly in fourth quarter 2010 but are expected to end 2010 at 695 million pounds, up 13 per cent from the end of 2009.

With higher broiler production, especially of heavier birds, along with uncertainties about export markets and continued weakness in the domestic economic outlook, most broiler prices have been moving downward, especially for breast meat products. Boneless/skinless breast meat prices in the Northeast market declined to $1.34 per pound in October, down 34 cents from the September average.

Prices for bone-in breasts followed a similar pattern, declining from $1.14 per pound in September to only $0.92 in October. Weekly prices point toward continued declines in the prices for breast meat products in November. One of the few prices that has shown any strength is the price for wings, which rose six cents per pound from September to October.

Turkey production steady

US turkey meat production in third quarter 2010 was 1.4 billion pounds, down fractionally from a year earlier. The small production decline was the result of a small decline in the average live weight of turkeys at slaughter to 28.3 pounds (down 0.4 per cent) and the number of birds slaughtered being fractionally smaller than the previous year. Turkey meat production in fourth quarter 2010 is forecast at 1.45 billion pounds, a relatively small gain in production from the previous year. This would be a switch, as turkey meat production has fallen on a year-over-year basis for the last seven consecutive quarters.

With lower turkey meat production throughout 2009 and in the first three quarters of 2010, stocks of turkey products (whole birds and parts) have been well below their year-earlier levels throughout 2010. At the end of September, overall turkey cold storage holdings were 470 million pounds, down 23 per cent from the previous year. The decline in cold storage holdings of all turkey products was almost equally divided between whole turkey and turkey product stocks. At the end of September, whole bird stocks were 284 million pounds, down 21 per cent from the previous year, and stocks of turkey products were down 26 per cent to 186 million pounds. With production expected to be up only fractionally in fourth quarter 2010, turkey cold storage holdings at the end of 2010 are expected to total 210 million pounds, the lowest year-ending stocks level since 2005.

With lower turkey meat production over the first three quarters of 2010 and much lower stocks of whole birds, there has been considerable upward pressure on turkey prices. Prices for whole turkeys at the wholesale level averaged $0.98 per pound in third quarter 2010, up 14 cents per pound from the second quarter and 25 per cent higher than the previous year. Whole turkey prices are expected to average $1.01 to $1.05 per pound in fourth quarter 2010, again around 25 per cent higher than a year earlier.

Egg production continues higher

Table egg production in third quarter 2010 was just over 1.6 billion dozen, about one per cent higher than a year earlier. On a year-over-year basis, table egg production has risen in the last seven consecutive quarters. With the number of table egg layers in production up slightly, table egg production is expected to continue to be above the previous year’s level in fourth quarter 2010 and into first quarter 2011. Overall table egg production is expected to again be higher in 2011, although the increase is expected to be less than one per cent.

Hatching egg production in third quarter 2010 was 271 million dozen, up six million dozen (just over two per cent) from third quarter 2009. Hatching egg production is again expected to be slightly higher in fourth quarter 2010, chiefly due to higher demand for broiler chicks.

However, production is expected to level off in 2011 as broiler production is caught between higher grain prices and little growth in the domestic economy.

Wholesale table egg prices in third quarter 2010 averaged $0.93 per dozen, down less than two cents per dozen from the previous year. However, egg prices varied tremendously during the third quarter. Seasonally higher demand in fourth quarter 2010 is expected to boost prices somewhat to $1.08 to $1.12 per dozen. This increase would still leave prices down from the $1.18 per dozen that table eggs averaged in fourth quarter 2009. Prices in 2011 are forecast to be lower, without the strong spikes that boosted prices in both the first and third quarters of 2010.

Egg exports down in September but much higher for the year

Although egg prices have been relatively volatile in 2010, eggs and egg product exports to a number of countries have remained strong. In September, total egg exports were the equivalent of 23.8 million dozen eggs. This was down five per cent from the previous year but over the first nine months of 2010, egg exports were 13 per cent higher than during the same period in 2009. Exports of both shell eggs and egg products declined in September. The reduction in exports is likely related to the strong domestic price spike in shell egg prices that occurred in late August and into September.

Egg shipments in third quarter 2010 totalled 67.3 million dozen on a shell egg-equivalent basis, down three per cent from the 69.1 million dozen exported in third quarter 2009 and almost identical to the amount exported in second quarter 2010. Year-to-date exports are down to Canada and Mexico but there were higher shipments to EU countries and a number of Asian countries, particularly Hong Kong and Japan.

Poultry Trade

September broiler shipments up from a year ago but down in the third quarter

September 2010 broiler shipments totalled more than 618 million pounds, up 6.7 per cent from a year ago. September broiler shipments were the largest since October 2008. One of the major contributing markets was Russia, which accounted for over 83.8 million pounds of US total broiler shipments in September 2010, the largest amount shipped to that country since December 2009. Mexico was the second largest export market for the United States, receiving over 79.5 million pounds of broiler meat.

Broiler shipments in the third quarter of 2010 finished at 1.64 billion pounds, down four per cent from last year’s total shipments. During third quarter 2010, the strongest US broiler export market was Mexico, which imported over 234 million pounds of broiler meat, or 14.2 per cent of US broiler shipments. With Russia returning as one of the largest US markets, 2010 fourth quarter broiler shipments are projected to equal 1.6 billion pounds.

Turkey shipments up slightly in September and in third quarter compared with a year ago

Turkey shipments totalled 49.7 million pounds in September 2010, a 1.4 per cent increase from last year. Although September turkey shipments showed an increase from last year’s total, there has been a sizable decline in turkey shipments from September. In August 2010, the United States shipped about 56.2 million pounds of turkey meat, almost 12 per cent more than was shipped in September. The two largest US turkey markets, Canada and Mexico, both imported over two million pounds less in September than they did a month earlier. A possible reason for the reduction in turkey shipments could be the increase in US turkey prices, coupled with relatively stable broiler meat prices. During September, Canada and Mexico increased their importations of US broiler meat by more than two million pounds.

Turkey shipments in the third quarter of 2010 totalled 158.7 million pounds, a five per cent increase from a year ago. Of the 158.7 million pounds shipped, Mexico accounted for 53 per cent. Canada, the second largest US turkey market, received 17 per cent of the total turkey meat shipped. Turkey shipments in fourth quarter 2010 are expected to be slightly higher than 2009 volumes.

Further Reading

- You can view the full report by clicking here.


November 2010