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US Poultry Outlook Report - April 2007

by 5m Editor
19 April 2007, at 12:00am

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

Poultry

U.S. broiler meat production is forecast to total 35.6 billion pounds in 2007, a slight decrease from 2006. This is the first year-over-year decrease in annual broiler meat production since 1973. With exports expected to expand to 5.4 billion pounds, domestic per capita broiler meat consumption is expected to decrease by almost 2.5 pounds, to 84.6 pounds on a retail weight basis. With lower broiler production in 5 of the last 6 months, prices have strengthened and over the next several months are expected to remain considerably higher than in the previous year. Although turkey production has increased, turkey supplies are expected to be relatively tight in 2007. Prices for turkey products will benefit from lower production and higher prices for almost all broiler meat products.

Broiler Production Revised Downward

Due to an expected reduction in the number of birds slaughtered and little or no increase in average bird liveweights, broiler meat production forecasts were reduced for all four quarters of 2007. Production in the first quarter of 2007 is estimated at 8.7 billion pounds, down 3.2 percent from the previous year. Broiler meat production is expected to be below the previous year in the first and second quarters, but above in the third and fourth quarters. Total broiler meat production for 2007 is forecast at 35.6 billion pounds, a slight decrease from 2006.

Over the first 2 months of 2007, broiler meat production totaled 5.7 billion pounds, down 2.1 percent from the same period in 2006. The decline resulted from a small decrease in the number of birds being slaughtered (down 0.4 percent), and a small decline in the average liveweight at slaughter.

Over the last 5 weeks (March 3 to April 7), the number of chicks being placed for growout has averaged approximately 175 million per week, unchanged from the previous year. In the last 3 weeks the number of eggs being placed in incubators has been higher than during the same time last year. If this trend continues, it points toward a slight increase in the number of chicks placed for growout and a larger number of birds available for slaughter by the end of the second quarter.

The estimate of broiler cold storage holdings at the end of the first quarter of 2007 was reduced to 610 million pounds, 29 percent lower than the previous year and down 90 million pounds from the previous estimate. The reduction comes as the result of lower production forecasts and continued strength in the general economy. At the end of February, cold storage holdings of almost all broiler products were down, with stocks of dark meat products down the most compared with a year earlier. Products such as leg quarters, drumsticks, and thighs were all at least 44 percent lower than at the same time in 2006. Ending stocks forecasts for the second, third, and fourth quarters of 2007 were also lowered.

In March, the 12–city price for whole broilers averaged 79 cents per pound, up 27 percent from the previous year. Prices for most other broiler products were up significantly compared with a year earlier. In the first half of 2006, prices for many broiler products were depressed by higher production and cold storage holdings. Prices for boneless/skinless breasts were reported at $1.52 per pound in March in the Northeast market, a 53-percent increase over the previous year. Also, March prices for leg quarters, wings, and thighs were 130, 50, and 79 percent higher than the previous year. With lower broiler production in 5 of the last 6 months and lower stock levels, broiler prices are expected to remain considerably higher than in the previous year, especially in the next one to two quarters.

Turkey Markets Remain Tight

U.S. turkey meat production is now estimated at 5.8 billion pounds in 2007, up 2.4 percent from the previous year. Most of the production increase is expected to come from a higher number of birds being slaughtered, as average weights are expected to be down from the previous year.

Over the first 2 months of 2007, turkey meat production totaled 928 million pounds, up 7.6 percent from the same period in 2006. During this period the number of turkeys slaughtered was up 10 percent and the average live-bird weight was 29.2 pounds, down about 2.4 percent from the previous year. Turkey meat production estimates were also increased slightly for the second and third quarters of 2007.

At the end of February, cold storage holdings of turkey products totaled 318 million pounds, up slightly from the previous year. The increase is the result of larger holdings of whole birds, which were up 18 percent from the previous year to 148 million pounds. In contrast, holdings of other turkey products were 170 million pounds, down 11 percent from the same period in 2006.

Prices for whole turkeys have remained strong through the first quarter of 2007, although they have declined seasonally from the very high prices in fourth-quarter 2006. Prices for whole hens in the Eastern market averaged 69.7 cents per pound in first-quarter 2007, up 4 percent from first-quarter 2006, which in turn was 2 percent higher than first-quarter 2005. While turkey production is forecast higher in 2007 and the stock estimates are also slightly higher for 2007, declines in turkey prices will be limited by higher prices in the broiler market and for many beef and pork products.

On April 1, the USDA announced that there was an outbreak of low pathogenic H5N2 avian influenza (AI) on a turkey farm in West Virginia. Approximately 25,000 birds were culled and all poultry farms within a 6-mile radius were being monitored. Low pathogenic AI is common in birds and causes only minor sickness. The low pathogenic AI virus poses no risk to human health. However, a number of countries have placed bans on the imports of all poultry products from West Virginia as a result of the outbreak. West Virginia is only a minor producer in terms of overall U.S. broiler and turkey production.

Eggs

In the first quarter of 2007, wholesale and retail egg prices averaged much higher than in the first and fourth quarter of 2006. The price rise was mainly due to rising feed prices, smaller U.S. egg-layer flocks, and declining egg production. U.S. exports of total shell eggs and products (in-shell egg equivalent) accounted for 202.0 million dozen in 2006, compared with a record high of 203.3 million dozen in 2005.

Wholesale Egg Prices Post Sharp Rise in 2007

Wholesale egg prices averaged $1.05 per dozen in the first quarter of 2007, compared with 71.4 cents a dozen a year ago and 89.0 cents in the fourth quarter of 2006. The almost-48-percent price rise in the first quarter of 2007 over the previous year largely reflects higher costs of corn and soybean meal. Egg production declined in the first quarter as U.S. layer flocks were reduced, and given inelastic price demand for eggs, prices were sharply higher.

In the first quarter of 2007, U.S. egg-type layers averaged 288.5 million birds (on first-of-the-month basis), compared with 291 million birds in the first quarter of 2006. In the first quarter of 2007, the number of U.S. egg-type layers decreased steadily by 2.1 million birds, from 289.5 million birds on the first day of January to 287.8 million birds on the first day of March 2007. Consequently, table-egg production is forecast to decrease by 1.3 percent, from 1,611 million dozen in the first quarter of 2006 to 1,587 million dozen in the first quarter of 2007.

Retail egg prices are expected to rise substantially, to $1.67 per dozen in the first quarter of 2007, compared with $1.36 per dozen in the first quarter of 2006. In February 2007, retail egg prices averaged $1.75 per dozen, which is a record high. Higher shell-egg prices likely reduced the quantity of federally inspected eggs going to the breaking market by nearly 3 percent in the first quarter of 2007 compared with the first quarter of 2006.

Exports of Eggs and Egg Products Nearly Unchanged

U.S. exports of total shell eggs and products (in-shell egg equivalent) amounted to 202.0 million dozen in 2006, compared with 203.3 million dozen in 2005, or slightly less than 1 percent. The slight decline was associated directly or indirectly(trade diversions) with the recovery of several countries from outbreaks of the Highly Pathogenic Avian Influenza (HPAI) that occurred during 2005 and 2006.

In 2006, U.S. exports of shell-egg and egg products to major Asian markets (Japan, Hong Kong, China, South Korea, Thailand, Vietnam, Taiwan, and the Philippines) decreased from 83.5 million dozen in 2005 to 67.3 million dozen, or a share decline from 41 percent to 33 percent. The decline in the U.S. export share to those Asian countries was partially offset by rising U.S. exports to Canada and Mexico from 64 to 71 million dozens, or from a 31.5 percent share in 2005 to a share of over 35 percent in 2006. Likewise, U.S. exports to EU-25 countries were up from 19.1 million dozen to 20.7 million dozen, while those to all other countries increased from 36.5 to 43.2 million dozen.

U.S. exports of shell eggs and products to Brazil rose significantly to 4.4 million dozen (up 65 percent); those to the Dominican Republic, 2.2 million dozen (up 268 percent); Guyana, 1.9 million dozen (up 16 percent); Costa Rica, 1.4 million dozen (up 20 percent); Saudi Arabia, 1.7 million dozen (up 367 percent); South Africa, 892,000 (up 141 percent); and Egypt, 870,000 (up 124 percent).

Fifty-four percent of U.S. egg-product exports in 2006 were shell eggs, and the remaining 46 percent were in-shell egg equivalents. In 2006, U.S. exports of shell eggs increased 3.3 percent compared with 2005, while shipments of egg products (in-shell egg equivalent) declined 4.7 percent.

Egg Market Summary

In the first quarter of 2007, wholesale and retail egg prices averaged much higher compared with the first and the fourth quarter of 2006. The price rise was mainly due to rising feed prices, smaller U.S. egg-layer flocks, and declining egg production. U.S. exports of total shell eggs and products (in shell egg equivalent)accounted for 202.1 million dozen compared with a record high of 203.3 million dozen in 2005.

Further Information

For more information view the full Livestock, Dairy and Poultry Outlook - April 2007 (pdf)

April 2007