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US Poultry Outlook Report - April 2009

by 5m Editor
16 April 2009, at 12:00am

By USDA, Economic Research Service - This article is an extract from the April 2009 issue of <em>Livestock, Dairy and Poultry Outlook Report</em>. US broiler meat production in 2009 is forecast to be four per cent down this year compared to 2008. Turkey production was 13 per cent lower in the first two months of 2009 than the same period last year. Table egg production is also lower than last year, with first quarter wholesale prices down more than 30 per cent on 2008.

Summary

The forecast for US broiler meat production in 2009 was reduced by 300 million pounds to 35.5 billion pounds, down about four per cent from 2008. With a large decline in broiler production expected in first-quarter 2009, the estimates for broiler ending stocks were also reduced. Even with lower production and stocks, wholesale prices for many broiler products have continued to remain below the previous year.

Turkey production in January and February was 913 million pounds, down 13 per cent from the previous year. This is almost the exact opposite from the first two months of 2008, when turkey production rose by 13 per cent. Although production is down, turkey stocks remain high and whole bird prices for first-quarter 2009 were down five per cent from a year earlier.

Broiler Production Revised Downward

The forecasts for broiler meat production were revised downward in the all four quarters of 2009. The downward revisions were 100 million pounds in the first and second quarters and 50 million pounds in the third and fourth quarters. The new forecast for 2009 is 35.5 billion pounds, down about four per cent from 2008. On a quarterly year-on-year basis, the sharpest production decline is in the first quarter, followed by gradually smaller declines in the second and third quarters. There is expected to be slightly higher production in fourth-quarter 2009, partially due to expected improvements in economic conditions but also due to the strong decline in production that occurred in fourth-quarter 2008. Throughout 2009, the production decrease is expected to come almost exclusively from a smaller number of broilers being slaughtered. Average bird weights in 2009 are expected to be basically unchanged from the previous year.

Over the first two months of 2009, broiler meat production totaled 5.6 billion pounds, down 9.6 per cent from the same period in 2008. The decrease has come almost exclusively from lower numbers of broilers slaughtered, (down 10.1 per cent), as the average liveweight at slaughter during the first two months of 2009 (5.55 pounds) was almost identical to the previous year. The decline was magnified by the fact that both January and February each had one less slaughter day than the previous year.

The decline is expected to continue through the first three quarters of 2009, as the number of hens in the broiler breeder flocks was down 6.6 per cent in February. The number of eggs placed in incubators and chicks placed for grow-out also continues to track well below the previous year. During the last five weeks (March 7 to April 4), the number of chicks being placed for grow-out has averaged approximately 169 million per week, down 6.5 per cent from the previous year. The five-week average for chick placements has consistently been below the previous year since the beginning of May 2008.

The forecast for broiler cold storage holdings at the end of first-quarter 2009 was reduced to 620 million pounds, down 125 million pounds from the previous quarter and 17 per cent lower than the previous year. This is a 70-million-pound reduction from the previous estimate, as sharp decreases in production and continued strength in the export market have combined to rapidly draw down stocks. At the end of February, cold storage holdings were down for almost all broiler products. Ending broiler stock estimates were also lowered for the second, third, and fourth quarters of 2009. The reduction is due to forecast declines in broiler hatchery production, which is expected to translate into lower broiler meat production over the first three quarters of 2009.

In first-quarter 2009, the 12–city price for whole broilers averaged 79.7 cents per pound, up two per cent from the previous year. Most of the increase in the first quarter was due to higher prices (82 cents per pound) in January, as whole bird prices declined in February and March. Prices for most other broiler products in first quarter 2009 were down from the previous year, with prices for boneless/skinless breast meat down six per cent. Prices for most leg meat products were also lower, with prices for leg quarters averaging 36 cents per pound, down 17 per cent from the previous year. A major exception to the generally lower prices was chicken wings.

Prices for chicken wings averaged $1.48 per pound in the first quarter, up 24 per cent from the previous year. Prices for wings normally peak in late January or early February but this year prices declined only slightly (4 cents) between February and March. Prices for many broiler products are expected to gradually strengthen as lower production reduces supplies. However, the upward price pressure typically associated with lower production and stocks is expected to be partially offset by reduced demand in the weak domestic economy.

Broiler Exports Up 11 per cent in February

Broiler exports in February totaled 561 million pounds, down from January but 11 per cent higher than the previous year. While adverse economic conditions have impacted almost all of the major export markets, this has partially been offset, so far, by lower prices for leg quarters. Driving the higher exports were year-on-year gains in shipments to Mexico, Cuba, and Lithuania and a number of smaller markets. These increases were partially offset by somewhat lower shipments to Russia and China.

Turkey Production Down Sharply

US turkey meat production is now estimated at 5.8 billion pounds in 2009, down 7.1 per cent from the previous year. As with broilers, turkey producers have greatly cut back production in the face of rapid increases in the costs of feed and energy.

Starting in March 2008, the numbers of poults placed for grow-out were below the previous year. The impacts of these actions were first seen in fourth-quarter 2008, which had almost no growth in production. However, the full impact of the production decreases will be seen in 2009, with expected sharp production declines in the first three quarters and a more moderate decline in the fourth quarter. This month, the overall turkey meat production forecast was lowered a total of 190 million pounds, with reductions made to the production forecast of each quarter. As with broilers, the lower turkey meat production is expected to come from fewer birds being slaughtered, as average weights are expected to be up only slightly.

Over the first two months of 2009, turkey meat production has totaled 913 million pounds, down 13 per cent from the same period in 2008. During January and February, the number of turkeys slaughtered dropped 13 per cent compared with the previous year, and average live bird weights were 30.1 pounds, almost identical to the previous year. However, the first two months of 2009 had two fewer slaughter days than the same period in 2008.

At the end of February 2009, cold storage holdings of turkey products totaled 470 million pounds, up 13 per cent from the previous year. The increase includes much larger holdings of whole birds, up 40 per cent from the previous year to 217 million pounds. Along with increased whole bird holdings, stocks of other turkey products totaled 253 million pounds at the end of February, a decline of three per cent from the previous year.

Prices for whole turkeys have remained consistently below the previous year through first-quarter 2009, as lower production has not yet reduced cold storage holdings of whole birds enough to boost prices. Prices for whole hens in the Eastern market averaged 73.8 cents per pound in first-quarter 2009, down five per cent from first-quarter 2008 but six per cent higher than in first-quarter 2007.

Even with lower turkey production forecast for 2009, the large quantities of whole birds currently in cold storage and the weak economy are expected to combine to keep whole turkey prices in the first three quarters of 2009 below year-earlier levels.

Turkey Exports 20 Per Cent Lower

Turkey exports totaled 39.3 million pounds in February, down 20 per cent from the previous year. Shipments were lower to a variety of countries, with declines to the top four largest markets of Mexico, China, Russia and Canada. These lower shipments to the major markets were only partially offset by higher exports to some smaller markets such as Hong Kong, Guatemala, Angola and Cuba. Shipments to Mexico have totaled 50.1 million pounds so far in 2009, down about one per cent from the same period in the previous year.

Table Egg Production Forecast Lower

The forecast for first-quarter 2009 table egg production was lowered slightly to 1.59 billion dozen eggs, down five million dozen from the previous month. Even with the downward revision, the forecast remains slightly higher than the previous year. The 2009 forecast for hatching egg production was reduced by 10 million dozen eggs to 1.06 billion dozen. The reduction is chiefly the result of reduced production of meat-type bird eggs for hatching, in line with the reduction in the broiler production forecast.

Over the first two months of 2009, table egg production was 1.04 billion dozen, down about three million dozen from the previous year. Table egg production is expected to be slightly higher than the previous year throughout 2009. In the first two months of 2009, the number of hens in the table egg flock averaged 284 million birds, up slightly from the same period in 2008. Total table egg production for 2009 is now expected to be 6.45 billion dozen, less than one per cent higher than in 2008. The production of meat-type eggs for hatching in 2009 is expected to follow a similar pattern to the sharp decline in broiler production. During January and February, the number of meat-type hens in the hatchery flock averaged 54.2 million birds, down seven per cent from the previous year.

In March, the National Agricultural Statistics Service (NASS) released the Chicken and Eggs Final Estimates 2003-2007 report that contained revised production estimates for both table eggs and hatching eggs. The results were increases in table egg production in 2003 through 2006. The increases in annual production ranged from 5 to 25 million dozen eggs. Changes to annual hatching egg production were smaller, going from no change to as much as an additional 10 million dozen. There were no changes to the 2007 estimates that had already been published in the February NASS Chicken and Eggs 2008 Summary report.

Egg Prices Fall 31 Per Cent in First Quarter

The wholesale price for one dozen large eggs in the New York region averaged $1.10 in first-quarter 2009, down 31 per cent from first-quarter 2008.

With the Easter holiday in the middle of April this year, egg prices are expected to decline seasonally starting at the end of April. Egg prices in the New York market are expected to be between $1.03 and $1.07 per dozen in second-quarter 2009. While this is quite a decline from the previous year, it is still 14 per cent higher than in second-quarter 2007.

Egg Exports Down in February

In February, egg and egg product exports totaled 13.8 million dozen, down 13 per cent from the previous year. Much of the decline came from reduced shipments to Japan and Mexico. Shipments to Japan totaled only 2.1 million dozen, down 38 per cent from a year earlier. Exports to Mexico were down 30 per cent, declining even though the wholesale price of table eggs was considerably lower than the previous year. Demand for eggs and egg products was not down in all markets, with shipments to Canada and some smaller markets higher on a year-on-year basis.

Further Reading

- You can view the full report by clicking here.


April 2009