Summary

With continued lower chick placements, broiler meat production is expected to decline in fourth-quarter 2008 and through the first three quarters of 2009. With falling production, prices for many broiler products are expected to show some gradual upward pressure, but will be held back at first due to high stock levels.

Whole turkey prices remained relatively strong through the end of December. Whole hen turkey prices averaged 87 cents per pound in the fourth quarter and 88 cents per pound in 2008, the fifth consecutive year that average prices have risen.

Egg prices remained at relatively high levels through the end of 2008, as a continued smaller table egg laying flock has resulted in lower production. Egg prices in 2009 are expected to gradually strengthen through the Easter period and then decline seasonally.

Broiler Production Expected Down Four Per Cent in Q4 2008

During fourth-quarter 2008, the number of eggs set in incubators averaged 198 million per week, down 7.3 per cent from a year earlier. The number of chicks being placed for grow-out averaged 161 million per week, a decline of 6.7 per cent from the same period in 2007. The result has been a lower number of birds available for slaughter and a decrease in broiler meat production. The estimate for broiler meat production in the fourth quarter was reduced to 8.9 billion pounds, down 4 per cent from fourth-quarter 2007. This lowers overall 2008 broiler meat production to 36.9 billion pounds, 2 per cent higher than in 2007.

This decrease in the number of birds going to slaughter and lower year-over-year broiler meat production is expected to continue through the first three quarters of 2009. The annual estimate for broiler meat production in 2009 was lowered to 36.3 billion pounds, a 1.5 per cent drop from the revised 2008 estimate.

Broiler meat production in November 2008 was 2.66 billion pounds, a decrease of 12 per cent from a year earlier. A large portion of the decrease is the result of two fewer slaughter days in November 2008 than November 2007. The number of birds slaughtered was down 12 per cent from the previous year, and this decrease was compounded by a small decline (less than 1 per cent) in the average liveweight at slaughter to 5.61 pounds. Broiler meat production in December is expected to show a small increase, due to the fact that the month has two additional slaughter days over the previous year. Most of the change will come from a difference in the number of birds slaughtered; their average live weight is expected to be very close to the previous year.

Broiler stocks at the end of November totalled 796 million pounds, up 36 million pounds from the end of October and 15 per cent higher than a year earlier. Stocks of whole birds totalled 25 million pounds, which is an increase of 4 per cent from the previous month. Even with this increase in stocks, the price of whole broilers in November was 15 per cent higher than the previous year. Stock levels for most broiler products also were higher than the previous month. Slowing exports resulted in a build-up in stocks of leg meat parts. Stocks for leg quarters, legs, thigh and thigh quarters, and thigh meat all increase between the end of October and the end of November. Broiler stocks are expected to total 810 million pounds at the end of 2008, up about 91 million pounds from the end of 2007. With broiler production expected to decrease year-over-year in the first three quarters of 2009, ending stocks are expected to decline as 2009 progresses.

During November and December, there was a reversal in the direction of broiler prices. Over the first three quarters of 2008, with strong production increases, prices for breast meat products had been declining since the middle of the second quarter. The opposite was true with leg meat products, whose prices were being boosted by strong gains in exports. However, with broiler meat production down in fourth-quarter 2008, prices for many breast meat products began to strengthen, and the expected slowdown in the volume of broiler exports in November and December has put downward pressure on leg meat product prices. Over the next several months, breast meat prices are expected to very gradually increase as production declines on a year-over-year basis.

The increases will be moderated by the downturn in the economy. Prices for leg meat products are not expected to respond rapidly to the decline in production, due to the large stocks that have built up in the last several months and expected lower levels of exports during the first three quarters of 2009. After reaching a record level of 669 million pounds in October, broiler exports declined significantly in November to 571 million pounds. This decline had been anticipated due to the sharply falling price of leg quarters, starting in mid-October.

While broiler shipments were lower to a number of markets, a major portion of the decline was due to lower exports to Russia. In November broiler exports to Russia totaled 149 million pounds, 29 per cent lower than the previous year. Partially offsetting the steep decline in shipments to Russia were increases of 52 and 48 per cent to Mexico and China, respectively, compared with the previous year. Exports in December are also expected to be considerably lower than the previous year as many countries reduce imports due to the global economic downturn.

Turkey Prices Down in Q4 2008

In 2008, prices for whole hen turkeys peaked earlier in the fall than in 2007 and then declined more rapidly than a year earlier. This resulted in an average price for the third quarter that was 7 per cent higher than the previous year, while the average price for fourth-quarter 2008 was 87.3 cents per pound, down 4 per cent from fourth-quarter 2007. The average price for whole hens in the Eastern market in 2008 was 87.5 cents per pound, about 7 per cent higher than in 2007 and the fifth consecutive year of rising average prices (nominal basis). In first-quarter 2009, whole turkey prices are expected to remain slightly below year-earlier levels, and high levels of whole turkey stocks are expected to depress turkey prices through most of the year. Overall prices for 2009 are expected to be down slightly from the previous year.

Turkey production in November was 510 million pounds, 3 per cent lower than in November 2007. The decrease was chiefly due to the two fewer slaughter days in November 2008. The number of turkeys slaughtered in November was down 3.6 per cent from the previous year, and the average weight at slaughter fell by less than 1 per cent to 27.6 pounds. Turkey meat production in December 2008 is also expected to be higher than the previous year, chiefly due additional slaughter days compared with December 2007. The estimate for turkey meat production in fourth-quarter 2008 remained unchanged from last month at 1.58 billion pounds, about even with the previous year. The turkey meat production estimate for 2009 is about 6.1 billion pounds, down 3 per cent from 2008, with lower production in all quarters.

Ending stocks for all turkey products in fourth-quarter 2008 are expected to be 350 million pounds, up 90 million pounds or 34 per cent higher than at the end of 2007. At the end of November, cold storage holdings for turkey totalled 370 million pounds, 79 per cent higher than a year earlier. The increase was due to large cold storage holdings for whole birds and turkey parts. With lower turkey production expected in 2009 and fewer broiler products available, turkey stocks are expected to move lower than the very high stock levels of 2008, even while increasing seasonally.

Turkey exports in November totaled 59 million pounds, up 23 per cent from the previous year. Turkey exports for fourth-quarter 2008 are expected to be 160 million pounds, up 10 per cent from the same period in 2007. Turkey exports are expected to decline in 2009 to 605 million pounds, a decrease of 8 per cent from 2008. Although exports are expected to decline to a number of countries, much of the decrease will be to Mexico, our major export market, due to declining economic conditions.

Eggs Prices Down in Q4 2008

With table egg production continuing at below year-earlier levels through November, wholesale egg prices have remained relatively strong, although prices were lower than the very high levels seen in fourth-quarter 2007. Wholesale prices for a dozen grade A large eggs in the New York market averaged $1.21 in fourth-quarter 2008, down over 14 percent from the same period in 2007, but well above the five-year average for fourth quarter of 99 cents per dozen. For 2008, prices averaged $1.28 per dozen, 13 cents higher than the previous year. Prices moved higher throughout the fourth quarter, with prices averaging $1.19 in October, $1.24 in November, and $1.30 in December. Table egg production is expected to remain below the previous year through the first half of 2009, but then to move higher in the later part of the year. The average for the year is expected to be 4 per cent lower than in 2008.

With the decline in the number of broiler eggs being placed in incubators, the estimates of hatching egg production in fourth-quarter 2008 and first-quarter 2009 were both reduced by five million-dozen to 265 million-dozen. Hatching egg production in 2009 is expected to decline on a year-over-year basis in the first half of 2009, but to expand in the second half of the year, roughly in line with expected broiler production.

Egg exports in November totalled 16 million-dozen, down 29 per cent from the previous year. Overall egg exports in 2008 are expected to total around 208 million-dozen, down 17 per cent from the previous year. Over the first 11 months of 2008, much of the decrease has come from reduced shipments of table eggs. After totalling 78.7 million-dozen in 2007, shipments of these eggs have been 31 per cent lower so far in 2008. This decline is likely due to the relatively strong domestic prices for table eggs during 2008, especially in the first quarter.

Further Reading

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