ShapeShapeauthorShapechevroncrossShapeShapeShapeGrouphamburgerhomeGroupmagnifyShapeShapeShaperssShape

US Poultry Outlook Report - July 2008

by 5m Editor
18 July 2008, at 12:00am

By U.S.D.A, Economic Research Service - This article is an extract from the July 2008: Livestock, Dairy and Poultry Outlook Report.

Poultry and Eggs

2008 Quarterly Broiler Meat Production Estimates Increased

U.S. broiler meat production over the first 5 months of 2008 was 15.5 billion pounds, up 5.3 percent from the same period in 2007. This has been due to a number of trends—only recently has the number of chicks placed for growout been lower than a year earlier, the average weight at slaughter continues to be up considerably from the previous year, and the number of birds in the broiler breeder flock has been higher on a year-over-year basis, in each of the first 5 months. With production not declining as fast as earlier anticipated, the production estimates for the second, third, and fourth quarters were increased. The estimate for the second quarter is now 9.45 billion pounds, and the estimates for the third and fourth quarters were increased to 9.25 and 9.2 billion. This brings the revised total for 2008 to just over 37 billion pounds, 2.4 percent higher than the previous year.

However, with the steep climb in the expected prices for corn and soybean meal in late 2008 and through most of 2009, the estimate for 2009 broiler production was lowered to 36.6 billion pounds, just over a 1-percent decline compared with 2008.

Over the last 5 weeks (June 14 to July 12), the average weekly number of chicks being placed for growout was 179 million, down less than 1 percent from the same period in 2007. With a typical growout period of 7 to 8 weeks, chicks being placed during this period are expected to go to slaughter during the second half of July through the end of August.

Broiler meat production in May totaled 3.2 billion pounds, down slightly from a year earlier. The decrease in meat production was due to a smaller number of birds slaughtered in May, down 2.8 percent from the previous year. This, in turn, was influenced by 1 less slaughter day in May 2008 than May 2007. Most of this decline was offset by an increase of 1.5 percent (to 5.60 pounds) in the average live weight of birds going to slaughter compared with a year earlier. Preliminary data point toward a small decrease in total broiler meat production in June. Again, this will mostly be due to a decline in the number of birds slaughtered. Average bird weights at slaughter are expected to be up somewhat compared with June 2007.

Broiler production is now expected to increase slightly in the second half of 2008, putting some downward pressure on prices, especially for breast meat products.

Some of this pressure is expected to be counterbalanced by strong export demand that is expected to help to boost prices for leg meat products. Prices for whole birds averaged 79.4 cents per pound during first-half 2008, 2 percent higher than a year earlier. Price changes for broiler parts have been mixed. Boneless/skinless breast meat prices in the Northeast market averaged $1.41 per pound in first-half 2008, down 7 percent from the same period in 2007, while leg quarter prices averaged 45.6 cents per pound, up 11 percent from the previous year.

Broiler stocks at the end of May totaled 725 million pounds, 23 percent higher than a year earlier. Most of the increase has been in the “other” category so an explanation for the increase is not available. However, stocks of leg quarters were 90 million pounds, 49 percent higher than at the same point in 2007. The high stock levels at a time when wholesale prices for leg quarters were very strong indicates that although the product was in storage it already had been sold, since the buildup in stocks had not had a depressing effect on wholesale prices.

Broiler ending stocks for the second and third quarters of 2008 are expected to be higher than in the previous year, but the levels are expected to be below a year earlier in the fourth quarter due to strong export demand and slowing production.

Turkey Production Rises in May

Turkey production totaled 521 million pounds in May, up 1.8 percent from the previous year. The number of turkeys slaughtered was down less than 1 percent, largely reflecting one less slaughter day, but this decline was offset by a 2-percent increase in the average weight at slaughter to 29 pounds. With the increase in May, turkey meat production during the first 5 months of 2008 increased 8.2 percent compared with the same period in 2007. The increase in meat production is basically a combination of 5.1 percent more turkeys being slaughtered and a 2.4-percent gain in average weight at slaughter, compared with the first 5 months of 2007.

As with broiler production, the higher grain prices forecast for the next crop year are expected to place downward pressure on turkey production. Turkey production in 2009 is now expected to total 6.05 billion pounds. This would be a 2.2-percent decline compared with 2008.

Turkey meat production in the second half of 2008 is estimated at 3.1 billion pounds, up less than 1 percent from second-half 2007, and production is expected to decline slightly in the fourth quarter. The most recent turkey hatchery report showed net placement of poults for growout at 2.3 percent lower in June than in the previous year. Over the first 6 months of 2008, net poult placements have been lower than the previous year in 5 of the 6 months.

Even with a relatively strong increase in turkey meat production over the first 5 months of 2008, whole turkey prices are considerably above year-earlier levels.

Prices for whole hen turkeys in the Eastern market averaged 88.9 cents per pound in second-quarter 2008, up 14 percent from the previous year and 25 percent higher than in second-quarter 2006. Whole turkey prices are expected to remain above those of a year earlier through the rest of the 2008 and into 2009.

At the end of May, cold storage holdings of turkey products totaled 516 million pounds, 30 percent higher than the previous year. The increase has come from larger stocks of both whole birds and parts. Cold storage holdings of whole turkeys totaled 233 million pounds, an increase of 10 percent from May 2007. Holdings of turkey parts increased more rapidly and totaled 284 million pounds at the end of May, up 52 percent from the same period in 2007. The growth of turkey products in cold storage has occurred even with strong export demand, but slowing production in the fourth quarter is expected to result in ending stocks for 2008 being only slightly higher than a year earlier.

Egg Production Continues Down in May

U.S. table-egg production totaled 536-million dozen in May, down 0.7 percent from the same period the previous year. Over the first 5 months of 2008, egg production has been lower in 4 of the 5 months compared with the same month the previous year. The lower production in May was the result of a smaller number of birds in the table-egg laying flock. During May, the number of birds in the laying flock averaged 280 million, down just under 1 percent from May 2007. It is expected that the number of birds in the table-egg laying flock will slowly begin to expand, as the number of egg-type chicks hatched has been above the previous year in each of the last 7 months. Table-egg production is expected to be slightly higher than the previous year in the second half of 2008, but still below the amount produced in the second half of 2006.

The smaller production of table eggs in the first 5 months of 2008 has translated into higher egg prices at the wholesale level. In first-quarter 2008, the average prices for a dozen grade A large eggs in the New York market was $1.59, an increase of 51 percent from the previous year. Even with a steep decline in prices after the Easter holiday, egg prices in second-quarter 2008 averaged $1.17 per dozen, up from only 92 cents the previous year. Even with the expected gradual expansion in production in the second half of 2008, egg prices are now estimated to be $1.32 to $1.38 per dozen in the third quarter and to rise seasonally in the fourth quarter to between $1.40 to $1.50 per dozen.

Poultry Trade

Broiler Shipments Continue Strong in May

In spite of leg quarter prices higher than those recorded a year ago, broiler shipments continued to climb in May 2008. May broiler shipments totaled 636 million pounds, exceeding May 2007 shipments by 50 percent. Along with the 50-percent increase in volume, the value of broiler shipments in May 2008 also increased by 52 percent from a year earlier. Thus, the story continues in May to be increased volumes of broiler meat shipments, fueled by strong consumer demand and a weakened U.S. dollar. Percentage-wise, major increases in shipments occurred for Ukraine (1,105 percent), Vietnam (476 percent), Cuba (280 percent), and Korea (230 percent). Russia’s change in volume (136 to 215 million pounds)was by far the largest absolute increase among the U.S. major broiler markets.

To account for continued strong foreign demand for U.S. broiler meat, forecasts were adjusted. A total of 75 million pounds of broiler meat was added to the second-quarter estimates and 25 million pounds to the third quarter, changing the total for the year to 6.26 billion pounds, an increase of 8 percent.

May Turkey Shipments Show Signs of a Growing Market

Turkey shipments totaled 50 million pounds in May, up about 5 percent from a year ago. A strong demand, aided by a weakened U.S. dollar, continues to be the key reason for the increase in turkey shipments. While shipments to Mexico, the leading importer of U.S. turkey meat, were down by 11 percent from a year ago, the U.S. received a large boost in volume from Taiwan (203-percent increase), and China (107-percent increase). The value of U.S. turkey meat for May 2008 totaled 37.5 million dollars, up almost 7 percent from a year ago. Turkey shipments continue to be strong in the second quarter and are forecast to total 155 million pounds for the quarter.

Further Reading

- You can view the full report by clicking here.