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US Poultry Outlook Report - September 2006

by 5m Editor
25 September 2006, at 12:00am

By U.S.D.A., Economic Research Service - This article is an extract from the September 2006: Livestock, Dairy and Poultry Outlook Report, highlighting Global Poultry Industry data.

USDA Economic Research Service

Weather Conditions Improve Livestock Prospects

Feed and Forage Conditions: Improved moisture conditions across the northern Great Plains and western Corn Belt during August have resulted in much-improved corn and soybean yields.

Poultry

Broiler meat production continues to expand, but at a much slower pace than earlier in 2006. The result of this slowdown in production has been lower stocks and higher prices. The slower pace of broiler meat production growth is expected to continue through the fourth quarter of 2006. Turkey production has been higher than a year earlier, but prices for whole turkeys have held steady at 3 to 6 percent higher than the previous year for the last several months. Higher whole turkey prices are expected to continue through the Thanksgiving holiday period.

Poultry Trade

U.S. broiler and turkey exports were up in the month of July compared with a year ago. Broiler shipments totaled 441 million pounds, up 5 percent from July 2005 due to strong increases in broiler demand from Russia and other members of the Commonwealth of Independent States. Turkey shipments totaled 48 million pounds, up 6 percent from a year earlier due to the growth in the Taiwan and Russia markets.

Improved Moisture Conditions Raise Yields/Production Estimates

Improved moisture conditions across the northern Great Plains and western Corn Belt during August have resulted in much improved corn and soybean yield estimates. Corn production is forecast at 11.1 billion bushels, up 1 percent from the August estimate and fractionally above a year ago. If realized, this would be the second largest crop on record.

However, production of the other feed grains (sorghum, barley, and oats) is expected to decline. Total feed grain production (including corn) this year is expected to be up marginally from last year and down nearly 6 percent from the 2004/05 crop. Projected ending corn stocks were pulled down to 1.22 billion bushels and the 2006/07 farm price of corn is expected to average $2.15 to $2.55 per bushel, up from $1.99 a bushel in 2005/06 and $2.06 2 years ago.

Estimated global 2006/07 coarse grain production was lowered to 969.4 million metric tons, and world coarse grain ending stocks were lowered to 125.8 million tons. These declines were due to reductions in the European Union-25, Former Soviet Union-12, Canada, and Australia.

Similarly the soybean crop is forecast at 3.09 billion bushels, again the second largest crop on record. Yield prospects have increased across the Corn Belt and most of the northern and central Great Plains. Consequently, soybean meal production is projected at 42,035 thousand short tons, up 2.5 percent from last year and up 3 percent from 2004/05. Soybean meal prices are expected to average $147.5 to $177.5 per short ton, down from $173.50 in 2005/06 and $182.89 in 2004/05.

Third-Quarter Broiler Meat Production Up Slightly

The U.S. broiler meat production estimate for third quarter 2005 is 9.0 billion pounds, up less than 1 percent from the previous year. Almost all the production increase is expected to come from higher average weights at slaughter as the number of birds slaughtered in the third quarter is expected to be down slightly from the same period in 2005.

Low prices for most broiler products over the first 4 to 5 months of 2006 led to reductions in the number of eggs placed in incubators and the number of chicks placed for grow out. However, total broiler meat production has continued to grow slightly due to higher average weights. Broiler meat production in July was 2.85 billion pounds, up 1.5 percent from a year earlier. The number of birds slaughtered in July was 716.5 million, down marginally from the previous year, while the average live weight at slaughter was 5.38 pounds, up 2.1 percent from July 2005.

For the week ending September 9, the National Agricultural Statistics Service estimated that 173.2 million broiler chicks were placed for grow out, less than a 1- percent increase from a year earlier. This is the second week of growth in chick placement, following an extended period where chick placements had declined compared with the previous year.

Stronger prices for many broiler products and a generally better short-term outlook for grain prices may encourage an increased pace of broiler production in the future. However, any weekly increases in chick placements seen in early September 2006 are chiefly due to the lower chick placements in September 2005 caused by disruptions from hurricane Katrina.

Prices for a number of broiler products have begun to strengthen over the last several months. While prices for most broiler products in August were still lower than a year earlier, the prices for most broiler products were up considerably from earlier this year. Prices for whole birds averaged 68 cents per pound in August, down 4.5 percent from the previous year, but up about 9 cents per pound from April. Prices for leg quarters, breasts, and other products have also strengthened considerably over the last several months. Leg quarter prices in August averaged 39 cents per pound.

This is down about 15 percent from the previous year, but up over 100 percent from the low prices seen in April of this year. The increase in leg quarter prices is partially the result of strength in the export market along with the slowdown in the growth in broiler production. Prices for breast meat products have also strengthened in the last several months. In August, prices for boneless/skinless breast meat in the Northeast market averaged $1.34 per pound, up just over 1 percent from August 2005, but up 37 cents per pound from the average in April 2006.

Turkey Production Up in July

U.S. turkey meat production totaled 3.25 billion pounds in the first 7 months of 2006, up 3 percent from the same period in 2005. The forecast for the third quarter of 2006 is for meat production of 1.41 billion pounds, an increase of 35 million pounds (2.5 percent) from a year earlier.

Turkey meat production in July was 458.4 million pounds, up 6.1 percent from a year earlier. The increase was mostly the result of a higher number of birds being slaughtered as the average weight rose only slightly. The number of turkeys slaughtered in July was 20.8 million, an increase of 5.1 percent from July 2005. The average live weight at slaughter was 27.8 pounds, up less than 1 percent from a year earlier.

Although turkey meat production has been higher in the first half of 2006 and turkey exports have been lower than the previous year, overall turkey stocks are about even with a year earlier. Ending stocks for the first half of 2006 were revised slightly to 507 million pounds, about the same as in 2005, but down considerably from comparable stock levels in 2002, 2003, and 2004.

Turkey stocks at the beginning of August were 511 million pounds, down 1.5 percent from a year earlier, but there is a wide difference in the stocks situation for whole birds and turkey meat parts compared with the previous year. Stocks of whole turkeys at the beginning of August were 247 million pounds, 13.7 percent lower than at the beginning of August 2005, reflecting strong domestic demand. Stocks of turkey parts at the beginning of August were 264 million pounds, 13.5 percent higher than the previous year. This increase is partly the result of lower turkey exports.

The decline of whole birds in cold storage holding has placed upward pressure on whole bird prices. In August, the average price for whole hen turkeys in the Eastern market was 78.7 cents per pound, up 3.6 percent from the previous year. Prices for whole hens in the third quarter are forecast to average 78-79 cents per pound (up about 2 cents per pound from a year earlier).

Broiler Exports Are Up in July

Broiler exports for July, the first month of the third quarter, totaled 441 million pounds, up almost 5 percent from July 2005. The primary reason for the increase in U.S. shipments was broiler demand growth in markets, such as Russia and other members of the Commonwealth of Independent States (CIS). Shipments to CIS (excluding Russia) expanded in July after falling considerably in March and May.

The CIS imports of U.S. broiler meat grew from 23 million pounds in July 2005 to 49 million pounds in July 2006, a 114-percent increase. Shipments to Russia, the largest U.S. broiler export market, have been volatile from month to month but strong overall. Shipments to Russia increased from 144 million pounds in July 2005 to 170 million pounds in July 2006, an 18-percent increase. While specific factors responsible for broiler demand growth in these markets are uncertain, U.S. broiler prices continue to be competitive.

Turkey Exports Grow Stronger in July

Turkey exports totaled 48 million pounds in July 2006, up 6 percent from a year ago. The chief reason for the increased turkey shipments has been the growth in the Chinese (Taiwan) and Russia markets. July shipments to Taiwan increased by 73 percent, while shipments to Russia increased by 211 percent from July 2005. July turkey shipments were the largest since December 2005 and appear to be strengthening monthly.

Further Information

For more information view the full Livestock, Dairy and Poultry Outlook - September 2006 (pdf)

September 2006