Jul. 19, 2012 - The following in an excerpt from the USDA Livestock, Dairy and Poultry Outlook report. The complete report can be found here.
2012 Broiler Meat Production Down Slightly
U.S. broiler meat production for the first 5 months of 2012 was 15.4 billion pounds, down 1 percent from the same period in 2011, as a result of a smaller number of birds being slaughtered. This was offset partially by higher average weights at slaughter. Over the January - May period, average broiler weights at slaughter were 5.83 pounds, 0.7 percent higher than in the same period in 2011.
With adverse weather conditions in many areas of the country impacting corn production, rising grain prices and the sluggish economy are expected to result in a less rapid recovery in broiler production in the second half of 2012 and only slight growth in 2013. The production estimate for fourth-quarter 2012 was reduced by 50 million pounds. The estimate for 2013 broiler meat production was reduced by 400 million pounds to 37.1 billion pounds, up only 0.6 percent from 2012. Most of the reduction is expected to come from reduced numbers of broilers being raised, as average weights are expected to be close to those in 2012.
During May, the number of birds in the broiler breeder flock was estimated at 52.9 million, down 5.3 percent from a year earlier. On a year-over-year basis, the size of the broiler breeder flock has been lower than the previous year since February 2011. With this reduction in the number of broiler breeder hens, the number of eggs placed in incubators and chicks hatched are expected to continue to be lower than the previous year, potentially reducing the amount of birds available for slaughter.
Over the last 5 weeks (June 9 to July 7), the average number of chicks being placed weekly for growout was 166.3 million, 1.2 percent lower than in the same period in 2011. The difference between weekly chick placements this year and in the same period in 2011 has narrowed in the last several weeks. Smaller numbers of chicks placed for growth is expected to continue at least for several weeks, as the number of eggs placed in incubators in the last 5 weeks has averaged 1.2 percent lower than in the previous year.
Broiler meat production in May 2012 totaled 3.3 billion pounds, 0.8 percent higher than a year earlier. The increase in meat production was due to a combination of relatively small gains in both the number of birds slaughtered in May, up 0.5 percent from the previous year, and higher average weights at slaughter, up 0.3 percent to 5.83 pounds. The number of birds slaughtered was higher due to the additional slaughter day in May 2012 compared with May 2011. Weekly broiler slaughter data from AMS indicate continued higher average liveweights at slaughter in June. Due to higher broiler meat production in May and continuing higher average bird weights, the production estimate for second-quarter 2012 was raised to 9.35 billion pounds, 50 million higher than the previous estimate.
Broiler meat production is expected to be down 1.7 percent in second-quarter 2012 compared with the previous year, with almost all of the reduction coming from lower bird slaughter. These production decreases are generally expected to have a positive impact on wholesale broiler parts prices.
After rising in first-quarter 2012, prices for whole birds dropped to an average of 85.9 cents per pound during second-quarter 2012, 4 percent higher than a year earlier. This pattern also held true for a number of other broiler cuts. Prices for boneless/skinless breast meat in the Northeast market averaged $1.38 per pound in June, 11 percent higher than the previous year. A strong export market supported higher prices for leg quarters and thigh meat in June, 7 and 4 percent above June 2011. Wing prices continue to be the strong point for broiler products, averaging $1.80 per pound in June, 105 percent higher than the previous year.
Broiler stocks at the end of May totaled 611 million pounds, down 15 percent from a year earlier. The year-over-year decline in cold storage stocks varied widely for the different categories. Stocks of whole birds and breast meat products were down significantly, while stocks of legs and thigh meat products were higher. Stocks for whole birds were 13.9 million pounds, a decrease of 35 percent from the previous year. Stocks of breast meat were down over 28 percent from the previous year and totaled 111 million pounds. Since the beginning of 2012, stocks of breast meat have fallen by 21 million pounds and this decrease has been reflected in stronger wholesale prices over the last several months. Over the last 6 months of 2011, stocks of wings gradually were reduced, and this pattern continued over the first 3 months of 2012. Stocks of wings rose in April and May, but still remain considerably lower than the previous year (down 36 percent in May), placing upward pressure on prices.
For the remainder of 2012, cold storage holdings of broiler products are expected to gradually increase. While broiler meat production on a year-over-year basis is expected to be slightly lower in the second half of 2012, the decline is expected to be partially offset by lower exports and a sluggish domestic economy. Broiler stocks are expected to slowly rise, ending the year at 650 million pounds.
Turkey Production Rises in May
Turkey meat production totaled 520 million pounds in May 2012, up 4.7 percent from a year earlier, as a result of a higher number of turkeys slaughtered, 21.8 million, up 6.1 percent from a year earlier. This was partially offset by a drop in the average liveweight at slaughter to 29.8 pounds (down 1.1 percent). Much of the gain in the number of turkeys slaughtered was the result of an additional slaughter day in May 2012 compared with a year earlier. Over the first 5 months of 2012, turkey meat production totaled 2.4 billion pounds, 3.8 percent above the same period in 2011. The average liveweight for turkeys at slaughter during this period was 30.4 pounds, slightly higher (0.7 percent), than in the same period in 2011. The number of birds slaughtered totaled 100.6 million, an increase of 3 percent.
Rising grain prices are also expected to have a downward impact on turkey production. The turkey meat production estimate for fourth-quarter 2012 was lowered by 25 million pounds to 1.55 billion pounds, and the estimate for 2013 was lowered by 100 million to 5.94 billion pounds.
Turkey meat production in the second half of 2012 is expected to be higher, at 3.0 billion pounds, (up 3 percent from the second half of 2011). The turkey hatchery report showed that net placement of poults for growout in May were 25.1 million birds, up 4.9 percent from the previous year. Over the first 5 months of 2012, net poult placements totaled 121.3 million, up 4.8 percent from the same period in 2011. Turkey meat production is expected to remain above the previous year through the rest of 2012 but is expected to decline slightly in 2013.
With higher turkey production so far in 2012, stocks of whole birds have risen to well over their year-earlier levels. The growth in whole bird stocks, however, has not impacted prices yet. National prices for whole hen turkeys averaged $1.07 per pound in second-quarter 2012, up just over 7 cents per pound from the previous year. Whole turkey prices are expected to remain above year-earlier levels through the remainder of 2012.
At the end of May, cold storage holdings of all turkey products totaled 500 million pounds, up 12 percent from a year earlier. The increase has come from both higher stocks of whole birds, up 9 percent, and turkey parts, up 15 percent. Cold storage holdings of whole turkeys totaled 258 million pounds and holdings of turkey parts were 242 million pounds. The increase in turkey products in cold storage has developed as increases in production have only been partially offset by strong export demand, especially to Mexico. Stocks of turkey products (whole birds and parts) are expected to follow the normal seasonal pattern, increasing through the third quarter and then declining during the peak demand period in the fourth quarter. With only slightly higher production expected for the second half of 2012, ending turkey stocks for 2012 are forecast at 250 million pounds, up 18 percent from the previous year.
Egg Production Higher in Second Quarter
U.S. table egg production totaled 557 million dozen in May, up 0.6 percent from the same period the previous year. Higher table egg production in May was the result of an increase in the number of layers in the table egg flock. During May, the number of hens in the table egg laying flock averaged 282 million, up 1.2 percent from a year earlier. The increase in the number of birds in the table egg laying flock was partially offset by a slightly lower rate of lay for those layers. Although wholesale prices are relatively strong, rising feed prices are expected to negate any incentives to expand the size of the table egg flock significantly. Table egg production in the second half of 2012 is expected to total 3.4 billion dozen, fractionally higher than in the second half of 2011.
Wholesale prices for grade A large eggs in the New York market averaged $1.00 per dozen in second-quarter 2012, down over 6 percent from the previous year. In June and carrying over into July, egg prices have been steady over a number of weeks at $1.05 per dozen.
With only small changes expected in the table egg flock, egg prices are expected to remain below the previous year through the remainder of 2012. However, egg prices may experience some upward pressure over the short term if significant quantities of shell eggs are exported to Mexico in reaction to an outbreak of avian influenza.
Shell Egg Exports to Mexico Expected To Increase
Mexico has been one of the largest markets for U.S. egg exports for a number of years. A recent outbreak of avian influenza in the largest shell egg producing State in that country could increase the demand for imported eggs. To the extent this occurs, it may impact U.S. shell egg exports in the second half of 2012. However, it is uncertain whether higher exports to Mexico will be in addition to normal overall exports or if the shipments would come at the expense of lower shipments to other countries.
Total egg exports (shell eggs and egg products) were 24.7 million dozen in May 2012, down 6 percent from the previous year. Much of the decrease was due to much smaller shipments to Japan and South Korea. Exports to Japan in May totaled 2.8 million dozen, down 55 percent from the previous year. Exports to Korea declined 69 percent to only 401,000 dozen. Egg exports to Korea had expanded in 2011 and this month’s exports were more in line with what was exported to Korea in May 2010. These declines were partially offset by strong increases in shipments to Hong Kong and Israel.
Over the first 5 months of 2012, shell egg and egg product exports totaled 112 million dozen, 5 percent lower than the same period in 2011. Shipments have expanded to Canada, Hong Kong, and a number of EU countries, but these gains were offset by large declines to Japan (down 23 percent) and Korea (down 85 percent).
Broiler Shipments Up in May
Broiler shipments in May 2012 rose from a year earlier. May 2012 broiler shipments totaled 599.4 million pounds, a 6-percent increase from last May’s shipments. Sizeable increases in broiler shipments went to Mexico, Russia, Angola, and Cuba, four of the seven largest U.S. broiler markets. In May, Mexico—the U.S. top broiler market—imported 28 -percent more broilers than it did a year ago, while Russia, the U.S.’ second largest market—imported 313 -percent more broiler meat than it did a year earlier. Other major broiler meat destinations, such as Angola and Cuba, also experienced strong demands for broiler meat. The volume shipped to Angola was almost 35 million pounds more in May 2012 compared with a year earlier and about 20 million pounds more to Cuba. These increases are primarily due to a strong demand for U.S. broiler meat coupled with some softening in leg-quarter prices.
Turkey Shipments Dropped in May
Turkey shipments in May 2012 were down 4.5 percent from a year ago. A total of 61.7 million pounds of turkey meat was shipped to various international locations. Shipments to three of the major U.S. turkey markets dropped from a year earlier. Over 31 million pounds of the turkey went to Mexico, a 17-percent decline from that shipped the previous year. Other major turkey markets, such as China and Hong Kong, imported 12- and 26-percent less turkey meat, respectively, than a year ago. In contrast to these declines, exports to Canada—the third largest U.S. turkey market—rose 69 percent from May 2011. There were also some increases in turkey meat shipped to minor markets, such as Japan, South Africa, and Russia.