Broiler meat production in second-quarter 2015 totaled 10 billion pounds, 4 percent higher than in the same period in 2014. This is the 11th consecutive quarter of year-over-year increases in broiler meat production. Production in June totaled 3.4 billion pounds, 6.4 percent higher than the previous year. A major factor in the strong increase in June production was one additional slaughter day in June 2015 compared with the previous year. In the first half of 2015, broiler meat production was 19.7 billion pounds, an increase of 4.3 percent compared with the first half of 2014. Although the broiler meat production forecasts for the second half of 2015 were lowered, production is forecast to expand in the second half of 2015 at around the same rate as in first-half 2015.
The declines in broiler exports due to highly pathogenic avian influenza (HPAI)- related bans has meant more broiler products have been available for sale on the domestic market, putting downward pressure on prices. Normally, with the downward trend in broiler prices, broiler integrators would begin to contract or slow down production. Over the past several weeks the year-over-year growth rate for the number of broiler eggs placed in incubators has declined, and the number of chicks placed for growout has also started to drop. However, even though growth in the number of bird in the production process may be declining, the average weight of those birds at slaughter continues to rise; over the first half of 2015, the average live weight of birds at slaughter has been almost 2 percent higher than the previous year. The impact of the lower prices on integrators has been lessened to some extent by lower prices for corn and soybean meal in the first half of 2015 compared with a year earlier.
With numerous trade restrictions expected to be in place for some time yet and falling prices, integrators appear to be reducing the number of chicks entering the production process. This has led to reductions in the production forecast for the third and fourth quarters of 2015. The forecast for the third quarter was lowered to 10.3 billion pounds and for the fourth quarter to 10.2 billion pounds, a total reduction of 200 million pounds.
During July, there was a difference between the year-over-year growth in the number of eggs placed in incubators each week and the growth in the number of chicks placed weekly for growout. Over the last 5 weeks (July 4 to August 1), the number of eggs placed in incubators has averaged only 0.6 percent higher than during the same period in 2014, down from 2 percent higher only 3 weeks earlier. Yet over this same 5 week period, the number of chicks placed for growout has averaged 2.2 percent higher than the previous year. This growth rate means that the number of birds slaughtered in August and through the end of the third quarter is expected to be higher than the previous year, but bird slaughter numbers later in the year may be closer to year-earlier numbers.
Broiler stocks in cold storage at the end of June totaled 688 million pounds, 22 percent more than the previous year. Cold storage holdings of most individual broiler product categories were significantly higher compared with the previous year. The increase in stock levels stems from a combination of strong upswings in domestic production and the decline in export trade resulting from the outbreaks of
HPAI during the first half of 2015. Although shipments of broiler products have been restricted or banned by a number of countries, almost no broilers have contracted HPAI and so the production of broiler meat (unlike that of turkey or eggs) has not been impacted. Stocks of whole birds increased to almost 20 million, pound, 151 percent more than the previous year. While cold storage holdings of legs were actually down slightly from the previous year, stocks of leg quarters, thighs, and thigh meat were all significantly higher than a year earlier. Stocks of leg quarters declined from May, but were 139 million pounds, 39 percent higher
than the previous year. Stocks of thighs and thigh meat were up 18 and 28 percent from a year earlier. The only major broiler part whose stocks were lower than the previous year was wings. Cold storage holdings of wings have been lower than year-earlier levels for the last 17 months.
Cold storage holdings of broiler products are expected to remain above the previous year in the third and fourth quarters, but with the reductions in the forecasts for production, the forecasts for ending stocks for both quarters were reduced by 50 million pounds. The forecast for third-quarter ending stocks was reduced to 700 million pounds, still 18 percent higher than in 2014. The forecast for fourth-quarter ending stocks was lowered to 725 million pounds, an increase of 7 percent from the previous year.
Over the first 7 months of 2015, wholesale prices for most broiler products have declined compared with same period last year. The decline has been stronger over the last several months as the HPAI outbreaks and the resulting trade interruptions
have placed more broiler products on the domestic market, placing downward pressure on prices. Whole bird prices averaged $1.07 per pound in May, but prices fell significantly in both June and July and in early August had fallen to the low- $0.80’s per pound. This has resulted in a downward revision in the forecast for the third and fourth quarters. Whole bird prices are forecast at $0.89 to $0.91 per pound in the third quarter and only slightly higher, at $0.89 to $0.95 per pound, in the fourth quarter.
July prices for most broiler parts were also significantly lower than the previous year. Prices were lower for both breast meat and leg products. Boneless/skinless breast meat averaged $1.37 a pound in July, down 31 percent from a year earlier. Prices for other breast meat products were also lower. Prices in July for leg meat products such as leg quarters and boneless/skinless thighs were down 48 and 26 percent, respectively, from a year earlier. However, prices remained well above the previous year for wings, a reflection of their continuing lower cold storage levels. Even with the downward revisions in production for the second-half of 2015, most broiler parts prices are expected to be under downward pressure through the end of 2015.
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Source: USDA