17 May 2012
First-Quarter Wholesale-to-Retail Spread Record-Wide
The full set of data that is now available for the first quarter of 2012, is useful in
explaining important hog and pork market dynamics of the quarter, as well as in
indicating potential market direction as the markets move into summer. As a
whole, the data suggest that of all the players in the pork market chain—hog
producers, packer/processors, wholesalers, retailers, and consumers—the only ones
left smiling by the price and demand/supply metrics of first quarter may be pork
retailers. First-quarter retail pork prices finished at $3.49 per pound, 6 percent
higher than a year ago and the highest first-quarter retail price on record. Record
retail prices reflected, in part, robust first-quarter U.S. exports, which were 15.8
percent higher than a year ago. Strong exports—23 percent of first-quarter
commercial pork production—left U.S. per capita disappearance almost 1 percent
below the first quarter of 2011. Tighter first-quarter domestic supplies and higher
prices for competing animal proteins likely supported record retail prices.
At the wholesale level, the situation remains quite different. Wholesale pork prices
have lagged year-earlier prices from late January to the present. First-quarter
USDA wholesale primal cutout values were 5 percent below first-quarter 2011.
Strong retail prices combined with weak wholesale values to yield the widest firstquarter wholesale-retail spread ever: $2.03 per pound. While it is possible that soft wholesale prices reflect slower forward bookings for export, it is more likely that retailers are defending their spread by favoring strong returns over sales volumes. Higher first-quarter retail prices for beef (+9 percent) and for chicken (+5 percent) would accommodate a retail strategy that places less emphasis on maximizing pork sales volume. Such a strategy could lower wholesale pork demand.
Second-quarter 2012 commercial pork production is expected to be 5.5 billion pounds, 2.8 percent higher than a year ago. Increased April-June pork production derives from year-over-year larger fall and winter pig crops and heavier estimated dressed weights. Second-quarter prices for live equivalent 51-52 percent lean hogs are expected to average $62-$64 per cwt, 8.4 percent lower than a year ago. Prices for 2012 are expected to be about 6 percent lower than a year ago.
Commercial Pork Production and U.S. Pork Exports To Increase Moderately in 2013
In 2013, moderate increases in farrowings and continued strong productivity gains
are expected to yield an annual pork production level that is about 2.3 percent above
2012. Commercial pork production is expected to be 23.8 billion pounds. Higher
estimates for average dressed weights as a result of lower feed costs contribute to
the higher production forecast. Hog prices next year are expected to be $57-$61 per
cwt, about 2.7 percent below 2012.
Foreign demand for U.S. pork products will continue to be an important market focus in 2013. Lower U.S. pork prices next year, together with continued global economic growth will, in all likelihood, support continued strong exports. Next year USDA anticipates that 22.7 percent of commercial pork production will be exported, versus almost 23 percent this year. Total U.S. pork exports for 2013 are forecast at 5.4 billion pounds, about unchanged from this year. As is almost always the case, over two-thirds of U.S. exports in 2013 are expected to go to U.S. North American Free Trade Agreement (NAFTA) partners, Canada and Mexico, and to Japan. Japan is expected to remain—solidly—the no. 1foreign destination for U.S. pork exports in 2013.
U.S. pork imports next year are expected to be in line with 2012 estimates, or about 810 million pounds. In the past, the United States has imported about 4.3 percent of its annual pork disappearance; next year should be no different. U.S. imports of live swine next year are likely to be somewhat higher than forecasts for 2012: 5.87 million head in 2013, versus 5.78 million head expected this year, due mostly to expectations of higher Canadian production as indicated by stronger breeding inventories in Manitoba.
In 2013, per capita pork disappearance is expected to be year-over-year higher in each quarter. For the year, per capita pork disappearance is expected to be 47.2 pounds, 2.1 percent above 2012. For a demand inelastic commodity such as pork, small increases in per capita disappearance are often accompanied by disproportionately lower prices up and down the supply chain. Retail pork prices will likely average about $3.40 per pound, or about 3 percent below forecast retail prices for 2012.
First-Quarter Exports Up Sharply
First quarter U.S. pork exports were 1.4 billion pounds, 15.8 percent ahead of last year. The five strongest markets for U.S. pork are shown in the table below. Firstquarter exports to China likely represent the tail end of deliveries of large purchases made in 2011. The USDA’s Foreign Agricultural Service expects 2012 China’s pork imports from all sources to decline by 14 percent. See http://www.fas.usda.gov/dlp/circular/2012/livestock_0412.pdf. USDA also forecasts a 14-percent reduction in South Korea’s imports in 2012, from all sources, as the pork sector recovers steadily from 2010-11 outbreaks of foot and mouth disease. The Government of South Korea recently announced that it would limit the initial 70,000 metric tons (MT) duty free tariff rate quota (TRQ) for fresh/frozen pork bellies announced for the period April-June to 20,000 MT.
U.S. Pork Industry Moving Toward Open Sow Housing as an Alternative to Gestation Crates
In recent years, a growing number of major U.S. companies that demand and supply pork products have adopted strategies that explicitly move away from direct or indirect use of gestation crates in pork production. McDonald’s Corp.—a major buyer of pork products—and thus an indirect user of gestation crates—recently announced that it would require its pork suppliers to submit plans by May 2012 that transition suppliers’ production facilities from use of gestation crates, to group sow housing. McDonald’s thus joins other major U.S. buyers of pork products along with major U.S and Canadian pork-producing companies, in adopting business models that incorporate group sow housing in pork production. Pork users and pork producers appear to be making this move in response to a developing public perception that crating sows during gestation is detrimental to the welfare of the animal.
The Current U.S. Hog Production System: Gestation Crates
For the last 30 years, typical U.S. hog production has employed individual crates to
house pregnant females during gestation.
The typical gestation crate measures 7
feet by 2 feet, or 14 square feet, and was adopted by the industry to overcome innate
hierarchical swine behavior. Female swine, in particular, tend toward aggressive
behavior to establish dominance when they are housed in groups. This means that
freely moving pregnant swine tend to fight until dominance is established. Such
aggression can cause serious injury to less-dominant females and to unborn piglets.
When the females are crated, aggression and threat of injury are minimized.
Gestation crates also facilitate individualized animal care, feeding,
The downside of gestation crates is the severe constraint on movement that the 14- square-foot crate imposes. While the crate affords the pregnant female some limited side-to-side and back-and-forth movement, it totally prevents the animal from turning itself around. The animal welfare questions that are raised by the movement limitations of gestation crates have motivated the industry to adopt a different means of pork production that allows the pregnant animal freedom of movement.
Group Sow Housing as an Alternative to Gestation Crates
A production model based on group sow housing places pregnant swine in open
pens that allow them free movement. An accurate description of a “typical” group
sow housing barn is elusive because no single type has yet evolved in the United
States. Consequently, there is wide variation in design characteristics of existing
grouped housing units. For example, the number of animals grouped in one pen
can vary anywhere from 5 animals to more than 100, depending on per-animal
space allocations. The groups themselves can be “static,” meaning that all the
animals in a pen enter it together when the group is formed, or “dynamic,” meaning
that animals enter and exit the group. The size of the groups and the per-animal
space allocations often determine the method employed to feed the animals.
Feeding the animals in a group setting presents serious challenges given the tendency of swine toward aggression, particularly at feeding time. There are various methods available to feed the animals in a group setting. Three of the most common are electronic sow feeders, where the animals are trained to line up to enter feeding stations from which individualized rations are dispensed, based on information read from chips implanted in the animal’s ear; trickle feeding, where feed is delivered over a period of 15 to 30 minutes to troughs or on the floor of the pen; and free-stall feeding, where the animal enters a stall, often with a door closing upon entry, allowing her protection from aggressive pen mates during feeding. Each feeding method has a different set of cost, space, and management requirements, which together interact with group size, per animal space allocations, and numerous other physical characteristics of the unit’s design to affect the animals’ wellbeing.
Gestation Crates and Group Sow Housing: What Do Comparative Studies Show?
There are now many comparative studies in the animal science literature that
document differences in production performance, behavior, and welfare indications
between animals housed in gestation crates and those housed in pens. One of the
most often-cited studies was carried out by McGlone et al. (2004). This study
aggregated research findings from 35 previous comparative studies to determine
whether sow behavior, performance, or physiology differed between the two
housing types. The study tested for statistical differences between farrowing rates;
pigs born per litter; oral, nasal, and facial behaviors;
and cortisol blood levels
gestating animals. The research results, which are summarized in the table below,
indicate that the differences between the means of measured variables were not
statistically significant. That is, none of measures were significantly (P < 0.05)
influenced by sow housing type. The study concludes that “gestation stalls or wellmanaged pens generally … produced similar states of welfare for pregnant
[females] in terms of physiology, behavior performance, and health.”
This study also addresses two issues important in comparing the different systems. The study indicates that sow productivity—as measured by farrowing rates and pigs per litter—is not affected by housing type. This is good news to for U.S. pork producers, some of whom equate group housing with lower female productivity and lower asset returns. More important perhaps, the study identifies the producer’s animal handling/management skills as the key to maintaining productivity of sows housed in pens.
With respect to concerns about the effects of gestation crate housing on animal welfare, neither McGlone et al., nor current animal science research generally provide clear, empirical evidence that switching to group housing improves the welfare of pregnant female swine. The literature is supportive of the contention that sow/gilt welfare is not determined by housing type. “In other words proper design of stalls and pens can result in equivalent animal performance and welfare outcomes, although the design features for achieving that objective will differ. Therefore, it’s not clear that simply switching to group housing will inherently improve or reduce sow performance or welfare.”
The Group Sow Housing Model Often Employs Gestation Crates To Assure Swine Safety
As the sector continues to evaluate sow housing options, it will be important not to
overlook two crucial safety features of the group sow housing model: First, the
group sow housing model often does not exclude the usage of sow crates. In
current practice in both the European Union and the United States, newly bred sows
are crated for around 30 days to insure proper embryo implantation. Moreover, the
pregnant females are typically crated for a 5-day period just prior to farrowing.
Pregnant females are thus removed from group pens at periods in gestation when
they are most vulnerable to aggression and injury. Second, both production
models—gestation crate-based and group sow housing—move pregnant females
into farrowing crates just prior to the birth of the litter.
The farrowing crate— different in dimension and design from the gestation crate—is designed to allow the female to position herself to nurse the litter. The sow’s movement is restricted to prevent injury to the litter, such as crushing or smothering . Crate use in the group sow housing model implies that the female spends about 35 percent of the year—4 months—in individual housing and the balance of the year in a group setting. Under a gestation crate system of production, the animal is crated 100 percent of the time.
Cattle and Beef Sectors Mostly Take Recent Events In Stride
Drought effects continue to diminish in the United States except for some areas in
the Southeast and Southwest. However, most of the northern half of Mexico
remains under drought conditions, resulting in a 22-percent year-over-year increase
in year-to-date (weekly AMS data through May 5) imports of Mexican feeder cattle
into the United States. Corn planting and emergence in the United States is well
ahead of last year and the 5-year averages. Similarly, 88 percent of winter wheat is
in fair-to-excellent condition leading to a decline in wheat prices. With wheat
prices below corn prices, feeding with wheat could alleviate some of the pressure of
high corn prices on cattle-feeding profit margins.
Federally inspected (FI) slaughter of beef cows has declined steadily since last fall when beef cows represented as much as 60 percent of total (weekly) FI cow slaughter. The cow-calf sector is enjoying high prices for both cull cows and feeder cattle and, despite record-high input costs, is one of two sectors of the cattle/beef industry experiencing positive profit margins—the other being beef packers, since early this month. Feeder cattle prices have dipped from their 2012 record levels of February and March due to declines in stocker calf spring/summer grazing demand and increasing cattle-feeding losses, but they are expected to increase later this year and in 2013.
Cattle feeders continue to experience negative feeding margins due to higher costs of feeder cattle and feed. Feed-grain prices are expected to moderate slightly through the spring and summer of 2012, but feeder cattle and soybean meal prices are expected to increase during the same period. Without a significant improvement in fed cattle prices and lower feed and/or feeder cattle prices, feeding margins will not improve.
The situation does not appear likely to improve until later in 2012 or early 2013 when new-crop corn prices decline. Weaker corn prices are likely to be accompanied by relatively high protein-meal prices because of an apparent shift from soybean acreage to corn acreage, leading to the expectation of higher supplies of new-crop corn and associated price declines. Another factor offsetting lower new-crop corn prices is anticipated increases in feeder cattle prices over the remainder of 2012 and throughout 2013 in response to the tightest feeder cattle supplies in decades.
In hindsight, cattle and beef prices appear to have reached a seasonal spring high early this year, consistent with recent and anticipated weather patterns and their effects on weight gains by cattle in feedlots through the past mild winter. While seasonal price patterns would typically be lower during the summer, the highest prices for 2012 are anticipated to occur during the second half of the year. Based on normal seasonal price patterns, wholesale beef markets appear to have weathered the bovine spongiform encephalopathy (BSE) and lean finely textured beef (LFTB) storms of March and April 2012 without serious price damage. An exception is the market for 50-percent lean trim. Although short-term impacts are negative, the future outcome for LFTB and 50-percent lean beef trim demand and prices is uncertain and will depend on how consumers respond to LFTB. Prices for 90- percent lean beef have increased steadily since reaching a low in September 2011.
Otherwise, price impacts as a result of the April 23 BSE event have been limited primarily to most live and feeder cattle futures price contracts declining by their daily allowable limit on April 24, 2012, followed by a quick recovery. In the meantime, packer margins have improved to show positive returns for the first time since last September. Retail beef prices continue near their highest levels, averaging $5.05 per pound for Choice beef and a record $4.70 per pound for allfresh beef in April.
First-Quarter U.S. Beef Exports 12 Percent Lower
Beef exports in the first quarter of this year have been sluggish compared with a year ago, perhaps due to a slightly strengthening U.S. dollar through first-quarter 2012. U.S. beef exports were lower year-over-year to Japan (-4 percent), Mexico (- 11 percent), South Korea (-41 percent), and Hong Kong (-19 percent). Exports to Egypt and Vietnam were higher, year-over-year, by 31 and 37 percent, respectively. Total U.S. beef exports are expected to decrease in the third and fourth quarters of 2012 compared with year-earlier levels as less beef is available for export. U.S. beef production is expected to be 5 and 8 percent lower in the third and fourth quarters of 2012, and exports are expected to be 9 percent and 6 percent lower in those quarters. Beef export levels in 2013 are expected to be only slightly (1 percent) below forecast 2012 levels, at 2.65 billion pounds.
First-Quarter U.S. Beef Imports 27 Percent Higher
U.S. beef imports for 2012 are forecast over 18 percent higher, year-over-year, at 2.4 billion pounds. First-quarter imports were 26 percent higher compared with a year earlier Imports were 91 and 4 percent higher, year-over-year, from Australia and New Zealand and 13 and 40 percent higher from Canada and Mexico, respectively. U.S. beef imports for the second, third, and fourth quarters of 2012 are forecast to be 12, 16, and 22 percent higher year-over-year. Increased imports are expected from Oceania, as improved pasture conditions in Australia and New Zealand have boosted carcass weights and production in those countries. Strong U.S. demand for processing beef, amid tightening U.S. production, is expected to at least partly offset the higher Australian dollar and to support higher imports of beef to the United States. U.S. beef imports from North American trading partners Canada and Mexico are also expected to remain strong compared with year-earlier levels. Growth of 8 percent in the U.S. beef import market is forecast for 2013, totaling 2.6 billion pounds.
Higher Mexican Cattle Imports Offsetting Lower Imports from Canada
U.S. cattle imports through the first quarter are fractionally higher compared with
the same period a year ago. Lower imports from Canada have been offset by higher
imports from Mexico through the first quarter of 2012. Cattle imports from Mexico
were 24 percent higher than in 2011 through March. The continued increase of
cattle imported to the United States from Mexico stems from the severe drought
conditions that were—and in some cases, still are—present in the southern tier of
the United States throughout last year and which extended into northern Mexico.
Present export rates of cattle from Mexico may be; however, it remains to be seen whether, and to what extent, Mexican cattle exports to the United States may drop off as the year progresses. This may be largely dependent on weather patterns and if pasture conditions improve.
In the first quarter cattle imports from Canada were 5 percent below a year ago. According to AMS weekly reports, imports of slaughter steers/heifers and cows through April are 11 and 18 percent below year-earlier levels compared to the same time period last year. The lower import levels are likely due to Canadian producers being in the midst of herd rebuilding and retaining females for breeding. Imports of Canadian feeder cattle, however, are 69 percent higher than a year ago, due to a sluggish spring Canadian feeder cattle market and a stronger price incentives in the United States. Total U.S. cattle imports for 2012 are forecast at 2.075 million head and at 1.95 million head in 2013, or 6 percent lower year-over-year.
Milk Production Continues Robust Expansion While Prices Soften; in 2013, a Modest Production Increase Could Help Support Prices
Corn prices are moderating for both the current crop year and for 2012/13. The
corn price is projected to be $5.95 to $6.25 a bushel in 2011/12, a decline from
April’s projected price and to slip to $4.20 to $5.00 a bushel next year. Higher corn
plantings and higher expected yield could lead to a record-high corn supply in
2012/13 despite tight carryin stocks. The recent Crop Progress report showed a
crop well ahead of average development for this time of year. While this is no
guarantee of above-average yields, it minimizes the risk of yield loss due to late
planting. Soybean meal prices continue to inch upward; this month’s forecast calls
for soybean meal prices to average $360 a ton for the current crop year, up from
April’s forecast. For 2012/13, prices are forecast at $335 to $360 a ton. The April
Agricultural Prices reported the preliminary estimate of alfalfa hay prices at $207
per ton. Hay prices could move downward with the 2012/13 crop. The benchmark
16-percent protein dairy ration was calculated at $11.20 per cwt for January-March
2012. Given crop price forecasts, the ration value will likely head down later this
year and could fall further in 2013. For dairy producers, the welcome relief from
high feed prices will likely be countered by lower milk prices for the balance of
2012, with some recovery likely in 2013. On balance, the milk-feed price ratio is
not expected to signal expansion until later in 2013.
The total number of milk cows for 2012 was raised slightly from April to 9.23 million head. The Milk Production report indicated higher than expected cow numbers and, despite weakening returns, producers were not reducing herds as quickly as expected. May is the first month for 2013 forecasts. The dairy herd in 2013 is expected to decline to 9.17 million head, reflecting 2012’s high feed prices and lower milk prices. Milk per cow for 2012 was boosted to 21,880 pounds from the April projection. Production per cow is forecast at 22,100 pounds for 2013. The rise in milk per cow this year is due to nearly ideal production conditions in much of the United States. Next year’s projected increase in production per cow reflects the moderating feed price outlook. Production for 2012 was raised this month to 201.9 billion pounds. The initial forecast for 2013 is for production to reach 202.6 billion pounds, based on higher output per cow.
Milk-equivalent imports on a fats basis are forecast at 3.3 billion pounds for both 2012 and 2013 and 5.4 and 5.2 billion pounds for 2012 and 2013 respectively on a skims-solids basis. Milk-equivalent exports on a fats basis are projected at 8.5 billion pounds in 2012, rising to 8.7 billion pounds next year. Exports on a skimsolids basis are estimated at 31.5 billion pounds this year and 32.4 billion pounds in 2013.
Higher than expected milk production and weaker-than-expected demand led to lowering of the 2012 prices for the major dairy products in May, except for whey. The cheese price was lowered to $1.555 to $1.605 per pound, butter was reduced to $1.425 to $1.505 per pound, and the nonfat dry milk price was revised to $1.235 to $1.275 per pound. The whey price was increased to 56.0 to 59.0 cents per pound as it appears demand is stronger than expected earlier. Next year’s milk production increase is modest, keeping with the herd-size declines, in response to 2012’s high feed prices and lower milk prices. Higher forecast exports and continued firm domestic demand should strengthen 2013 prices. The 2013 cheese price is forecast at $1.600 to $1.700 per pound, butter at $1.465 to $1.595 per pound and NDM at $1.320 to $1.390 per pound. Whey prices are forecast at 55.5 to 58.5 cents per pound, very near 2012 prices.
Milk prices for 2012 were revised downward based on lowered product prices. The Class III price is projected at $15.80 to $16.30 per cwt, the Class IV price was lowered to $14.50 to $15.10 per cwt and all milk is projected at $16.90 to $17.40 per cwt. In 2013, milk prices should recover. The Class III price is forecast at $16.20 to $17.20 per cwt, the Class IV price is forecast to rebound to $15.40 to $16.50 per cwt and the all milk price is expected to climb to $17.25 to $18.25 per cwt.
Broiler Production Higher in 2013
U.S. broiler meat production is expected to total 37.5 billion pounds in 2013, up 2.5
percent from 2012, with the growth spread over the year as processors expand
production in response to generally better conditions. The increase in broiler meat
production is expected to come from both a greater number of birds slaughtered and
a small increase in average bird weights. There are two primary factors that will
likely influence expanded broiler meat production in 2013. The first is the degree to
which processors feel demand will reflect expansion in the general economy. The
second factor is what integrators expect for changes to corn and soybean prices. At
the present time corn prices for the marketing year are forecast to average $4.20-
$5.00 per bushel in 2012/13, down from $5.95-$6.25 per bushel a year earlier. This
decline will be mitigated by relatively high prices for soybean meal. Prices for 48
percent protein soybean meal are forecast at $350-$365 per ton in 2012/13,
compared to $360 per ton the previous year.
Broiler meat production in first-quarter 2012 totaled 9.1 billion pounds, a 2.2 percent decline from the same period in 2011. The number of broilers slaughtered fell by 2.6 percent to 2.1 billion birds. Partially offsetting this decline in birds slaughtered was a small (0.6 percent) gain in the average weight of birds at slaughter to 5.83 pounds. With the number of chicks placed for growout down about 4 percent from the previous year, the number of broilers slaughtered would normally be expected to be down more, but due to the Leap Year first-quarter 2012 had an additional processing day compared with first-quarter 2011.
The broiler meat production forecast for second-quarter 2012 is 9.1 billion pounds, down 4.3 percent from a year earlier. Broiler production is expected to be below the previous year until fourth-quarter 2012 when processors are expected to respond to a gradually strengthening economy and lower grain prices.
Over the last 5 weeks, (April 7 through May 5), the number of chicks being placed for growout has averaged 3.9 percent lower than in the same period in 2011. In addition, the number of eggs placed in incubators has been down 4.4 percent. These estimates point toward continued declines in broiler meat production in second-quarter 2012 and into the third-quarter.
Broiler cold storage stocks totaled 549 million pounds at the end of first-quarter 2012, 17 percent below first-quarter 2011. The decline in cold storage holdings extended to most of the categories in the report. Most of the decrease is attributable to the lower broiler meat production in the first quarter. With broiler meat production forecast lower than the previous year through the first three quarters of 2012, cold storage of broiler products is also expected to be below the previous year through the same period. Cold storage is expected to rise in fourth-quarter 2012 as production rises. Much of the decline at the end of the first quarter is attributable to lower holdings of leg quarters and wings, down 27 percent and 52 percent from a year earlier. Some of the decline, especially for leg quarters, is the result of strong exports during first-quarter 2012.
The 12-city wholesale price for whole broilers is expected to average 86 to 89 cents per pound in 2012, up from 79 cents per pound the previous year as lower production through the first three quarters of 2012 is expected to place upward pressure on prices. Prices in 2013 are expected to fall slightly and are forecast at 82 to 89 cents per pound, as expected higher production in 2013 gradually placing downward pressure on prices.
Turkey Production To Post Small Increase in 2013
Turkey meat production is expected to increase in 2013 to 6 billion pounds, up
almost 1 percent from the previous year and the third consecutive year with a
production increase. The production increase is expected to come from both an
increase in the number of birds slaughtered and slightly higher average live weights
at slaughter. With higher prices throughout 2011 and expected in 2012, turkey
producers should have an incentive to increase production in 2013, as long as the
general economic indicators remain positive.
In first-quarter 2012, turkey meat production was 1.4 billion pounds, up 3.1 percent from the first quarter of 2011. After rising only slightly in third-quarter 2011 compared to a year earlier and falling in the fourth quarter, turkey processors have responded to the strong prices for whole birds that were present throughout 2011. The increase in turkey meat production was the result of a moderate increase in the number of birds slaughtered (up 1.7 percent) and higher average weights for the turkeys at slaughter (up 1.3 percent). With turkey prices higher throughout 2011, turkey producers have had an incentive to increase production, with total production for 2012 estimated at 6.1 billion pounds, 3.3 percent higher than the previous year.
Turkey Stocks Higher
With higher production expected throughout 2012, cold storage holdings of turkey
products throughout the year are also expected to be higher than in 2011. At the
end of first-quarter 2012, turkey stocks were 376 million pounds, 15 percent higher
than in first-quarter 2011. The increase was from a combination of higher stocks of
whole birds, up 6 percent, and increases in stocks of turkey parts and products (up
23 percent). Stocks of whole birds had been lower than the previous year through
the first 10 months of 2011, and even though stocks are now higher than the
previous year, they are still well below historical levels. For example, at the end of
March in 2009, stocks of whole birds totaled 253 million pounds, 96 million pounds
or 61 percent higher than at the end of March 2012. Stock levels were also higher
for all the other categories of turkey products. While most of the gain in quantity
was due to higher cold storage holdings in the unclassified category, stocks of
turkey legs were also much higher than the previous year (up 73 percent).
Wholesale prices for whole hen turkeys are expected to average $1.07 to $1.11 per pound in 2012, up about 7 percent from a year earlier. Even with larger beginning stocks and increases in production expected in 2012, whole bird prices are expected to remain above the previous year throughout 2012, although the price gap on a year-over-year basis is expected to narrow considerably as the year progresses. In 2013, any upward pressure on prices from an improving domestic economy is expected to be offset by higher production.
Egg Production Down Slightly in 2013
Table egg production is expected to total 6.6 billion dozen in 2013, down
fractionally from 2012. While 2013 is expected to have higher prices for many
meat products and improving general economic conditions, egg producers are
expected to face lower prices for the remainder of 2012. While the rate of lay is
expected to very gradually increase, the decrease in production is expected to come
from a cut in the size of the laying flock.
Hatching egg production is expected to total almost 1.1 billion dozen in 2013, a marginal increase after a decline in 2011 and 2012. The expansion in hatching egg production is based on the forecast for higher broiler production starting at the end of 2012 and carrying through 2013.
Egg Production Higher in First-Quarter 2012
Egg production totaled 1.91 billion dozen in first-quarter 2012, up slightly (1 percent) from the previous year. The increase was due to greater production of table eggs at 1.65 billion dozen, up 1.7 percent from the previous year. Production of hatching eggs totaled 258 million dozen, down 3 percent as the production of broiler-type eggs continue down significantly from a year earlier. The average number of birds in the table egg flock during first-quarter 2012 was slightly higher (up 0.7 percent) than in 2011 at 285 million birds. Table egg production for the rest of 2012 is expected to continue to be slightly higher than the previous year during the second and third quarters and about even with the previous year in the fourth quarter. Production of hatching eggs is expected to have the opposite pattern with lower production through the first three quarters of 2012 and higher production in the fourth quarter as broiler processors react to the incentives of a generally better economy, higher prices, and slightly lower grain prices.
Egg Prices Higher in 2013
Better overall economic conditions in 2013 are expected to generate greater
domestic demand for shell eggs and egg products, especially from the food service
sector. However, higher production is expected to offset the demand and leave
overall wholesale egg prices in 2013 at $1.00-$1.08 per dozen, only slightly higher
than in 2012.
During first-quarter 2012, the wholesale price in the New York market averaged $1.09 per dozen for Grade A large eggs. This is up almost 3 percent from a year earlier, in part due to the high prices at the beginning of the year carried over from strong fourth-quarter 2011 prices of $1.31 per dozen. Shell egg prices have fallen seasonally since the Easter holiday and second quarter prices in the New York market are expected to be average $0.91-$0.93 per dozen, down 14 percent from the previous year.
Egg Exports up to 266 Million Dozen in 2013
Exports of shell eggs and egg products are expected to expand to the equivalent of
266 million dozen in 2013, slightly higher than the forecast for 2012. Higher
shipments in 2013 are expected to be generated primarily by stronger demand from
a number of Asian countries, including Hong Kong, Japan, and Korea. Egg exports
in 2012 are expected to contract, with smaller shipments to Mexico and Canada.
One factor that could affect the impact the 2012 forecast is high demands for
breaking eggs and egg products from EU countries facing lower production.
In the first quarter of 2012, egg and egg product exports totaled 63 million dozen, down 6 percent from the previous year. Much of the export decrease occurred in March, when shipments were down 13 percent from the previous year. The March decline is chiefly the result of sharp drops in shipments to both Korea and the United Arab Emirates. Shipments to Korea during first-quarter 2012 were only 1.1 million dozen, down 88 percent from the same period in 2011.
Broiler Shipments Rose in March 2012
Broiler shipments rose in March 2012 from a year earlier. March broiler shipments
totaled 595 million pounds, a 7-percent increase from last March. U.S. broiler meat
exports remain strong in spite of higher leg-quarter prices in the first-quarter of
2012 than in the same period of 2011. Cuba, one of the top seven U.S. broiler
markets, imported almost 41 million pounds more of broiler meat from the U.S. in
March 2012 than a year earlier. Broiler shipments to Russia, the second-largest
U.S. broiler market, were up 96 percent from last year. Other foreign markets such
as Georgia, Mexico, and Lithuania also made considerable contributions to March
2012 increase in broiler shipments.
For 2013, it is projected that the United States will ship 6.975 billion pounds of broiler meat to countries around the world. Next year’s projection is less than 1 percent below the 2012 projection for broiler shipments. Two reasons for this small drop include greater domestic demand and a continued decline in shipments to Russia.
Turkey Shipments Continue To Climb in March
March 2012 turkey shipments were up from a year ago. A total of 64.2 million
pounds of turkey meat was shipped abroad, a 9-percent increase over March 2011.
Turkey shipments to Mexico, Hong Kong, Canada, and the Philippines were all up
from a year ago. The largest increase was exports to the Philippines, at 368 percent.
Next after the Philippines, shipments to Canada increased 65 percent from last
March. Volumes of turkey meat shipped to smaller markets, such as Jamaica and
Gabon, were also up in March 2012 compared with a year ago.
Turkey shipments in 2013 are projected to reach an all-time high. It is projected that turkey exports will total 730 million pounds, 1 percent higher than the projections for 2012, which will be a record if it holds. The primary reason for the increase in turkey exports is the continuing increase in shipments to Mexico, the largest U.S. turkey market.
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