Assessing the situation and outlook at mid-year, USDA’s Economic Research Service (ERS) determined that the broiler industry “seems reluctant” to shift into an “expansion mode,” according to department analysts reporting in this month’s edition of “Livestock, Dairy, and Poultry Outlook.” Broiler chick placements continue to be slightly lower than the previous year, the report said. Over the last five weeks (May 11 to June 8), the average number of chicks placed per week was 166 million, down 0.4 percent from the same time period in 2012. This five-week moving average of broiler chick placements has been lower than during the comparable time a year earlier for the last nine consecutive weeks.
Contributing importantly to increased production is the ongoing development of heavier average weight of broilers. The average live weight of birds in April 2013 at slaughter rose to 5.9 pounds, up 1.2 percent from April 2012. Average live weights at slaughter have been gradually increasing for decades. Over the first four months of 2013, weights were 1.2 percent higher than the previous year. The continued growth in average weights, combined with an increase in the number of birds slaughtered, is expected to push third-quarter broiler production to 9.6 billion pounds, ready-to-cook weight, an increase of 75-million pounds from the previous estimate by ERS.
With relatively slow growth in broiler production during January through April and with stock levels starting to move closer to year-earlier levels, wholesale prices for most broiler products have risen. May prices, the latest average prices available, were higher for most broiler products than prices than in the previous year.
The May average price for boneless/skinless breast meat in the Northeast market was $1.95 per pound, a significant gain of 34 percent from the previous year. The average price for bone-in breast meat also rose strongly, up 19 percent from a year earlier. Even more unusual was the number of products whose wholesale prices were higher in May than the previous year even though at the end of April cold storage holdings were higher.
Prices for whole birds averaged $1.10 per pound in May, an increase of 26 percent from May 2012, even though stock levels for whole birds were 8 percent higher. This contradiction also held for a number of thigh meat products. Stock levels of thighs and thigh meat were both higher at the end of April, while the wholesale prices of boneless/skinless thighs and bone-in thighs were higher than the previous year.
Wing stocks and prices followed a more traditional pattern. Wing prices averaged $1.35 per pound in May, down 23 percent from the previous year. Wing prices have been under downward pressure from the much higher levels of cold storage holdings. With cold storage holdings moving closer to year-earlier levels, broiler prices are expected to decline slightly but to remain well above last year.
Looking at the beef cattle situation, ERS explained that ongoing drought in most of the Western United States and declining cow-calf producers’ profit margins continue to motivate relatively high levels of beef cow slaughter. Through May 25, 2013, second-quarter federally-inspected weekly cow slaughter averaged 10 percent larger than for the same period in 2012, with beef cow slaughter up 17 percent and dairy cow slaughter up just over 3 percent.
First half 2013 total commercial cow slaughter is projected to be 3 percent above first half 2012 slaughter and could be the largest number slaughtered since nearly 3.5 million cows in 1996, 17 years ago. This high cow slaughter, combined with high heifer slaughter, implies a further decline in the national aggregate cow inventory and potentially reduced supplies of beef for several years into the future.
ERS revised its second-quarter pork production forecast of 5.52 billion pounds, which is about even with the second quarter of 2012. The revision follows from a smaller than expected June hog slaughter and slightly lower average dressed weights. For 2013, U.S. commercial pork production is expected to total 23.4 billion pounds, about a percentage point higher than in 2012. For 2013, hog prices are expected to average $59-$61 per hundredweight, about 1 percent below the average annual price last year. Pork production in 2014 is forecast to increase to 24 billion pounds, with prices averaging $56-$60 per hundredweight.
