Broiler production is expected to continue to expand during the second half of 2013, with production in the third and fourth quarter “significantly higher” than a year earlier, according to the August “Livestock, Dairy and Poultry Outlook” report from USDA’s Economic Research Service (ERS).
Corn prices are expected to decline with the downward move accelerating in fourth-quarter 2013, ERS said. Anticipated lower feed costs and relatively strong growth in the domestic economy will further encourage the broiler industry to expand the numbers of chicks being placed for growout, an increase that has already started. Broiler production during the second half of 2013, will likely total 19.1 billion pounds, an increase of 3 percent from the same period in 2012.
During the first half of 2013, 4.2 billion broilers were slaughtered, a decrease of 0.3 percent from a year earlier. The decline in the number of broilers slaughtered was offset by higher average liveweights at slaughter. The average liveweight at slaughter during January-June this year was 5.89 pounds, up 1 percent from the first half of 2012. In second-half 2013, both the number of broilers slaughtered and average bird weights at slaughter are expected to be above the previous year, ERS said.
With respect to broiler meat/parts in inventory, ERS expects cold storage holdings to be below the previous year at the end of the third and fourth quarters of 2013 as falling prices for many broiler products will promote consumption, especially compared with higher priced beef products. Broiler products are expected to experience downward price pressure in the second half of the year as production increases in response to anticipated lower feed costs, ERS added.
During July, the prices for a number of broiler parts have fallen. While some of this is a normal seasonal decline, much of the decrease can be attributed to somewhat higher cold storage holdings and higher broiler meat production in July. With higher broiler meat production expected to carry-through the third and fourth quarters of 2013 and into 2014, the stepped-up output will continue to place some downward pressure on broiler product prices.
Looking at the export market, ERS noted that China made a noticeable contribution to increase exports in June, at least percentage wise. The 22 million pounds of broiler shipments, excluding feet-paws, to China amounted to an 85-percent increase year over year. This quantity was prior to the recent ruling from the World Trade Organization against China’s anti-dumping and countervailing duties on imports of U.S. chicken parts. Prior to implementing duties in 2010, U.S. broiler shipments to China consistently exceeded 40 million pounds per month. Although it is expected that any reduction in duties will support exports to China, the timing for implementing the ruling is uncertain and is not included in the broiler export forecast. USDA forecasts 1.975 billion pounds of broiler exports for the third quarter of 2013, a 25- million-pound increase in the forecast from the July release. The increase in the estimate is primarily driven by lower expected prices, ERS said.
The beef outlook can be mostly summarized by looking at the retail beef market. ERS sees retail beef prices showing no signs of declining significantly for the near term. This will likely be the situation with inadequate cash market supplies of 50-percent lean beef trimmings providing a positive influence on the estimated monthly retail Choice beef price. The inadequate supplies of 50-percent lean trim in the spot market are reportedly due to packers using their production of the fatty trim for their own blending needs.
It is likely that supplies of fed cattle for the remainder of 2013 will be more than adequate because placements of heavy cattle—especially over-800- pound feeder cattle—over the last several months are running higher than previously estimated. These heavy weight placements will be ready for market after a shorter feeding period than for the more typical lighter weight cattle placed on feed both before and during the same period, bunching supplies of fed cattle when they all go to market at the same time.
Regarding the pork outlook, larger pork supplies during first half 2013 did not result in lower hog prices, as is the usual situation. Prices of both live hogs and retail pork were slightly higher year-over-year. ERS noted that mandatory price reporting changes that went into effect for pork price reporting in April 2013 which makes year-over-year comparisons of wholesale pork prices not possible until next April. Given very strong retail beef and chicken prices so far this year, it is likely that in response, consumers bought greater quantities of pork during January-June this year. Consumers paid slightly higher retail pork prices—even when greater quantities pork products were available—compared with the same period in 2012, ERS reported.
