Broiler production in November was estimated at 3.4 billion pounds, an increase of 4.2 percent when adjusted for slaughter days. Slaughter increased by 2.5 percent (adjusted for slaughter days), while average live weights increased by 1.4 percent. Preliminary weekly slaughter data suggest that slaughter and weights will continue to increase year over year in December. The fourth-quarter production forecast remains unchanged from last month.

Increases in slaughter in 2020 will be supported by a larger breeder flock as well as by increased industry processing capacity as plants that came online in 2019 are expected to scale up to full capacity in 2020. Gains in aggregate live bird weights will continue to be supported by an increasing share of heavy-bird production. The 2020 production forecast was revised up to 45.4 billion pounds, almost 4 percent higher than 2019 forecast production.

Abundant broiler supplies relative to demand put significant pressure on whole bird (National Composite) wholesale prices in 2019, which averaged 88.6 cents per pound for the year-9.4 percent lower compared to 2018. With expectations for increased production in 2020, whole bird prices are expected to remain relatively low in 2020 at 86.5 cents per pound-3 percent lower than 2019.

Boneless/skinless breast meat, which has typically been the most valuable part of the bird, was also relatively low, averaging 105.7 cents per pound in 2019, which is 3.6 percent lower year over year and 19 percent lower than the 5-year average. Despite expectations for lower whole bird prices and breast meat prices, producer margins may find some relief from higher leg quarter and whole leg prices, which averaged 38.8 cents per pound (+12.7 percent year over year) and 58.8 cents per pound (+27.2 percent) in 2019, respectively.

Leg quarter and whole leg prices are expected to remain firm in 2020 due to increasing global demand. Additionally, producer margins should benefit from redirecting chicken paws from low-value rendering to higher value exports to China.

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The increased production will likely impact broiler cold storage inventories. November’s cold storage report indicated a significant increase in broiler ending inventories, reaching 957 million pounds-the largest quantity on record. This increase was driven by large inventories of breast meat, leg quarters, other, and thigh meat. It is unlikely that cold storage facilities will liquidate by the end of the year, which was the basis for increasing the 2019 ending stocks forecast to 940 million pounds.