February 23, 2004

US Broiler Output Forecast To Increase 4% In 2004

Broiler production in the U.S. is forecast to increase by 4% in 2004 with the majority of increase coming as a result of heavier birds.
 
Joel Greene, livestock analyst with the World Agricultural Outlook Board, U.S. Department of Agriculture, is presenting his poultry market forecast here Friday at the USDA's 2004 Agricultural Outlook Forum.
 
Broiler production in 2003 was up just 1.3% from the previous year, with all of the expansion occurring during the second half of the year after output during the first half had fallen below the previous year. Greene said surging beef prices in the last half of 2003 helped pull up broiler prices, resulting in increased egg sets as processors were able to sell more product at higher prices.
 
Since September 2003, egg sets in incubators have been up about 1.9% from previous year rates, and placements of eggs have risen by about 2.3%, he said. A similar trend is expected to continue through 2004.
 
Greene said strong demand for breast meat in the U.S. is causing the industry to produce heavier weight birds.
 
Broiler production in the U.S. is forecast to hit 33.9 billion pounds. Higher feed costs are not expected to dampen expansion since broiler meat prices are expected to reach record levels, he said.
 
Broiler prices, based on the USDA's 12-city wholesale market report, are expected to average 68 to 72 cents per pound, up sharply from the 2003 average of 62 cents. Strong domestic demand along with expected increases in export demand are driving the higher price forecast.
 
Broiler exports are seen climbing by nearly 7% in 2004 to about 5.3 billion pounds. There is more stability in the international markets currently than there was last year. Russian imports of poultry for 2004 are "limited by an absolute quota of about 2.3 billion pounds," and the U.S. is allocated 1.7 billion of that total, Greene said. The U.S. shipped about 1.45 billion pounds of broiler meat to Russia in 2003.
 
Greene said the outbreak of highly pathogenic avian influenza in 10 Asian countries led to import bans of poultry by major importers such as Japan, South Korea and Hong Kong. The U.S. is expected to gain some of this business but Brazil is "likely to gain more than the U.S., he said. Brazil will be able to produce certain products most demanded in the Asian markets.
 
Turkey production for 2004 is forecast at 5.66 billion pounds, which would be only slightly above that of 2003, Greene said. Output was down about 1.2% last year due to negative returns for processors. Higher projected feed costs are "not very conducive" for production expansion or price improvement in 2004, he said. 2004 prices are forecast at 61 to 65 cents per pound.
 
Wholesale prices for eggs were sharply higher in 2003 due to a combination of factors including strong demand and tight supplies. Greene said prices had fallen during the previous six years, resulting in weak returns for producers. The number of layers on U.S. poultry farms last year was down about 0.5% from 2002 but a increase of about two eggs per layer resulted in a slight output gain for the year.
 
Contributing to the smaller layer flock last year were outbreaks of exotic Newcastle disease in California, which ranks as the fifth largest egg producing state. Also, the industry has started to implement animal welfare guidelines that recommend fewer layers be placed in cages.
 
Egg production in 2004 is projected to increase 1.3% to 7.4 billion dozen. Table egg production is projected at nearly 6.3 billion dozen, up 1%, and hatching eggs are forecast at 1.1 billion dozen, about 3% higher.
 
Consumer demand for eggs remained strong in 2003 due in part to their relatively low price and interest in high-protein diets. Wholesale prices climbed by 31% to 87.9 cents per dozen. This put them at the highest level since 1996. In 2004, wholesale prices are expected to be from 96 to 102 cents per dozen, a record high.