Source: Rita Jane Gabbett, MEATINGPLACE, 9/2/19


June broiler production is estimated at 3.5 million dozen, a 0.6% increase year over year or a 5.5% increase when adjusted for slaughter days. This increase comprised a 3.9% increase in birds slaughtered (adjusted for slaughter days) and a 1.6% increase in average aggregate bird weights, according to USDA’s latest Livestock, Dairy and Poultry Outlook report.  

Preliminary weekly slaughter data from the Agricultural Marketing Service suggests that July slaughter and average weights will continue to be up year-over-year.

During the first three months of the year, aggregate bird weights were down year- over-year, signaling what was thought to be a potentially negative outlook for gains in 2019 bird weights. However, in the second quarter, consistent year-over-year increases in average weights have pushed year-to date average weights 0.3% higher than for the same period in 2018. This increase can largely be attributed to the growing share of large-bird slaughter.

On a year-to-date basis, the percent share of large-bird slaughter has consistently exceeded prior-year shares. It is expected that large bird slaughter will continue to increase for the remainder of 2019 and into 2020, supporting higher aggregate bird weights, USDA analysts Kim Ha and Alex Melton wrote in the report.

Based on expectations that average bird weights will continue to gain, the third quarter production forecast is revised up to 11.2 billion pounds and the fourth quarter is revised up to 10.8 billion pounds. Production for 2020 is revised up to 43.8 billion pounds, more than 1% higher than the 2019 production forecast.

Firm prices in parts offset soft whole bird segment
Whole bird (National Composite) wholesale prices averaged 88.24 cents per pound in July, nearly a 7% decrease from the previous month. While this decline is consistent with seasonal patterns, prices are down more than 20% compared to last year and 12% compared to the five-year average, the report noted. 

Based on expectations that the benchmark broiler price will continue to be down in the second half and into 2020, USDA lowered its third-quarter price forecast to 80 cents per pound and the fourth quarter to 75 cents per pound, while the 2020 price forecast was revised down to 92 cents per pound, about a 6% increase over forecast prices for 2019.

Despite low prices in the whole bird segment, producer margins continue to be supported by strong wholesale prices in the parts segment. With the exception of breast prices (for example, boneless/skinless breast prices were down 12.7% year over year in July), all other product categories — including whole legs (+33.1%), leg quarters (+31.3%), drumsticks (+9.5%), thighs (+32.5%), boneless/skinless thighs (+9.2%) and wings (+36.7%) — continue to outperform year-earlier prices as well as historical averages.

Prices for dark-meat products continue to be supported by strong global demand stemming in part from African swine fever, the report stated.

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