Large Beef, Pork, Chicken Supplies Squeeze Turkey Consumption

Turkey consumption is on a path to decline by about 1% this year compared with 2016, and market analysts lay this at the foot of large competing meat supplies.

The Livestock Marketing Information Center pointed out in the “Livestock Monitor” that first-quarter 2017 domestic turkey use was up 4% to 5% from Q1 2016, but since then volumes have dropped by 3% to 4%.

Preliminary indications for the current quarter suggest consumption is down about 0.5%, the LMIC said.  The slowdown in consumption has resulted in an accumulation of frozen whole birds and parts, and turkey prices have been pressured as a result.

Turkey production profitability this year was projected to be the lowest since 2009, the LMIC said.  Wholesale whole bird prices this year have been about 30% higher than they were in 2009, but prices of parts and deboned items were at similar values to 2009.

Feed costs also were 3% higher in 2009 than they are this year.

In the wake of those poor economic returns, 2010 turkey production slipped by less than 1%, the LMIC pointed out.  Annual turkey consumption this year was pegged at 5.2 billion pounds by the LMIC, down from 5.3 billion in 2016, a decline of about 2%.

Turkey inventories in freezers at the end of this year are on a path to be the highest since December 31, 2008, the LMIC said.

 

STIFF COMPETITION FOR CONSUMERS

 

What’s more, projected increased production of beef, pork and chicken next year were expected to keep prices for these meats on the defensive, so there is little reason to expect turkey consumption next year to change from this year’s amount, the LMIC said.

For the next two years, the major market outlook issue or headwind for all US livestock and poultry markets is the sheer tonnage of product that will be produced, the LMIC said.  In 2018 and 2019, forecasts call for record large output.

Flat turkey consumption trends and large frozen inventories at the start of the year are the framework for lower turkey prices in 2018, at least for the first few months, the LMIC said.

Lower turkey prices for an industry already struggling with profitability points to the probability that production next year will be less than this year, the LMIC said.

October turkey hatchery output was up 3% from the prior October but was down 1% in September, USDA data showed.  Turkey eggs in incubators Nov. 1 were up about 5% from a year earlier.

A reversion to a declining trend for turkey hatchery output appeared likely before the end of this year.  An annual production decline of 3% to 4% next year could help reduce frozen product inventories and support higher prices.

That would lead to a recovery in industry profitability in the second half of the year.

 

CATTLE, BEEF RECAP

 

No trading took place on the Livestock Exchange video auction Wednesday.  Cash trade was reported later in the week at $119 to $121 per cwt on a live basis, up $2 to $4 from the previous week and at $189 to mostly $190 dressed, steady with the previous week.

The USDA’s choice cutout Monday was up $2.20 per cwt at $208.19, while select was up $1.93 at $185.54.  The choice/select spread widened to $22.65 from $22.38 with 61 loads of fabricated product sold into the spot market.

The CME Feeder Cattle index for the seven days ended Friday was $156.69 per cwt, down $0.51.  This compares with Monday’s Jan settlement at $149.95 per cwt, down $0.37.