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Poultry and eggs.

Slower Production Increases In Second-Half 1992

Broiler production will likely expand 5 percent in 1992 despite the generally low net returns through most of 1991 and a continuing sluggish economy. Chicks hatched in February-April, along with generally heavier slaughter weights, indicate second-quarter production was near 5.25 billion pounds, up about 4 percent from last year. First-half production could this rise 6-7 percent from a year before, with the first quarter up 9 percent, including an extra slaughter day.

Production indicators point to continued modest growth during the third quarter. Chicks hatched in May were up slightly less than 2 percent from a year ago and weekly chicks placements during June and early July averaged 1-2 percent. Slaughter weights averaged about 2 percent higher than a year ago through June, due to generally cool weather. Continuation of slightly higher weights than a year ago will support the projected 3-percent production growth in the third quarter.

Smaller Increases In Hatchery Supply Flock

Expansion in the broiler hatchery supply flock is estimated to be smaller during 1992 than a year earlier, based on cumulative placements 7 to 14 months earlier. The estimated future size of the supply flock, which reflects the future number of hens in the hatching egg flock, slipped gradually from about a 5-percent increase from a year ago in May to nearly unchanged in December. These increases support expectations of smaller production growth during the second half and continued modest growth in early 1993.

Broiler Prices Below Last Year

Abundant poultry and red meat supplies will keep broiler prices slightly below a year earlier. The 12-city composite wholesale price for whole broilers in 1992 is expected to average around 50 cents a pound, versus 52 cents in 1991. Second-quarter wholesale prices averaged 52.2 cents a pound, about unchanged from a year ago. April and May wholebird prices were supported mostly by increasing chicken breast meat prices. Indications suggest good movement of chicken breast meat to fast food chains during those months. June whole-bird prices fell, reflecting sluggish demand for chicken breast meat due in part to poor cookout weather during and after the Memorial Day weekend.

Whole-bird prices in early July averaged slightly higher than a year ago, reflecting a boost in the demand for broilers, particularly for chicken breast meat, during the Fourth of July weekend. Whole-bird prices, however, will probably ease to slightly below a year earlier for the rest of the summer, given competition from declining red meat and low turkey prices.

Modest production growth combined with expected strong broiler exports during the summer quarter will lend some support to broiler prices. Third-quarter wholesale prices for whole broilers are expected to average in the high 40's to low 50 cents a pound range, while fourth-quarter prices will decline seasonally to the high 40's, a few cents below last year.

Retail prices for whole broilers in 1992 are expected to average below last year, again reflecting increased supplies and strong competition with other meats. During the third quarter, retail prices will likely hold steady from the second quarter and average around 86 cents a pound. Fourth-quarter prices are expected to decline seasonally from summer, but are still likely to average in the mid-80's.

Net Returns Are Lower

On a whole-bird basis, net returns are expected to average above breakeven in 1992, but be the lowest in several years, given generally lower broiler prices and slightly higher feed costs through the first half.

Second-quarter net returns averaged below a year earlier, due to slightly higher feed costs while broiler prices held steady. During the second half, feed costs will likely average unchanged from a year before, but lower broiler prices will push net returns to below year earlier averages.

Overall Broiler Exports at Near Record Rate

U.S. broiler exports, estimated at 1.25 billion pounds for 1992, will be near last year's record. Increased sales to the Pacific region, particularly Japan and Hong Kong, will likely make up about half of total exports. Increased sales are also likely to Mexico, Canada, the Caribbean, and the Middle East, with whole-bird exports to the latter sold under the Export Enhancement Program (EEP).

EEP sales are resuming to Egypt, after a halt during 1989-1991 when poultry imports were severely restricted. While exports are down to the former USSR, which last year accounted for 15 percent of U.S. broiler exports, small sales have been made to Moldova and to the Russian Republic.

As of early July, no broiler export credit sales have been made to the former USSR this year. Broiler exports are increasing to many small markets around the world, including Central and South America, and Romania.

Record Exports In Early 1992

During the first 4 months of 1992, broiler exports were a record 436 million pounds, 8 percent above a year earlier, and valued at $204 million. A relatively high 6.4 percent of broiler production was exported. Sales were up sharply to the Pacific region, which accounted for 52 percent of the total, compared with 44 percent last year. Sales were up 32 percent to Hong Kong and 28 percent to Japan, the largest market. The U.S. maintains a 50 percent share in the large Hong Kong market for low-priced chicken parts. Some of this product is re-exported to China. So far this year, the U.S. has about a 28 percent share in the intensely competitive Japanese market where Thailand holds about a 39 percent share. China has increased exports rapidly to Japan and has about a 15 percent share, and Brazil, about 14 percent.

U.S. exports were up 37 percent from last year to Mexico, which accounted for 12 percent of the total. Demand is strong for the attractively priced U.S. chicken leg parts, despite rapidly increasing domestic production. Sales to Canada were 26 percent above last year as production there is little changed this year, offering an opportunity for increased exports to the growing Canadian market.

Relatively weak prices in the U.S. contributed to the increased exports. Whole bird and leg quarter prices during the first 4 months of the year were the lowest since 1988.

About 93 percent of the exports were broiler parts, with an average export value of 46 cents, compared with 49 cents last year. For whole birds, the average value was 52 cents, compared with 54 cents a year earlier. Canadian imports, which include more breast meats parts, had an average value of $1.03 per pound, placing Canada third, following Japan and Hong Kong in terms of total value.

Of the few whole birds exported, most were destined to Mexico, Canada, Guatemala, and to the Middle East under the EEP. Total EEP sales at 18.6 million pounds during the first 4 months represented slightly more than 4 percent of broiler exports during this period.
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Title Annotation:international trade
Publication:Frozen Food Digest
Article Type:Industry Overview
Date:Oct 1, 1992
Previous Article:Vegetables and specialties outlook.
Next Article:Health and natural foods.

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