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Moderate Production Growth

First-quarter turkey output was up nearly 4 percent from a year earlier, but included one more slaughter day. Poult placements indicate second-quarter production will be about 3 percent above last year, and growth of about 3 percent is expected during the second half. For 1992 overall the increase will be about 3 percent, compared with last year's 2 percent.

These relatively low growth rates reflect the consistently poor returns experienced by turkey producers, including an unusual fourth-quarter loss last year. The weak economy in 1990-91, compounded by large increases in pork supplies starting in the second half of 1991, contributed to weakness in turkey sales.

Some turkey processing plants have closed, and production in California, particularly, has declined. However, one California plant is reopening later this year, and output is increasing in some other parts of the country. USDA's Poultry--Production and Value report indicates that turkeys raised were up about 1 percent in 1991, to 285 million birds, and liveweight production rose slightly more. But production declined in two of the three leading states, Minnesota and California, and was flat in North Carolina. Producer prices declined about 2.5 percent and the total producer value of turkey also declined slightly, to $2.34 billion. However, turkeys' share of the total value of broilers, eggs, turkeys, and chickens held steady at 16 percent.

Low Prices

Wholesale turkey prices in 1992 are little changed from last year's low level. First-quarter Eastern region hens averaged 56 cents per pound, the same as a year earlier. Prices were supported in part by a special purchase program by the USDA early in the year. Overall, however, product movement was slower than a year earlier.

In the second quarter, prices are expected to average 58-62 cents, compared with 62 cents last year. Large stocks and large supplies of virtually all meats, particularly pork, are pressuring prices.

In the second half, prices are expected to firm seasonally and average about the same as a year earlier, based on continued but moderate increases in production, brisk exports, and some strength from economic recovery. For the year, prices should average 59-63 cents, compared with 61.3 cents last year.

Retail prices are lower, with frequent specials offering bargains to consumers. Prices for whole birds have been relatively low since late last fall. During first-quarter 1992 they averaged about 95 cents per pound, 4 percent below a year earlier. During Easter, turkey was-fairly widely featured at attractive prices. Consumers will continue to benefit from bargain turkey prices for the remainder of this year, due to large, competing supplies of most meats.

Poor Returns

Producers have been realizing losses since the fourth quarter of 1991. Losses in first-quarter 1992 were the same as a year earlier. Losses are continuing in the second quarter, unlike last year when returns improved. Higher feed costs, averaging about 5 percent above a year earlier, are contributing to the current poor returns. Feed costs are expected to remain higher in the third quarter, but to ease and move slightly below a year earlier in the fourth. Net returns in the third quarter should be about breakeven, and are expected to be above breakeven in the fourth. The outlook for better returns later this year may encourage increases in poult placements.

Stocks Increase

While 1992 began with stocks below a year earlier, by the beginning of the second quarter stocks had risen to a record 391 million pounds, 5.6 percent above a year earlier. Whole birds, at 263 million pounds, were 16 percent above last year, but other turkey stocks were lower. Stocks are expected to remain relatively high this year, in part reflecting production increases. Large increases in pork supplies mean very sharp competition for the consumer's meat dollar, unlike in 1989 and through most of 1991, when supplies of red meats were not increasing and turkey was growing.

Product movement was slow in the first quarter, with turkey consumption estimated slightly below a year earlier. Turkey consumption is likely to increase only moderately this year. For 1992, using the revised, lower production numbers, consumption is estimated at about 18.4 pounds per capita, compared with 18.0 last year.

Record Exports

Turkey exports in 1992 are expected to be up 15-20 percent from last year's record. While still a small portion of production, exports this year will account for about 2.5 percent of output. Exports are helping support some parts prices, particularly dark meat parts. Parts make up over 90 percent of exports and their average unit value of 76 cents per pound during January-February was nearly 9 percent higher than last year. Whole-bird exports were lower valued, averaging 58 cents per pound, compared with 73 cents a year earlier.
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Title Annotation:turkey industry
Publication:Frozen Food Digest
Article Type:Industry Overview
Date:Jul 1, 1992
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