Poultry Outlook Summary

-All segments of poultry production were at least marginally profitable in 2000 due mainly to low feed prices. 2001 will likely be a rerun of 2000 with profits highly dependent on feed prices going even lower. Even this will not likely be enough to keep egg producers in the black.

- Even with low feed prices, profit margins were tight for broiler producers in 2000 with some producers incurring losses. Broiler production slowed considerably by mid year due to profit problems, registering only a 3% gain for the year.

- Broiler producer's reduced growth rate may translate into reduced cash flows for contract growers as houses remain open longer between flocks.

- After an almost 7% production growth in 1999, 2000's broiler production slowed to half the 1999 growth and well below the 20 year average growth rate of 5%. 2000's 3% production increase was only the third year-to-year broiler production growth below 4% . 2001's production growth will be only slightly larger than 2000.

-Broiler exports rebounded in 2000 from 1999's disappointing levels. 2001 exports may show only modest growth from 2000's level. 

-Turkey profit margins exceeded broilers in 2000 with production up a modest 2%. 2001 turkey production will be up another 2%. Turkey prices may rise again in 2001, leading to an even better profit margin than in 2000. Turkey exports will show little growth in 2001 after a 6% growth in 2000. 

-Egg production was up 2% in 2000 and will likely show a similar growth in 2001. Prices will decline and may be slightly below production cost even though feed cost will be reduced.
 

Broilers

Production

Broiler producers experienced some of the same problems in 2000 that other meat producers have contended with over the last 20 years. With consumer demand for all broiler meat but white meat in particular experiencing sluggish growth, increased production resulted in declining prices. As a result, broiler producers found themselves facing small or negative profit margins despite low feed prices. 

Unlike most other meat producers, the broiler industry has the ability to slow production within a relatively short time. By mid year of 2000, broiler placements were lower than in 1999 and the nations breeder flock was down by 1.5%. In addition, producers seem to be making a conscientious effort to keep a lid on bird weights as the large bird market, prime target for breast deboned products, became glutted. Thus, production slowed considerably in the last half of the year with some accompanying improvement in product prices. The result was that yearly broiler production increased by the second smallest margin in 18 years, registering only a 3% growth for the year. 

Producer attempts to hold the production line was paying off in September as prices strengthened with production actually falling from 1999's levels. However, with production up for the year, the yearly average broiler price for 2000 is expected to come in 4% below 1999's annual average and will represent the lowest whole bird price since 1995. Despite the yearly price decline, profit margins for most producers remained positive in 2000 due to the low feed prices. As a result, production in 2001 will likely grow at slightly more than the 2000 rate, but still below the long term average growth rate. 
 

Demand

Strong domestic demand fueled gains in boneless breast prices in 1998. Boneless breast prices and demand held reasonably well through the first of 1999, but began to collapse in late 1999. Breast price during the first six months of 2000 were the lowest in 10 years. Fast food demand growth has bolstered wing meat prices. At the same time, a resurgent export market has provided some help to dark meat prices. Exports in 2000 will be up by about 7% but will not likely register further gains in 2001. 
 

Prices and Returns

Wholesale broiler prices will likely average 56 cents per lb. in 2000, or a little over 2 cents less than 1999's average and a full 7 cents less than 1998's average price. 2000's price will be the lowest whole bird price in five years. Prices during the last part of 2000 showed some strength as production actually dropped below 1999's at times. But production for the fourth quarter of 2000 will likely cover 1999's production by 3% or so and drive prices back below the previous year's price. If producers increase production by 4% or so in 2001, expect another 2 cent or so drop in prices down to the 54 cents per lb. level for the yearly average price. In this case, broiler production returns would be paper thin with little room for unexpected negative changes in feed prices or meat demand.
 

Broiler Outlook Summary

Turkeys

Production

After two and a half years of losses, turkey producers reduced production in 1998 and held the line again in 1999 and 2000. Thanks to the decline in feed cost and the smaller production, producers have found themselves in the black for over two years. Holiday turkey production during the last of 2000 will be only slightly larger than 1999's production, with yearly production up about 2%. Turkey production will increase again in 2001 in response to industry profits. For the year as a whole, production in 2001 looks like it will exceed 2000's production by about 2%.
 

Demand

Turkey exports improved by 12% in 2000 over 1999's effort. Significant gains were posted in Mexico, Russia, and Hong Kong. Some export growth is forecast for 2001 but the 2000 growth will not likely be repeated. Turkey exports will consume close to 8% of domestic production in 2000 and again in 2001. Domestic demand looks improved as a larger supply of turkey found consumption at a higher price. The reduced pork competition of 2000 obviously helped some but pork production will be on the rebound the later half of 2001.
 

Prices and Returns

Turkey prices were slightly higher the last half of 2000 than in 1999. Prices for the holiday quarter may exceed 1998's by about 2 cents with reduced competition from ham. For the year as a whole, prices will average about 2 cents higher than 1999's 69 cents per lb. average and almost 10 cents above the 1998 average price. 2001's average price may drop about 3 cents below 2000's average provided production does not expand more than the modest 2% forecast, as competition from pork grows and exports stagnate. Still, the profitability found by turkey producers in mid year 1998 should extend another year.
 

Turkey Outlook Summary

Eggs
 

Production

Egg production increased by about 2.5% in 2000. However, profits have been weak since the middle of 1999 so production may be held to a 1% to 2% increase in 2001. 
 

Demand and Usage

Eggs are back! From a low per capita usage of 235 eggs in 1995, 2000's usage grew to 260 eggs. Per capita consumption has grown at an annual rate of 5 per person the last five year. Egg and egg product exports were only marginally improved in 2000 but may show some better gains in 2001.
 

Prices and Returns

Egg prices were about a cent per dozen lower in 2000 than in 1999 and likely represented about a breakeven situation for most producers. Prices are likely to be off by 1 to 2 cents per dozen in 2001. If feed prices decline again in 2001 and production is held in check, egg production will again be somewhere close to production cost. Given the egg producers history, it is noteworthy that large losses have not occurred since 1995. 2001 is shaping up like the closest thing to a clear loss year since 1995 however. 
 

Egg Outlook Summary

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