US: Broiler Market Outlook Week 46, November 18, 2024

The holiday season is approaching in the United States , and this is partly determining the market picture. Thanksgiving (November 28) is the second-largest food holiday in the United States, generating a $2.1 billion boost in grocery store sales. AA turkey on the Thanksgiving table is a familiar sight for many American families, a long-standing tradition that is deeply ingrained in American culture. But the future of that tradition and the support of U.S. consumers for the turkey industry has become less certain in recent years, due to supply issues or changing preferences.

Holiday promotions have a major impact on what shoppers put in their shopping carts. Thanksgiving is marked by a widely used retail tactic called a "loss leader" to attract foot traffic. Retailers typically price turkeys low, at a loss or sometimes for free, in the hopes that sales on the rest of the consumer's Thanksgiving shopping basket will include items that will help offset those losses.

While turkeys still feature prominently on the front page of retail ads in the weeks leading up to Thanksgiving, the USDA's 40-49 Weeks Activity Index has shown a marked decline over the past few years. Frozen turkeys in these key weeks are down 36% in 2023 compared to 2018 levels.

To get an idea of ​​what prices consumers should expect at the grocery store this Thanksgiving, it’s important to understand that the turkey industry spends all year preparing for the holiday. Most Thanksgiving turkey contracts are typically closed in the first quarter of the year. For example, in January 2023, wholesale prices for frozen whole turkeys hit a record high of $1.71 per pound, up 33% from the previous year and 112% higher than 2019 (pre-pandemic). And somehow, retailers in the most competitive markets were still able to offer consumers whole frozen turkeys for less than $0.30 per pound. In 2024 , wholesale prices have dropped 50% year over year, averaging $0.87 per pound, the lowest since 2019.

In recent years, inflation has hurt both producers and consumers. While feed corn prices have declined from recent peaks over the past 12 months, turkey producer costs have remained high since 2023 and were down just 18% year over year in the 12 months ending January 2024. All of this suggests that wholesale prices have declined more than producer costs as producers prepare to ship turkeys for the 2024 holiday season.

Turkey supplies are down, but the shift may not be as pronounced in 2024. As retailers began preparing for Thanksgiving in January, turkey inventory forecasts were expected to be at their lowest in four decades, signaling a decline in availability by Thanksgiving 2024. Beyond consumer preferences, the animal protein industry has faced supply-constraining challenges: high operating costs, labor shortages, regulatory hurdles, and disease concerns. U.S. turkey flocks have struggled with two diseases in particular: highly pathogenic avian influenza (HPAI) and avian metapneumovirus (AMPV). However, the primary reason for the decline in poult placements has been weak profitability for U.S. turkey producers.

While the sharply lower placement numbers suggest a significant drop in turkey availability for Thanksgiving, whole turkey inventories in cold storage have risen about 4% year over year, peaking in September of this year at 246 million pounds. But that contrasts with a decline of about 100 million pounds compared to 2018, suggesting the market is more receptive to smaller supplies of whole birds.

 Dynamics of prices and sales volumes of broilers

Average weighted price of broilers by region

Region

Average weighted price, cents/lb

Sales volume (thousand pounds)

Week 44

Week 45

Growth per week,%

Week 44

Week 45

Growth per week,%

Oriental

126.33

126.64

0.2%

4 813

4 971

3.3%

Central

121.68

121.08

-0.5%

2 119

1 645

-22.4%

West

140.88

141.31

0.3%

2 735

2 890

5.7%

Dynamics of prices for chicken cuttings

Weekly reviews are available with a subscription.