Wholesale whole turkey prices fell in 2017 relative to 2016 and have remained below historical averages since January, indicating that demand may not be keeping up with current supply levels, the U.S. Department of Agriculture reported in the latest “Livestock, Dairy & Poultry Outlook.”
“Typically, wholesale turkey prices have a seasonal trend, with prices climbing from their bottom level in the beginning of the year to a peak near Thanksgiving. This year, whole turkey prices have not increased as in years past and have dipped further throughout the summer and fall,” USDA agricultural economist Alex Melton said.
The average price for a whole frozen hen in August was just under 97 cents/lb. -- 3% below January and 19% below August 2016. As of the fourth week of September, USDA said prices had fallen further to 96 cents/lb.
“The last time wholesale prices were below $1/lb. as late as September was in 2010,” Melton said.
As a result, the forecast for whole frozen hen prices was reduced and is expected to average 99 cents/lb. for 2017. In 2018, USDA expects that prices will recover slightly from 2017 and average $1.00-1.08/lb.
“Do low wholesale prices indicate lower retail prices? Not always. While wholesale and retail price movements are strongly correlated on a yearly basis, seasonal factors can disrupt this correlation,” Melton explained.
During the Thanksgiving holiday season, retail turkey prices are commonly near annual low points, he said, adding that the percentage markup from the wholesale to retail price also declines to a low point during that period.
The average markup between January 2014 and August 2017 was 42%. The November average markup over the same period was just 13%.
The data indicate that competition between retailers for Thanksgiving business may lead to lower costs for consumers, even as wholesale prices rise. Because wholesale prices have remained low late into the year, retail prices may fall below previous years, or the trend of low retail markups in November may be disrupted, according to USDA.