Holiday turkey market well supplied

Ham to be less competitive this holiday season as prices remain weak.

Contrary to last year, when avian flu wreaked havoc on U.S. turkey production during the six months leading up to Thanksgiving, there are no supply issues this year, according to the Livestock Marketing Information Center (LMIC).

Hatchery output during the spring quarter was up 5% from a year earlier, and summer-quarter hatchery output was up 10%. The frozen inventory of whole birds on Oct. 1 was only 1% higher than last year, but frozen inventories of parts and meat were 32% higher. This should allow for more of the increase in October and November production to be marketed as whole birds, LMIC noted.

Turkey production during the current quarter is projected to be up 100 million lb. from a year ago. Oddly, turkey production during the first three weeks of October was down from a year earlier. According to LMIC, much of this can be attributed to Hurricane Matthew, which created massive flooding in turkey production regions of North Carolina. Estimates of losses were close to 2 million birds, accounting for 3% of U.S. production for the quarter.

LMIC said turkey consumption during the October-to-December quarter has been in the range of 1.5-1.6 billion lb. for the last 10 years. Occasionally, it will move above 1.6 billion lb. if pricing relative to ham is supportive and if grocery store retail sales are posting impressive gains. That is not the case this year, however, LMIC added.

The U.S. Department of Agriculture's Agricultural Marketing Service reported that the ratio of wholesale turkey prices to the value of the ham primal during the first nine months of this year was 1.84. LMIC pointed out that this is about the same as last year but 80% higher than in 2014 and 30-40% higher than the average in the years before that.

This means that in 2015, "ham provided rather stiff competition for turkey during the holiday quarter,” LMIC said, adding that ham prices remain rather weak this year, which means there should be rather good retail store featuring of both items for the balance of this year.

LMIC said the turkey industry has tried, in recent years, to target end-of-the-year frozen inventory at 200 million lb. At the end of 2012, frozen inventories were 296 million lb., and in 2008, the year-end carryout was 396 million lb.

“If turkey production this quarter would come with a 100 million lb. increase from a year ago, along with consumption close to or slightly less than last year, frozen inventories at the end of the year would be close to 350 million lb.,” LMIC said.

The decline in wholesale turkey prices since late September suggests that the industry is cognizant of frozen stock levels and is now making efforts to encourage more consumption before the end of the year, LMIC said.

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