COMMODITIES

Commodity Insights

Competitive Commodity Information: Are we positioned to withstand another bird flu outbreak?

Is the market ready for another bird flu outbreak?

In early March, USDA confirmed a highly pathogenic form of bird flu in a breeding flock of 73,500 Tennessee broiler chickens. Alerted after hundreds of birds died suddenly, the agency identified the cause as a strain of the flu virus that came from wild birds, unrelated to the virus that caused the 2015 U.S. outbreak, but deadly and contagious nonetheless. Officials destroyed the entire flock to keep the virus from spreading, as well as worked with workers to ensure they didn't carry the disease to other farms.

Although the avian fluenza response plan worked as designed, this latest outbreak may have marketers wondering: Are we at risk of facing turkey, chicken or egg shortages should another widespread outbreak occur similar to the last one, in 2015? USDA called that 2015 outbreak the largest animal health emergency in U.S. history, costing farmers nearly 50 million birds and a conservatively estimated total economic impact of more than $3.3 billion before ending in June of that year. Retail turkey prices weren't noticeably affected, but egg prices soared in response.

Where do poultry markets stand going into this upcoming flu-risk season?

Chicken. Broiler meat production in January was 2 percent above last year at this time, at 3.5 billion pounds, owing mostly to an increase in the number of birds slaughtered, USDA reports. December production was 3.3 billion pounds, 4 percent above December 2015 on a per day basis. Preliminary data suggested that February production was also higher than a year earlier on a per-day basis; however, bird weights may have been lower, masking a larger number of birds in the supply than implied by the slaughter data. Growers appear to be continuing a trend toward sending birds to processing at lighter weights, in order to alleviate some reported quality problems. These recent developments, as well as the recent resumption of growth in average weights, contributed to increased expectations for first-quarter production. The forecast was raised 50 million pounds above the previous first-quarter forecast.

Meanwhile, stocks of broiler meat in cold storage as of Dec. 31 were 783 million pounds, 6 percent below a year earlier, but 3 percent above November, largely due to a higher breast meat total. Year-ending stocks for 2017 were increased 30 million pounds.

The March 5 announcement confirming avian flu led some countries to restrict imports of poultry from this country, although most of these countries had limited their restrictions to poultry and products from Tennessee or from within a more limited area in the vicinity of the finding. Although those restrictions would in theory save some supply for domestic use, only a small proportion of U.S. broiler meat would be affected by these restrictions, USDA says.

Eggs. In late February, USDA revised egg production estimates upward for the last two years, bringing the size of the U.S. table-egg layer flock as of Jan. 1 higher by about 4 million birds from the previous estimate, to 314 million birds, a record level for that date. This led 2017 production forecasts for both table and hatching eggs to be increased substantially from the February forecasts, totaling 2.82 billion eggs more in aggregate for the year.

In fact, December data for the average number of table-egg layers in the national flock was the highest since the series began in 1984. This contributed to higher-than-expected production for the fourth quarter, at 22.8 billion. In addition, the nation's flock appears to getting more productive, now laying 80.6 eggs per 100 hens, an all-time record.

As with chicken meat exports, the appearance of flu in Tennessee will likely lower U.S. egg and egg product exports, but exports in 2017 are now forecast to reach 305 million dozen, a 9-percent increase above 2016.

Turkey. Turkey farmers appear to be making up for losses incurred during the last flu outbreak. USDA reports production grew 5 percent in January 2017 compared with a year earlier, as the industry continued to build on the gains made in 2016. Recent growth is largely due to increased young turkey placements from turkey hatcheries, which have averaged 6 percent higher over the last 6 months compared with the same period a year earlier. The forecast for production in the first half of 2017 was raised 15 million pounds to account for the placement expansion. Total production in 2016 reached 6.0 billion pounds, an increase of 6 percent over 2015 and 4 percent greater than 2014. Year-ending stocks reached 279 million pounds to close out 2016, the highest since 2012. As a result, 2017 ending stocks were increased to 300 million pounds.

Competitive Commodity Information: 2017 and beyond in world commodity trends

10 year commodity trends sneak peak

When USDA releases its longterm agricultural sector outlook for the next ten years later this month, the projections through 2026 covering commodities, trade and aggregate indicators of the farm sector will give retailers a glimpse of the next decade's expectations. Once the agency makes it available, you can access the entire report here (Adobe Acrobat format). Until then, here are some highlights of what the report will show:

 

Less Land in Crops; Conservation Continues. As prices for most crops have fallen from highs of recent years, U.S. farmers have responded by planting fewer and fewer acres to the major field crops. That decline is expected to continue, as the acres planted for corn, sorghum, barley, oats, wheat, rice, upland cotton and soybeans is projected to remain below 250 million acres. Wheat, corn, and cotton account for most of the decline between these years. Much of that idled land will remain in the government program that compensates farmers for removing the most environmentally sensitive land from cropping use.

Plantings will gradually decine

Plantings will gradually decine

Corn Ethanol Use Remains Level. Ethanol production in the United States is projected to fall over the next decade. But even with the U.S. ethanol production decline, demand for corn to produce ethanol continues to have a strong presence in the sector. While the share of U.S. corn expected to go to U.S. ethanol production falls, it accounts for over a third of total U.S. corn use throughout the projection period. Use in feed to produce farm animals that produce your meat, milk and eggs remains the No. 1 use of this farm staple.

Corn use for ethanol will level off

 

U.S. Appetite for Meat will Stay Strong. Per-capita consumption of meat and poultry will continue, although more moderately than in the past, with chicken still leading the plate by almost double over beef and pork.

Meat consumtion will stabilize

U.S. to Continue as Meat-Growing Power. In order to feed both those domestic consumers and a growing international meat market, U.S. farmers will continue the upward trend in production of the major meats.

Meat production estimates

Increasing Animal Productivity. A theme illustrated in USDA's projected data: U.S. agriculture will continue to produce more and more food using fewer and fewer resources. Here's an example: The amount of milk put out by the average U.S. dairy cow is almost three times what it was compared to 30 years ago. That means the size of the nation's dairy herd will continue dropping, even as milk supply continues to climb.

Milk cows and their production

 

Competitive Commodity Insights: Holiday Meats

Turkey pricesTurkey. Although USDA preliminarily reports weekly production of turkey for the month of October was below year-earlier levels and that total production for the final quarter of the year has been cut by 30 million pounds, the average price for whole hens has not risen in anticipation of Thanksgiving's demand increase as much as they would in a normal year. USDA lowered its fourth-quarter forecast for frozen hen prices to $1.18 to $1.22 per pound, on the basis in part of stocks of tom turkeys that are at their highest level for a September in three years. In addition, exports that draw off the domestic supply and could contribute to increased prices remained well below levels seen during 2012 to 2014, when they were shut off by avian influenza.

Competitive Commodity Insights: Five more ideas to keep the grills going this winter

Five more ways to keep shoppers grilling

Of the 75 percent of American adults who own a grill or smoker, according to Virginia's Hearth, Patio & Barbecue Association, the trade group for grill manufacturers, 61 percent of them will use their grill or smoker year-round. If you're tapering off the grill promotions after Labor Day, you're missing out on a significant and growing segment, says the association. Need more evidence?

Partners

Supported by the Nebraska Corn Board

The Nebraska Corn Board, on behalf of 23,000 corn farmers in Nebraska, invests in market development, research, promotion and education of corn and value-added products. The board aims to work closely with the farmer-to-consumer food chain, to educate everyone about the role corn has in our everyday healthy lives. The Nebraska Corn Board is proud to sponsor the Farmer Goes to Market program to help bring its mission of expanding demand and value of Nebraska corn to the consumer, through the strongest touch point in that chain: the Nebraska retail grocer.


In patnership with the Nebraska Grocery Industry Association

The Nebraska Grocery Industry Association was formed in 1903 by a group of Omaha grocery store owners, wholesalers and vendors to allow them to promote independent food merchants and members of the food industry, and to promote education and cooperation among its membership. NGIA continues to represent grocery store owners and operators, along with wholesalers and vendors located throughout Nebraska, by promoting their success through proactive government relations, innovative solutions and quality services. NGIA offers efficient and economical programs. NGIA also lobbies on both a state and national level, ensuring that the voice of the food industry in Nebraska is heard by our representatives.


Supported by the Nebraska Farm Bureau

The farm and ranch families represented by Nebraska Farm Bureau are proud sponsors of the Farmer Goes to Market program. We take great pride in supporting Nebraska's agricultural foundation. A key part of that effort is to make sure we produce safe and affordable food. This newsletter is an important part of our effort to connect the two most important parts of the food chain -- the farmer and the grocer -- with the goal of increasing consumer awareness and information about how their food is raised in Nebraska.