A.I. to tighten holiday turkey supply

by Ron Sterk
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While much of the impact on the current H5N2 highly pathogenic avian influenza (HPAI) outbreak has been on eggs and egg products, the virus also is affecting the meat side of the poultry market, especially turkeys. That impact may be less evident, especially to consumers who mainly see higher egg prices and certain products missing from retail shelves or restaurant menus, but come turkey-buying time this fall, it may well be noticed. 

Ron Sterk

Ron Sterk,
Senior editor, markets

Just as AI has hit the top egg-producing state — Iowa — the hardest, it also has had the greatest impact in the top turkey-producing state — Minnesota. By the latest count from the US Department of Agriculture, more than 7.7 million turkeys have died or been euthanized overall due to AI. Because turkey operations tend to have smaller flocks than chicken farms, considerably more turkey operations have been affected, and Minnesota even has more total detected cases (105) than does Iowa (75). Minnesota so far has lost more than 4.8 million turkeys, about 10 percent of the 46 million produced annually in the state, or slightly less than one month’s outturn. Turkeys lost in all states account for about 3 percent of national annual production.

Nearly 20 percent of the 237.5 million turkeys slaughtered in 2014 came from Minnesota, and about 30 percent of those are sold as whole birds for the holiday season.

A significant difference between the impact on eggs and turkeys is the rebuilding time for the turkey industry may be longer. For laying hens, the egg is the “end product,” so to speak, while for turkeys and broilers, the meat is the end product, so eggs are hatched and birds must be fed to slaughter weight.

The timeline from hatching to slaughter for turkeys ranges from 14 weeks for a hen to 22 weeks for a tom, plus 28 days to hatch the egg. So, from when the turkey egg is laid to slaughter takes about four to six months. The restocking process was under way in Minnesota, but with just a few flocks as of mid-June. There is a long ways to go before numbers will be back to pre-A.I. levels.

“The biology of turkeys and the structure of the turkey hatchery industry are expected to result in a time lag in rebuilding flocks to pre-A.I. levels,” the USDA said, which the agency doesn’t expect to happen until the end of 2016.

There has been some impact on the broiler market as some countries have banned broiler imports because of AI, adding to the unrelated ban on exports to Russia because of the Ukraine conflict.

“What this situation has done is increase the amount of broiler products on the domestic market, boosting cold storage holdings and resulting in placing downward price pressure on a number of broiler products,” the USDA said in its June Livestock, Dairy and Poultry Outlook. That’s not the case for turkeys.

Turkey part prices reported by the USDA have soared since the AI outbreak was detected in Minnesota in early March. Boneless/skinless turkey breasts were quoted at $4.65 a lb. last week, up 60 percent from mid-March, when values were near one-year and seasonal lows. Prices for destrapped turkey tenders were quoted at $4.25 a lb., up 50 percent in the same period.

The USDA in June reduced its forecast for 2015 turkey production and raised its forecast for turkey prices.

In its June Turkey Hatchery report, the USDA said eggs in incubators on June 1 totaled 27.4 million, down 5 percent from a year earlier, turkey poults hatched in May totaled 22.3 million, down 8 percent, and net poults placed in May were 21.6 million, down 7 percent. Those numbers were in stark contrast to the USDA’s June 2014 Turkey Hatchery report, which showed eggs in incubators up 8 percent, poults hatched in May up 8 percent and poults placed in May up 9 percent from the prior year.

Hatching and poult placements in the first half of the year are critical for turkey supplies with birds going into freezers ahead of the holiday season.

In its June Cold Storage report, the USDA said there were about 243 million lbs. of whole turkeys in freezers on May 31, up 11 percent from April 30 and up 1 percent from a year earlier. The increase in freezer stocks from the end of April to the end of May was 26 million lbs. this year compared with 44 million lbs. last year.

While freezer supplies of turkeys may help mitigate the impact of AI on the turkey market compared with dramatic increases in egg and egg product prices, which have tripled in some cases, any loss in production can’t help but have an effect on prices, especially as demand peaks during the holiday season.

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