WASHINGTON – Turkey producers are expected to scale back increases in production because rising grain prices are projected for 2011, according to the Oct. 22 Livestock, Dairy, and Poultry Outlook from USDA‘s Economic Research Service. Turkey-meat production in the first half of 2011 is still expected to be somewhat larger than the previous year, but the higher feed prices are expected to have a greater impact on production in the second half of 2011, causing production to be slightly lower than in the second half of 2010.

During the first eight months of 2010, turkey-meat production totaled 3.67 billion lbs., down 2.2% from the same period in 2009, which was, in turn, down sharply from production in the first eight months of 2008. The decline in meat production has been the result of lower bird slaughter, as the number of turkeys slaughtered during the first eight months of 2010 was 157 million, down 3.4% from the same period in 2009.

Partially offsetting this decline has been a 1% increase in average weights at slaughter. Turkey-meat production in August 2010 was 481 million lbs., up 3.8% from one year earlier. This increase was the result of one more slaughter day in August 2010 than in August 2009. The number of turkeys slaughtered (21.6 million) was 5% higher, and the average live weight at slaughter was just under 28 lbs., down 1% from a year earlier.

Cold-storage holdings of turkey products at the end of August totaled 496 million lbs., down 24% from the previous year. The decrease was due to sharply lower cold storage holdings of whole birds and turkey parts. At the end of August, cold-storage holdings of whole birds were 295 million lbs., down 22% from August 2009, and cold-storage holdings of turkey parts totaled 201 million lbs., down 27% from a year earlier.

With lower production and continued strong exports, the forecast for third-quarter ending stocks was reduced to 500 million lbs., 114 million lbs. below those of the previous year. The estimate for fourth-quarter 2010 ending stocks was also lowered. At 210 million lbs., fourth-quarter 2010 ending stocks are down almost 20% from the previous year, the lowest fourth-quarter ending stocks since 2005.

Lower production, strong exports and lower stock levels have all combined to place upward pressure on whole turkey prices. The average price for whole hen turkeys (8-16 lbs. in the Eastern market) was 97.9 cents per lb. in third-quarter 2010, almost 20 cents higher than a year earlier (up 25%). The wholesale price for Eastern market whole hens in fourth-quarter 2010 is expected to be $1.00-$1.04 per lb., up from 81 cents per lb. a year earlier.

Over the last several months, prices for many turkey parts have also been trending upward. Prices for turkey wings (v-cut) in August were 88 cents per lb., up 12% from a year earlier, and boneless/skinless turkey breasts averaged $1.90 per lb., 92% higher than in August 2009.