Ahead of the Thanksgiving season, the average retail price of turkey hit its lowest level in a decade after a 7% drop from last year.
In a WATT Poultry Chat interview, Dr. Thomas Elam, president of FarmEcon LLC said the numerous public health warnings against holding holiday gatherings drove down demand for turkey for Thanksgiving 2020.
Austin Alonzo: I understand you wanted to talk a little bit more about the post thanksgiving turkey market.
Thomas Elam: Since we talked a week ago, we've gotten in some really interesting reports from USDA and the American Farm Bureau that continue to point to COVID related impact with travel restrictions and fewer families getting together for Thanksgiving.
You know, we don't get direct evidence on demand, we have to look at prices and production stocks and make inferences about demand because nobody actually reports demand. But here's what we found out: We saw another year-over-year reduction in turkey production in the monthly U.S. Department of Agriculture production report. And the American Farm Bureau, which reports annually the cost of the holiday meal, they do a survey on average retail prices for all the ingredients that go into your typical family turkey dinner, and what they found was that the average retail price of turkey, whole turkeys, frozen whole turkeys, in grocery stores this year was down an astounding 7% from last year. And that's the lowest retail price in a decade. And that retail turkey price reduction drove the annual cost of that hypothetical meal there is down also to the lowest level in a decade.
To back that up, we also just got in the monthly USDA stocks reports on frozen hens. If you look at this chart, what it shows is the beginning of the year hen stocks way below last year. And that difference has been narrowing all year long. Until I think when we get the next couple of reports in, we're probably going to see hen stocks very close to last year in spite of lower production. So again, that points to these COVID related travel restrictions and fewer family gatherings and lower consumer interest in buying big turkeys for Thanksgiving dinners for large groups. Hopefully this is a transitory event and by this time next year, we'll be back to normal.
But it's kind of a good thing for the turkey industry that they started off the year with low stocks on frozen hens because if they didn't, this leftover turkey was going to be hanging around probably for a year from now until next Thanksgiving and further depressing the market. So a little bit of good news there for the turkey industry. But obviously when you look at all the data, it was not a good Thanksgiving year for the turkey industry.
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