Whole bird turkey stocks declined to near record low prices in November 2020 despite COVID-19 impacts on holiday gatherings.
In a WATT Poultry Chat interview, Dr. Thomas Elam, president of FarmEcon LLC, reviewed U.S. Department of Agriculture stock reports and discussed how stocks reflect both demand for turkey and the industry's current production environment.
Austin Alonzo: Let's take a look back at the end of last year's turkey market and maybe provide a bit of a preview for what those statistics are going to mean for the beginning of next year.
Thomas Elam: We saw some significant numbers come in on the stocks report for the end of November that I want to talk about and also talk about the production numbers and what that might indicate for the first half of next year. Interesting, the stocks for whole birds, both hens and toms, at the end of November, came in at near or record low levels. Total turkey stocks came in at right at the bottom end of the range that we've seen historically, little over 190 million pounds where 250 is more normal. Almost all of that reduction was in whole birds.
So despite COVID, despite the fact that there were probably fewer family gatherings over Thanksgiving, we still saw significant out movement of frozen toms and frozen hens over the Thanksgiving season. Frozen hens came in at a little over 11 million pounds, which is the lowest we've ever seen. In the records that I've reviewed for this for this interview. Toms were right at the record low but slightly above. So we did see significant out movement from frozen stocks in the month of November which is good news. And the fact that stocks are now down to, total stocks down to near record low levels for the month of November.
However, our breast stocks remain elevated. And that's being reflected in some some very flat to even declining spot market prices for breast and breast are a significant source of revenue for this industry. We know that one of our major integrators just shut down one of their big plants. And that integrator relies on breast meat for a significant proportion of their business. So there's a sign of distress in the industry from these low breast meat prices. Hopefully, with continued production cuts, and we are seeing production continue to decline.
So far this year, we've averaged about 20 million pounds a month below last year. And that number is continuing to decline in the shutdown from this major integrator is going to add to that in the first part of next year. With the production declines, we should start to see some positive price developments in the first half of 2021.
Whether or not that happens, of course is going to depend on demand, you got to look at the total picture domestic and export. Export demand has never gotten back to where it was before the 2015 HPAI episode. And that has added certainly to the negative situation on prices. But this combination of continuing declines in production and these very, very low stock levels are starting to set us up for a more favorable 2021.
And actually in the next installment of this series, I would like to take a close look at the total situation for 2020 including exports which we don't have complete data on yet and try to flesh out this picture for 2021 a little more fully.
This transcript edited for length and clarity.
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