VIDEO: Signs show weak demand for turkey ahead of Thanksgiving

Dr. Thomas Elam, president of Farm Econ LLC, says COVID restrictions on Thanksgiving gatherings play a major role in the frozen hen market.

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Thomas Elam provides insight on the U.S. poultry industry. (Courtesy of Thomas Elam)
Thomas Elam provides insight on the U.S. poultry industry. (Courtesy of Thomas Elam)

Turkey stocks and prices are indicating weak demand for the meat ahead of Thanksgiving Day 2020. 

In a WATT Poultry Chat interview, Dr. Thomas Elam, president of Farm Econ LLC, said he sees signals that COVID-19 related warnings against family gatherings during the holiday season are stifling demand for birds.

Austin Alonzo: Can you provide one last look at the fresh and frozen turkey market before the beginning of the holiday season? 

Thomas Elam: It's been an interesting holiday season because of COVID. As we talked about last week, bans on - state bans on gatherings and so forth as really put a damper on this Thanksgiving season and in more ways than one move. So a lot bigger situation, obviously than just the turkey market. First, I'd like to talk about just some general trends and what's going on in the turkey market.

The slide on turkey production, we'll take a look at that first.  What's happened there has been over the last four or five years we've seen these huge swings in turkey production that 2014 was a bad year for production. 2015-16 was another bad year because of HPAI. But since 2017, production has been trending slowly downward and that's because the industry has not been making a lot of money.

The second chart I sent you is on stocks and it's broken out by parts. And if you look at the heavy blue line that is hen stocks, and those have been coming down for the last few years. Each peak is lower, and that peak generally happens in September, early October. While we did see some strength in hen prices over this year, just today USDA came out with the weekly hen prices in their weekly turkey situation report and those prices have dropped about 10 cents a pound since last week, which is very unusual for this time of year. And that combined with some very heavy specialing that we've seen on frozen turkeys not so much fresh but frozen. Fresh markets held up pretty well but it's a limited supply. That kind of drop this early in the year is very unusual. We've frequently seen that happen in mid- to late December. But to happen in November is a strong indication that demand is weak at retail and that's now being reflected back to this 10 cent drop in wholesale frozen turkey prices. 

Frozen tom prices have also dropped about 10 cents a pound those move generally up and down together like this sometimes a penny or two apart. But they stay pretty close to each other. Over in the rest of the parts markets, in spite of declines in general in parts like fresh tom meat, frozen tom meat, breast meat and the other stocks, the miscellaneous stocks that are near all been trending downward. And yet we have seen very little strength in parts prices. This generally indicates weak demand when you see production going down and prices are not, you know, strengthening or at least staying steady. It's really a bad indication for demand. Where that comes from, I'm not quite sure but I'm sure one thing, these COVID restrictions on Thanksgiving gatherings have played a major role in what's going on in the frozen hen market.

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