COVID-19 will have a lasting impact on the turkey market, resulting in a significant decrease in overall production for the year.
“Back in July, the USDA issued a forecast for turkey production in 2020. That outlook predicted more turkey than I think we’re going to produce. Year to date, we were down 108 million pounds at the time of that forecast, with 79 million of that occurring in May,” Dr. Thomas Elam, president of FarmEcon LLC, said during the Midwest Poultry Federation Convention's virtual show on August 12.
“If you look at trends, it’s likely that we’ll be down 350-400 million pounds by the end of the year.”
A shift towards retail
Like the egg and the broiler industry, the turkey market was forced to shift many processing operations from foodservice to retail after restaurants closed dining rooms to limit the spread of the virus.
“Foodservice parts were primarily diverted to retail. It’s difficult to take products designed for foodservice and fit them into retail, but it did largely manage to happen,” Elam said.
Whole bird markets
A low inventory means that turkey prices are higher than ever.
“Hen frozen stocks are well-below prior years. It started low this year and the market hasn’t produced enough hens for the freezer section to catch up. On the other hand, tom frozen stocks are about average,” Elam explained.
“These low hen stocks are resulting in strong prices for both hens and toms, the second highest prices I’ve seen since 2015. The fresh hen premium over frozen has declined though. Traditionally, it’s been 15 to 25 cents. It was 10 cents recently.”
Looking forward
The outlook for the turkey market going forward depends on multiple factors, primarily the behavior of COVID-19 going forward.
“The demand outlook depends on COVID-19 and government policy, including future virus spread and mortality, business restrictions and government economic support. Turkey is not getting a significant amount of aid from the government. Turkey integrators are not considered to be farmers,” Elam said. “All of these factors are very unpredictable, so keep in mind that this could all turn on a dime, particularly business restrictions that could be affected by COVID-19.”
View our continuing coverage of the coronavirus/COVID-19 pandemic.
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