The Year's Top Livestock Stories No. 2

What Do 33 Million Dead Chickens Mean to Beef Producers?

Victoria G Myers
By  Victoria G. Myers , Progressive Farmer Senior Editor
As poultry losses climb, cattle producers may be surprised at the impact it has on this year's market. (DTN/Progressive Farmer photo by Jim Patrico)

For cattle producers the idea of 33 million lost birds in the poultry industry seems staggering. After all, the entire U.S. beef cow herd is 29.7 million head. Surely the astronomical losses being reported among poultry producers will impact everything from feed prices to the cost of a pound of chicken. With poultry, however, it's all relative.

Recent numbers from the USDA and the U.S. Poultry and Egg Association, showed total number of layers at 362 million, broilers at 8.5 billion and turkeys at 235 million. Add it up and it's a staggering 9 billion-plus birds. Thirty-three million of that is 0.37%, less than a half a percent. And 0.37% is probably not going to shake the foundation when it comes to cattle feed prices. In fact Kevin Good, CattleFax senior analyst, expects very little impact will be seen on the beef side as a result of the poultry losses.

"There are two camps on what this means for beef, one is bullish and one is bearish," said Good. "What I see right now is that things are still in balance. They will lose a little production, yes. Although for now it seems to be hitting the egg guys worse than anybody else."

In terms of meat production, Good thinks there will still be a big year over year increase in broiler production.

Based on earlier USDA forecasts, broilers were poised to ramp up production to almost 40 billion pounds this year, from 38.5 billion pounds in 2014. Turkeys, now expected to drop about 2% in terms of production, were set to go up to 6 billion pounds from 2014's level of 5.7 billion pounds.

The bigger issue in all of this, says Good, will be exports. And that is what the livestock industry is watching.

Derrell Peel, livestock marketing specialist with Oklahoma State University, agrees. He said the fact that poultry producers are now shut out of several export markets will have an effect here in the U.S. that may seem counter-intuitive.

"In the short run we are going to see increased domestic supplies of poultry," he said. "Depopulating birds because they are sick won't have a negative supply impact here in the U.S., due to the loss of exports.

"Even if everything ended today in terms of this outbreak, it would take several weeks to months for the international impact to go away. So the idea that we are going to somehow drain the supply of poultry is a long way down the road. We are not even close to impacting the meat supply."

Countries that have banned imports of U.S. poultry and poultry products now include South Korea, Mexico, Canada and China.

Would a bigger domestic supply of broiler meat hurt beef sales? Peel said that seems unlikely based on recent numbers from the Choice Retail Beef Demand Index.

The index, by Glynn Tonsor, Kansas State University, showed choice retail beef demand at 91.09 for the first quarter of 2015, up 13.57%. This was the highest level of demand in the first quarter of a year since 2005, when the number hit 92.16.

"It's my belief that people who were priced out of the beef market have probably been out for two or three years now," said Peel. "Lower prices for poultry may well mean more consumption, but I don't think it will come at the expense of beef. The only reason we aren't selling more beef today, even at these higher prices, is simply because the supplies aren't there."


Victoria Myers