Cheaper Turkeys for the Holidays

Spend Matters welcomes a guest post from Yasan Namazi of Mintec.

With Thanksgiving in three days and Christmas fast approaching, one’s mind turns to turkey. The U.S. consumes 20% of its turkey at Thanksgiving and another 10% at Christmas. What is the current state of the market for this most seasonal of birds?

The last two months of the year are a critical time for the turkey market. The holiday season puts a great deal of attention on the turkey market, with prices tending to peak around Thanksgiving. However, in 2013 the increase in price has been much weaker than usual, and turkey prices are down around 10% from this time last year.

Turkey

Turkey production fell during the third quarter of 2013 to 1.44 billion pounds, down 2.7% from this time last year. The high feed prices seen in 2012 had kept turkey prices high and led to a drop in demand. As a consequence, less poults (newly hatched turkeys) were produced, causing the fall in the number of adult turkeys and leading to a 5% year-on-year drop in turkey slaughter numbers in Q3 2013. However, the average slaughter weight has increased, partially offsetting the fall in the number of slaughtered turkeys.

Despite this drop in production, turkey prices this year have increased much less than in recent years. Turkey stocks were up 4% year-on-year to 542m pounds in September, as demand has dropped both domestically and also from key export markets. US turkey exports in 2013 are forecast 7% lower than 2012, leaving more available for the domestic market and acting to limit the seasonal rise in prices.

The drop seen this year in the cost of feed has also reduced the seasonal rise in turkey prices. Corn prices have nearly halved since June 2012 and are now at a three-year low. This fall in price has been driven by the record corn production seen in the 2013/14 US harvest, with production reaching 355m tons, up 30% from last season’s drought-affected crop, which pushed corn prices up. Likewise, global production of soybean meal, another important turkey feed ingredient, has increased by 4% year-on-year, driving down feed prices.

With feed prices lower, demand falling, and stocks plentiful, it’s no surprise that these particular holiday birds are sitting pretty.

Discuss this:

Your email address will not be published. Required fields are marked *