Organic chicken production in the U.S.
Production of organic chicken skyrocketed in August of 2016, with the number of organic chickens harvested moving from between 200,000 and 500,000 to numbers between 600,000 and 1,300,000. In November 2017, the USDA started reporting weekly organic chicken production separately from conventional chicken production. After that major increase in production in 2016, the number of head slaughtered per week in certified organic facilities smoothed out and has remained fairly consistent year over year.
Currently, the processing of organic birds is between one and two percent of the total number of birds collected. The northeast, northwest, and Pacific regions generally account for the largest percentage of organic chicken retail features in the U.S. Organic chicken retail sales appear aligned with the cost of living. Regions with a historically higher cost of living generally show higher retail features for organic chicken. Perhaps high costs throughout much of these region’s economies allow consumers to view products with increased price points in a more muted manner compared to consumers in regions in which money changes hands in smaller quantities. Organic retail features also appear closely related to prominent political party affiliation, with regions that predominantly house democratic voters tending to have much higher percentages of the nation’s sales.
Turkey tailwind: momentum building towards Thanksgiving season
The turkey industry has had a tough time conjuring up demand this past year. A steep decline in demand and prices for frozen whole turkey began in May of last year, following all-time high prices. The price drop hit its plateau in December and has remained completely flat this year. While frozen turkey doesn’t appear to be making any headway yet, fresh whole turkey offerings are starting to gain some momentum. Negotiations of fresh products for Thanksgiving often start taking place in March or April, but this year very few transactions surfaced throughout spring and this first part of summer, leading to fresh offerings being unquoted by Expana during this time frame. However, some producers are breathing a sigh of relief as they are finally able to ink sales for fresh Thanksgiving sales. Due to the increased availability of transactional data, Expana expects to reinstate quotations for fresh turkeys sometime within the next couple of months.
Medium egg meltdown: heat, demand and the price pressure
Although most conventional egg prices have been under pressure for the past couple of weeks, medium-sized eggs have been decreasing at a faster rate than their larger counterparts. Despite improvements in housing conditions, laying hens remains susceptible to extreme heat, which much of the nation has been experiencing recently. In response to high temperatures, birds tend to eat less, and as a result, lay smaller eggs.
Since most of the nation’s production is geared toward laying large eggs, this heat-related size loss is significantly impacting medium egg production, leaving some producers in a state of surplus. This size is not typically preferred by American consumers, limiting opportunities to pack these eggs for retail shelves, especially given the heat’s dampening effect on consumer interest overall.
While those with excess have found opportunities to sell mediums into hard-cooking, food processing and export channels, buyers in these sectors are selective in their approach, often seeking discounts. Given mounting availability, and in turn competition, sellers have been forced to acquiesce, leading to substantial discounting.
In contrast, larger sizes, which have not experienced the recent surge in production, are in better balance and enjoy higher retail interest, resulting in less significant discounts. As temperatures across much of the nation return to more moderate levels, production is normalizing, and the industry remains watchful of medium egg trends going forward.
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