General: Profits for red meat and poultry are expected to be rather thin for this next year. As we start the year, feed costs are very high and expected to remain so, at least until 1996 planting intentions or production data are known. This is coupled with large red meat and poultry supplies. Despite all this, the poultry meat industry continues to expand. A possible limitation to Southeast (specifically South Carolina) expansion is external factors--this would include issues such as laws aimed at confinement livestock, environmental concerns, land use rights, etc. Exports continue to be a long-term growth potential because the U.S. poultry industry produces the lowest cost/highest quality products and does an outstanding job of marketing.

Massive increases in feed costs have been devastating to net returns for the poultry sector. Product prices remained strong during the second half of 1995 and this allowed profits to generally remain positive.

Broilers: U.S. broiler production continues on the rapid expansion path and should increase another 6 percent in 1996. This means that output has increased by about one-third in the past 5 years. Despite the late 1995 high feed costs, returns were generally strong for this sector last year. The late 1995 monthly pullet chick hatch for broiler placement continued to run well above the previous year. Based on current data, we could see quarterly increases for 1996 of: I, +5%; II, +5%; III, +9%; and IV, +6%. The last part will still depend somewhat on early-year feed prices. Cold storage holdings of chicken meat continues to increase; this could have a negative impact on future prices.

Quarterly 1996 broiler prices should average below last year except for the first quarter. Fourth quarter 1994 and first quarter 1995 prices were significantly lower for broilers and this is why QTR I 1996 average prices should be above 1995. Prices (12-city basis) will likely be around the mid-50's for the year and is projected to average about 55.50 for 1996. This is compared to 56.40 for all of 1995. Part of the price forecast is dependent upon competing meats and there will an abundance for this next year. Profits should still remain positive but not as good as 1995.

Exports continue to become a more important part of this industry. Integrators remain aggressive in the world market. This has been a tremendous outlet for our dark-meat cuts and especially leg quarters. One potential problem is that Russia and China account for about two-thirds of our total exports. Canada and especially Mexico were down for this past year. Other markets, such as Korea, Japan, South America, and the Middle East continue to be good customers. Exports are probably tied to our cold storage holdings as a staging area for putting together large lots of specific parts for export.

Turkeys: This sector will likely have a 4 percent increase next year. This will be primarily because of strong 1995 profits -- the best in nine years. The first two quarters of 1996 should average 2-3 percent over last year, but the third quarter could be 8-9 percent over 1995. The large third quarter increase is partly because of the quarterly decline last year. Prices are expected to be below costs for the first two quarters of this year. However, a large portion of profitability still depends on the holiday trade.

Turkey production grew rapidly in South Carolina this past year. The industry continues to concentrate in and around North Carolina.

Turkey exports continue to increase and follow many of the same patterns as broilers. Russia continues to be the big customer and is well over 70 percent of all exports.

Eggs: Egg production for 1995 was below the previous year while prices averaged over 5 cents per dozen higher. This resulted in a year of stronger positive returns. First quarter 1996 production will likely remain close to the same period last year and keep returns positive. However, because of the recent positive returns, production will probably increase 2-3 percent through the rest of 1996. Given this and current feed prices, we could see two quarters of negative returns. For all of 1996, production is projected to be up by 2 percent while prices will average slightly higher than 1994. The outlook for the egg sector remains rather uncertain at this time because of such issues as the large supply of molted hens in the flock, uncertainty of Export Enhancement Program monies, and, feed prices relative to those producing at or below break-even.

Egg exports for 1996 are expected to be close to last year or slightly higher. Lower prices should help improve shipments.

The 1995-96 blizzard/bad winter had an interesting impact on this industry. Short-term prices jumped at some locations due to the inability to deliver the product or very strong demand. Some also feel that there was some increase in sales because of the weather related "bread-milk-egg" stockpiling.

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1996 by Department of Agricultural and Applied Economics, Clemson University.