How Markets Talk Turkey

The rewards and challenges of seasonal demand, in six charts.

You're not imagining it. The price of frozen turkey in the U.S. really does get dramatically cheaper as Thanksgiving approaches.

The meat averaged about $1.50 per pound in November and December over the past four years, about 10 cents less than in the balance of the year. And the price decline as Thanksgiving grows closer can be particularly dramatic -- in 2014, retail turkey prices fell almost 15 percent over the course of November.

Gobble Gobble

Prices of frozen turkey meat slump toward the end of every year

Source: USDA, Bloomberg

Note: Prices updated at end of each month.

This is often regarded as a violation of economics 101 -- aren't prices meant to be highest when demand is strongest? -- but in truth, it's quite the opposite. It's meaningless to concentrate much on demand unless you're looking at supply, too, and the U.S. stocks up almost 300 million pounds (136,000 metric tons) of frozen turkey meat every year in time for the holiday season.

Turkey Mountain

The volume of turkey meat in U.S. cold storage falls by three-quarters between late September and late November every year

Source: USDA, Bloomberg

Note: Figures taken at the end of each month.

Freezing has been a huge benefit for poultry farmers, helping them escape the tyranny of seasonal price movements. Hens, which make up the majority of frozen whole birds turning up on Thanksgiving tables, take between 12 and 14 weeks to raise to slaughter weight. 1  

That makes Thanksgiving extraordinarily badly timed for farmers who want to keep both their birds and their feed in the freshest possible condition. Most of the cost of raising turkeys comes from the corn and soy-meal-based feed they eat, but farmers who raise their poultry in time for Thanksgiving using feed purchased at generic futures prices will find themselves doing the bulk of their spending when costs are high.

Seasonal Adjustment

Five-year average prices for poultry feed get cheap at precisely the wrong time for turkey farmers

Source: Bloomberg

Prices of both soy meal and corn tend to peak in the spring and then get a smaller bump over the summer, when fresh turkeys are being bred for Thanksgiving. The best time to be buying feed ingredients, in fact, is in the last three months of the year -- the worst possible season for any seasonally minded farmer who doesn't use and store processed feed or keep slaughtered birds in meat lockers.

This sort of seasonal arbitrage also reduces pressure on processing facilities. It would be wasteful for U.S. abattoirs to have the capacity year-round that they'd need if they were to satisfy the Thanksgiving demand surge with fresh meat alone. By sticking dressed carcasses into cold storage, the industry is able to ensure that for most of the year it slaughters a reasonably consistent 4 million to 4.5 million turkeys each week.

Killing Time

Weekly slaughter figures for turkeys certainly pick up in November, but not by that much

Source: USDA

Note: 2013 figures.

Supermarkets also have to ensure that they time the cycle properly. While retail prices for turkey plummet around Thanksgiving, wholesale prices of both fresh and frozen birds tend to surge, inflicting severe punishment on any stores that have misjudged their stock.

For all the effort that goes into ensuring a year-round supply of reasonably priced turkey, Americans are showing less and less interest in eating the stuff. The U.S. population has risen about 20 percent since the mid-1990s, but turkey consumption has barely increased and has actually been trending down over the past decade.

Pigs Might Fly

Pork and chicken are making up an ever-increasing share of U.S. meat consumption, while beef and turkey stagnate

Source: USDA

Note: Beef/veal and pork figures are for carcass weight equivalent. Includes forecasts. Turkey figures not available beyond 2014.

The same goes for beef, which was overtaken by chicken as America's favorite meat back in 2002. Annual domestic chicken consumption this year will be 57 percent higher than in 1996, according to the U.S. Department of Agriculture, while pork will be up 24 percent. Beef will have fallen 2 percent over the same period, while turkey rose just 1.3 percent between 1996 and 2014, the last year for which data are available.

That should be a comfort for those who regard Thanksgiving as a reminder that turkey belongs in the garbage rather than on the table. The American public is coming round to their way of thinking.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
  1. The biggest specimens in supermarkets are normally male toms -- which can be twice the size, require more feed and time to reach slaughter weight, and occasionally inspire panicked online queries with titles like "Have 40 lbs turkey. How do I cook this thing?"

To contact the author of this story:
David Fickling in Sydney at

To contact the editor responsible for this story:
Paul Sillitoe at

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