The Henningsen Cold Storage Co. warehouse in Stilwell, Okla., was so jammed with frozen turkeys from the likes of Butterball and Cargill Inc. this year that manager Scott Mayberry turned down requests to store about 1 million more birds, or double his inventory.
"We didn't have any room," said Mayberry, who manages 3.5 million cubic feet of space that is the size of two Home Depot Inc. stores and usually holds as much as 20 million pounds of frozen turkeys before the Thanksgiving holiday in November, the peak for U.S. demand.
Rising output last year and slowing sales left domestic stockpiles tracked by the government at four-year highs in August and September. That signals deeper seasonal discounts on retail prices that are the highest on record going back to 1980, because about 85 percent of the 46 million birds Americans eat at Thanksgiving meals are frozen rather than fresh, according to the National Turkey Federation.
"We overproduced a bit in 2012, and we had quite a few excess birds left over in freezers," said Tom Elam, the president of food-industry consultant FarmEcon in Carmel, Ind.
U.S. warehouses held 325.34 million pounds of frozen whole turkeys in September and 335.55 million pounds in August, the highest for each month since 2009, U.S. Department of Agriculture data show. Stockpiles typically peak at that time of year in preparation for Thanksgiving, said David Harvey, a USDA economist.
Farmers will sell turkeys on average for $1.01 to $1.05 a pound in the last three months of 2013, as much as 4.8 percent less than a year earlier, the USDA estimates.
The decline comes as prices fall for many commodities. The Standard & Poor's GSCI Spot Index of 24 raw materials is down 3.7 percent this year, heading for the first annual drop since the recession in 2008, led by a 39 percent plunge in corn. The Bloomberg U.S. Treasury Bond Index lost 2.3 percent since the end of December, while the MSCI All-Country World Index of equities rose 18 percent.
While retail meat prices tracked by the government rallied to records this year, after a 2012 surge in feed costs forced poultry and beef producers to cut output, consumers probably will be paying less for Thanksgiving birds than in 2012, said Corinne Alexander, an agricultural economist at Purdue University in West Lafayette, Ind.
Whole frozen turkeys averaged $1.819 a pound in September, up 12 percent from a year earlier and the highest since at least 1980, the Bureau of Labor data show. Consumers won't have to pay that much because retailers discount the birds at this time of year as a "loss leader" to attract more shoppers, Alexander said.
With a "substantial" drop in wholesale costs, grocers will expand promotions and discounts on Thanksgiving turkeys, with some already at 59 cents a pound, said Russell Whitman of commodity researcher Urner Barry in Toms River, N.J.
Schaul's Signature Gourmet Foods, an Elk Grove, Ill.-based grocery distributor, is saving a few cents a pound on every frozen turkey it buys from processors and growers in the northern Midwest, said Robert Schaul, 62, the company president.
"There are plenty of turkeys this year," Schaul said, adding that he is selling frozen birds for about $1.45 to $1.50 a pound, down a few pennies from last year.
While there are plenty of frozen birds, the fresh market may be short of supply. Placement of poults, or turkeys that are a couple weeks old or younger, were down 10 percent throughout the summer because of high feed costs, said John Burkel, chairman of the National Turkey Federation and a fourth-generation turkey grower in Badger, Minn.
"There were cuts all the way across the industry to keep production levels around Thanksgiving manageable," Burkel said. "Those cuts are going to show as we move forward in the fresh market."
Turkey output will total 5.86 billion pounds this year, down 1.8 percent from 2012, according to the USDA. There also is evidence that increased discounting is boosting demand, as the number of frozen birds in cold storage at the end of October fell 6.7 percent from a year earlier, government data show.
At Henningsen Cold Storage in Oklahoma, which turned away as much as 20 million pounds of birds around July or August because the space allotted for poultry was already full, the turkey inventory has been reduced about a quarter of its peak, with the rest left for Christmas holiday sales, Mayberry said. About half the warehouse is used for turkeys, with the rest holding mostly frozen pies and other food items, he said.
Butterball, the largest U.S. producer, said earlier this month that it had a "limited availability" of fresh turkeys as weight gains declined on some of its farms. The Garner, N.C.-based company expects to "completely fulfill" all consumer orders of fresh birds by Christmas, Stephanie Llorente, a company spokeswoman, said in an e-mailed statement.
Even with fewer fresh birds, Butterball's inventory of the more common, frozen whole birds is "ample," and it has shipped 100 percent of customers' frozen orders, Llorente said.
The average cost of feeding 10 people the 12 items typically served for Thanksgiving will be $49.04 this year, down 0.9 percent from 2012, according to an informal survey of retail food prices by the American Farm Bureau Federation. Excluding store promotions, the average price of a 16-pound turkey fell 2.1 percent to $21.76, down 47 cents, the biggest drop of any food item, the federation said.
