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Higher meat prices supported by foodservice return

There’s no immediate end in sight to elevated protein prices with an anticipated comeback in foodservice further supporting demand for chicken, pork and beef, according to BMO Capital Markets analyst Kenneth Zaslow.

The COVID-19 vaccine rollout, shifting trade flows, China demand and renewable diesel expansion all factor into the outlook, Zaslow wrote in a Monday note.

“Foodservice recovery is on the horizon, particularly given consumer pent-up demand and acceleration of the vaccine rollout,” he stated. “A weak dollar and improved U.S. trade relations may support grain and protein exports (e.g., beef, chicken, legs, ethanol).”

The so-called chicken sandwich wars between QSRs have boosted margins in the poultry market, taking care of feed costs. “Wings remain the industry bright spot, at $2.63 a pound,” or up more than 70% year-to-date, he noted.

Beef margins have surged above $350 a head amid ample supplies, accelerating U.S. exports and limited Australian exports, the analyst wrote.

In Zaslow’s view, African Swine Fever creates a “new wrinkle” in the market, but likely helps keep U.S. pork exports stronger for longer.

Par Kate Gibson (15/03/2021)

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<a href="">Prices Stock photos by Vecteezy</a>

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