top of page

Meat and poultry supply growth stalls amid higher prices

Broiler industry expansion remains constrained by breeder productivity issues while beef and pork production head lower.

Inflation is a hot topic and meat and poultry prices are central to the discussion.

Price changes

According to U.S. Department of Agriculture’s Agricultural Marketing Service (USDA-AMS) data, the heavy choice beef cutout value (wholesale) averaged $2.81 per pound during the first 10 months of 2021. That compares to an average of $2.38 per pound overall last year.

The USDA pork cutout value averaged $1.08 per pound from January 2021 through October 2021, up sharply from the 2020 average of just $0.77 per pound.

Likewise, LEAP Market Analytics estimates the weighted wholesale value of all broiler meat sold during the first 10 months of 2021 averaged $1.10 per pound, well above last year’s average of just $0.74 per pound.

Buyers have been left reeling and desperately seeking relief from these higher prices. Generally, higher price levels and elevated profitability are connected in these sectors. This typically generates a supply response from producers. There is scant evidence of a supply rebound. In fact, the opposite is unfolding.

Broiler supplies

In the US broiler sector, the current supply situation is clear.

There is enough plant capacity in place for the industry to be processing at least 3 or 4% more birds than it is. However, plunging breeder productivity, along with lingering damage to industry infrastructure in the wake of February 2021’s winter storms, kept expansion in check. Ready-to-cook broiler production is on track to increase less than 1% overall this year compared to last.

After accounting for population and export trends, domestic per capita availability of chicken should decline slightly overall in 2021 from 2020. Supply growth in 2022 increasingly appears as if it will be minimal at best.

Competing proteins

Trends in competing protein sectors are even more daunting. There is greater fragmentation in these industries. Elevated beef and pork values haven’t necessarily translated into strong profit margins for cattle and hog producers.

Both have been on the front lines of exploding input costs. Many cattle farmers are dealing with severe drought. Hog producers remain shell-shocked from conditions at the outset of the pandemic that led them to euthanize nearly two million animals.

Beef cow inventories (as of January 1, 2021) slid lower the past two years, and liquidation continues with cumulative (January 2021 through mid-October 2021) beef cow slaughter totaling 2.75 million head, up 10% from the 2020 pace.

Hog producers’ caution can be seen with a June-August 2021 pig crop that totaled just 33.9 million, 6% smaller than the same period in 2020.

Meat and poultry supplies are poised to contract in consecutive years (2021-22) for the first time since 2011-12.

Impact on retailers

Combined domestic per capita availability of beef, pork, and chicken is on track to decline less than 1% overall this year from 2020. It is forecasted to shrink another 1 to 2% overall in 2022 and could wind up sinking back close to 2018 supply levels.

Retail and foodservice will likely view this outlook with alarm. It implies products will be even more scarce in the coming year after prices already launched into the stratosphere.

Meat procurement will remain a challenge in this environment. Food retailers are likely to keep passing along higher prices to consumers.

Par : Mark Jordan (03/11/2021)

Source :

Images : tirées de l'article original

bottom of page