Rising chicken prices put pressure on U.S. consumers

Higher chicken prices should improve the profits of leading producers Tyson and Pilgrim's Pride, but will hurt consumers as they try to save money by forgoing higher-quality proteins. One index shows that chicken producer profits have reached their highest level in a year.

Chicken consumption in the United States is expected to exceed 100 pounds per person for the first time this year, according to U.S. Department of Agriculture data.

Beef consumption is projected to fall to its lowest level since 2018 as prices rise due to reduced cattle supplies . Meanwhile, reduced consumer spending has driven pork consumption to its lowest level since 2015.

Arkansas-based Tyson, which sells all three types of meat, is facing a chicken glut after making huge profits when meat prices soared during the pandemic.covid-19 .

The company announced it would close six chicken plants in the US this year, employing approximately 4,700 people, to cut costs. Analysts believe its chicken business likely returned to profitability in the quarter ended September 30 after two quarters of operating losses.

Reduced supply now benefits producers' profits.

In the six weeks ending September 23, chicken producers placed approximately 2.7% fewer chickens for meat production than a year earlier, when they saw a 4.5% increase. According to U.S. data, the cumulative number of placements for 2023 has fallen below the previous year's level.

The Chicken Meat and Feed Price Index, which reflects poultry producer profitability, reached its highest level in more than a year in September. Lower feed costs are helping producers boost profits, and corn prices are near their lowest in three years.

According to the latest monthly data from the U.S. Department of Agriculture, retail prices for whole fresh chicken and bone-in legs reached nominal records in August. Prices for drumsticks have risen 10% from a near-year low reached in February.

Wholesale prices also increased.

Further rises in chicken prices could threaten demand, said Adam Speck, senior commodities analyst at Gro Intelligence.

But consumers are still choosing chicken because beef supplies are dwindling after ranchers cut their herds during a three-year drought in the Great Plains.