Over the past year, while some meat prices have fallen, chicken prices have remained stubbornly high. High demand, supply issues and even breeding issues with underperforming roosters kept the pressure on. The supply shortage has even prompted some restaurants, like Wingstop, to experiment with less popular items like thighs.
But now, conditions are finally easing, paving the way for further price declines. In the year to October, without accounting for seasonal fluctuations, chicken prices jumped 14.5%, according to data from the Bureau of Labor Statistics.
But in October, prices fell 1.3% from the previous month. And promotions and offers are right around the corner.
The poultry industry was able to solve one of the problems that reduced supply last year – poor rooster choice that led to fewer chicks than expected.
In May 2021, poultry giant Tyson explained that it was running out of chickens due to disappointing results with the type of breeding rooster it had chosen.
“We’re changing a buck that, quite frankly, we made the wrong decision on,” Donnie King, then Tyson’s chief operating officer and chairman of the poultry group, said at the time. There was an “unexpected drop” in hatching earlier that year due to the type of roosters he was using, said King, now CEO.
Tyson wasn’t the only one with the problem, noted Christine McCracken, executive director of animal protein at Rabobank. “If you look at the industry as a whole, there were productivity issues that challenged several operators,” she said.
Since then, producers “have gone back to a more traditional bird,” she said.
But the roosters don’t bear all the blame. Chicken processors were caught off guard by the sudden rebound in foodservice demand in 2021 after massive restaurant closures in 2020, said Grady Ferguson, principal research analyst at Gro Intelligence, a data analytics firm. agricultural.
The decision to reduce supply in 2020 has affected flock sizes in 2021 – you cannot reduce a flock of chickens overnight. Indeed, growers bet in 2020 that demand would still be down in 2021 and projected that a smaller supply would be enough, he said.
But in 2021, demand is back in full force. Because of this, chicken farmers were “undersupplied [and] unable to meet the demand for this unexpectedly white-hot post-isolation demand” for the chicken, Ferguson said.
With a better alignment of supply and demand, wholesale prices have fallen in recent months and grocery store prices have started to follow.
It takes some time for lower wholesale prices to reach consumers.
Part of the reason is long contracts that shield buyers and sellers from volatility. It’s also because wild price swings at the grocery store would be shocking to consumers, so retailers would rather raise or lower prices steadily than stick closely to what’s happening on the market. wholesale market.
Yet, a drop in wholesale prices eventually leads to a drop in retail prices, which is starting to happen.
The drop marks a welcome turnaround from higher chicken prices this year, which added an additional stressor to the grocery store for consumers who have turned to chicken as a more affordable alternative to beef and seafood. other expensive cuts of meat.
Chicken is always cheaper than beef or pork when you look at posted prices, said Jayson Lusk, head of the agricultural economics department at Purdue University.
“Whether [consumers are] being pinched, their real purchasing power decreases, poultry will look like a good option. And more grocery stores will likely start offering more chicken specials after the holidays.
At this time of year, shoppers are typically looking for roasts, stew meats, sausages and, of course, turkey. Retailers can offer promotions on these seasonal foods to attract customers.
But customers just aren’t interested in chicken, so it doesn’t make sense to offer promotions on the item during the holidays.
But that will likely change early next year, Rabobank’s McCracken said, once the holidays are over and people make new resolutions.
“Everyone is going back to leaner, healthier meats at the start of the year,” she said. This means that offers are coming.