Chicken prices, with the exception of wings, remain depressed due to excess protein supplies, according to Rabobank’s latest “Agribusiness Review.”
“High retail prices of many chicken products continue to limit consumer interest. With scarce retail ad support, large supplies of competing proteins and growing supplies of chicken, we see limited improvement in prices in the near term,” the report noted.
Boneless breast meat prices are down 2% to 86 cents/lb. and are expected to move continue to move lower through year-end.
Rabobank reported that leg quarters are also depressed due to weak export interest. August exports were down 2.2% to 589 million lb., with double-digit declines in three of the top four leading markets. Gains in Canada and China were not enough to offset declines seen in Mexico, Angola and Cuba, the firm added.
Looking ahead, Rabobank said weak global economic growth will likely limit an export rebound in the fourth quarter, and while a gradual recovery is expected in 2021, sales will still remain below historic levels.
Prices for wings, on the hand, remain strong due to good foodservice demand and relatively limited inventories, Rabobank relayed. Prices for jumbo wings are currently 13% higher than the same period last year, but they are expected to move lower seasonally through year-end.
On the production side, Rabobank reported that recent placement data are in line with year-ago levels, which suggests limited growth in slaughter numbers through the rest of the year.
Ready-to-cook chicken production is currently down 1.4% year over year to 831 million lb., Rabobank said, "with a 3% decline in head slaughtered partially offset by modest increases in weight.”
Big bird production is lower due to weaker breast meat returns, but mid-weight bird production is up sharply, the report noted.
Fourth-quarter production is expected to be in line with year-ago levels. Total 2020 production will be up 1.2%, Rabobank said, adding that this is down 0.3% from earlier expectations.
According to the report, the hatchery supply flock on Sept. 1 was 4% higher than the same period last year, which suggests that integrators may either be retiring a large number of hens and/or anticipating a stronger market in the coming months.
As of right now, Rabobank forecasts ready-to-cook production to rise 0.8% in 2021 versus the year before.