Chicken wings and breast meat set to offer reprieve for inflation-weary consumers Lower prices of both wing and breast meat in recent months are creating a strong opportunity for grocers and restaurant chains to position chicken as an inflation-busting protein item for consumers. And, with March Madness in full swing, the timing couldn’t be better. This is welcome news after COVID-19. Through much of this period, chicken production struggled to keep up with consumer demand for take-out wings, as labor challenges and other supply constraints emerged through 2020 and during the first half of 2021. Weekly slaughter rates went from trending between four to six percent above year-ago levels, to down nearly four percent year-over-year through late 2020. Declining slaughter rates created significant problems for wing supplies in particular, due to the age-old problem of each bird having only two wings. Strong demand coincided with the ongoing supply squeeze, which sent wing prices sky high in 2021. However, when supplies began to recover, persistently record-high wing prices proved too much for the market to bear. As a result of market imbalances, wing inventories rose through the end of 2021, and prices began easing during the first quarter of 2022 as needs for the Super Bowl and March Madness – two of the strongest occasiondriven wing disappearance events on the calendar – were fairly easily met. Wing inventories, as measured by the U.S. Department of Agriculture’s (USDA) monthly cold storage reports, went from setting new fiveyear lows during 2020 and 2021, to growing to fiveyear highs through the first six months of 2022. As they waited for supply recovery, wingcentric restaurants scrambled to divert attention to other offerings. Some wing-only establishments even went as far as marketing drums or introducing chicken sandwiches as alternatives. During the most recent 12 months, improved line speeds and growth in head count have further eased availability constraints. Through the tail of 2022, the five-week moving average broiler harvest was frequently around four percent above prior year totals. At the same time, live weights have remained at or above trend line, contributing added value on a per-head basis, despite broiler valuation slipping.
Bigger birds, lower slaughter rates While falling slaughter rates were stressing wing supplies in late 2020, bird weights were eclipsing previous record-high levels, often overcoming the deficit in headcount. A good example occurred during the week ending Sept. 9, 2020. Slaughter was short of year-ago levels by three percent, but average live weights hit a new record, at 6.48 pounds, helping boost total broiler output three percent year-overyear. By late 2020, elevated live weights were continually helping to offset lower slaughter numbers – despite lower chick placements as the broiler industry dealt with ongoing breeder problems. Just as wing prices were setting new records, breast meat prices plunged to 20-year lows to end 2020. After finally bottoming out, the market for breast meat garnered attention and gained momentum during the second and third quarters of 2021. On a tailwind of tighter supplies, high beef prices and resurging food service demand, breast meat prices skyrocketed during the first half of 2022. But, production also rebounded, to the tune of an additional 75 million pounds per week, on average, in the third and fourth quarters. At the same time, disposable incomes were being crunched by inflation and restaurant visits were decelerating. This all sent wholesale chicken markets into freefall by November, which is essentially where markets remain today. Good news for consumer-facing channels While this looks bad for chicken producers, it should be very inviting for consumer-facing channels to promote chicken as they prepare for the 2023 grilling season – especially since U.S. beef production is set to hit its lowest level since 2017. With boneless breast meat trending around one dollar per pound – down from $3.50 per pound at mid-year – at the wholesale level to end 2022, it would be surprising if food service and retail outlets alike did not take note and plan accordingly. This spells price relief for consumers on at least two major animal protein items – chicken wings and breast meat – which they have gravitated towards in recent years, at a time when they are battling inflationary pressures elsewhere. While market conditions have been favor-
able for chicken buyers in recent months, the same can’t be said for producers. They have been squeezed by low chicken prices, as well as higher input costs across the board – particularly soybean meal, which has risen 25 percent over the past three months and is again approaching record highs. Thankfully, the strong profitability in 2022 should provide some cushion for chicken producers to weather the current storm of low chicken prices and high feed costs. With the shortage of other proteins and returning demand for chicken, CoBank expects the profitability outlook to improve notably by mid-2023. Brian Earnest is the lead economist for animal protein in CoBank’s Knowledge Exchange Division. This article was originally published by CoBank on March 13 and can be found at cobank.com.
Get your SimGenetics from these Colorado members: 7L Diamond’s Hi Altitude Bulls Leah and Peter Clark Bulls sell April 6, 2023 at Valley Livestock in Monte Vista • 719-849-8223
Far Out Cattle Ranch Jerrid Brisendine, 719-353-1747 All-Terrain Bull & Female Sale Monday, March 20, 2023 at Walsh, CO
Rains Simmental Bulls of the Prairie sale Saturday, March 11, 2023, Oakley, KS Mike Rains, 785-672-7129
Altenburg Super Baldy Ranch - Triangle J 120 bulls - Fort Collins, CO Saturday, March 18, 2023 Willie Altenburg, 970-481-2570
Hill Brothers Livestock Females always available. Paul, 417-849-6851 facebook.com/hillbrotherslivestock
Russell’s Reflected R Ranch SimAngus bulls sell private treaty Call Curt, 719-469-2857 for data or go to www.ReflectedRRanch.com
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Jay Hill Family Simmental & SimAngus bulls Private treaty • 970-520-1555 jaywhill@kci.net
T-Heart Ranch High-Altitude Bull Sale March 25, 2023 shane@t-heartranch.com 719-850-3082 or 719-850-3083
Bridle Bit Simmentals All-Terrain Bull & Female Sale Monday, March 20, 2023 at Walsh, CO Chad Cook, 719-529-0564
Mari Simmental Breeders Ron Mari • Holyoke, CO Selling black % & PB ET bulls 970-520-7333 for EPDs & data
Campbell Simmental Part of High-Altitude Bull Sale Saturday, March 25, 2023 at LaGarita, CO Robert, 970-749-9708
Phoenix Cattle Co. Fleckvieh Simmentals & Fleckvieh/Angus seedstock Roger Schager • 303-550-5592
Dilka Cattle Yearling and 18-mo-old bulls, PT Briggsdale, CO • 970-396-8791 thedilkas@aol.com
Cody Pitt Family Black & Red bulls private treaty Hotchkiss, CO • 970-778-9267 cmp5792@aol.com
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