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Poultry Market Prospects

BY MARK JORDAN

Broiler industry profit margin
compression likely in 2020
Lower prices and higher input costs are expected to reduce profitability
in the U.S. broiler industry in 2020.
In a cycle of profitability for the U.S.
broiler industry, the burning question
is: How much longer can the good
times last?

Weighted wholesale value of chicken vs.
US broiler industry margins

Cents per pound

95

15

90

12

85

9

80

6

75

3

70

0

65

2013

2014

2015

2016

2017

2018

2019

2020

Cents per pound (RTC-basis)

Input cost pressures ahead
As the biggest and most volatile cost
component, feed can make or break
a bottom line. Since 2015 broiler
feed costs are relatively stable, averaging between $0.18 and $0.21 per
live pound produced, according to
LEAP Market Analytics estimates.
The threat of feed costs soaring
back close to 2012 levels anytime
soon appears remote. Nevertheless,
domestic channels aren't likely to be
as well supplied with key feed inputs
in 2020 as they have been the past
couple of years.
In 2020, the industry should
prepare for a feed cost increase
of at least 3% to 5% from 2019.
Additionally, labor costs are experiencing more upward pressure than
usual. Minimum wage increases
went into effect in several states to
begin the year and persistently low
unemployment has created stiff
competition for workers.

Average net returns (right axis)

Weighted broiler cutout (left axis)

-3

Sources: LEAP Market Analytics, USDA Agricultural Marketing Service

 Profit margins in the US broiler industry were relatively strong last
year but appear headed lower in 2020.

Record supplies threaten prices
The threat posed by rising feed costs
is overshadowed by supply-side
developments likely to have negative
consequences for chicken prices.
Thanks to newly added capacity,
ready-to-cook chicken meat production in the U.S. increased nearly 3%
to 2019 from 2018. Production is
expected to rise another 3% in 2020,
to more than 45 billion pounds.
While the export outlook has

brightened, this kind of surge
in output is expected to stretch
domestic per capita availability of
broiler meat even further into record
territory in 2020 to 68.5 pounds
(boneless weight).
It will be difficult for the demand
side to keep up, especially with so
much beef and pork available. LEAP
Market Analytics is forecasting a
4% decline in the weighted average
value of chicken this year from last,
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Poultry USA - February 2020

Table of Contents for the Digital Edition of Poultry USA - February 2020

Poultry USA - February 2020
Contents
Popeyes’ chicken sandwich is great! Will people switch?
McDonald’s launches new bid to compete in chicken sandwich wars
Could avian flu-resistant chickens be a commercial reality?
Digital technology could streamline the poultry supply chain
ASF drives global poultry market in 2020
Could deboning machinery beat a skilled worker?
How to ensure a clean water supply in the broiler house
Woody breast discovery could offer options for control
Prevention, risk minimization keep foreign materials out
Dark meat is chicken’s next growth engine
Consumers still want value, convenience and flavor
What feed formulators need to know about organic rations
Midwest Poultry Federation Convention 2020: Poultry’s future
Product Review
Market Place
Ad Index
Poultry USA - February 2020 - CT1
Poultry USA - February 2020 - CT2
Poultry USA - February 2020 - Poultry USA - February 2020
Poultry USA - February 2020 - Cover2
Poultry USA - February 2020 - Contents
Poultry USA - February 2020 - Popeyes’ chicken sandwich is great! Will people switch?
Poultry USA - February 2020 - 3
Poultry USA - February 2020 - 4
Poultry USA - February 2020 - 5
Poultry USA - February 2020 - McDonald’s launches new bid to compete in chicken sandwich wars
Poultry USA - February 2020 - 7
Poultry USA - February 2020 - 8
Poultry USA - February 2020 - 9
Poultry USA - February 2020 - 10
Poultry USA - February 2020 - 11
Poultry USA - February 2020 - Could avian flu-resistant chickens be a commercial reality?
Poultry USA - February 2020 - 13
Poultry USA - February 2020 - 14
Poultry USA - February 2020 - 15
Poultry USA - February 2020 - Digital technology could streamline the poultry supply chain
Poultry USA - February 2020 - 17
Poultry USA - February 2020 - ASF drives global poultry market in 2020
Poultry USA - February 2020 - 19
Poultry USA - February 2020 - 20
Poultry USA - February 2020 - 21
Poultry USA - February 2020 - Could deboning machinery beat a skilled worker?
Poultry USA - February 2020 - 23
Poultry USA - February 2020 - How to ensure a clean water supply in the broiler house
Poultry USA - February 2020 - 25
Poultry USA - February 2020 - 26
Poultry USA - February 2020 - 27
Poultry USA - February 2020 - Woody breast discovery could offer options for control
Poultry USA - February 2020 - 29
Poultry USA - February 2020 - Prevention, risk minimization keep foreign materials out
Poultry USA - February 2020 - 31
Poultry USA - February 2020 - 32
Poultry USA - February 2020 - 33
Poultry USA - February 2020 - 34
Poultry USA - February 2020 - 35
Poultry USA - February 2020 - Dark meat is chicken’s next growth engine
Poultry USA - February 2020 - 37
Poultry USA - February 2020 - 38
Poultry USA - February 2020 - 39
Poultry USA - February 2020 - 40
Poultry USA - February 2020 - 41
Poultry USA - February 2020 - Consumers still want value, convenience and flavor
Poultry USA - February 2020 - 43
Poultry USA - February 2020 - 44
Poultry USA - February 2020 - 45
Poultry USA - February 2020 - What feed formulators need to know about organic rations
Poultry USA - February 2020 - 47
Poultry USA - February 2020 - 48
Poultry USA - February 2020 - 49
Poultry USA - February 2020 - Midwest Poultry Federation Convention 2020: Poultry’s future
Poultry USA - February 2020 - Product Review
Poultry USA - February 2020 - Ad Index
Poultry USA - February 2020 - Cover3
Poultry USA - February 2020 - Cover4
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