Chicken prices rise as consumers stay home during COVID-19

The U.S. chicken market should expect positive growth in 2020 despite challenges posed by the COVID-19 pandemic, reveals the latest Quarterly report from cooperative bank CoBank.

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Jshanebutt | BigStock.com
Jshanebutt | BigStock.com

The U.S. chicken market should expect positive growth in 2020 despite challenges posed by the COVID-19 pandemic, reveals the latest Quarterly report from cooperative bank CoBank.

In the first two months of 2020, chicken production grew 7.7%. At the time, the industry was largely optimistic given expectations that renewed exports to China would be happening soon. This growth exceeded expectations and CoBank now predicts the 2020 chicken supply to increase by 3-4%, up from the original estimates of 2-3%.

In March, the spread of COVID-19 shifted the focus to domestic markets. With most governing bodies advising people to stay at home, consumers have turned to at-home dining. Chicken sales have grown exponentially as a result, with the price of chicken breasts has increased at a rate higher than expected.

“The price of chicken breast, which is almost entirely sold domestically, has jumped in the last month beyond the expected seasonal increase,” the report explained. “With much of U.S. ordered to stay home, foodservice demand is in question. The degree to which that demand shifts to retail will dictate how long these positive prices remain.”

Looking forward

The U.S. could see an increase in chicken imports from China this spring and summer once the pandemic is under control there, however CoBank predicts that large exports from the U.S. to China during the next quarter are probably unlikely.

The two greatest challenges facing the protein processing market right now are the risk of lowered plant productivity or even shutdowns as a result of worker illness and a lack of space in cold storage facilities to hold product.

“As the coronavirus continues to spread, the biggest challenges for our customers are labor and supply chain disruptions. Transforming agricultural goods into food is process-intensive,” Dan Kowalski, vice president, Knowledge Exchange, CoBank, wrote in the report. “Keeping these key functions staffed, and navigating logistics disruptions, will be paramount to keeping the lights on and keeping us all fed.”

View our continuing coverage of the coronavirus/COVID-19 pandemic.

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