Predicted COVID-19 rebound materializes

Although general consumer confidence navigates a gloomier path, the outlook for poultry is brighter.

(Lightspring | Shutterstock.com)
(Lightspring | Shutterstock.com)

We discovered in the second quarter of 2020 that the poultry industry was confident about the future despite the economic chaos produced by actions related to the novel coronavirus

Although general consumer confidence navigates a gloomier path, the outlook for poultry is brighter.

Confidence returns

The third-quarter 2020 Poultry Confidence Index (PCI) stands at 118 (1996 = 100), up from 96 in the second quarter of 2020, above pre-COVID-19 levels. The Present Situation Index – based on perceptions of current business and labor market conditions – increased dramatically from 61 last quarter to the current 90. The Expectations Index – based on the short-term outlook for income, business & labor market conditions – continued to improve, moving from 120 last quarter to 136 this quarter.

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The poultry industry’s confidence is rebounding in spite of COVID-19.

Consumers still wary

These findings stand in contrast to the The Conference Board’s Consumer Confidence Index, which fell to its lowest level in six years. Consumers were skittish about both the present and especially the future.  Bloomberg Businessweek speculated that “consumers soured on employment and business conditions, indicating Americans are becoming despondent amid persistently high joblessness.”

The poultry industry voiced “less worry about COVID” as the industry has “gotten a handle on it.”  Added optimism comes from “continued re-openings,” a lifting of foodservice restrictions, and a return to “more normal” buying patterns.

Outlook from allied industries

A misstep in how we distributed survey invitations led to a serendipitous discovery – the allied poultry industry is slightly more optimistic than other segments of the market about conditions and opportunities, but less so about profits. These allied suppliers were 55% more likely to say that profits will be lower in six months.

An oft-cited concern from allied suppliers was a reduction in chick placements as this metric determines demand potential for many. Others said they were still dealing with supply-chain issues, declaring it will take time to “turn from a negative situation to a positive one.”  Finally, many allied suppliers mentioned that prices, and hence margins, were being “squeezed” as both vendors and customers were looking to cut costs any way they can and looking to them for assistance.

Summary

The poultry industry rebounded from a single, downward quarter associated with the COVID-19 virus.  Optimism returned as the industry quickly learned how to operate safely, and consumer activities began to return to normal.  However, as evidenced by the concerns of allied suppliers, the recovery will be slower and less profitable for some.

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