Since the pandemic began in the U.S. in March 2020, poultry industry confidence waned but not as much as anticipated.
Conditions and opportunities sank while profit projections were relatively unaffected. The resourceful poultry industry weathered the storm.
One year into the pandemic
A year later, industry confidence is back to – and even slightly above – pre-COVID levels.
The WATT/Rennier Poultry Confidence Overall Index for the first quarter of 2021 was 126 (1996 baseline = 100), up from 102 in the fourth quarter of 2020. The Present Situation Index – assessing current business and labor market conditions – increased from 90 to 115. The Expectations Index – based on a short-term outlook for business activity, labor and profits – rose from 109 to 133.
These findings parallel the general U.S. economy. The Conference Board’s Consumer Confidence Index improved in February 2021. It’s Present Situation Index showed a quarter-over-quarter gain for the first time in three months.
Renewed activity – especially the re-opening of restaurants – inspired by increasing COVID-19 vaccination should spur the foodservice market responsible for a large portion of poultry demand.
Vaccination inspires hope
Several of our poultry respondents cited COVID-19 vaccinations as the key to spurring economic activity. The Conference Board reported vacation plans, particularly for travel outside of the U.S. and via air, saw a major uptick in February 2021 and are poised to improve further as vaccinations efforts expand further.
This renewed activity – especially the re-opening of restaurants – should spur the all-important foodservice market responsible for a large segment of poultry production.
Outlook for 2021
Although feed prices are predicted to rise 10 to 12% in early 2021 due to record demand from China and decreased production in the Americas, many respondents felt the industry would balance supply and demand to maintain profitability.
Supporting this assessment, the U.S. Department of Agriculture predicts a less than 1% increase in broiler production in the first half of 2021 and a production decline in the second half due to higher feed costs. They believed these actions would support a 3.5 cent increase in price per pound, a 15% increase from 2020’s price levels.
Furthermore, several of our respondents emphasized that the poultry industry historically performs better than its primary protein competitors when feed prices climb.
The end in sight?
Widespread heard immunity from vaccination and prior infection, as well as the likely seasonality of the virus, all suggest the COVID-19 pandemic may be reaching its end.
After a year of logistical and operational wrangling, the industry now forecasts better conditions, opportunities and profits. Supply management should improve profits even though grain prices will be higher.