High prices for chicken wings are creating ripple effects for the entire parts market.
In a WATT Poultry Chat interview, Mark Jordan, executive director of LEAP Market Analytics, said high valuations are here to stay for wings which will drive poultry buyers to search for alternatives.
Austin Alonzo: We want to talk about wings today. The wing market is obviously very hot. What updates do you have for us?
Mark Jordan: There's a lot of crazy things going on. I think maybe over the last couple months, there's finally been a little bit of calm, that's happened in the wing market, or a calming effect. Prices are still incredibly strong.
Jumping right in here, I wanted to show an index basically reflecting demand shifts in the wing market. Starting really late last year, but especially transitioning here to 2021 demand -- and this is measured on a wholesale basis and a seasonally adjusted basis -- just exploded, just an extreme deviation from normal. Now, we're showing the index is reflecting a little bit of a rolling over effect as we move from the spring quarter to the summer quarter. Now still just off the charts strong. And a lot of that has to do with higher wholesale prices that are being passed along to the consumer and that there is starting to be a little bit of an effect. As wings have gone up on a wholesale level to above $3 a pound you're starting to see retail prices for raw product $4 a pound or better in many cases and a lot of prepared stuff you know $6, $7 or $8 dollars a pound so it's really started to be a little sticker shock there.
Back to the wholesale market. If you look at that wholesale price and you can see what's happened the last few years and what's kind of unfolded here in 2021. Of course, the market blew up it seemed like it was just rising inexorably there back in spring and peaked there around $3.35 pound since that point it is, as the chart indicates, backed off, cooled off a little bit in early summer. Now it has maintained pretty firm support there around $3 a pound still around $3.10, $3.15 a pound.
So these are still strong valuations and as we move through fall, we've still got the NFL playoffs, College Bowl season all that, so there's still a lot of seasonal factors that are going to keep prices strong, in my opinion. So, in terms of relief, I don't know that that's coming per se but it does seem like the market has a little bit of a lid on it compared to where it seemed headed the first four or five months of the year.
Frozen inventories, let's pivot here real quick. There's the cold storage stocks. Stocks of wings, as of the end of July, totaled 49 million pounds. Now that was the highest end of month cold storage total since the end of September last year. However, still extremely depressed on a historical basis. If you look back at the last several years at the end of July, still very depressed. So that's still an issue.
I'm just going to point out one last one here: the thigh market. These are bone-in thighs USDA, Northeast. There's some things that have been going on with high wing prices. Of course, buyers are looking for substitutes and want to do some things there. A big leader in the wings space is Wingstop. A few months ago, they launched an online offering, Thighstop, to make use of bone-in and boneless thighs sort of as a substitute the same way they use wings. And it's my understanding that's been a pretty successful thing.
Bone-in thighs, that market, you'd go back to the first of the year that market was fairly soft, especially in the second half of 2020. And you're starting to see the effects from Wingstop and potentially others using bone-in wings as a substitute going to these cheaper dark meat products. So, we're starting to see the ripple effects of just an extremely high valuation in the wing market and how that's carrying over and lifting other markets as well.
This transcript edited for length and clarity.
