While 2022 was a qualified success, 2023 could be troublesome for the broiler industry.
In a WATT Poultry Chat interview, Mark Jordan, executive director of LEAP Market Analytics, took a look back to 2022 and a look ahead to 2023.
Austin Alonzo: Let's take a look back at 2022. How did the chicken market perform?
Mark Jordan: I think you'd have to say pretty good overall. I would maybe put an asterisk next to that and say, in reviewing 2022, and the broiler complex and the industry overall, it was a good year. One of the best in the last few decades, in fact, not quite as good as 2021, based on the metrics I look at in terms of profitability. A lot of that has to do with the first half of the year was excellent. Those middle few months of summer represented something of a transition. And by year's end, the industry was looking at something of a hard landing. So it was definitely a tale of two (halves), but in aggregate the industry performed pretty well last year.
Austin Alonzo: What about looking forward to 2023? What's your forecast?
Mark Jordan: Yeah, I think this could be a pretty challenging one. Right now, the industry finds itself in a hole bigger than they've seen in a while.
I think one of the concerning things is that, what we've seen is really kind of this historic shift in demand-side forces going from this position of abnormal historic strength. And now seeing a bit of symmetry to swinging to, to conditions we really haven't seen in terms of historic weakness.
Some of this is seasonality and getting through winters. It can just be kind of a slow marketing period for chicken. But even adjusting for seasonality, demand is about as bad as we have seen it in the modern era. I think, from an industry standpoint, there's a lot of control integrators have individually and collectively over the supply chain, to try to work more favorable outcomes in the market if they run into hard times.
But this is something of a unique circumstance. And there's really, very limited control that producers have on the downstream players in the supply chain. Consumers especially, there's a lot of factors there in terms of what drives consumer interest in chicken and protein products.
I will say that chicken now has really firmly reestablished itself as the low-cost protein source. So, from that standpoint, I think that's a positive that argues for more interest. Chicken looks attractive in the broader protein space. So you would expect that to start leading to some more favorable outcomes or at least more favorable demand shifts here in the coming months, but the hole was dug so deep that I think it's going to be a little while before the industry really regains its footing here.
This transcript edited for length and clarity.