A new era of optimism in the US poultry industry?

For the last five years the WATT/Rennier Poultry Confidence Index documented an unprecedented strength and duration of optimism in the US poultry industry, peaking in the first quarter of 2015.

Masbro, Freeimages.com
Masbro, Freeimages.com

For the last five years, the WATT/Rennier Poultry Confidence Index (PCI) documented an unprecedented strength and duration of optimism in the US poultry industry, peaking in the first quarter of 2015.

I’ve been waiting for the proverbial ball to drop as nearly always happens with commodity-related markets. However, I now believe we might be entering a second wave.

The Overall Index now stands at 146.2, up from 140.1 last quarter. The 100-point baseline reflects the index recorded in 1996. The Present Situation Index held steady at 168.6, compared to 170.9 in the previous quarter. The Expectations Index rose to 131.2 from 119.5.

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Confidence in the poultry industry remains strong as the year 2017 ends. 

The term second wave was applied to feminism, colonization and technology to name a few. It’s when a movement or trend accelerates its pace and/or becomes more mainstream.

The current trend of optimism started in early 2013 and peaked in early 2015. Since then, it remained well above normative levels and recently started to climb again. This is even more amazing given the challenges faced recently, including: three major hurricanes, product recalls, a changing consumer and continued activist attacks.

Why this new uptick in confidence? First and foremost, demand is keeping pace with supply. Integrators are doing an excellent job of balancing these market factors. Steady chicken prices and favorable input costs are contributing as well.

In addition, several PCI survey respondents cited emerging benefits from recent technological improvements and other capital expenditures. These enhancements increase productivity and throughput, resulting in greater returns for less effort and cost.

There also seems to be a resurgence in hiring, due to a need to staff these new capital projects and also because of a general changing of the guard as new employees replace retirees. Many respondents said they were facing difficulties recruiting qualified personnel.

Finally, we cannot underestimate the surging consumer market. Stock markets set new records daily and are contributing to high consumer confidence.  According to Lynn Franco, director of economic indicators and surveys at The Conference Board: “Confidence remains high among consumers, and their expectations suggest the economy will continue expanding at a solid pace for the remainder of the year.”

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Optimism in the poultry industry started picking up around 2013, and is trending upward again after peaking in 2015.

If the poultry industry is indeed catching a second wave – and there are no game-changing events to alter the basic market dynamics – then we should expect this positive trend to continue for a few more years.

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Both the broiler and turkey markets are expected to continue their optimistic trend in the near term. 

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