CME: Chicken Prices Surprisingly High for Season

US - Wholesale prices for chicken breast meat have pushed up to the highest values of the year during the last couple weeks, write Steve Meyer and Len Steiner.
calendar icon 7 September 2016
clock icon 4 minute read

This is unusual, as highest prices for the year are typically achieved going into the Memorial Day holiday.

Breast meat prices have moved up 30 cents per pound from the last week in July to the end of August. Last year, during the same interval, breast meat prices went up 11 cents.

As reported by USDA’s Agricultural Marketing Service, breast meat prices have been more volatile this summer than in recent years. A bounce in prices from mid‐June to mid‐July was not of the magnitude seen in recent weeks but was still more price strength than seen in past summers.

Underlying the price performance is production this summer that is unchanged from last year. Average bird weights at time of processing were up .05 pounds during July. Weekly data on bird weights for August indicates that birds will be lighter than a year ago for the month.

The Livestock Marketing Information Center (LMIC) forecast of average bird weights for the summer quarter shows only a .02-pound gain. Last summer, bird weights were up .14 pounds from the summer of 2014.

In terms of ready‐to‐cook chicken production, this amounted to an additional 230 million pounds that put pressure on breast meat prices during the second half of last year.

Wholesale chicken leg prices have been having been as much, or more, of a surprise than breast meat prices in recent weeks. Leg prices have moved up 8 cents per pound (or 20 per cent) in two weeks during August.

Meanwhile, leg quarters (leg part with the back attached, as opposed to remove for just a leg) prices failed to show any upward adjustment. Legs tend to be more popular in the domestic market while leg quarters are a dominant export item.

The divergent price action between legs and leg quarters suggests that there are some positive chicken market demand factors at work coming from the domestic market.

Better domestic demand for chicken dark meat parts at this point in time is interesting because these chicken items tend to be more sensitive to competitive influences from beef and pork.

From a grocery store meat buyer’s perspective, wholesale pork loin prices were 5 per cent lower this last spring than a year ago and this summer will be 2‐3 percent lower (LMIC forecast). Wholesale choice beef prices were down 14 per cent from a year ago in the spring and should be down a similar amount this summer.

In the grocery store, the consumer is seeing retail beef prices this summer that are 5 per cent lower than a year ago and pork prices that are 4 per cent lower. With chicken production slated to be essentially unchanged this summer from a year ago, and competing meat prices lower, it would be normal to expect chicken prices to be lower, also, but current evidence at the wholesale level indicates otherwise.

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