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  • Writer's pictureMEYO

Beef is proving more Profitable than Chicken in the Pandemic

Inexpensive chicken was supposed to be the pick of the proteins in the pandemic. But suppliers with a greater focus on beef are outperforming those that rely more on poultry. U.S. and Brazilian chicken producers have been struggling amid oversupply, weak prices and sluggish consumption, with analysts saying a production cut may be needed to prop up prices and defend margins. Beef suppliers have benefited from comparatively stronger demand and prices.

In the U.S., meat production has recovered from virus disruptions, meaning supplies are outstripping demand amid still sluggish food-service sales. With beef output back to normal, the red meat is likely to compete with chicken for grocery-store sales.

“We are going to have this flood of red meat coming into the market,” said Peter Galbo, an analyst at Bank of America, adding that retail features for beef are expected to rise “dramatically” this autumn. Meanwhile chicken prices are too low and demand too weak to justify advertisements that can help generate sales.

Sanderson Farms Inc., the third-biggest U.S. chicken producer, estimated last week its total production in the fourth quarter of fiscal 2020 will fall 5% from a year earlier. CEO Joe Sanderson predicted “lower demand during the holiday season for all of our products.”

In top chicken exporter Brazil lower output or higher prices may be inevitable to cover a sharp rise in feed costs, said Ricardo Santin, head of exporter group ABPA.

Ref: BloombergQuint


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