Spend Matters welcomes another guest post from Rachel McIntyre of Mintec.
Super Bowl weekend saw some dramatic price increases for the cost of chicken wings. Since then, the market for chicken cuts has experienced some interesting price movements. Wing prices had lost nearly half their value and chicken breast prices have steadily increased to their highest level for nine years.
Chicken meat production was up 6.6% in April year on year as a result of increased flock and heavier birds. In June and early July, it has been reported that broiler companies have placed 1.01 billion eggs into the supply chain, 2.9% more than this time last year.
This increased promise in production comes as the USDA has forecast a record corn crop for this upcoming season. Even though the recent corn forecasts have been revised down by 135 million bushels, they still lie at a massive 14 billion bushels. To put this forecast into context, last season yielded 10.8 billion bushels and 2011/2012 saw production levels of 12.4 billion bushels.
With feed costs down and broiler production up, the only conclusion as to why breast meat is increasing has to relate to demand.
Chicken demand has risen by 3%, primarily due to beef cuts having reached a 10-year high on the back of a reduced cattle herd. Demand for chicken breast has been supported in particular by a number of fast food chain restaurants introducing new chicken-based meals to their menus.
However, the future should bring us cheaper prices as the new flock kicks in over the next few months, and this will happily be supported by the record feed crops.