Poultry market comes 'through a pretty challenging year,’ as 2024 rebound remains uncertain

10-Oct-2023 - Last updated on 10-Oct-2023 at 14:40 GMT

Image Credit: Getty Images - Roxiller

The US poultry market is facing several headwinds between higher cost of retailer inputs and lighter demand as it closes out 2023, while 2024 is shaping up to be a continuation of many of the trends the industry has experienced this year, Christine McCracken, executive director of animal protein at Rabobank, told FoodNavigator-USA.

“We've come through a pretty challenging year for the poultry industry. I think there was a little excess production here in the US, and we thought there'd be a little bit more demand for poultry given some of the high costs of other proteins, and essentially, we just haven't seen the pickup in demand yet. We still think it's coming," she said.

Consumers opt for other meats, cheaper chicken products

Overall, the global poultry market is expecting smaller than normal growth this year at 1.2%, compared to the historical average of 2.5%, according to Rabobank research. Global trade in processed poultry meat has also seen an 18% drop in the first half of 2023 due to weak economic conditions, and US exports to China have dropped sharply by 23% year-over-year.

Consumers are trading out of the poultry category and trading down to cheaper chicken options, including private label, McCracken said. Shoppers are looking for “cheaper proteins, whether that's [ground beef] ... [and] a lot of ground pork sales,” and “rather than buying breast meat, consumers are trading down maybe to a less expensive de-boned thigh meat or leg quarter,” she added.

Despite the trading down, the poultry market is seeing "some improvement for wings," and chicken tenders are seeing strong demand in foodservice, McCracken said. The at-home cooking trend is also driving demand for chicken wings and products that can be easily cooked with appliance like an an air fryer and will likely see a boost from football season and holiday activities, she said.

Will avian flu strike again?

On the production cost side, the poultry industry is facing a “mixed bag,” as feed costs have gone down and labor prices have gone up, McCracken said. Additionally, avian flu could impact the poultry market again, which drove up egg prices in 2022 and part of 2023.

However, McCracken doesn’t “expect to see the same level of ... devastation for our producers this year that we did last [year],” as the industry has developed new practices and began vaccinating birds in France out of concern for bird flu spreading.

“I think that [avian flu] is a threat to the industry always, but we learned a lot from this last outbreak. It is being carried by wild birds, which is obviously unfortunate, but the industry is really focused on being very mindful of biosecurity and making sure that they do everything they can to keep it out of the barns.”

2024 outlook for the poultry market remains unclear

Looking to the future, the poultry market is expecting 2024 to be very similar to 2023, and its growth will largely “come down to the strength of the economy, [as] chicken tends to do better in a weaker economy,” she said.

“It is all about right-sizing production for the current demand, and the reality is that demand for much of the year just wasn't there. When we think about the consumer into next year, it'll be hopefully a little better,” McCracken said. “Beef is really expensive, so I would see chicken and chicken breast meat specifically filling that void, as we think about the overall need for protein.”