Source: Chris Scott, MEATINGPLACE, 6/1/17


Lower weights, lower hatchability, robust export demand and a wing shortage should support strong chicken margins for the foreseeable future, BMO Capital Markets said in a report from its 12th annual Farm to Market Conference.

Tyson Foods Inc. should see chicken margins return to “above-normalized levels” in the current quarter thanks to strong protein fundamentals, BMO analyst Kenneth Zaslow wrote. 

Sanderson Farms Inc., meanwhile, is “best positioned to benefit from the stellar chicken margin outlook,” as it continues to consistently expand capacity, he said.

In presentations at the conference, companies indicated chicken weights are likely to decline or remain flat for the next several years. Reduced hatchability is also keeping supply in check, reflecting breeder changes in the industry, an older hatchery flock and the removal of antibiotics at the hatchery level, Zaslow said.

Export demand could grow even stronger if China opens its markets later this year. At the same time, demand for chicken wings has sent prices 30 percent higher from a year ago and should remain “exceptional” as wing concept restaurants expand and the popularity of wings continues to grow, the analyst said.   

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