Source: Chris Scott, MEATINGPLACE, 2/1/19


Chicken, pork and beef producers should see brighter days over the next 12 months despite specific challenges in each sector, one industry analyst is forecasting.

Jeremy Scott of Mizuho Securities predicts that the worst is over for the chicken market, which experienced among its most difficult periods in the last five years in December/January.

A “substantial improvement” in U.S. chicken margins will be powered by feature rotation, stronger exports and a shallower-than-expected ramp in new capacity, Scott said in a report to clients. Spot poultry margins have begun to move higher amid a faster-than-expected pricing recovery and an expected boost in chicken features in both restaurants and retail due to lower costs for breast meat, he said.

Pork
African Swine Fever (ASF) is expected to result in the culling of up to 5 percent of China’s market hogs and up to 10 percent of breeder hog inventories. The world’s largest pork producer could experience a severe shortage of pork products even though consumption in China is down, Scott said.

The analyst also believes there will not be a meaningful climb in pork imports into China until ASF is under control and transport and trade restrictions are lifted.

Beef
Scott sees beef packer margins continuing to trend favorably this year, even though they are off their seasonal highs and feature support is shifting toward chicken from beef.

A healthy animal supply and strong exports should continue to support higher-than-normal packer margins over the next six months, he said. Tyson Foods' beef operations should be a particular beneficiary, Scott predicted.

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