A moderating price environment for feed grains, particularly as compared to price levels from a decade ago, has provided protein companies with ample incentive to expand production over the last few years. While all three major protein categories — chicken, beef and pork — have interesting narratives heading toward the traditionally strong summer selling season, none is more compelling than the broiler industry. The fact that chicken overtook beef as the most consumed protein in the U.S. nearly 25 years ago is now largely taken for granted in a sector that has become almost entirely supply driven. Yearly, incremental growth has seemingly become an afterthought, and American consumers have yet to exhibit any form of real resistance to this continual expansion.
Historically, the explosive growth of chicken was undoubtedly linked to relative prices between proteins, as chicken was commonly a cheaper alternative than beef and pork substitutes. The resiliency of chicken as demonstrated by a consumer focus on healthy eating, product innovation and expanded fast food menus, however, has clearly made pricing less of a factor than it once was. In fact, most pork products are now cheaper than chicken in retail markets, but this has not driven domestic consumption materially higher. Rather, the moderate expansion within the domestic pork industry has been almost entirely driven by foreign demand. For the last decade, when feed price inflation and overproduction caused two severe down cycles within the chicken sector, it would seem broiler companies suddenly became immune to the repercussions of supply expansion.