Pilgrim's Pride underestimates US meat supplies

Lower beef and pork supplies have increased demand
calendar icon 10 February 2023
clock icon 2 minute read

Pilgrim's Pride Corp, one of the biggest US chicken companies, underestimated meat production at the end of last year, Chief Executive Fabio Sandri said on Thursday after the company reported a surprise quarterly loss, reported Reuters.

The company, owned mostly by meatpacker JBS SA, joined rival Tyson Foods Inc in misjudging that lower beef and pork supplies would increase demand for chicken as consumers grapple with high inflation.

Pilgrim's shares still rose by 5% as the company said it expects beef supplies to shrink later this year and is now seeing some consumers switching to chicken.

Executives expected total meat supplies to tighten toward the end of 2022 because US ranchers slashed the size of the cow herd while avian influenza wiped out millions of turkeys, Sandri told analysts on a call.

As a result, Pilgrim's ramped up chicken production by placing more eggs into incubators for birds that came to market as food in the quarter ending in December, he said.

"The whole industry started placing more chicks," Sandri said.

However, retail chicken demand rose by just 1% because of higher-than-expected beef and pork supplies while the availability of retail, or case-ready, chicken meat jumped by 8.5%, Sandri said. At the same time, the availability of chicken for commodity, or "big bird," markets increased by 12%, he said.

"All this 20% more production in the big bird and the case-ready segment ended up in the foodservice segment and the commodity segment, which pressured the price to levels that we have never seen," Sandri said.

He added there was "total protein availability much higher than anticipated."

Chicken prices will stay below last year's levels through the first half of 2023 but trend higher in the second half, Rabobank said.

Pilgrim's Pride reported a quarterly adjusted loss of 49 cents​​ per share, compared to earnings of 56 cents a year earlier. Analysts expected earnings of 2 cents per share.

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