Meat and poultry
Consumer demand for meat and poultry products accelerates as market recovers from impact of drought and avian influenza.
 

KANSAS CITY — The market for meat protein is coming into balance. After years of disruption, with drought devastating the beef industry and avian influenza affecting the poultry markets, supply and demand across the various meat proteins are moving toward equilibrium. Combine that balance with favorable market conditions and you have a recipe for success.

In early August, Tyson Foods, Inc., Springdale, Ark., one of the world’s largest processors of meat protein, issued its outlook for 2018, and it was positive.

“With ample supplies of cattle, we see very good conditions for our Beef business as far out as 2020 as we enter the early stages of a multiyear expansion cycle,” said Thomas P. Hayes, president and chief executive officer of Tyson Foods, during an Aug. 7 conference call to discuss financial results. “Absent a shock to the system such as a drought or an import ban, our Beef business is well positioned for profitable, long-term growth.”

Meat and poultry
 

Mr. Hayes added that the beef industry also will be helped by the opening of China to U.S. beef exports.


“…we’re proud to say that Tyson Foods was the first to arrive in China with U.S. beef,” he said. “While shipments to this part (of the world) are very small, we’re optimistic. Chinese consumers prefer high-value cuts, and we think they’ll appreciate this pure quality of U.S. beef. (It’s) too soon to know yet what this could mean for exports, but we believe there’s great potential in this. U.S. beef export demand was up 20% year-over-year in Q3.”

Mr. Hayes sounded a similar note regarding pork. While the national herd is expanding, new processing capacity in the United States is coming on-line to absorb the increase.

Bacon burger
Food service demand for bacon has driven growth in pork.
 

“As with Beef, strong export demand was a key driver for our Pork segment, with U.S. pork exports up 10% year-over-year,” Mr. Hayes said. “Our operations performed very well as we’ve maximized revenue and mix.

“There’s been tremendous food service demand for bacon, which was a primary driver of the increased cutout. While performance could moderate from Q3 levels as global competition increases and labor markets tighten, the Pork segment is expected to perform well in Q4 despite pressure from competing proteins.”

On chicken, Mr. Hayes said higher prices have not dampened consumer demand.

Tyson chicken
Higher chicken prices have not dampened consumer demand.
 

“… Per capita consumption is projected to reach a record high this year,” he said.

Mr. Hayes’ assessment of the meat protein market is in line with data from the U.S. Department of Agriculture, which said positive changes in 2018 per capita beef, pork and poultry disappearance are expected to be driven largely by production increases, but also changes in trade in its July Livestock, Dairy and Poultry Outlook report.

In 2018, the U.S.D.A. is projecting per capita disappearance to be 58.5 lbs for beef; 51 lbs for pork, the largest per capita disappearance since 2004; 91.5 lbs for chicken; and 17 lbs for turkey.