USA- Grocery store shoppers in the United States are facing a pinch as chicken prices hit record highs, driven by a reduction in poultry production by companies like Tyson Foods.

The trend is expected to persist as consumers, grappling with rising inflation, are increasingly opting for chicken over higher-priced beef and pork.

The surge in chicken prices is aimed at boosting the earnings of major producers such as Tyson Foods and Pilgrim’s Pride.

Recently, profit margins for chicken producers have reached their highest levels in a year, according to industry reports.

Data from the U.S. Department of Agriculture also revealed that U.S. chicken consumption is on track to exceed 100 pounds per person this year, a historic high.

However, beef consumption is projected to drop to its lowest level since 2018 due to escalating cattle prices, while pork consumption has hit its lowest point since 2015, driven by consumer spending cutbacks.

Following the COVID-19 pandemic, Tyson Foods, headquartered in Arkansas, experienced a glut of chicken when meat prices surged. To cut costs, Tyson announced the closure of six U.S. chicken plants with nearly 4,700 employees this year.

Meanwhile, analysts anticipated that Tyson’s chicken business would return to profitability in the quarter ending on September 30, following two-quarters of losses.

U.S. facilities reduced the number of chicken eggs placed in incubators by about 2.8% in the six weeks ending on September 23 compared to the previous year.

This marked a significant reversal from the same period in 2022 when hatcheries increased egg placements by 3.6%.

Similarly, chicken producers placed about 2.7% fewer chicks for meat production in the same period, compared to a 4.5% increase the previous year. Cumulative placements for 2023 have fallen below last year’s levels, according to U.S. data.

“An index tracking chicken prices and feed costs, which reflects profitability for poultry producers, reached its highest point in over a year in September,” the report highlighted.

“Declining feed costs, with corn prices near three-year lows, have contributed to improved margins for producers.”

According to the U.S. Department of Agriculture, retail prices for whole fresh chickens and bone-in legs reached record highs in August, while drumstick prices climbed 10% from their nearly one-year low in February.

Despite these rising prices, the demand for chicken continues to grow. Chickens raised for meat largely avoided bird-flu infections in 2022, keeping supplies ample. Improving U.S. demand is helping reduce excess supplies.

However, concerns remain as companies still have large supplies of frozen chicken breasts in freezers, and Tyson recently announced layoffs in response to customer demand at one of its facilities in North Carolina.

As chicken prices continue to rise, there is a potential threat to consumer demand, but for now, consumers are choosing chicken over beef due to tighter beef supplies, resulting from reduced herds during years of drought in the Great Plains.

“We should see improving demand for chicken going forward,” Bill Densmore, senior director for Fitch Ratings noted.

“Retail beef prices are expected to remain high. Quarterly results for Tyson Foods are anticipated in November, where analysts expect to see positive margins for the company’s chicken business.”