Retail prices for chicken wings and breast meat have fallen sharply in recent months, bringing some much-needed relief to inflation-weary consumers. The falling prices are welcome news for foodservice providers as well, given the years-long market upheaval and supply shortages caused by COVID-19. And the timing couldn't be better as college basketball fans will soon flock to wing centric establishments to soak in March Madness.
According to a new report from CoBank's Knowledge Exchange, lower wholesale prices for wings and breast meat are creating a strong opportunity for grocers and restaurant chains to feature chicken as an inflation-busting protein item for consumers. Grocers are also likely to leverage the lower prices to promote chicken as they prepare for the 2023 grilling season, especially since U.S. beef production is set to hit its lowest level since 2017.
"With wholesale prices for boneless breast meat trending significantly lower than last year, it would be surprising if food service and retail outlets alike didn't take note and plan their summer meat case features accordingly," said Brian Earnest, lead animal protein economist for CoBank. "Particularly given the inflationary pressures in other animal protein sectors."
Throughout much of the pandemic, chicken production struggled to keep up with consumer demand for take-out wings due to labor challenges and other supply constraints. Strong demand, coupled with the ongoing supply squeeze, sent wing prices sky high in 2021. As wing-centric restaurants waited for inventory levels to build, many scrambled to divert attention to other offerings.
Breast meat prices skyrocketed during the second half of 2022 on a tailwind of tighter supplies, high beef prices and resurging food service demand. But, production rebounded to the tune of an additional 75 million pounds per week on average in the third and fourth quarters. At the same time, disposable incomes were being crunched by inflation and restaurant visits were decelerating. This all sent wholesale chicken markets into freefall by November, which is essentially where markets remain today.
While market conditions have been favorable for chicken buyers in recent months, producers have been squeezed by low chicken prices and higher feed costs. Soybean meal has risen 25% over the past three months and is approaching record highs.
But Earnest said strong profitability in 2022 should provide some cushion for chicken producers to weather the current price cycle. "With the shortage of other proteins and returning demand for chicken, we expect the profitability outlook to improve notably by mid-2023," he added.
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