It’s safe to count chickens even before they hatch
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
By Robert Cyran
NEW YORK, Oct 30 (Reuters Breakingviews) -Americans are cock-a-hoop for chicken. McDonald’s MCD.N just introduced the Chicken Big Mac, shares of Wingstop WING.O are up 1,100% over the past decade, the Chick-fil-A chain is rolling out an entertainment app, and producer profitability has soared. All the clucking makes it harder to convey a warning about the $50 billion U.S. market for birds bred to eat, but the sky will fall.
Capitalism and science have combined to cultivate fowl so cheap and prevalent that chicken bones have become a notable part of archeological records. The credit, or blame, belongs with factory farming. Industrialization may increase the risk of pandemics, intensify pollution and raise poultry whose tasteless meat is prone to conditions like “woody breast,” but it also means chickens that grow to maturity twice as fast, are double the weight, and about three times as efficient at processing feed as a century ago.
The result is lower prices and higher consumption, which has nearly quadrupled since 1960.
Protein-rich diets have nourished Big Chicken. At $11 billion Pilgrim's Pride PPC.O, which also churns out pork, revenue is forecast to exceed $18 billion this year, twice as much as a decade ago, according to estimates collected by LSEG.
Chicken, however, is a commodity, as prone to wild industry and economic swings as any other agricultural product. When times are bad, companies slash output, which leads to shortages. Prices eventually rise, followed by more factories, new ways to serve the birds and, apparently, chicken-related mobile apps.
So-called broilers go from egg to slaughter in just a few months, so changes can happen much faster than for, say, coffee, where growing plants takes years. Because chicken consumption is bound to keep rising, it can be hard to ascertain when booms and busts will occur.
In early 2022, for example, Pilgrim's Pride said supply was constrained by avian influenza, while higher construction and labor costs dissuaded companies from expanding. Three quarters later, a glut depressed the company’s adjusted EBITDA margin from 11.5% to 1.5%.
Producers today are riding high. Unexpectedly high mortality rates have constrained supply. Beef prices are near a record high, thus curbing the competition. Feed costs also have decreased. Pilgrim's Pride’s profitability jumped to 14.4% in its most recent quarter, approaching previous peaks, and its stock price has almost doubled in the past year.
This boom may last longer than usual. Hurricane Helene pummeled big chicken-producing areas. Before long, though, it’ll be time to count the chickens – before they hatch.
Follow @rob_cyran on X
CONTEXT NEWS
Pilgrim’s Pride, a producer of poultry and pork, is due to report its third-quarter financial results on Oct. 31.
Americans keep eating more chicken https://reut.rs/4e10Q8O
Chickens bred to eat are still getting bigger https://reut.rs/48mFWzv
Pilgrims Pride's wild poultry ride https://reut.rs/3AcR5q8
Editing by Jeffrey Goldfarb and Pranav Kiran
Eng oxirgi yangiliklar
Javobgarlikdan voz kechish: XM Group korxonalari har biri faqat ijro xizmatlarini koʻrsatadi va onlayn savdo platformamizdan foydalanish huquqini beradi, bu odamga veb-saytda yoki veb-sayt orqali mavjud boʻlgan kontentni koʻrish va/yoki undan foydalanishga ruxsat beradi hamda uni oʻzgartirishga moʻljallanmagan va uni oʻzgartirmaydi yoki kengaytirmaydi. Bunday kirish va foydalanish huquqi doimo quyidagilarga boʻysunadi: (i) Shartlar va qoidalar; (ii) Risklar haqida ogohlantirish; va (iii) Javobgarlikni toʻliq rad etish. Shuning uchun bunday kontent umumiy maʼlumot sifatida taqdim etiladi. Xususan, shuni esda tutingki, bizning onlayn savdo platformamiz mazmuni moliyaviy bozorlarda biror bitimni amalga oshirishga oid maslahat yoki taklif emas. Har qanday moliyaviy bozorda savdo qilish sizning kapitalingiz uchun jiddiy risk darajasini oʻz ichiga oladi.
Onlayn savdo platformamizda chop etilgan barcha materiallar faqat taʼlim/axborot maqsadlari uchun moʻljallangan va unda moliyaviy, investitsiya soligʻi yoki savdo maslahatlari va tavsiyalar; yoki bizning savdo narxlarimizning qaydlari; yoki har qanday moliyaviy vositalar bilan bitim tuzish maslahati yoki taklifi; yoki sizga kerak boʻlmagan moliyaviy reklama aksiyalari hisoblanmaydi
Har qanday uchinchi tomon kontenti, shuningdek XM tomonidan tayyorlangan kontent, masalan: fikrlar, yangiliklar, tadqiqotlar, tahlillar, narxlar va boshqa maʼlumotlar yoki bu veb-saytda joylashgan uchinchi tomon saytlariga havolalar umumiy bozor sharhi sifatida "boricha" taqdim etiladi va investitsiya maslahatini tashkil etmaydi. Har qanday kontent investitsiya tadqiqoti sifatida talqin qilinsa, siz bunday kontentni investitsiya tadqiqotlarining mustaqilligini ragʻbatlantirish uchun moʻljallangan qonun talablariga muvofiq moʻljallanmagan va tayyorlanmaganligini eʼtiborga olishingiz va qabul qilishingiz kerak, shuning uchun unga tegishli qonunlar va qoidalarga muvofiq marketing kommunikatsiyasi sifatida qaraladi. Mustaqil boʻlmagan investitsiya tadqiqoti va yuqoridagi maʼlumotlarga oid risk haqida ogohlantirishimizni oʻqib chiqqaningizga va tushunganingizga ishonch hosil qiling, unga bu yerdan kirish mumkin.