U.S. consumers have their pick of cheap protein right now. One consequence is lower returns for the country’s chicken-processing giants.
Sanderson Farms Inc., one of the largest American poultry producers, posted disappointing quarterly earnings on Thursday and blamed it on ample supplies. While overall demand for chicken is strong, prices are under pressure because of the glut of beef and pork.
“Demand is pretty good across the proteins,” Tom Hayes, chief executive officer of Tyson Foods Inc., the country’s biggest meat company, said in an interview in Chicago. But “there’s a lot of proteins out there, so prices are down.”
Interactive chart below shows pound per capita since 1970.
Tyson benefits from producing all three major types of meat. While chicken is a tough business, beef is doing better, thanks to strong demand and falling cattle costs, a combination of factors that helped the company to post higher-than-expected fiscal third-quarter earnings earlier in August.
Sanderson, in contrast, is focused on chicken, which it said "will continue to compete against an abundant domestic supply of protein, which may continue to pressure market prices." Also on Thursday, Hormel Foods Corp. gave a full-year earnings forecast that trailed analysts’ estimates and reported a plunge in profits from its commodity meat operations.