Global Chicken Prices Soar Amid Supply Shortages and Strong Demand in 2023

Published Oct 6, 2023

In 2023, chicken prices had a volatile year, initially rising due to supply shortages caused by the avian influenza pandemic and inflation. While there was a brief dip in mid-year, prices surged to historic highs in August and September, driven by strong demand, particularly in the US and South Asia. This trend was also influenced by major producers adjusting production and consumers preferring chicken due to rising prices of beef and pork. Strategic reductions in chick placements supported price stability. South Asia saw fluctuations tied to cultural and agricultural factors, with expectations of higher soya prices impacting chicken costs. Looking ahead, both the US and South Asia expect continued bullish chicken prices due to robust demand and favorable market conditions.

Throughout 2023, chicken prices have demonstrated a consistently bullish trend, driven by a combination of factors, including inflationary pressures and the impact of the avian influenza pandemic, which severely affected the global poultry industry. This influenza outbreak, which extended across multiple countries, resulted in a significant supply shortage. The United States (US) and the European Union (EU) were among the regions most affected by this crisis, as reported by Tridge.

In a noteworthy shift, prices experienced their first notable decline of the year in June and July, prompting industry experts to anticipate a sustained change in pricing trends. However, a surge in demand, particularly in major regions like the US and South Asia, drove prices to historic highs in August and September. This price surge was notable in US grocery stores, where chicken prices reached record levels. Market dynamics indicate that these elevated prices will likely persist as major producers, such as Tyson Foods, adjust poultry production to enhance profit margins. Concurrently, mindful of inflation, consumers have shown a preference for chicken over other meats like beef and pork. The United States Bureau of Labor Statistics reported that the average price of fresh whole chicken reached USD 1.96 per pound (lb) in August, marking a 3.7% increase compared to USD 1.89/lb the previous month and setting a new record high.

Source: US Bureau of Labor Statistics, Tridge

Chicken producers implemented a strategic reduction in chick placements for meat production, with a decrease of approximately 2.7% during the six-week period ending on September 23 compared to the previous year. This decision comes after a 4.5% increase in chick placements during the corresponding period of the previous year. Notably, cumulative placements for 2023 fell behind those of the previous year, a shift that began around the conclusion of May, as indicated by United States Department of Agriculture (USDA) data.

This calculated cutback in chick placements appears to have positively impacted the chicken market. Concurrently, it contributed to an uptick in chicken prices. According to Tridge data, the average price of chicken reached USD 1.17/lb on September 18, signifying a noteworthy 9.3% increase compared to USD 1.07/lb on August 7. This trend reflects the dynamic relationship between production decisions and market pricing in the chicken industry, highlighting the industry's adaptability to respond to supply and demand dynamics.

Source: Tridge

After a period of decline spanning from April to August, poultry prices in South Asia have recently begun to climb once more. This upward trend can be partly attributed to the conclusion of Hindu religious periods, Shravan and Adhik Maas, which historically impacted consumption patterns. Moreover, the expected rise in soya prices following the harvesting season, as soya is a major component of poultry feed, is further expected to exert pressure on chicken prices.

The surge in chicken prices is evident in various key markets. For instance, in Kolkata, Bengaluru, and Delhi, farm gate chicken prices reached as high as INR 55.34/lb in the current month, marking a substantial 22% increase compared to July and August when farm gate prices averaged INR 45.36/lb, as reported by Indian spot trading data. A similar trend is observed in retail prices, which have risen to INR 117.94/lb in September, reflecting a noteworthy 23.8% increase compared to INR 95.26/lb in July and August. These fluctuations underscore the dynamic nature of the poultry market in response to changing factors such as cultural practices and agricultural cycles.

In the coming three months, the outlook for chicken prices remains bullish in the US and South Asia due to increased consumer demand and favorable pricing dynamics in the meat market. In the US, rising demand is expected to drive chicken prices higher. Consumers are continuing to prefer chicken over beef and pork, which are currently experiencing higher prices. The tight supply of beef, resulting from ranchers reducing their herds due to three years of drought, contributes to the preference for chicken. This trend will likely persist, keeping chicken prices elevated in the US.

Similarly, in South Asia, improving demand for chicken is anticipated. Retail prices for alternative meat products like beef remain high, prompting consumers to turn to chicken as a more affordable option. With the onset of festivities and the wedding season, demand for poultry is expected to regain momentum in the October to December quarter of FY24. This uptick in demand will likely exert upward pressure on chicken prices in the region.