Sign in Subscribe
Newspaper publishing

Meat Industry Outlook: Increased Chicken Supplies Meet Growing Demand

Strategic Insights

— 2 min read

As the meat industry continues to navigate through a changing landscape of supply and demand, major players such as Tyson Foods Inc. and McDonald's Corp. are reporting significant strides in their respective sectors. Despite concerns over climbing chicken supplies, Tyson President and Chief Executive Donnie Smith is confident that the company will be able to match supply and demand in 2011. Meanwhile, McDonald's global same-store sales rose 7% in July, marking the highest monthly gain since January 2009. The push for greater efficiency in the beef and pork sectors has also led to improved return on sales for Tyson, with both segments posting record figures in the third quarter.

Key Takeaways:

  • Tyson Foods Inc. expects to match supply and demand in the chicken market in 2011, despite concerns over climbing supplies.
  • McDonald's Corp. reported a 7% increase in global same-store sales in July, the highest monthly gain since January 2009.
  • The beef and pork sectors have seen improvements in return on sales for Tyson, with both segments posting record figures in the third quarter.
  • Tyson increased its normalized range for beef return on sales to 2.5%-4%, up from 1.5%-3%, as a result of greater efficiency in the beef business.
  • The normalized range for pork return on sales was also increased to 4%-6%, up from 3%-5%, citing greater efficiency.
  • Live cattle futures declined in response to a sudden decrease in cash flowing into the futures market.
  • Argentina's beef exports slumped sharply in the first half of the year due to tight supply and government limits.
  • Chicago Mercantile Exchange hogs trended downward due to underperforming market fundamentals.
  • Cattle traders in the Plains were looking over the beef prices published by the U.S. Department of Agriculture and hoping for support.
  • Midwest cash hog prices declined by $1 to $2 per hundredweight as packers backed away from the market.

Statistics:

  • 7%: McDonald's global same-store sales increase in July.
  • 5.7%: McDonald's same-store sales gain in the U.S. in July.
  • 5.3%: McDonald's same-store sales gain in Europe in July.
  • 10.1%: McDonald's same-store sales gain in the Asia/Pacific, Middle East and Africa division in July.
  • 2.5%-4%: Tyson's normalized range for beef return on sales.
  • 1.5%-3%: Tyson's previous normalized range for beef return on sales.
  • 4%-6%: Tyson's normalized range for pork return on sales.
  • 3%-5%: Tyson's previous normalized range for pork return on sales.
  • 44%: Decrease in Argentina's beef exports in the first half of the year.
  • 100,000 metric tons: Argentina's beef exports in the first half of the year.
  • $1.95 per hundredweight: Increase in USDA's choice composite boxed beef carcass price.
  • $152.74: USDA's choice composite boxed beef carcass price.
  • $1 to $2 per hundredweight: Decline in Midwest cash hog prices.

Sources:

  • Dow Jones Commodities News via Comtex (August 09, 2010)
  • Dow Jones (August 10, 2010)
  • SmarTrend Alert (August 05, 2010)

Read more