April 2021 Protein Inflation Update
Robust near-term demand driving increased 2021 protein inflation forecast
We are raising our 2021 meat inflation forecasts for chicken and pork, while our beef inflation forecast remains mostly unchanged. Common themes across the three major proteins (chicken, beef, and pork) include strong demand in both retail and foodservice, tighter labor markets, limited production expansion, and a short term boost from stimulus payments. We see the retail, fast food, and full service restaurant industries as being in competition for available product, which is supportive for prices across the three proteins.
- We are forecasting chicken breast inflation at +33% y/y for 2021 on strong demand from the QSR sector and tight supplies. We are forecasting similar levels of inflation for wings and leg quarters.
- We are forecasting -4% y/y for annual deflation in the choice beef cutout, with almost the entirety of deflation coming from May comps to last year’s COVID-19 induced spike, while most other months are expected to be inflationary.
- We are raising our pork cutout inflation forecast from +6-8% y/y to 13% y/y due to a stronger than expected early spring rally, stemming from persistent demand.