Tyson Adds Workers, Breeds Bigger Flocks as Chicken Demand Soars

The biggest U.S. chicken producer is struggling to keep pace with rising demand for crispy sandwiches and wings.

Tyson Foods Inc. said it is raising wages to improve staffing at its poultry plants, spending tens of millions of dollars to buy meat from competitors and even bringing in a new male bird to help breed bigger flocks.

Understaffed processing lines and problems on farms and hatcheries have cut into the Arkansas-based meat giant's chicken production, executives said, at the same time that reopening restaurants' demand for chicken is booming.


Costs Eat Into Tyson's Chicken Profits --- Market Talk

0756 ET - Demand for chicken sandwiches and wings is surging at US restaurants this year, but for the country's biggest poultry processor, rising costs are offsetting much of the benefit. Tyson Foods says that while its average price for chicken climbed 7.8% in the quarter ended April 3 and overall revenue increased, the company also recorded $320M in legal contingencies and $125M to $140M in higher feed ingredient costs. Those came on top of ongoing Covid-19 expenses and severe cold weather across the US South in February, which hit Tyson's chicken operations. Tyson's adjusted operating income from chicken falls to $6M for the quarter from $99M in the prior-year period. (; @jacobbunge)




Chicken Boom Forces Tyson to Scramble -- Market Talk

1005 ET - US restaurants aren't the only ones having to scramble for chicken breasts and wings. Tyson Foods, the top US chicken producer, says it is spending more on outside meat purchases to meet demand from customers, after labor shortages, cold winter weather and other challenges raising chickens have constrained Tyson's production. The company is working on staffing up plants and even bringing in a new male breeding bird to help improve its hatching rates, but for now, Chief Operating Officer Donnie King says, "we're too dependent on the outside purchase of meat." In chicken, Tyson buys meat from other processors when demand exceeds the company's own supply. (; @jacobbunge)


Tyson Foods Estimates 30% of Employees Vaccinated -- Market Talk

0815 ET - Meatpackers have been vaccinating workers against Covid-19 at plants since early February, but top US protein producer Tyson Foods still has a long way to go. The Arkansas company estimates 42,000 employees have been vaccinated so far, which would represent about 35% of Tyson's US employee base, and 30% of its global total. The CDC estimates that 34.4% of the total US population now are fully vaccinated. In the meat industry, companies and unions have been working to overcome skepticism among some plant workers, mounting educational campaigns and offering incentives. (; @jacobbunge)




Cattle Higher as Producers Have Difficulty Ramping Up -- Market Talk

15:41 ET - Most-active live cattle futures trading on the CME finished up 2% to $1.185 per pound Monday. The pace of cattle slaughter is going slower than this time last year, suggesting some issues with producers being able to ramp up to take advantage of resurgent demand from food service providers. "Despite strong demand, packers continue to have a difficult time ramping up production," says Steiner Consulting. "Labor is a challenge for packers on a good day and these days the problem has become even worse as all industries are clamoring for people." Hog futures, meanwhile, closed trading Monday down 0.5% to $1.12475 per pound. (; @kirkmaltais)



Estimated U.S. Pork Packer Margin Index - May 10 
Source: USDA, based on Wall Street Journal calculations. 
All figures are on a per-head basis. 
Date     Standard Margin       Estimated margin 
         Operating Index         at vertically - 
                             integrated operations 
May 10       -$ 26.12            +$ 98.16 
May  7       -$ 24.70            +$ 98.82 
May  6       -$ 26.23            +$ 99.92 
* Based on Iowa State University's latest estimated cost of production. 
A positive number indicates a processing margin above the cost of 
production of the animals. 
This report compares the USDA's latest beef carcass composite 
values as a percentage of their respective year-ago prices. 
          For Today              Choice   67.4 
      (Percent of Year-Ago)      Select   65.5 
USDA Boxed Beef, Pork Reports 

Wholesale choice-grade beef prices Monday rose $3.23 per hundred pounds, to $309.11, according to the USDA. Select-grade prices rose $3.49 per hundred pounds, to $293.76. The total load count was 71. Wholesale pork prices fell 31 cents, to $111.39 a hundred pounds, based on Omaha, Neb., price quotes.

(END) Dow Jones Newswires

May 10, 2021 17:19 ET (21:19 GMT)

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