Analysis: Evaluating the link between pork and poultry prices

Prices for poultry and pork have fallen over the past month but remain at elevated levels. 

The rise in poultry prices has been attributed to several factors including the overseas outbreak of avian flu, more expensive chickens, and higher feed prices. Many analysts and executives in the poultry industry have also said that rising pork prices have helped support chicken prices. 

To assess the impact of pork prices on chicken prices we have examined national average wholesale price data from the past several years, including years before African Swine Fever (ASF), to gauge the impact of this effect. 

The prices of the two types of meat had little connection in 2018, with an r-squared of weekly prices at just 0.36, indicating that prices were rarely moving together. 

This changed in 2019 as ASF led to a sharp rise in pork prices and supply shortages in protein. Both pork and chicken rallied sharply together, and the r-squared in 2019 rose to an extremely high level of 0.94. Both chicken and pork prices peaked in the same week in November 2019 before falling. 

In 2020 and 2021, this correlation broke down and was only 0.15. Pork prices remained very high in 2020 due to shortages but at the same time, many hog farmers switch to raising poultry as a less-risky alternative. This led to an over-supply of poultry and prices fell while pork prices remained high. 

2021 saw increased volatility in poultry prices while pork prices consistently fell throughout the year due to large increases in hog supplies coming online. 

This correlation has increased again and is at 0.73 so far in 2022. Some of this is due to specific factors in each market that have pushed up prices at the same time. But there are some shared factors that have pushed up prices, including higher feed costs. Additionally, normal variations in prices are unlikely to dramatically change consumer behavior. When pork prices rise dramatically, consumers are more likely to switch to cheaper options which increase demand for poultry. 2019 and 2022, both years which saw sharp and dramatic rises in pork prices, have also seen large rises in chicken prices and therefore a higher correlation between the two proteins.