US Protein Markets: Navigating Geopolitical Storms and Supply Chain Shifts

The U.S. protein market is in the throes of a perfect storm. Geopolitical tensions, supply chain disruptions, and climate extremes are reshaping demand, pricing, and investment opportunities across beef, poultry, and seafood sectors. For investors, the key lies in identifying where vulnerabilities create asymmetric upside—and where to avoid overpaying for overhyped risks.

Beef: A Tight Market with Long Leverage

The beef sector is the poster child of constrained supply. The U.S. beef cow herd, now at a 28-million-head low, is 3.5 million head smaller than its 2019 peak. Drought in the West, cyclical herd contraction, and rising feed costs have tightened supplies, pushing retail beef prices to an average of $8.25/lb. in 2025—up 3% from 2024.

Investment angle: Beef producers like JBS (JBS) or Tyson Foods (TSN) benefit from scarcity-driven pricing, but investors should favor companies with exposure to premium cuts (e.g., Choice-grade beef), which command higher margins. However, avoid overpaying—beef prices are already nearing peak valuations, and a Fed rate cut or easing inflation could moderate demand.

Poultry: Cost-Efficiency Under Strain

Poultry remains a budget-friendly protein, with fresh chicken breast prices lagging behind beef by $1.96/lb. Yet the sector faces its own challenges. Avian influenza outbreaks, winter weather, and labor shortages have cut chicken production, while exports to Canada and Mexico face tariff risks.

Investment angle: Poultry's value proposition hinges on its role as a beef substitute. Companies like Pilgrim's Pride or Sanderson Farms (SAFMC) could see demand surge if beef prices keep climbing. However, the sector's profitability is hostage to feed costs (corn and soybean prices) and disease risks. Short-term traders might bet on volatility, but long-term investors should wait for a correction.

Seafood: Tariffs, Scarcity, and Strategic Plays

Seafood is the most politically charged sector. U.S. tariffs on Canadian imports (lobster, crab) and potential retaliatory measures from China and Mexico threaten supply chains. Meanwhile, scallop prices have surged 70% in two years due to U.S. landings dropping 30%, while shrimp faces overproduction and inflation-driven demand weakness.

Key opportunities:
1. Short-term play: Shrimp prices have fallen 10% since early 2025 due to oversupply. Investors could use this dip to buy into processors like Bumble Bee at a discount, betting on stabilization as demand recovers.
2. Long-term bet: Turkey legs. The U.S. turkey herd is at a record low of 13 million head, with HPAI wiping out 1.6 million birds since 2024. Fresh turkey breast prices have risen 54% since January, signaling a supply crunch. Companies like Pilgrim's Pride (which owns a turkey division) could benefit from this scarcity.

The Geopolitical Wild Card: Middle East Tensions and Climate Risks

Middle East conflicts—particularly those affecting oil and feed grain supply chains—add another layer of uncertainty. Higher oil prices increase transportation costs, while wheat shortages (due to Ukrainian war impacts) could drive up feed costs for all proteins.

Risk mitigation: Investors should pair protein plays with hedges against input costs. For instance, buying corn futures could offset rising feed expenses for poultry and pork producers.

The Bottom Line: Target Value Plays, Avoid the Overcooked

The protein market is bifurcated: beef and turkey are long-term bets on scarcity, while shrimp offers a tactical rebound opportunity. Pork stands out as a value play—its prices are projected to rise 1.8% in 2025, with production stability making it a lower-risk substitute to beef.

Avoid overpaying for seafood stocks until trade tensions ease, and steer clear of poultry if feed costs spike beyond current expectations. In this volatile landscape, the key is to follow the supply chain: where scarcity meets inelastic demand, investors will find the best returns.

Final advice: Use the recent dip in poultry and shrimp valuations to build positions, but stay nimble. The protein market's next phase—driven by climate, trade, and disease—will reward those who parse the data and act decisively.