Soaring demand means retail prices have not fallen substantially, even though feed prices are low. Retail chicken prices in 2016 were just 11 cents off the 2014 high of $1.53 per pound. Prices hit highs for beef in 2015 and for pork in 2014, and they remain close to those levels.
But as beef prices have come down, consumers have bought more, according to Cargill Inc, one of the world’s largest suppliers of ground beef. The privately held company swung to an operating profit in the quarter ended May 31 from a loss a year ago on the back of strong demand for poultry and beef.
"If you have low grain prices for a sustained period of time, ultimately that translates into lower beef prices," Chief Financial Officer Marcel Smits told Reuters.
High profit margins in meat production stand in stark contrast to the fortunes of crop producers and grain merchants such as Archer Daniels Midland Co and Bunge Ltd. These companies are struggling to profit from international grain trading due to the global glut.
The clearest winners among meat producers are poultry firms, which get a direct benefit from cheap feed because they own and feed the birds that they slaughter.
Sanderson Farms, the third-largest US poultry producer, is so confident grain prices will stay low that it is buying small amounts of feed to cover short-term needs, Chief Financial Officer Mike Cockrell told Reuters. Last year, in contrast, the company booked soybeans in advance to lock in prices that were lower than they are now.
"Chicken margins are blowing out," said Kelly Wiesbrock, portfolio manager at Harvest Capital Strategies, which owns about 255,000 shares of Pilgrim's Pride, the second-largest US chicken producer, and 100,000 shares in Tyson Foods Inc, the biggest US meat processor.
Sanderson Farms has turned in net profit margins of over 6pc for the last three years, a feat it last achieved in 2003-05. Pilgrim's Pride had a record streak of net profit margins of 5.5pc and above in the last four years.
Dividends have been similarly bountiful. Sanderson Farms made a record payout last year while Pilgrim's Pride, in which Brazil's JBS has a 78.5pc stake, splashed out with special dividends totaling $8.52 per share in 2015 and 2016.
In beef production, the privately held companies that fatten up cattle on feedlots, are seeing record profits for 2017, according to Jim Robb, an analyst at the Livestock Marketing Information Center.
Gary Vetter, a farmer who raises cattle and corn in Iowa, put it this way: corn growers are "subsidizing the feedlot."
Smithfield Foods, the world's largest pork producer, said feed makes up over 65pc of the cost of producing hogs and that the company's ability to source high-quality grain at low cost gives it a competitive advantage.
It buys grain for farmers who raise hogs for the company under production contracts.
"Low grain prices are good for the pork industry," Smithfield spokeswoman Heather Houston said in an emailed statement.
Smithfield, bought by China's WH Group Ltd in 2013, no longer makes financial information available to the public.
John Prestage, whose family owns Prestage Farms which sells hogs to Smithfield and other processors, said those who pay for the feed benefit most from cheap grain prices.
"In our case, it is us," he said.