Poultry companies are producing more chicken than consumers can buy, depressing wholesale prices and squeezing their profits. The dynamic sets up potential inflation relief for shoppers and restaurants looking to pare down their costs for protein.

Suppliers such as Tyson Foods, Pilgrim's Pride and Wayne-Sanderson Farms have been ramping up offerings of boneless chicken breasts, wings and thighs over the past year to meet what was expected to be an onslaught of consumer demand. More Americans were expected to spurn pricier steaks and burgers in favor of cheaper chicken sandwiches and tenders.

Beef demand hasn't cooled. Bigger chicken breeds and flocks not being decimated by disease over the summer have led to a glut in an industry that slaughters more than nine billion birds a year .

Chicken supplies were up about 4.5% in the quarter ended June 28 from the prior year, according to Pilgrim's Pride, the second-largest U.S. poultry processor.

"The head count was a little higher than everybody anticipated," Pilgrim's Pride Chief Executive Fabio Sandri said on a July investor call. "Demand was more than offset by the increase in supply."

Wholesale prices for boneless, skinless chicken breasts are down about 37% from 12 months ago, according to FactSet. Weaker prices have weighed on profit margins. Second-quarter profit for Pilgrim's Pride fell 96% from a year earlier to $13.4 million.

Large volume buyers, and ultimately consumers, are likely beneficiaries from falling prices. Retail prices for boneless chicken breasts were down about 1.4% in June from a year prior, according to the Labor Department.

The cheaper prices have allowed Midwest grocery chain Fareway Stores to run a number of poultry promotions aimed at getting more shoppers in its stores.

Jeff Cook, vice president of market operations, said the grocer ran a monthslong sale of $1.99 per pound of chicken breasts earlier this year and several $2.99 per pound promotions. The grocer had been pricing its breasts at about $4.99 per pound.

"Poultry hasn't seen the seasonal increase like it usually has," he said.

Good Food Holdings, which owns supermarkets like Bristol Farms in California, is earning higher profit margins on chicken and then using some of the savings to reduce prices for consumers on more expensive beef products, like 80/20 ground beef and New York strip steak, CEO Neil Stern said.

Restaurants are also adding more chicken items to their menus to have cheaper protein options for their patrons, according to industry officials.

"The best way you could be lowering your food costs right now is by having a more poultry-forward menu," said Kevin Hourican, the CEO of food distributor Sysco.

Poultry prices are historically volatile. Processors are constantly trying to match the number of chicks they need to hatch to the amount of meat their customers are willing to buy. Periods of low wholesale prices or high grain prices can put some chicken companies in dire financial conditions.

Over the past few years, chicken has been immensely profitable for meatpackers. Massive corn and soybean crops have made livestock feed -- the top expense when raising a chicken -- cheap. Meanwhile, demand for chicken cuts has been steadily climbing, driven by Americans' appetite for protein.

But poultry companies ended up hatching too many chicks and overestimating demand. Through the first six months of this year, companies slaughtered more than 4.9 billion chickens, up 3% from the same period last year and up 6% from five years ago.

One thing hurting the chicken business: Consumers love beef. Even though beef prices are at record levels due to a nationwide cattle shortage, that hasn't dented demand. Retail sales volumes were up 2% for the 52 weeks that ended July 12, according to market-research firm Circana.

Favorable weather conditions helped more birds reach maturity than expected, poultry executives said. Diseases such as bird flu, which have previously decimated flocks, haven't been as much of a factor in key chicken-raising regions.

Roughly 90% to 95% of birds in a commercial chicken barn survive the six to eight weeks it takes until they are ready for slaughter. Even a small uptick could result in millions of extra chickens moving through processors' plants.

"The industry shot themselves in the foot this year," said Pooran Sharma, an agriculture analyst for financial services firm Stephens. "All you had to do was just be disciplined around production."

A new genetic line of chickens is also fueling the glut. The poultry industry has for years prioritized breeding bigger chickens, aiming to increase the amount of products harvested from each bird.

Cobb-Vantress, owned by Tyson Foods, rolled out a new chicken breed this year that grows faster on less feed, producing more meat at a lower cost. Tyson, the biggest U.S. chicken processor, has struggled in the past with breeds that produced unexpectedly high numbers of unhatched eggs.

Tyson executives said earlier this month that the company is more insulated than its competitors from depressed prices, after years spent improving its chicken operations. Now, most of the chicken processed at its plants goes into the company's Tyson-branded frozen, precooked products sold in grocery stores, where demand is growing.

In the past, the company sold more of its chicken to other processors, distributors or restaurant customers at lower wholesale prices.

Pilgrim's has been trying to grow its branded-products business. The company has rolled out new chicken-nugget lines in recent years and it said it has grown its Just Bare brand to 13% of chicken market share from 1% in three years.