Producers Finding A Plus In Commodities Pricing

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Corn and soybean growers’ loss is becoming poultry grower’s gain.

As the cattle industry suffered through drought effects that prompted huge selloffs and resulted in soaring consumer prices, those raising the nation’s chickens stepped in to fill the void with lower-cost protein.

To understand the current situation facing chicken and turkey growers, one must first look backward.

Since 2012-2013, commodity prices have steadily fallen.

Corn and soybeans have been particularly hard hit because growers planted more acres and harvested bumper crops. Market prices for soybean meal, for instance, hovered around $430 per ton in 2012-2013.

Prices dipped to around $365 in 2014 and are barely above $300 per ton now. A bushel of corn sold for nearly $6.50 three years ago. Now, that bushel brings roughly $3.60.

Those two commodities are extremely important to poultry producers, as they are two main ingredients in poultry feed.

According to statistics gathered by the U.S. Department of Labor, prices for agriculture feed dropped significantly over the past year.

Crude feedstuff prices dropped 14.9 percent from March 2014 to March 2015, while intermediate feed costs fell 4.6 percent.

Feed prices shouldn’t increase soon.

Futures contracts for soybean meal show that price remaining in the $310 range through 2018. Corn futures rebound a little, but don’t rise above $4.35 for the next three years.

Lowering input costs, when possible, is the most direct way agriculture producers can increase their bottom line, and so the poultry market looks strong for the coming year, according to U.S. Department of Agriculture forecasts.

USDA estimates that broiler meat production will increase 3.6 percent this year, totaling 40 billion pounds. That number could have been higher, but an issue with egg sets and the resulting chick placements in 2014 lowered the number of chicks available to grow.

A strong dollar abroad and avian flu concerns domestically will result in an export drop of about 2.5 percent.

Combine those factors with historically high beef prices, and the market for poultry is strong for 2015.

Turkey producers have enjoyed lower feed prices, too, and USDA forecasts an increase in production of 5.6 percent for this year.

Egg sets are ahead of last year by more than 7 percent, and that additional capacity has forced prices down a bit — 2 percent from 2014.

Bolstering poultry producers’ position beyond 2015 is that those market forces are likely to extend beyond this year.

The avian flu has appeared in several flocks around the country. Officials note that containing the virus within a flock is fairly easy, though all birds must be exterminated.

The risk to people is minimal, though several nations have banned U.S. poultry imports.

USDA suggests that the import bans will not harm U.S. production because other markets will increase their imports.

Dan Fogleman, senior manager, public relations, for Tyson Corporate Affairs, said company officials could not comment on how feed prices are affecting Tyson Foods’ poultry operations because of a “quiet period” leading up to an earnings report.

Calls to Peco Foods were not returned.