Economist says protein prices down in 2014, but profits to rise

While the weather in the Corn Belt has not been ideal this year, analysts are still expecting a record-high corn crop. Dr. Thomas Elam, economist, FarmEcon LLC, forecast at the Farm Journal/Watt Grain and Meat Outlook webinar the average farm price for corn at $4.50 per bushel for the 2013-2104 crop year, a drop of over $2.25 per bushel from 2012-2013. This expected decline in the corn price, along with a drop in the Decatur soybean meal price from $455 per ton in 2012-2013 to $400 in 2013-2104, will result in a feed cost drop that will cushion the bottom line impact of what Elam expects to be record-high protein production in the US in 2104.
Total U.S. production of ready-to-cook beef, pork, turkey and chicken peaked at 92.7 billion pounds in 2008. Production dropped in 2009 as the result of high grain prices and a sluggish economy. In 2014, Elam predicts that ready-to-cook pounds of meat and poultry will set a new record high of 93.9 million pounds. He predicts that production of ready-to-cook turkey pounds will increase by around 7.4 percent and broiler volume will increase by 5.4 percent.
The volume increases for broiler and turkey meats will result in declines in the wholesale prices of these meats, but the industry will stay profitable. Elam projects the national frozen tom turkey price will average $0.98 per pound in 2014, down from $1.05 in 2013. He predicts the national broiler composite price will average $0.92 per pound in 2014, down from $1.01 in 2013.
Beef prices are expected to continue to rise in 2014 as total beef production falls by 7 percent, according to Elam. The average Texas Panhandle Slaughter Steers, Choice 1100-1300 pounds, is predicted by Elam to rise to $1.30 per pound in 2014, from the 2013 estimated average of $1.25 per pound.

Purdue economist says high beef prices will benefit pork, poultry producers

The total United States cattle and calf inventory fell to its lowest level since 1952 this year as a result of high grain prices and drought. Dr. Chris Hurt, professor, agricultural economics, Purdue University, speaking at the WATT Meat and Poultry Supply and Price Forecast webinar said that 57 percent of the cattle herd is raised in parts of the U.S. that are still in some sort of drought. Low rainfall on pasture and range lands has made any expansion of the cattle herd difficult, and the U.S. herd is expected to get smaller before it begins to expand.
High cattle and retail beef prices will help to support poultry and pork prices into 2014, Hurt said, even though poultry and pork supplies are expected to increase next year. Hurt predicts increases in production of pork, chicken and turkey of 3, 3 and 4 percent, respectively, in 2014, while beef production falls 6 percent.
Per capita consumption of red meat and poultry in the U.S. set an all-time high in 2008 at 222 pounds, but it fell to 203 pounds in 2012. Hurt expects that per capita consumption of red meat and poultry in the U.S. will recover some of the lost ground as production of pork and poultry ramp back up. He predicts that per capita consumption of red meat and poultry will rise back gradually to 210 pounds by 2016.
Hurt predicts profitability for hog producers from the third quarter of 2013 through the third quarter of 2014. He estimates that hog prices will range from $63-67 per hundredweight over this 12 month period, and costs will be approximately $58 per hundredweight. Hurt predicts that Oklahoma City Steer prices will average $165 per hundredweight in 2014.

UK poultry breast meat, free-range egg sales decline due to economy

The UK market for poultry meat and eggs has not been immune to ongoing economic difficulties in the country, including a decline in national sales of poultry breast meat, according to British Poultry Council chairman John Reed, who spoke at the 2012 British Pig and Poultry Fair.
Shoppers in the UK are switching to more dark meat and whole birds, due at least in part to their need to economize by cooking more meals at home instead of eating out, said Reed. The trend is likely to continue as consumers choose more value or standard products rather than paying extra for standard-plus, organic or free range.
Bird size at slaughter is also altering in response to the weak market. Several years of increasing broiler weights in the UK ended with the first economic crisis in 2007 and, since then, the average weight of bird marketed has declined. The reasons are thought to be due to cutbacks in consumer spending, a national increase in the number of single-person households and the demands coming from fast-food companies to supply them with a highly weight-specified raw material, according to Reed.
UK egg outlook
Demand for free-range eggs in the UK has collapsed, new data suggest. According to the latest figures on retail sales, for the first time in years the share of free range has dropped to below half the total market. Some 5 percent have been lost in the last year alone, with free range’s share of sales standing at 53 percent as recently as May 2011.
The reason is price, says the chief executive of Europe’s largest egg business, Peter Thornton, who addressed a discussion on the UK poultry meat and egg outlook at the Pig and Poultry Fair. A massive and growing differential has opened up over the past three months in the retail price for various egg categories, said Thornton. Customers have reacted by buying fewer free-range eggs and choosing instead lower-priced cage type. Sales of cage eggs at major retailers have surged this year by some 20 percent.
“In the current economic situation, the retail environment is very tough,” said Thornton. “Consumers are trading down and buying less. Over 40 percent of their purchases at present are grocery items being sold on promotion. For us, the big thing happening is the trading down from free-range to cage eggs, yet the free-range people are still talking of expansion. Although it is likely that the current demand for cage eggs will moderate, free-range producers should still take at least a two-year view of the market outlook, rather than trying to fill an expected short-term gap in supplies.”

Sao Paulo wholesale poultry prices remain strong

The price of wholesale poultry meat traded in Sao Paulo, Brazil rose in February and remained firm into March, despite a fall in volumes.
According to the Center for Advanced Studies on Applied Economics, 257,000 tons of fresh poultry meat were traded in February, a contraction of 12.5 percent compared with January. The numbers are also 4.3 percent lower than February 2010 numbers, according to the Center.

Broiler margins drop with high feed prices

The ratio of broiler prices to animal feed prices dropped to 2.9 in July due to a combination of lower meat values and more expensive feed, according to recent reports.
Feed bills were 77% higher in July than in the same time during 2010, but a drop in domestic demand resulted in broiler prices dropping by 9.6% to $0.47 per pound. Breast meat prices have also dropped, by 27% to $1.1695 per pound over the last year.
Producers have responded to lowered demand by cutting back, reducing capacity and focusing on exports.

Poultry, meat prices rise as global food index climbs

Poultry prices rose 3% as the overall meat index increased to match April's record 180.4 points, according to the United Nations' Food & Agriculture Organization's latest report.
The global food index, currently at 233.8 points for 55 food commodities, is a symptom hinting at prices that may double in the next two decades, according to the FAO. "High feed prices are making their way into those sectors," said Abdolreza Abbassian, a senior economist at the FAO. Experts have said that they expect price swings to remain even as demand continues to increase with a growing global population.

Ukraine poultry producer's volume up 2% for first quarter 2011

Ukraine-based MHP S.A.'s volume of chicken meat sales to third parties increased by 2% during the first quarter of 2011 compared to 2010, reaching 84,300 metric tons, according to the company's report.
The average chicken meat price through the first quarter of 2011 increased by 4%, to UAH 12.83 (US$1.61) per kilogram of adjusted weight when compared to the same time in 2010. Poultry production costs in the first three months of 2011 rose slightly in UAH terms compared to 2010 due to the increase in grain and utility prices, which were partially compensated by the lower cost of hatching eggs.

Oklahoma farmers gain $14.5 million judgment

Three hundred farmers who brought a class-action lawsuit against OK Industries saw their complaint upheld in court for $14.5 million.
The farmers had alleged that the company used its status as the only buyer in the area to manipulate in its favor what it paid to the farmers. "We wanted fair treatment," said Charlie Been, a former chicken farmer who was part of the lawsuit. The case went to trial in 2008, resulting in a jury verdict for the farmers of $21.1 million that was later reduced to $14.5 million. Attorney for OK Industries Charles Goodwin said he does not know whether the company will appeal to the U.S. Supreme Court or ask for a rehearing with the full court of appeals.

IPC: Increased feed costs mean higher poultry meat prices

Significant increases in the cost of grains used in poultry feed "are having a negative impact on the cost of poultry production around the world, and will inevitably lead to higher prices of poultry meat in the global marketplace," said a statement released by the International Poultry Council (IPC) at its annual meeting.
According to the IPC, higher costs of grains like wheat, corn, soybeans and barley cannot be absorbed by the poultry industry alone and must be passed along to the consumer in the form of higher poultry prices. In the last four months, the cost of corn and wheat has risen by roughly 50%, while the cost of soybean meal has risen by 20%. A drought in Russia, too much rain in the U.S. and a planting delay in Brazil have all been contributing factors to these numbers. 
On the upside, says the IPC, improved weather conditions in 2011 could bring grain prices back down; in the meantime, while poultry prices will rise, they will not be impacted as heavily as other meat prices due to poultry's inherent efficiencies in feed conversion ratios.

Chicken wings no longer a cheap menu addition

Some restaurants are adjusting their menus in the face of escalating chicken wing prices, according to USA Today. The wholesale price of wings shot up 39% from 2008 to 2009, thanks to high demand as the formerly “throw away” item became an increasingly popular dish, the newspaper reported.
While demand for wings has flown up, demand for other parts of the bird has fallen with the recession, so increasing chicken production is not a viable economic option, said Richard Lobb of the National Chicken Council.
Many restaurants are taking advantage of the overall lower poultry prices to introduce boneless chicken “wings” to their customers, the newspaper reported.

Experts: poultry industry set to rebound in 2010

The coming year will be a profitable one for U.S. broiler producers as the economy continues its recovery from recession, according to a panel of economists who spoke at the Poultry Market Intelligence Forum held during the 2010 International Poultry Expo in Atlanta, Ga. The forum was a joint effort of U.S. Poultry & Egg Association and the National Poultry & Food Distributors Association.
Paul Aho of Poultry Perspective said that he expects U.S. bulk leg quarter prices will be lower in the first half of 2010 than they were in the same period in 2009. In the second half of the year, he expects leg quarter prices to exceed year-before levels and end at around $0.10 per pound higher than at the close of 2009. He said that trade difficulties with Russia will create a drag on leg quarters early in 2009, but he expects some resolution to the dispute and that Russia will buy U.S. leg quarters in 2010. Boneless skinless breast meat prices should be higher in the U.S. throughout 2010 than in 2009, according to Aho.
Mike Donohue of Agri Stats said that “2010 should be a good year for the industry” in terms of profitability.
He said that live performance in 2009 was outstanding and credited a number of factors for the long upward trend, including improvements in bird genetics and in on-farm equipment and housing. Average livability for the U.S. industry was more than 96% in 2009, up 1.5% from 20 years ago. Improved flock health has also resulted in a roughly two-thirds reduction in the rate of field condemnations at the processing plant over the same period.
Donohue explained that some of 2009’s outstanding live broiler performance can be attributed to increased downtime between broiler flocks, which was a result of production cutbacks.
The range between the best and poorest performing companies in terms of feed cost per live pound of broiler has increased from around $0.05 per pound in 2005 to $0.11 per pound in 2009. Donohue said that this increased spread results from the costs of grain purchasing positions, logistics of moving grain and differences in bird performance.
Subsidized corn-based ethanol production in the U.S. continues to cost the U.S. broiler, turkey and egg industries billions of dollars, according to Donohue. Based on Agri Stats data, he estimated that U.S. poultry producers have spent $18.5 billion more for corn over the last two-and-a-half years than they would have in the absence of ethanol mandates, subsidies and tariffs.