Grain prices having little impact on meat supplies

It is an amazing country we live in. Population is increasing. Per capita demand for goods and services keeps growing even at higher prices. There may be short grain supplies over the next few years, but so far this has not had a long-term effect on animal agriculture. Short-term shortages may occur, but over the next couple of years per capita supplies should be similar to those experienced this year.

Combined per capita meat supplies these next few quarters will be greater than in the year earlier. We foresee no real reduction, except in beef, which was determined several years ago when calves were given away. Shorter-term cycles exist in the hog and poultry industries. Some say that with nearly complete integration in these industries, old cycles may not even exist or may be smoothed out considerably.

Broiler meat demand was great during the hot summer months, but will drop this winter as supplies keep growing. Fairly tight red meat supplies will help along with very solid exports of various chicken products. The 12-city, whole-broiler prices shown may be a bit optimistic as the fourth quarter value high was 68 cents in 2004. Do we have a different situation now? Yes, as cost of production, processing and delivery all are higher. Before, production costs were the culprits.

Feed prices into first quarter 2008 will be determined by this fall's record supply of coarse grain and much smaller oilseed supply. Some farmers are already planning what to plant in the spring. This is true not only here but throughout the world. Some economists say we need 8 to 10 million more acres to plant in 2008 just to meet our normal growing demand. This assumes another billion bushels of corn will be used to produce ethanol.

Severe drought in Australia, Europe and the USA's Southern Plains occurred in 2006. Also drought conditions in Ukraine, Russia and parts of Europe this year reduced output. Abnormal weather these last two years has reduced the world wheat supply and caused near panic in some parts of the world. Thus, less wheat for feed could help exports of U.S. poultry and animal products. A weak dollar helps, too.

Our November-April projection for corn prices is $3.45 versus $3.61 per bushel in the same period last year. Our estimate for soybean meal prices November-April is $265 per ton versus $194 per ton in the same period last year.