Corn acreage headed up
Seasonal factors contribute to prices of agricultural food products
Prices of agricultural food products are advancing earlier than in the past when feed costs rose. Seasonal factors are coming into play as early summer weather dictates outdoor cooking. This usually means greater use of poultry products in the May-September period. Since per capita meat supply will be close to a year ago, prices should be firm. Young chicken demand should remain good right through the third quarter before upward adjustments in production take place. Breeder pullet chick placements suggest optimism within the broiler industry. Key to fourth quarter output will be feed costs.
Farmers can be expected to do all they can to meet the fastest growing corn demand ever. The March 30th prospective planting report indicated acreage planted in corn this year will increase 15 percent over 2006. The outlook is clouded by a predicted drop in soybean acres, since the poultry industry is a major buyer of soybean meal as well as corn. Record oilseed crop is expected in South America, however, as their weather has been nearly ideal. Such should help keep the price relationship between soybean and corn in favor of producing corn or some type of coarse grain.
A major change in the political regime in Washington could impact the demand for corn. What happens if the 54-cent tariff on imported ethanol is not extended? Brazil is the largest producer of ethanol and would love to send us more. Other uses of DDGS could impact the demand for corn. Numerous changes are taking place that will create wild price movements in your feed costs. Also the bull market for corn is getting pretty old and may have peaked before you read this. Previous bull markets lasted less than two years.
Recession fears could soften fourth quarter prices on meat products if too much is produced. Per capita supply close to year-ago levels, however, should move well, helped by solid export business. Low U.S. and world unemployment levels suggest good food consumption in most developed countries. More 'ifs' than usual face the U.S. economy and its people in this year of transformation of political power within our nation's capital. But farmers will be farmers, and coarse grain feed supply will be adequate into the next crop year.
Our May-October projection for corn prices is $3.75 versus $2.29 per bushel in the same period last year. Our estimate for soybean meal prices May-October is $220 per ton versus $171 per ton in the same period last year.n