The department forecasts that wholesale egg prices (New York) will average between 75 and 81 cents for 2007, up 2 cents from USDA’s October forecast.
In addition, the department increased fourth quarter 2006 price estimates by 4 cents per dozen, to 77-79 cents, from USDA’s October estimate. New York Grade A prices rose from 88 cents per dozen November 1 to $1.06/dozen November 20.
Overshadowing the price improvements, however, are department estimates that corn prices next year will be substantially higher than 2006 due largely to the sharp spike in ethanol production.
U.S. 2006 corn production was estimated by the department last month to be 10.7 billion bushels, down 160 million bushels from the October estimate and below industry expectations. Ending stocks are forecast to be down 60 million bushels to 935 million, less than half the ending stock levels of the past two years. As a result, the department has increased the average farm price of corn 40 cents higher than its October estimate on both ends of the range—$2.80 to $3.20/bu. That may be conservative. Corn futures prices November 30 on the Chicago Board of Trade had set new contract highs approaching $4/bu.
USDA noted that despite the third largest crop on record and typically low harvest prices, central Illinois corn prices jumped from an average of $2.07/bu. in August to $2.82 in October. The reason: ethanol, with corn use in fuel ethanol forecast for the upcoming market year at 2,150 billion bushels, up from 1,603 billion last year, and 1,323 billion in 2004-05.
Department economists said that wet distillers’ grains are priced very favorably and can comprise 20 to 40% of fed cattle rations, and perhaps higher levels can be utilized as feeding regimes are altered to this rapidly expanding feed source. “Unfortunately for the pork and poultry sectors, with present feeding technology, distillers’ grains are limited to about 10% or less of the feeding rations,” USDA economists said.