Since mid-October, combined live weights and head slaughtered have pushed available broiler meat supply up 4 percent to 6 percent versus a year ago. This will likely happen in the first quarter in relation to the reduced output in early 2007. Thus, prices are expected to move sideways into the second quarter. Relatively high feed costs will help keep 12-city wholesale prices above 70 cents per ready-to-cook (RTC) pound. Unemployment will be around 4.5 percent with a slow but growing Gross Domestic Product. No doubt consumer income is being hurt by deflated real estate values and high fuel costs. But most consumers have become more conservative, purchasing fewer luxuries. Our economy has gone through these cycles before and came out more productive than ever.
Competing meat supplies will continue strong, likely peaking in the April-June period when the broiler industry output surges in comparison to 2007 increased numbers. Pork is a real question, since hog prices during November were the lowest in 19 months. No relief in feed prices appears on the horizon, so some caution may be in order.
Red meat production January-October was up 2 percent from a year ago and is staying high. Less beef is expected but more pork until late 2008. Our low value of the dollar is boosting up all types of meat product exports. This may be pulling more broilers into production as more broiler meat is removed from the domestic market. Japan is finally buying beef again after several years out of our market.
Coarse grain and soybean prices are fighting for acreage in 2008. Therefore, both corn and soybean values will stay strong now that harvest is over and this year's record crop is stored. Future prices are attempting to predict what supply and demand will be. Therefore, these values could change dramatically. Fuel prices may have peaked and could fall. This would lower fertilizer prices and make breakeven prices different, which may favor corn. Weather, as always, is unknown and totally unpredictable six to nine months ahead. Our guess is for strong grain prices into late 2008 at least. Our low dollar value helps move soya products and wheat overseas. Foreign users of corn seem to buy as needed regardless of price.
Our January-June projection for corn prices is $3.45 versus $3.67 per bushel in the same period last year. Our estimate for soybean meal prices January-June is $275 per ton versus $204 per ton in the same period last year.