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News and analysis on the global poultry
and animal feed industries.
Broilers & Layers / Egg Production
on November 18, 2014

Forecasts for 2015 positive for poultry and swine producers

Lower grain prices, increased demand for protein, reduced cattle numbers and slower-than-usual response to positive returns all point toward strong profits

The record corn and soybean harvest in the U.S. this fall have led to dramatic reductions in rations for poultry and swine producers, and these lower feed costs will likely continue for several months.

Tim Brusnahan, vice president of consulting and principal, Richard A. Brock & Associates Inc., estimates the farm price for corn will be between $3.10-3.70 for the 2014-15 crop year. Speaking at WATTAgnet.com’s Grain and Meat Outlook Webinar, with his estimates for corn planting, production and use for the 2015-16 crop year, Brusnahan projects that the ending stocks for the 2014-15 and the 2015-16 crop years will be more than 2 billion bushels. With this 2 billion-bushel carryover, he estimates that the farm price for corn will remain well below $4 per bushel.

For soybeans, Brusnahan estimates that the farm price will be between $8.50-10.50 per bushel for the 2014-15 crop year and that bean prices will fall even lower to the $7.50-8.50 range for the 2015-16 crop year. Even with the expected decline in soybean price, Brusnahan said that expected returns for planting soybeans will be better than for corn, so acreage is expected to shift from corn to soybeans for the 2015-16 crop year.

Brusnahan said the end of the “bull market” for crops will likely result in some acreage being pulled out of grain and oilseed production. He said that about one-third of crop farmers in the five largest grain-producing states are under age 35 or over 65. He explained that young farmers (under 35) might not have the capital to make it through bear markets for grain and that older farmers (over 65) may just quit farming rather than try to struggle through a bear market.

Protein production to ramp up

Dr. Thomas Elam, economist, FarmEcon L.L.C. said the stage is set for expansion in the animal protein sector in 2015. Producers' financial results have improved, interest rates are still near historical lows, demand is strong, and feed costs should remain at or near current levels.

Export demand for animal protein has been very strong. Volume has been increasing even as prices have increased significantly throughout the past few years. In addition, cold storage stocks of meat and poultry have continued to drop this fall relative to the past few years.

Elam projects a 0.9 percent increase in total meat production in 2015. He projects that beef production will fall by 3 percent next year while pork production will remain virtually unchanged from this year. Broiler and turkey meat production are estimated to rise by 3.5 and 4.1 percent, respectively, according to Elam. He said that the impact of porcine epidemic diarrhea (PED) virus is the big wild card for pork production. If the U.S. swine industry is able to control PED virus, then production will begin to ramp up in 2015.

Elam predicts a slight drop in chicken prices in 2015 and a larger drop in turkey prices. He said that poultry prices will be supported by high beef prices.

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