Corn prices are likely to remain near current levels, in the $4/bu range between now and 2010, with soybean meal $250/ton, said Paul Aho, poultry economist, who spoke at the Midwest Poultry Federation nutrition symposium in St. Paul, Minn., on March 17.

The reason for the crash in grain prices late last year, Aho says, was largely the dramatic decline in oil prices that nobody saw coming. This was mainly due to the downturn in demand caused by the world economic recession. Another reason for the decline in grain prices was the increase in global supplies, particularly higher wheat supplies in Australia. Yet another factor for the decline in grain prices was "the flight of speculators from the market," he says.

In Aho's view, grain prices have become linked to oil prices now that 30% of the U.S. corn crop is used for ethanol, and the corn-energy link is likely to continue. After a two-year lull, he sees both oil prices and grain prices rising once again by 2011, in part because he believes the world economy will grow once again beginning that year. "We'll likely see $5/bu. corn, even $6/bu.," he says. One additional factor ethanol has created for livestock producers, he says, is that it has made energy feeds more expensive and protein relatively less expensive, and that is likely to continue.

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Aho sees broiler production costs in the 35 cents per pound range for the next two years, before climbing back to the 45 to 50 cent range over the next five years as grain prices climb.

Globally, Aho says, human consumption of all animal protein is taking a hit during the current recession, but he sees poultry coming back once the global economy recovers two years from now, although "beef may stagnate." He adds that the world economy is likely "to come out of it" (the recession) in 2011. He notes that the world economy has gone from a 5% growth in 2004-05 to actually a contraction of 1%, according to a prediction this week by the World Bank.

One reason why Aho believes oil prices are headed back up is what he calls a geopolitical peak: many oil producing nations are unstable politically or have political problems, such as Nigeria, Indonesia, Iran, Iraq, Venezuela, with the exception being Canada. He adds that "oil prices reached $147/barrel last year for an $84/barrel average before the huge drop." But a key point, Aho says, is that "we’ll be climbing back up," and again, as energy goes, so goes corn.