Sometimes when corn and soybean growing conditions are especially favorable, they say you can almost hear the crop growing. It might be early in the season for that, but with favorable early July crop conditions continuing this week, you can almost hear poultry producers smiling.
Meat production expansion is muted and beef and pork prices are high. Lower grain prices, if they come to fruition, would add to the prospects for profitability in the poultry sector.
A tantalizing sign is the Sanderson Farms share price, which recently rose above $100. The company’s stock is a pure poultry play. Its 52-week range, as of July 15, was $59.77 to $102.99.
Corn production projection near record
Projected 2014/15 U.S. feed grain supplies were raised the week of July 7 with increases for corn and sorghum beginning stocks and higher expected sorghum production. Corn production is projected at 13,860 million bushels, just 65 million bushels below the 2013 record.
As temperatures cool down, U.S. corn and soybean crop conditions are mostly estimated as “good” or “excellent” the week of July 14.
The critical pollination period for the corn crop is from now until late July, and the crop is flourishing under nearly ideal growing conditions. These conditions support an outlook for record yields across most of the Corn Belt, which, if they materialize, should result in lower input costs to poultry producers.
“The projected range for the season-average corn price is lowered 20 cents on each end to $3.65 to $4.35 per bushel,” according to the World Agricultural Supply and Demand Estimates released July 11.
Longer-term economics favorable to poultry production
“Crop prices are expected to drop for one to two more years, before stabilizing at levels that remain above the pre-2008 period but significantly below recent peaks,” the UN Food and Agricultural Organization (FAO) and the Organization for Economic Cooperation and Development (OECD) said in a recent report.
The demand for protein-rich foods will rise substantially over the next decade as consumers in the developing world adopt a more western diet, it said.
Over the next decade the FAO and OECD expect global meat consumption to increase 1.6 percent a year, resulting in more than 58 million tons of additional meat being consumed by 2023 and poultry overtaking pork to become the most popular meat.