Energy, grain prices challenges for poultry

by World Grain Staff
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ATLANTA, GEORGIA, U.S. — Speaking at the Poultry Market Intelligence Forum at the 2011 International Poultry Expo in Atlanta, Georgia, U.S., Dr. Paul Aho, principal, Poultry Perspectives, commented, “The two biggest challenges facing the poultry industry are grain and energy prices.”

In 2010, the ethanol industry used 40% of the corn crop, up from 10% in 2003. Aho said that use of corn to make ethanol is driving corn prices. When speaking about Washington politicians’ love affair with ethanol and their reluctance to remove tariffs, subsidies and mandates that favor ethanol over other uses for corn, Aho remarked, “We could have a serious world food crisis and that might finally change things.”

Current high levels of chicken production coupled with high grain and energy prices do not bode well for broiler producers.

“This could be a very difficult year with cutbacks, rationalization and consolidation,” Aho said.

Mike Donohue, vice-president, Agri Stats Inc., stated, “2008 was the worst year financially for the U.S. broiler industry that most people have ever seen.”

The industry’s response in 2008 was a 5% to 6% reduction in pounds produced. Donohue commented the broiler industry is currently at record high weekly slaughter volumes.

The Agri Stats industry average cost per bushel of corn was $6.25 in the first week of January this year, according to Donohue. He expects corn to be $7.00 to $7.25 per bushel for March and be up to $7.30 per bushel by May.

“We are at a crisis in availability and costs for feedstuffs,” he remarked. The industry average weight for “big” broilers went over 8 pounds per bird for the first time last fall. Big chickens continue to gain ground in production efficiency. But, Donohue said that $7.00 to $7.50 per bushel corn will cause companies to start dropping weights in their big bird programs.
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