Energy, Grain Prices Lead Challenges; Exports Grow

US - Speaking at the Poultry Market Intelligence Forum at the 2011 International Poultry Expo (IPE) in Atlanta, Dr Paul Aho, principal of Poultry Perspectives, commented that the two biggest challenges facing the poultry industry are grain and energy prices.
calendar icon 9 February 2011
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In 2010, the ethanol industry used 40 per cent of the corn crop, up from 10 per cent in 2003. Dr 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 favour ethanol over other uses for corn, Dr 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 cut-backs, rationalisation and consolidation," Dr Aho added.

High corn prices could mean lighter birds

Mike Donohue, vice president, Agri Stats Inc., stated: "2008 was the worst year financially for the US broiler industry that most people have ever seen." The industry's response in 2008 was a five to six per cent reduction in pounds produced. Mr 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 Mr 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 eight pounds per bird for the first time last fall. Big chickens continue to gain ground in production efficiency. But, Mr Donohue said that $7.00 to $7.50 per bushel corn will cause companies to start dropping weights in their big bird programmes.

World poultry exports continue to grow

Just 20 years ago, poultry exports represented only five per cent of total world poultry production. Exports made up 10 per cent of total production in 2010 and are projected to reach 14 per cent of total production in 2030. Jim Sumner, president, USAPEEC, said that global demand and per capita consumption of broiler meat continues to increase. Even with higher grain prices, world per capita chicken and egg consumption will continue to rise, because chickens are more efficient converters of grains to meat than either swine or cattle.

Russia and China have been top export markets for US broiler producers for a number of years. In 2009, 40.4 per cent of total US broiler exports went to Russia and China. Exports to these two countries fell to 11.6 per cent of total US exports in 2010. Even with the export difficulties in China and Russia, total US broiler export volume only dropped by four per cent in 2010 and the monetary value of exports actually increased.

In 2010, almost 20 per cent of total US broiler production was exported. Turkey exports accounted for around 10 per cent of total US production last year. The total value of US poultry exports of all kinds was $4.5 billion in 2010.

The Market Intelligence Forum was part of the comprehensive education programs presented at the 2011 International Poultry Expo and International Feed Expo, sponsored by US Poultry & Egg Association and American Feed Industry Association.

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