Short Supply & Elevated Prices Common Themes
GEORGIA, US - Short supply and elevated prices have become a common theme throughout all protein sectors, according to John Carley, VP and Senior RM for Wells Fargo Bank.
2 December 2011
4 minute read
Mr Carley was speaking to feed ingredient purchasing managers and other poultry industry professionals, who had gathered at the 2011 Grain Forecast and Economic Outlook Conference in Atlanta, Georgia. The conference was sponsored by USPOULTRY.
Mr Carley provided an overview of the protein markets in his presentation, A Wall Street View of the Protein Markets. He gave a review of some of the top industry companies from all protein sectors. He concluded his presentation with a look at the food and agribusiness' view of the protein markets.
Mr Carley commented: "The view of Wall Street, in my opinion, is strong. I think the protein sector is well positioned, both domestically and in the export markets. The broiler business has done a nice job of not relying on Russia for dark meat exports and has found other markets in which to move product."
Economist Dr Paul Aho, presented an Economic Outlook for 2012. He observed that as a result of the recession, consumption of red meat and poultry are both down. He remarked that total meat consumption was down by over 20 pounds during this recession, which is unprecedented. Dr Aho provided information from Rabobank, which shows that the US is decreasing animal protein by a rate of about one and one-half per cent per year.
By the end of 2012, the US will be reducing the production of animal protein on a five per cent per year rate. Dr Aho predicts that the US will see corn prices falling for 2012 from $6.50 to $5.50, deboned chicken breast prices at $1.40 to $1.50, and leg quarter prices at $0.55. Dr Aho concluded his presentation by remarking that the future will include a slowly improving economy and lower input costs, resulting in profitability returning to the poultry industry in 2012.
Mike Gilbert, Sr. Product Manager of Fats and Oils for Griffin Industries, gave a feed and ingredient trend presentation on fats and oils. Mr Gilbert mentioned that there were about ten billion pounds of animal fat and grease produced each year in the US, with poultry fat making up about 15 per cent of the total.
Mr Gilbert presented information from the US Census Bureau which showed that 483 metric tons of rendered fat is estimated for use in biodiesel production in 2011, with the mandate being 800 million gallons of biodiesel fuel made in 2011. Mr Gilbert indicated that this is the first year the biodiesel industry has been profitable. He also discussed the reasons the fat market price has fallen over the last year and changes that could affect the fat and oil market in the future.
Other sessions included an Oilseed Outlook; Ethanol/Renewable Fuels/Acreage Legislation... Impact on Poultry Industry; and a Feed Grain Outlook.
