Hopes for a substantial rebound in profitability for meat and poultry producers and processors in 2021 will be difficult to come by with corn and soybean meal prices at multi-year highs, forecasts Will Sawyer, lead economist, animal protein, CoBank.
Feed costs have been relatively benign since 2012, helping US beef, pork and poultry sectors to expand more from 2014 to 2019 than in any five-year period in the industry’s history, noted the report.
But, in 2021, the US animal protein sector will face 12% higher feed costs due to steeper corn and soybean meal prices – the highest since 2011, he said.
“With corn futures above $4 per bushel and soybean meal futures around $350 per ton, cattle feeders, hog producers and chicken producers face higher prices for feed than they have in many years. These higher feed costs come at a challenging time, as meat and poultry industry margins have been pressured by weak prices in 2020 due to COVID-19."
The pandemic not only impacted demand in the US, primarily in foodservice, but also processing through plant shutdowns, reduced plant efficiency from increased worker absenteeism, and higher costs through pay raises and investments in personal protective equipment (PPE). These higher plant costs have negatively impacted prices and margins for producers up the supply chain, commented Sawyer.
Chinese demand
Most of the increase in feed prices is driven by Chinese demand.
China is rebuilding its pork supply after African swine fever (ASF) decimated its hog herd, leading to a surge in US grain exports and prices. The country’s imports of animal feed look to surpass all-time highs in the 2020-21 crop year, driven by significant increases of not only soybeans but also corn.
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December 16, 2020 at 12:00AM
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Surging feed prices will test recovery in US animal protein production - FoodNavigator-USA.com
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