WATT PoultryUSA - October 2016 - 16
16 ❙ WATTPoultryUSA Bumper corn crop doesn't equal lower chicken prices The data suggest little can be said about the future of chicken prices simply because the corn crop is a good one. BY MATT BEESON Midwest jumbo boneless chicken breast prices June through August Summer Percent change 2.5 30 20 10 1.5 0 1.0 -10 Does cheap feed equal cheap meat? Percent change US dollars 2.0 -20 0.5 -30 0.0 -40 '03/'04 '04/'05 '09/'10 '14/'15 '15/'16 Crop year The crop years 2003-04 and 2009-10 show that bountiful corn crops don't necessarily lead to cheap chicken prices. Meat buyers say, "Cheap feed eventually equals cheap meat!" Academically, it is a simple argument. Lower costs improve returns and result in expanded meat production, which leads to lower-cost meat. It is a long trail, but it ends with a conclusion that is easy to defend. Data, however, suggests that this is not always the case. Let's test the assumption made between supply, demand and prices. The table, which shows the record corn yield years since 2000, could be challenged as overly simplistic, but it is a basic test of the "cheap feed equals cheap chicken" theory. It summarizes the price of breast meat the summer before the harvest, the summer after the harvest, and the percentage change in price. www.WATTAgNet.com ❙ October 2016 Andrea Gantz Prior summer The U.S. Department of Agriculture (USDA) surprised the market with the forecast of huge (record by almost 4 bushels per acre) corn yields in this year's crop. Although not in the bin, it is great news for livestock producers. Feed costs will likely be the lowest since 2006. Does that mean cheap chicken?
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