Aviagen Broiler Economics sequence
27 August 2024
4 minute learn
Grain costs proceed to fall. A big harvest this yr within the US of corn and soybeans mixed with continued progress in manufacturing in South America signifies that poultry producers worldwide are more likely to proceed having fun with low grain costs. Low grain costs could nicely final for one more yr. Nevertheless, it’s essential to keep in mind that bear markets finally finish so get pleasure from this one whereas it lasts.
The benchmark worth of corn in Chicago is now $4 per bushel ($160 per metric ton) and is more likely to keep low for the remainder of the yr as a result of enormous shares of unpriced previous crop corn on US farms have to be bought within the subsequent two months to make room for the approaching ample harvest. Soybean meal can be a discount as a result of return of manufacturing in Argentina this yr and the continued progress of complete manufacturing in South America.
Costs are unlikely to reverse path within the quick time period. Because the US drought monitor beneath exhibits, the Corn Belt is in glorious form aside from a small space on the intense jap edge. General, in South America and the remainder of the world, circumstances are additionally favorable.
How lengthy will the bear market in grain backside final? It may final by way of crop yr 2025-2026 because the world financial system continues to be sluggish and provides stay ample. The World
Financial institution expects that the half decade of 2020 to 2025 may have the slowest world financial progress in 30 years. Nevertheless, with costs now beneath the price of manufacturing in lots of instances, greater costs are inevitable within the not too distant future.
Corn
The most recent WASDE report tasks that world corn manufacturing will proceed to be ample in crop yr 2024-2025. Two crop years of upper manufacturing and better ending stock resulted in decrease costs. The common farm worth within the US final crop yr was $6.54 per bushel ($262 per metric ton). The common this crop yr will find yourself lower than $5.00 ($200 per metric ton) and is more likely to be even decrease subsequent crop yr. An common worth of $4.20 ($166 per metric ton) is projected by the USDA for crop yr 2024-2025 which begins on the finish of this month.
Soybeans
Manufacturing continues to extend quickly in South America. The big capacity of Brazil to extend soybean manufacturing mixed with the manufacturing of Argentina and Paraguay ends in South America now representing 55% of world manufacturing. Continued rising manufacturing in South America and a great harvest within the US signifies that the US benchmark worth of soybean meal is projected to common solely $320 ($352 per metric ton) within the subsequent crop yr which begins on the finish of this month.
World and US ending shares might be greater on the finish of this crop yr and presumably subsequent crop yr as nicely. Larger ending inventories, in fact, are more likely to result in decrease costs.
Hen business
Sluggish progress on the earth financial system not too long ago is mirrored in the gradual progress of world hen manufacturing. World hen manufacturing progress averaged simply 1.5% not too long ago. It’s possible that progress will speed up beginning in 2025 and rise to a median of 2% for the final half of the last decade.
Low costs within the US in 2023 led to a rise in manufacturing of solely 0.4% final yr. For 2024, the USDA predicts progress will improve to 1.1% with many of the progress within the second half of the yr.
Poultry per capita consumption within the US continues to take market share from crimson meat. Between 2021 and 2025, crimson meat per capita consumption fell by 3 kilos (1.4 kilos) whereas poultry consumption rose by 5 kilos (2.3 kilos). Complete meat consumption is comparatively steady.
Deboned Breast
The spot costs of deboned breast within the US rose surprisingly quick within the first 5 months of 2024, helped by excessive costs for competing meats. As well as, a comparatively sturdy US financial system with low unemployment helped assist the value. For the complete yr the common worth of deboned breast is more likely to be considerably greater than final yr.
Frozen Leg Quarters for Export
Spot costs for frozen leg quarters are barely greater than final yr regardless of a discount within the quantity of exports. Commerce points and a comparatively robust greenback are lowering the potential quantity of exports.
Wings
Wing costs are remarkably excessive. The worth is now double the worth final yr at the moment. Wing costs may be anticipated to stay excessive as demand seems to be insatiable.
As a result of agency demand for hen and low worth of grain, hen manufacturing within the US is presently worthwhile when calculated utilizing spot costs, and is more likely to proceed to be worthwhile all year long.
