Sunday, March 11, 2007

US Meat Prices Predicted to Rise

USDA is predicting that US meat prices will rise because of the demand for corn in ethanol production. Some producers will likely reduce production also contributing to the rise in prices.

Beef may drop by 62 million pounds and poultry by 124 million pounds:

The Agriculture Department said beef output would dip by 62 million lbs and
chicken by 124 million lbs from last month's estimate, with total red meat and
poultry production forecast for 90.359 billion lbs. Cattle, hog and poultry
feeders say abrupt increases in feed costs -- predominantly corn -- are
squeezing their operations.

Producers will send fewer animals to slaughter and at lower prices this
year, said USDA. Both are ways to use less feed. Corn prices have doubled since
last fall. The ethanol industry is expected to use 2.15 billion bushels of the
2006 corn crop and 3.2 billion bushels of this year's crop.
"The decline in
beef carcass weights reflects several factors, including higher feed costs,
harsh winter weather and higher-than-expected first quarter beef slaughter,"
said USDA. Based on low slaughter numbers in January, broiler output was
expected to fall in the first half of this year but rebound in the final

Tyson Foods posted a record profit in January, but warned that continued high corn prices would mean added costs passed onto consumers:

While chicken producer Tyson Foods Inc. posted its first profitable quarter
in a year on Jan. 29, executives warned that a dramatic rise in feed costs will
raise chicken prices.
''Companies will be forced to pass along rising costs
to their customers, meaning consumers will pay significantly more for food,''
Chief Executive Dick Bond said.
Deputy Agriculture Secretary Chuck Conner
said demand most likely will prompt farmers to plant more acres in corn.

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