Feed prices now at a sweet spot for poultry farmers

Economist Paul Aho says prices for corn and soybean meal are near the bottom and are likely to start increasing

The poultry industry is currently enjoying some of the best prices for feed ingredients, but those prices are likely to go up in the next few years, an industry economist said.

Speaking at the 2017 International Production & Processing Expo (IPPE) Poultry Perspective Economist Paul Aho discussed the prices of the two major feed ingredients – corn and soybeans, which at the present time are very good.

“This really is a sweet spot for the poultry industry,” said Aho. “We’re really enjoying these prices. This is as good as it gets.”

Corn production and prices

Aho reflected back to 2012, when corn prices reached a high point of around $7 per bushel. It has now reached levels around $3 per bushel.

Corn production is stable both in the U.S. and abroad, but with the lower prices, farmers do not have the incentive to increase production.

And while ethanol production accounted for about 35 percent of the corn harvest several years ago, it has stabilized and is currently around 25 percent, having less of an effect on prices.

Aho expects corn prices to gradually go back up, and one major contributing factor is the possibility of decreased production as many are predicting millions of acres where corn was planted last year will be planted to soybeans this year.

Soybean production and prices

The cycle for soybean prices will likely be about 10 months behind the cycle for corn prices, Aho said.

And while now is a great time to buy corn and a good time to buy soybeans, even better times for soybeans are apt to be on the horizon.

“The predicted shift from corn to soybeans this year, in my opinion, will create an oversupply of soybeans,” Aho said. “I think if you are a poultry producer and you’re looking at buying soybeans or soybean meal, I think you can hold off. Better prices will come later in the year.”

Assuming there will be a good soybean harvest in the U.S., Brazil and Argentina, Aho said there may be a lot of soybeans this fall. 

Roy Graber is a staff reporter at WATT Global Media