Bullish outlook on meat production

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Meat production will continue to grow globally, spurred by rising personal income levels.

That trend, coupled with a predicted long-term decline in grain prices, should bode well for the meat industry.

“Global protein consumption is expected to increase, with chicken being the largest benefactor because of how quickly it can turn grain into meat,” said Ryan Turner, commodity risk manager for ITL FCStone, New York.

His comments came during a panel overview of the world livestock industry at the eighth annual Oilseed & Grain Trade Summit, Minneapolis, Oct. 22.

Worldwide, demand for and consumption of meat continues to increase as personal income levels rise.

Of the forecasted growth during the next 10 years, poultry is expected to account for 50 percent, pork 30 percent and beef 17 percent, Turner said.

By 2022, per-capita meat consumption in China, for example, is predicted to be 50 kilograms compared with 40 kilograms today.

Shuanghui International Holdings Ltd.’s acquisition of Virginia-based Smithfield Foods Inc. also may be a sign of things to come, Goldsmith said.

“China struggles to assemble a safe, secure livestock system, so the acquisition of Smithfield almost as a turn-key event for the Chinese industry makes a lot of sense,” he said. “It’s also beneficial for the producers and the grain supplier complex here in the U.S.”

High grain prices hurt meat producers
In the United States, recent high grain prices have resulted in record-high consumer prices for poultry, beef and pork, Turner said.

It typically costs 50-60 cents to put on a pound on a fed steer in Kansas, he said. At the peak last summer, the price was up to $1.30 per pound, which was reflective of $7-8-per-bushel corn.

Pork producers saw similarly high feeding costs, topping out at $200 per head this past July. That figure should drop to about $150 per head after the first of the year.

The high feeding prices forced beef and pork producers to reduce herd sizes.

As grain prices drop, Turner said he expected producers to rebuild. In the case of beef especially, it may take longer to rebuild cow-calf numbers.

Although consumer poultry prices also climbed to record levels with high grain prices, the price spread wasn’t as great as with beef or pork.

“It pushed demand away from beef and pork to chicken,” he said. “Chicken replaced beef and pork, and a lot of it was a price function.”



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