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Response to Lower Feed Costs Expected to Influence 2013 Profitability

31 July 2013, at 7:51am

CANADA - An agricultural economist with the University of Missouri expects the response of livestock and poultry producers to lower feed costs to influence profitability during the rest of 2013, writes Bruce Cochrane.

In response to record high feed costs fueled by last summer's drought in the US American farmers are expected to harvest their ever 14 billion bushel corn crop prompting the US Department of Agriculture to predict the biggest ever year to year decline in corn prices.

Dr Ron Plain, an agricultural economics professor with the University of Missouri, says the typical summer peak in live hog prices combined with some relief on the feed cost side has pushed the majority of North American pork producers back into the black.

Dr Ron Plain-University of Missouri:

Key thing right now is still the weather.

We're optimistic about this fall's harvest but still the crop went into the ground late because of the cool wet spring and so what shapes up on that will really determine just how much of a drop we have in corn prices.

The other thing is to watch how the livestock and poultry industry responds.

The last quarterly survey of hog producers in the United States didn't indicate a whole lot of expansion plans but if we get growth there, if the poultry industry expands then we may well see meat supplies growing as fast almost as feed costs decline so that's the two key things I think producers ought to be watching.

Dr Plain says pork exports will also be a key factor.

He notes the U.S. typically exports over 20 per cent of the pork it produces and Canada is also a big pork exporting country so what happens to demand in China and Japan for North American pork products will also have an impact on the market.

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