Short supply, higher prices common in protein markets

by Meat&Poultry Staff
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TUCKER, Ga. – Short supply and elevated prices are a common theme throughout all protein sectors, said John Carley, vice president and senior relationship manager for Wells Fargo Bank, while addressing feed ingredient purchasing managers and other poultry industry professionals at the 2011 Grain Forecast and Economic Outlook Conference in Atlanta, Ga. The conference was sponsored by USPOULTRY.

He presented an overview of the protein markets in his presentation, A Wall Street View of the Protein Markets. "The view of Wall Street, in my opinion, is strong,” he said. “I think the protein sector is well positioned, both domestically and in the export markets. The broiler business has done a nice job of not relying on Russia for dark-meat exports and has found other markets in which to move product."

An Economic Outlook for 2012 was presented by economist Dr. Paul Aho. As a result of the recession, consumption of red meat and poultry are both down, he said. Total meat consumption was down by over 20 lbs. during this recession, which is unprecedented, he added. Aho provided information from Rabobank, which shows that the US is decreasing animal protein production by a rate of about 1.5 percent per year. By the end of 2012, the US will be reducing the production of animal protein on a 5 percent per year rate.

Aho predicts the US will see corn prices falling for 2012 from $6.50 to $5.50, deboned chicken breast prices at $1.40 to $1.50 and leg quarter prices at $0.55. He concluded his presentation by stating the future will include a slowly improving economy and lower input costs, resulting in profitability returning to the poultry industry in 2012.

There were about 10 billion lbs. of animal fat and grease produced each year in the US, with poultry fat making up about 15 percent of the total, said Mike Gilbert, senior product manager of fats and oils for Griffin Industries, during his presentation. He presented information from the US Census Bureau, which showed that 483 metric tons of rendered fat is estimated for use in biodiesel production in 2011, with the mandate being 800 million gallons of biodiesel fuel made in 2011.

This is the first year the biodiesel industry has been profitable, Gilbert indicated. He also discussed the reasons the fat market price has fallen over the last year and changes that could affect the fat and oil market in the future.

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