WATTagNet: Economist says protein prices down in 2014, but profits to rise

While the weather in the Corn Belt has not been ideal this year, analysts are still expecting a record-high corn crop. Dr. Thomas Elam, economist, FarmEcon LLC, forecast at the Farm Journal/Watt Grain and Meat Outlook webinar the average farm price for corn at $4.50 per bushel for the 2013-2104 crop year, a drop of over $2.25 per bushel from 2012-2013. This expected decline in the corn price, along with a drop in the Decatur soybean meal price from $455 per ton in 2012-2013 to $400 in 2013-2104, will result in a feed cost drop that will cushion the bottom line impact of what Elam expects to be record-high protein production in the US in 2104.

Total U.S. production of ready-to-cook beef, pork, turkey and chicken peaked at 92.7 billion pounds in 2008. Production dropped in 2009 as the result of high grain prices and a sluggish economy. In 2014, Elam predicts that ready-to-cook pounds of meat and poultry will set a new record high of 93.9 million pounds. He predicts that production of ready-to-cook turkey pounds will increase by around 7.4 percent and broiler volume will increase by 5.4 percent.

The volume increases for broiler and turkey meats will result in declines in the wholesale prices of these meats, but the industry will stay profitable. Elam projects the national frozen tom turkey price will average $0.98 per pound in 2014, down from $1.05 in 2013. He predicts the national broiler composite price will average $0.92 per pound in 2014, down from $1.01 in 2013.

Beef prices are expected to continue to rise in 2014 as total beef production falls by 7 percent, according to Elam. The average Texas Panhandle Slaughter Steers, Choice 1100-1300 pounds, is predicted by Elam to rise to $1.30 per pound in 2014, from the 2013 estimated average of $1.25 per pound.