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What's Behind Increased Meat Prices?

written by

Ben Simmons

posted on

May 24, 2021

It is a joy to have Beth working with me on the farm. Frankly, we make a great team. ​

With the increased business she has been traveling with me to make our weekly deliveries. Between stops we have time to talk and discuss stuff without interruptions. An added benefit is she sometimes reads informative articles to me like the one from meatingplace magazine that I'll take the details from for today's newsletter.

We are already hearing from customers how meat prices in the grocery stores have increased. And, our feed supplier has communicated that it is only a matter of time before he will have to raise our feed prices (used for hens, broilers, and pigs).

According to the meatingplace article - Corn prices were $5.3825 a bushel at the start of March 2021, a 43.3% increase from a year earlier. While soybeans were up to $13.9125 a bushel, a 54.5% increase.

The present uptick is not driven by falling supply; rather, it is spectacular demand, specifically from China. According to the USDA's Feed Outlook, for the last four months of 2020, China imported 124 million bushels of corn, up from less than 1 million bushels in the same period a year earlier. China's soybean imports from the U.S. were up 52.8% from 2019 to 2020.

SkyNews Australia reported that China is bullying Brazil to import Brazilian corn & soybeans as well.

Makes you wonder what China either knows or is planning for that we don't know! Why have their needs increased more than 124 times?

What is the impact on beef, pork, and chicken prices?

Poultry producers and processors have been feeling the pressure of pricier feed for several months now (4/21 magazine issue). According to sources, weekly chick placement has been trending down and are expected to remain 2% below 2020's levels. They noted that strong take out demand has increased chicken wing prices 48% over 2020 and the "chicken sandwich wars" have boosted boneless breast meat by 41%.

Beef prices will go higher. However, feedlots will switch from buying lighter cattle to grow in the feedlots (when feed cost are cheap) to buying heavier cattle (8-900 lb) that would not require as much higher priced feed to get them to market weight.

Pork prices- producers will initially respond by selling lighter weight hogs for slaughter. They also predict some producers will be unable to stay in business, which would lead to a reduction in the pig supply six to 12 months from now. This is in addition to the massive euthanization of pigs the Spring of 2021 - Tyson alone killed more than 40,000 tons.

One of our closest friends text me Thursday to say Wal-Mart was out of bacon and sausage.

So, what should you expect from Nature's Gourmet Farm prices?

Beef- grain prices will not affect our beef cost. However, strong demand may affect prices. Currently, I don't see any changes.

Chicken & Eggs - both would increase with an increase in feed cost. The amount is dependent on the actual feed increase. Experience tells me this will not be a one time and done but will be multiple increases in feed cost that will in turn affect meat cost.

Pork- same as chicken and eggs PLUS a supply shortage at grocery stores will drive prices higher. Pork will most likely be the first increases we have.

I know this subject is not glamorous and exciting, but I'm here to also help you understand and prepare for what is going on in the meat industry so you are informed and not surprised.

And, if China continues to buy heavy and the U.S. has a bad corn & soybean crop year all bets are off. The priority could become availability vs. price!

As always, we thank you for rewarding our hard work with your trust and support.

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