USDA report: Ethanol policy to keep corn price high

The continued U.S. demand for corn-based ethanol combined with the ongoing European Union biodiesel demand for vegetable oils will keep prices for corn, oilseeds and many other crops at historically high levels, according to a new USDA report “Agricultural Projections to 2020.”  The report forecasts meat, poultry and grain production through the next decade. 

Projections for the next several years show the livestock sector responding to high feed prices by producer returns being “squeezed” and production incentives being reduced, which together will lead to declines in production for both the red meat and poultry through 2012.  This price pressure, combined with increasing meat and poultry exports, will result in declining domestic consumption of meat and poultry though 2013, the report noted.

Beef production is projected to decline through 2012, and then rise through the remainder of the projection period, with beef cow numbers going from 31 million head in 2011 to 34 million head by 2020.  Reduced returns on pork in 2011 will trigger reduced production in 2012, although production is forecast to increase later in the decade.  Pork production increases will be supported by gains in breeding, herd productivity and increased slaughter weights.

Poultry production will rise the most over the next decade, with poultry’s feed-to-meat conversion advantage being the biggest reason for the gain.  Poultry prices are set to increase with greater demand, with increased poultry production coming from higher bird numbers as well as higher average weights.

The report found that by the end of the decade, total meat and poultry consumption per capita will rise by 2.7 percent from 2009 to 2020, driven largely by increased consumption of poultry.  Per capita consumption of beef, pork, and lamb are all forecast to decline, with veal remaining the same.

(Source: http://www.cattlenetwork.com/cattle-news/association/ami/USDA-report-Ethanol-policy-to-keep-corn-price-high.html?ref=104)