Record corn prices mean more expensive meat, dairy products

NEW YORK (AP) — Raging Midwest floodwaters that swallowed crops and sent
corn and soybean prices soaring are about to give consumers more grief at
the grocery store.

In the latest bout of food inflation, beef, pork, poultry and even eggs,
cheese and milk are expected to get more expensive as livestock owners go
out of business or are forced to slaughter more cattle, hogs, turkeys and
chickens to cope with rocketing costs for corn-based animal feed.

Rod Brenneman, president and chief executive of Seaboard Foods, a pork
supplier in Sawnee Mission, Kan. that produces 4 million hogs a year, said
high corn costs were already forcing producers in his industry to cut back
on the number of animals they raise.

"There's definitely liquidation of livestock happening," and that will cause
meat prices to rise later this year and into 2009, said Brenneman, who is
also the vice chairman of the American Meat Institute.

Brenneman's cost for feeding a single hog has shot up $30 in the past year
because of record-high prices for corn and soybeans, the main ingredients in
animal feed. Passing that increase on to consumers would tack an extra 15
cents per pound onto a pork chop.

It's a similar story for U.S. beef producers, who now spend a whopping 60-70
percent of their production costs on animal feed and are seeing that number
rise daily as corn prices hover near an unprecedented $8 a bushel, up from
about $4 a year ago.

"This is not sustainable. The cattle industry is going to have to get
smaller," said James Herring, president and CEO of Amarillo, Tex.-based
Friona Industries, which buys 20 million bushels of corn each year to feed
550,000 cattle.

Corn's prices were already rising before the floods, driven up 80 percent
over the past year as developing countries like China and India scramble for
grains to feed people and livestock. U.S. production of ethanol, an
alternative fuel that can be made with corn, has also pushed prices higher,
prompting livestock owners to lobby Washington to roll back ethanol
mandates.

On Mon, 23 Jun 2008 00:19:01 -0400, Mark A wrote:

> NEW YORK (AP) — Raging Midwest floodwaters that swallowed crops and sent
> corn and soybean prices soaring are about to give consumers more grief at
> the grocery store.
>
> In the latest bout of food inflation, beef, pork, poultry and even eggs,
> cheese and milk are expected to get more expensive as livestock owners go
> out of business or are forced to slaughter more cattle, hogs, turkeys and
> chickens to cope with rocketing costs for corn-based animal feed.


Going to mean a lot more than that. Corn is used a LOT.

Corn farmers planned on planting 8% LESS corn this year, most likely in an
effort to keep prices high.

OK, prices are high! And, a number of farms are on contract, which means
they have to sell their crop at $6/bsh price, while the buyer reaps the
rewards of the higher price.

See! Speculation does work!