Surging Feed Prices to Test US Animal Protein’s Recovery

Key Points

• Feed costs have been relatively benign since 2012, helping the beef, pork and poultry sectors to expand more from 2014 to 2019 than in any five year period in the industry’s history.
• In the coming year, U.S. livestock and poultry producers will face more feed cost inflation than they have in over a decade, challenging their ability to recover after a difficult and volatile 2020.
• China is rebuilding its pork supply after ASF decimated its hog herd, leading to a surge in U.S. grain exports and prices. La Nina also threatens grain and oilseed crop prospects in South America and Eastern Europe.
• Average producer margins for cattle, hogs and broilers fell into negative territory in 2020 after the COVID-19 pandemic disrupted foodservice demand and drove widespread meat plant slowdowns and shutdowns.
• Hopes for a substantial rebound in profitability for meat and poultry producers and processors in 2021 will be difficult to come by with corn and soybean meal prices at multi-year highs.

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