US pleased with corn, concerned about soy

Bill Roenigk, senior vice president and chief economist of the National Chicken
Council (NCC), said that while the Council is encouraged by the USDA
Prospective Plantings report that the outlook is clouded, since the poultry
industry is a major buyer of soybean meal as well as corn. The chicken ration
typically consists of 70% corn and 20% soybean meal.

Inspired by the fuel
ethanol boom, US farmers intend to plant the largest amount of land to corn in
63 years—90.454 million acres (36.6 million hectares). Soybean plantings are
projected at 67.140 million acres (27.2 million hectare), the smallest area
since 1996.

“The weather is going to drive it all,” said Tom Buis,
president of the National
Farmers Union, pointing to the uncertainties of the growing season. USDA
figures are based on a survey of 86,000 growers during the first two weeks of
March.
The cost of producing a chicken has gone up 40% since last summer due
to the runup in corn prices. Only a modest rise in food prices was seen in 2006,
but with high corn prices increasing feed costs, beef and poultry price
increases should begin to accelerate this year.

The NCC has estimated
that a total of 21 million new acres of corn will be needed in 2007 and 2008.
The ethanol industry has 114 plants in operation, and 80 under construction,
nearly all of which run exclusively on corn.

“If 12 million new acres are
planted this year, that leaves nine million needed for next year,” Roenigk said.
“At some point, we are going to run out of land and the ability to shift more
acreage from soybeans and cotton into corn.”

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