As the U.S. corn harvest winds down, the U.S. Grains Council (USGC) said global livestock producers are in the enviable position of being able to both take advantage of competitive feed grain prices and invest in the future growth of their businesses.
In 2012, as corn prices hovered around $8/bu., many poultry, swine and dairy producers rode out the high prices, buying one cargo of corn at a time while waiting and hoping for the market to improve. However, USGC said the strength and ingenuity of U.S. farmers has global livestock producers once again set to reap the benefits of large crops. In fact, U.S. farmers have produced four harvests exceeding 350 million metric tons per year, with the 2016 crop currently projected at 386 mmt.
The result has been tremendous growth in global corn ending stocks and a dramatic decline in the price of corn, which translates into savings for overseas companies, USGC added.
For example, a poultry company importing 25,000 mt of corn per month in 2012 would have paid nearly $8 million each month for that corn, which makes up 60% of the feed costs. In 2016, that same producer can receive the same quantity of corn for less than $3.5 million per month, saving the company more than $4.5 million per month, or $54 million per year, in feed costs.
“This dramatic savings in the cost of the primary input for the global feed industry -- combined with projections for a continued abundance of corn, as highlighted by record global ending stocks -- results in a very favorable buyer’s market,” USGC said.
U.S. farmers have shown their ability to rise to the challenge and produce an abundance of corn to meet market needs, USGC added, and low prices and significant cost savings all lead to conditions that are favorable for massive growth in the global livestock industry.
“The message to buyers is clear: Now is the time to both buy and to invest in your future,” the council said.