As global grain prices have soared, feeding livestock has become so expensive that wheat has been moved into the animal feed category. Not only are livestock facing adjustments in eating habits, but even global trade flows have shifted dramatically.
As grain prices soar, the cost of raising livestock has also increased, and consumers may have to pay higher prices for meat, Bloomberg reported on 29. Wheat has gradually become a feed option, the world’s top food companies have made policy adjustments.
The meat and chicken industries are still making good profits, so higher prices are not dampening their appetite,” said Brian Williams, a New York-based senior vice president at Macquarie Group Ltd. have not dampened their appetite. However, corn prices have gone up enough that in some areas of the U.S., wheat is being moved in.”
Williams noted that a series of bad weather or problems over the summer could lead to more wheat becoming feed, as seen in 2012; this could happen if corn prices stay above $7.00/bushel for a sustained period of time.
It all may seem simple, but there are risks associated with changing the animals’ diets: calves should not be fed wheat, and if they eat too much wheat, they will become bloated.
Researchers at North Dakota State University (USA) recommend that wheat should not make up more than 15 percent of a livestock’s diet. The color of poultry skin also varies with what they eat, with corn-fed chickens looking yellowish, a trait avoided in some countries.
In a rare move to cut costs, U.S. chicken-processing giant Perdue Farms Ltd. has taken the step of importing soybeans from rival Brazil, buying 31,450 tons of them next month alone. Brazil’s largest food-processing company, BRF S.A., is turning to neighboring Argentina for corn, while Chinese and U.S. feed producers are buying wheat commonly used in bread-making.
With corn prices rising, China is buying wheat from several countries, and Brazil is picking some up, said Juan R. Luciano, chairman and chief executive of Archer Daniels Midland (ADM), one of the world’s four largest grain merchants. U.S. corn arriving in China will soon be more expensive than wheat, he said on an earnings call this week.
Feed producers and meat processors may soon get some relief. While U.S. crop acreage valuations disappointed the market earlier this year, crop prices have soared since the survey was conducted, which could spur farmers to increase acreage.
Agri-tech startup Farmers Business Network said in March that growers had renewed agreements with the agency to set aside land for environmental purposes, but now that crop prices have risen, the land will be put back into production.
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