Chip Flory, editor of ProFarmer, said he anticipates a significant increase in corn produced in the Gulf states of Louisiana, Mississippi, Alabama and Texas, as well as a little further north into Arkansas. With a large percentage of the broiler chicken industry being based in those states, it could bode well for poultry producers seeking the corn for feed. Added costs to ship the corn to other regions and current struggles for the ethanol industry make poultry producers’ odds even better.
Poultry’s competitive edge
Flory and Dr. Thomas Elam, president of FarmEcon LLC, both said that the poultry industry in the Southeastern U.S. will be in a prime position to compete against the ethanol industry and export markets for the greater corn supply in those states. Both spoke during the March 26 Grain and Meat Outlook Webinar, hosted by WATTAgNet and Farm Journal. The webinar, which can be viewed at http://www.wattagnet.com/ondemandwebinars.aspx, was the first in a series.
The broiler chicken industry has rebounded well after a couple of rough years, Elam said, and its financial stability will play a big factor in competing for those feed grains once they are harvested.
“There’s a pretty good run of profitability here,” said Elam. “They’ve got their balance sheets in fairly decent order. After the cutbacks they made a year ago or two years ago, they’re pretty healthy. I think they’re in a pretty good position to compete.
“The ethanol industry is under a lot of stress, and it hasn’t been able to pull corn in from other states or from overseas for that matter,” said Elam. “It’s been shutting plants down and cutting down on production schedules.”
Logistics will also play a key role in where the grain ends up, just as it has in the past.
“Last year, prior to September 1, we harvested about 1.2 billion bushels of corn out of the South,” said Elam. “That stuff was put directly into the usage channel, and a lot of that was used in the Southeast. The poultry guys were competing for it and the southeastern hog guys were competing for it. Just because of the location of the corn, and the transportation costs it would take to get it into the Midwest ethanol facilities, the southeast livestock and poultry industry will compete for that corn.”
Southern shift to corn
Easing drought conditions in the Gulf states has made the situation for planting and growing corn more favorable for farmers there, said Flory. And with corn carrying a greater profit potential than cotton, many farmers are making that leap.
“That area is well ahead of the pace from about a year ago,” said Flory. “They’re putting a lot of corn in the ground down in the Gulf states, and we’re losing cotton acreage. For the last couple of years, guys have been walking away from cotton. This year, they’re running away from cotton.”
Flory estimated that anywhere from 2.5 to 3 million acres in land that ordinarily may have been used for cotton will be available for other crops. Corn will be planted in most of that land.
While Flory and Elam both said during the webinar that a lot can happen between now and harvest time, they each indicated that the supply will be greater in those southern states, creating a demand for the grain.