While meat and poultry companies continue wringing their hands in worry over how increasing use of corn for ethanol might impact their animal feed prices, along comes another situation that could make their headaches much worse. Simply put, the corn outlook is the worst in decades, according to the Edmonton Journal.
As the result of wet weather delaying corn planting in the United States this year, global inventories may end at their lowest in 37 years, which will mean higher costs for both consumers and livestock producers.
Due to excessive rain, more than one-third of U.S. Midwest fields were planted after the mid-May target for optimal growth. As of June 5, Ohio farmers were the furthest they've been behind since 1989 with 58 percent sowed, according to government data.
Goldman Sachs said on June 6 the disruptions increase the "potential for a shortfall." In the past year, corn futures more than doubled to $7.365 a bushel in Chicago and may increase above $9 should conditions get even worse, Morgan Stanley warned.
This rally is hiking costs for both meat producers and ethanol makers. All of this bad news has led, in part, to global food inflation accelerating in nine of the past 11 months, according to the United Nations' monitoring mechanism.
Source: American Sheep Industry Association