News

Corn and meal demand impact from avian flu is limited

A market strategist says the avian influenza outbreaks have only a limited effect on corn and soybean meal demand.  Rich Nelson of Allendale tells Brownfield Ag News the impact to the corn and soybean meal market is mostly psychological.

“At this point in time, we’re only writing off 20 million to 30 million bushels of corn use from the total bird flu problems here,” said Nelson on Wednesday.

That’s chicken feed compared to what U.S. poultry gobbles up every year – about 1.24 billion bushels of corn, and about 15 million tons of soybean meal.  Nelson says the corn market has been in a softening trend lately, but primarily for other reasons.

“Perhaps this did add on to the pressure we’ve seen recently in corn prices mostly due of course to the planting going on this week, but as a whole, I’d estimate maybe [the decrease because of avian influenza] five to ten cents per bushel,” said Nelson.

The impact of the culled birds on the poultry market itself is negative, said Nelson.  Even though the avian flu die-off has taken poultry off the market, outbreaks have resulted in several countries banning the import of U.S. poultry.

“For right now, that actually overshadows the issue on production,” said Nelson.  “The main problem with this is that if we can’t export it, that means we actually have to deal with it here in the U.S. competing at the meat counter with the other meats.”

Nelson estimates that warmer weather may soon provide a break in avian influenza infections, but if the issue returns with the migration of waterfowl in the fall, he says the resulting corn write-off may total as much as 45 million bushels.

“For this year’s effect on actual grain demand, it may actually not be as big of an issue compared to the other problems we have in the industry, for instance the over-supply issue from the U.S. as well as South America,” said Nelson.  “As we lead into next year though, if this is still with us and flairs up, this actually might have a much bigger effect than it will have for the short term.”

AUDIO: Rich Nelson — Allendale (4 min. MP3)