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Chicken Producer Shares Up on Corn View

by 5m Editor
2 April 2007, at 9:50am

NEW YORK - A U.S. Department of Agriculture report showing farmers intend to plant 15 percent more acres of corn this year boosted shares of chicken producers Friday.

Growers plan to plant 90.5 million acres of corn in 2007, up from 78.6 million acres last year, according to the department's spring plantings report. The number represents the highest acreage since 1944, when farmers planted 95.5 million acres.

Chicken producers are hoping the increase in acres will help soften corn prices, which are about $1 per bushel above average due to high demand for ethanol. Corn is used to make the alternative fuel that has risen in popularity with the government heralding it as way to reduce the country's dependance on foreign oil.

Chicken producers, meanwhile, use the corn as an ingredient for feed. As corn prices have surged, chicken prices have gone up about 40 percent. The higher costs have started affecting profits at meat producing giants like Tyson Foods Inc., who warned in January they would have to start passing costs on to consumers.

Bill Roenigk, senior vice president and chief economist at the National Chicken Council, said although he is encouraged by the possibility of a bigger harvest this year, the resulting 11 percent drop in soybean acres may create another problem.

"This is definitely a mixed report," Roenigk said in a statement. "Twelve million additional acres in corn will help meet needs for feed, fuel and exports, although at a high price."

"But much of the increase is coming out of soybeans, also a critical crop for us," he added.

Roenigk said meal for chickens typically consists of 70 percent corn and 20 percent soybean meal, with 10 percent minerals and other ingredients.

Source: CNBC

5m Editor