Animal Feed: Costs and Prices

The increase in the international prices of corn and soybeans, inputs used to produce animal feed, threatens to put upward pressure on the production costs of meat, eggs and dairy products.

Friday, January 29, 2021

In recent months, the international price of a bushel (27 kilos) of soybeans increased by 28%, from $10.6 to $13.62, between November 1, 2020 and January 28, 2021.

According to stock exchange data, for the period under analysis, the corn bushel went from $3.98 to $5.36, which is equivalent to a 35% increase.

Livestock farmers, a sector that demands animal feed made from corn and soybeans, are already beginning to perceive the increase in production costs caused by these variations in the price.

Romulo Chaves, president of the National Chamber of Pig Farmers of Costa Rica, told Nacion.com that "... the increases in corn and soybean prices began to be perceived in August last year, but the strongest escalation began in November."

According to the most recent report of the Food and Agriculture Organization of the United Nations (FAO), during December 2020, corn export prices increased, due to persistent concerns about crop prospects in South America and the indirect effect of the sharp increase in soybean prices, which reinforced the upward trend.

Daniel Castillo, president of the National Chamber of Milk Producers, reported that "... according to the supplier of concentrate for animal feed, the price in Costa Rica has risen between 5% and 15% from November to date."

Costa Rican producers agree that the unusual demand from China, a country that is currently recovering strongly its livestock production, has caused corn and soybean prices to tend to rise in recent months.

Data collected by CentralAmericaData specifies that during the first half of 2020, companies in the region bought corn abroad for $525 million, 20% more than what was reported in the same period of 2019, a variation that is explained by the increase in imports from all Central American markets.

If the same trend continues, businessmen estimate that the increase in costs will begin to be reflected in the prices paid by consumers for food of animal origin.

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The growing consumption of meat, eggs, dairy and grains is driving the agricultural industry which benefits from dietary changes at the global level.

The phrase "The protein business is a very good place to be right now," made in an article in The Wall Street Journal by a US pork producer reflects the boom being experienced by the agricultural industry around the world, thanks to changing trends in food consumption of animal protein products which are beginning to be used in place of carbohydrates in consumer's diets.

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