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Meat producers face record feed prices

Meat producers are braced for a sharp hit to profits after the price of a key ingredient for fattening chickens and pigs hit an all-time high as a result of the intense heatwave in the US farming belt.

Soyabean meal, crushed from oilseed and mixed with corn to make animal feed, on Thursday exceeded the record set during the 2007-08 food crisis. Benchmark CBOT July soyameal futures rose to a record $475 per short ton, up 4.6 per cent.

Other futures markets also surged late in the session. Corn was at its highest in more than a year, with benchmark CBOT July corn reaching $7.76¾ a bushel, up 8.1 per cent on the day. The December contract, against which much of the coming harvest will be priced, hit a peak of $7.13 a bushel, up more than 37 per cent over the last three weeks.

Soyabeans rose to within reach of a record set in July 2008, hitting a session peak of $16.44½ a bushel, up 4.6 per cent.

The jump in prices will hurt chicken processors such as Tyson Foods, Sanderson Farms and Pilgrim’s Pride, which is controlled by Brazil’s JBS. Poultry eat more than 40 per cent of the meal crushed from US soyabeans, according to Bill Roenigk, chief economist at the National Chicken Council.

Meal prices soared along with broader grain markets as drought and temperatures of more than 100F (38C) were forecast to continue in US corn belt states such as Illinois, Indiana and Iowa, threatening crop yields.

Mike Cockrell, chief financial officer of Sanderson Farms of Mississippi, said feed made up 55 per cent of the company’s cost of goods sold. It had locked in soyameal costs only through to the end of July.

“At the end of the day, chickens eat corn and soyabean meal. There are no viable substitutes.” he said. “So we and others in our industry will have no choice but to pay a higher cost to feed our chickens. If history proves a reasonable guide, high-priced grain means high-priced meat at some point in the future”.

“If you know how to do a rain dance, I encourage you to do so,” said Mr Cockrell.

via Meat producers face record feed prices – FT.com.

The South African Poultry Association “grossly overstated official import statistics” in submissions to the investigation into poultry imports from Brazil, documents addressed to the World Trade Organisation (WTO) from Brazil claimed.

According to BusinessDay, the claims by the Brazilians sought to cast doubt on the integrity of SA’s trade practices, in a dispute that dents two emerging economies which in recent years have worked on forging closer economic and political relations.

Last week Brazil announced that it had taken the dispute between its poultry association, headed by Francisco Turra, and SA’s organisation to the WTO, saying SA ha d been “uncooperative”.

“SA did not make an objective examination, based on positive evidence of the volumes of dumped imports and the effects of prices in the domestic market,” Brazil’s foreign ministry says in its document to the WTO.

Submissions by the Association of Meat Importers and Exporters of SA, which has also applied for a review of the decision to impose provisional duties on certain cuts of chicken from Brazil, also concur with Brazil’s submission to the WTO.

Association CEO David Wolpert said that not only were the statistics submitted by SA’s poultry body to the International Trade Administration Commission of SA (Itac) investigation into poultry dumping incorrect, but they inflated the imports from Brazil by 54 per cent.

“These misinterpreted stats were also used to hide the fact that Argentina exported significantly higher volumes at lower prices to SA,” he said.

Mr Wolpert claims the import statistics provided by SA’s poultry association are “fundamentally incorrect” and do not reconcile to the official statistics from the South African Revenue Service (SARS).

However, Itac refuted claims that it has used the incorrect data, saying the statistics were obtained from SARS.

“Further consideration made by the commission on this issue, based on comments to the preliminary report received from the interested parties, will be detailed in the commission’s final report to be released in due course,” said communication manager Thembinkosi Gamlashe.

Brazil also claims SA failed to give exporters ample opportunities to present evidence prior to the imposition of provisional duties.

Mr Wolpert said some documents were disregarded by the commission due to technicalities.

Itac said that all interested parties were given opportunities to provide information in a format required by the commission’s regulations and questionnaires were sent to interested parties.

via Brazil Claims SA Industry Body Inflated Poultry Imports.