It’s remarkable to think about, but corn production in the United States, or the lack of corn production in this country, quite literally has an effect on almost every aspect of our lives and especially on the lives or restaurateurs.
The USDA recently announced a severe cut in the corn prospects for the corn crop, causing a severe spike in the price of futures. The price of a bushel of corn is expected to hit $6 for December deliveries.
Cutbacks in Various Meat Products
The expected shortage of corn is said to be leading to the rise of prices of poultry, beef and pork. In addition, there may be a spike in the costs of high fructose corn syrup and possibly even ethanol. Below, we’ve detailed expected cost increases for various products:
Pork
The general consensus is that pork producers need to be paying no more than $4 per bushel for corn in order to break even when they sell live hogs. At current corn prices, it is expected that the cost of pork is going to skyrocket as producers begin trying to make up for the extra cost of the feed they need to provide for their herd.
The price of Smithfield Food for example, a major pork producer, is expected to go down in fiscal 2012 as the price of feed skyrockets.
Cattle and Poultry
Cattle and poultry prices are expected to continue to rise as well. Of course, the fact that beef and poultry prices have been steadily rising for the past few years already is just an indicator that we can expect to see even faster price increases now that the cost of feed is expected to skyrocket as well.
Export Products
The one bright spot on the horizon is exports. As the value of the dollar continues to fall relative to world currencies, exports are expected to continue to grow. The recent price increases in the cost of corn futures are expected to lead to a significant rise in the value of cattle, poultry and hog exports.
Jim Balis' Blog 