Pork & Chicken Now Luxury Items As US Plummets Into Austerity
July 25th, 2012
In a perfect storm of a new day rising, rationing is coming to the United States. The US Department of Agriculture last week lowered its estimate of how much corn will be used to feed livestock by 650m bushels – that’s 12 percent. It also reduced its US exports of corn by 300m bushels. All this as Thursday prices pushed above $8 a bushel for the first time ever, leading analysts to portend dramatic rises in the price of staple foods.
In the wake of the corn market volatility, FT has stated that pork and chicken are set to join beef as a luxury meat due to drought in the US and a US ethanol policy that is using corn for purposes other than food, namely ethanol. Corn and soyameal, the main ingredients in animal feed, are setting records in cost amid the worst drought in half a century as extreme heat compromises crops across the US, the world’s main producer of animal feed.
“Beef is simply going to be too expensive to eat. Pork is not going to be too far behind. Chicken is catching up fast,” said Larry Pope, chief executive of Smithfield Foods. “Are we going to really take protein away from Americans?”
Smithfield posits that US corn crops will yield less than 140 bushels an acre or below, thus reducing greatly harvest expectations internationally. “I’ll use the word catastrophe – that’s my definition,” Mr Pope told the Financial Times. According to Pope, Smithfield has used futures positions to lock in feed costs into the spring of 2013. “I thought that $6 corn was end of the world,” said Mr Pope, who has worked at Smithfield for more than thirty years. “I never could have realised that I would be thankful to be buying it at $7.”