Continued high feed costs will undoubtedly have long-term negative implications for livestock and poultry production, according to Mark Welch, AgriLife Extension Service grains marketing economist at Texas A&M University.  High grain prices have had more of a direct impact on the livestock sector than anything, he said.  “It will take some time to adjust to this. We are seeing fewer broiler chicks placed on feed through 2012. The sow slaughter is above the five-year average. The drought has pushed more cattle to feedlots, but also has increased herd culling,” he added.  Eroded profit margins and lack of foreseeable profit margins for animal agriculture producers “will mean lower feed demand in response to lower livestock and poultry numbers,” Welch explained.

Welch said the latest field surveys indicate a national yield of 120 bushels per acre, 3 bushels below USDA’s August yield report. “It looks like we are on track for 120 bushels an acre,” he said. “The question is once we get the supply situation settled, how far have we cut back on usage? We’ve cut back on ethanol use, feed use, and we’re pulling back on the exports market. Given the high prices that we are seeing, we are probably about where we need to be,” Welch predicted. Food prices will continue to be pressured upward by higher corn prices, he indicated. “It certainly will have some influence over time. “We need to remember as dramatic a price jump as this has been, this rally is only a couple of months old. It started in mid-June and it will take some time to get through this,” Welch noted. Moderate energy prices have helped curtail any drastic increases in food prices, Welch said. Gasoline and diesel prices have been absorbed by manufacturers of food products and transportation costs have been held in check.