March 12, 2007

High grain costs pushing up prices of chicken in the US

Strong demand for corn from ethanol is driving up the cost of livestock and will raise prices for beef, pork and chicken, the Agriculture Department said Friday.

Meat and poultry production will fall as producers face higher feed costs, the department said in its monthly crop report.

Ethanol is consuming 20 percent of last year's corn crop and is expected to take up 25 percent of this year's crop.

The price increases have driven the costs of feeding chickens up 40 percent, according to the National Chicken Council.

Although the average price of corn has remain unchanged from last month, it is now US$3.20 a bushel, up from US$2 last year.

Chicken producer Tyson last month said it would pass the increased costs to consumers.

Deputy Agriculture Secretary Chuck Conner reassured the industry that increased demand likely would prompt farmers to plant more acres in corn, adding that the agriculture department would issue planting predictions later this month.

Soybean prices are averaging US$6.30 a bushel, up from last month's average of US$6.20 compared with last year's price of US$5.66. Wheat prices are averaging US$4.25 a bushel, unchanged from last month and up from US$3.42 last year.