Marketing

By John Berry

I’ve had a couple discussions with producers about the impact of High Path Avian Influenza in the upper Midwest, and the price of corn. The thinking goes something like; with over 50 million birds destroyed due to the outbreak, the corn that would have been consumed is now on the market looking for another home. How might this impact farm prices?

I took a little time and went through some statistics on poultry, corn available and corn used for feed to try and get at a reasonable response to this concern. The result of this research is shared here.

We can see from Chart 1 the number of birds euthanized to date is relatively minor compared to the total U.S. flock.

Chart 2 illustrates the relationship of which sector uses how much of our corn crop annually. The section in the 12:00 to 4:00 o’clock position is where poultry feed comes from. The section noted as “ethanol feed” represents the DDG value-added portion of the corn spent in ethanol production.

Chart 3 then shows us; of the corn used for animal feed; which species is consuming how much of our annual crop of corn. Without a doubt the amount of corn used in poultry production is significant when taken as a whole.

Without much fancy calculating (I struggled at calculus in school) it appears to me that given the total amount of corn available to the market, the amount of corn consumed by various sectors of the market and the relatively low numbers of affected birds; I expect the Avian Influenza outbreak of 2015 to have little if any noticeable impact on the national price of corn.

Of course, this uses some major assumptions including the disease continuing a decrease in infection rates and the bushels of corn both on-hand and coming to market following the 2015 harvest. We’ll see what does actually occur.

Source:psu.edu