Wednesday, April 4, 2007

More corn

Certainly, corn prices have been volatile over the last week. It appears that while we won't be going back to $2.50/bushel corn, we probably won't be hitting $4.50/bushel in the near future.

Nevertheless, Pilgrims Pride is continuing their commitment to a 5% cutback in chicken production during the upcoming year. This should help to put overall chicken production back in line with demand -- and, perhaps, helping to increase wholesale prices.

But, here is a tidbit about Pilgrims Pride that I did NOT know:

Regardless of the soybean decline, analysts considered the plantings report a big positive for chicken producers, particularly Pilgrim's Pride Corp., which doesn't hedge for grain -- making it more susceptible to market fluctuations in price.

How do you hedge? Or, more importantly, why is it important?


Jelligal42 said...

Do you know if the current status of corn and soybeans is changing the number of farms allocated to producing other crops? - GL

G. F. Barbato said...

i was waiting to see if someone else might answer... but...

based on the usda report, it appears that corn plantings are going up at the expense of soybean. while soybean planting is actually increased from last year; it did not increase as much as expected.

given Brazil's increasing focus on soybean, it promises to be an interesting year!