January 4

1/4 – The tone for commodities in 2021 will undoubtedly be set by higher feed prices. In just 5 months, corn & soymeal have both soared from multi-year lows to 6-year highs. Corn futures, which were $3.08 per bushel in August, have jumped by 58% to $4.87. Soymeal is up 55%, rising from $280 per short ton to $434 over the same period. China is the driving force in world feed demand, as it scrambles to rebuild its hog herd in the wake of ASF losses. Meanwhile, drought conditions have damaged crop yields from China trading partners Brazil & Argentina. So far for the 2020/21 marketing year, China’s bought 475M bushels of U.S. corn and has orders in place for another 1.2B bushels, up 242% from a year ago. Higher feed prices will dent margins for poultry producers and could constrain output just as foodservice demand comes back on-line post-vaccine.