While we corn growers are all gurgling with joy over the ethanol market, some of our best and most loyal customers are under considerable duress.
A 77 percent jump in the past year has made corn the most expensive since 1996, squeezing profit at Coca-Cola Enterprises Inc. and Tyson Foods Inc. Speculators including Pacific Investment Management Co. are basking in returns that go beyond forecasts made as recently as July.Part of the reason is the furor over immigration. It will be interesting to see if the new Congress and Pres. Bush reach an understanding on how to handle the illegal immigrants already fueling much our resilient economy.
A similar story ran in the LA Times back in July, about Arkadelphia, Arkansas. It was another tale of chicken processing plants, sudden immigration raids, over a hundred workers dragged away, and subsequent damage to the emotional and economic life of a city. The federal raiders got no cooperation, as the story tells it, from local prosecutors or sheriffs, who understand the local circumstances that make such raids a stupid waste of time that doesn't serve their communities, but disrupts them. Arkansas' Republican Gov. Huckabee even donated a grand to a relief fund set up for families hurt by the raid. [More]Between these two forces, I think much of our domestic livestock industry is up for grabs as we grain producers forsake them to become the ethanol sheiks. When Brazil is the place the world goes for chicken and pork instead of the US, we may wonder how we could have allowed this to happen.
Brazil’s world share of exports is expected to drop by one point to 38 percent. Brazil, which has shown annual increases in broiler meat exports over the last six years, is forecast to show a decrease in 2006 exports due mostly to weakening demand in a few of its major export markets. This is a result of economic factors within the country and AI concerns in importing countries. These AI concerns have led consumers to substitute other protein sources for poultry meat. These circumstances have led to an over supply issue in Brazil. With AI concerns expected to decline and as Brazil focuses on using more aggressive marketing strategies on its larger poultry importers, broiler meat exports are expected to rise 2 percent in 2007 to a total of nearly 2.6 million tons. [More]If avian influenza (AI) or bird flu remains a dormant threat, Brazil is poised to be formidable competition to US poultry giants. This will eventually impact our corn market.
And our food prices.