Grain supplies steady despite price spike - Broilers
Published:Sunday | October 17, 2010 | 12:00 AM
Despite rising grain prices on the world market on the back of last week's report of lower-than-expected harvest yields in the United States, and the knock-on increase it will mean for chicken-meat prices in Jamaica, one of the country's leading poultry producers is not worried that corn supplies will run short anytime soon.
"The corn crop in the US is still a strong crop and we are still in the early stages of the harvest," Ian Parsard, vice-president of finance and energy at Jamaica Broilers, said Thursday.
When the US harvest ends, other major producers such as those in South America would be starting harvesting to supply the world market.
Parsard pointed out that the current market dynamics in relation to grain was more about price than any major concern about the availability of supplies.
10 per cent hike
Jamaica Broilers last week signalled that chicken-meat prices are expected to rise by as much as 10 per cent over the next two weeks, pushed, it said, by higher grain prices on the world market.
The other major producer of chicken meat, Caribbean Broilers, so far has not indicated what impact the world-market conditions for grain and hence, for animal-feed prices, will have on its pricing policy immediately, or in the near future.
Company spokespersons were not immediately available for comment.
But with a monthly spend of between J$4 million and J$5 million on grain for its operations, Jamaica Broilers is bracing for a major impact on its expense line when it has to again buy the input in a few weeks' time.
Parsard said grain accounts for about 35 per cent of operational costs for Jamaica Broilers' large poultry business. The group mills its own animal feed and supplies the market with feed for poultry and other livestock.
With corn now fetching upwards of US$5.60 per bushel, up from around US$3.30 two months ago, the company is bracing to fork out more for its next monthly purchase of the commodity.
"Local feed producers who use corn and soybean among the main ingredients in the production of livestock feeds have been among those hit by a dramatic hike in the prices of those commodities," Jamaica Broilers said in a statement issued last week through its publicists.
It said the increase was the latest in a series of pressures on the price of grain which, in September, also reacted negatively to a 30 per cent reduction in the supply of wheat exported by Russia, another of the world's major suppliers.
"That situation has been made worse by the additional costs being incurred because of long queues of ships in the US Gulf waiting to load supplies of corn and soybean on order from the USA, Canada, and South America," Jamaica Broilers said.
While the group spokesman said some forward buying is done to hedge against world-market price rises, he noted that this was not done to any significant degree as any price reduction below the forward market purchase price would mean that consumers lose out on the benefit of lower spot-market prices.
"A delicate balance has to be struck between the spot and forward markets," Parsard told Sunday Business.