HAMBURG, Sept 4 (Reuters) - Signs are intensifying that livestock farmers are cutting production as the surge in soybean and corn prices to record levels this summer raises animal feed costs, Hamburg-based oilseeds analysts Oil World said on Tuesday.
“Livestock producers have started to react to the high costs of soymeal, corn and other ingredients,” Oil World said. “(Profit) Margins have become negative, leading to increased animal slaughtering.”
U.S. soybean and corn futures hit record highs this summer as scorching temperatures and drought ravaged crops in the U.S., while drought also severely cut soybean harvests in major exporters Brazil and Argentina. Both soybeans and corn are key animal feed ingredients.
“These high prices are painful for livestock producers and will initiate a cutback in production, primarily in poultry and pig industries,” Oil World said.
In Brazil, production costs for poultry have increased by 25 percent following the soybean and corn price rises, it said. “As a result, poultry production has started to decline and it is now expected to fall to only around 12 million tonnes in calendar year 2012, down 7 percent from last year,” it said.
“Poultry production has also started to decline in the U.S. and other countries.”
Global soymeal consumption is likely to fall in Oct./Dec. 2012 as the high prices reduce livestock output, it said. The trend is likely to continue in the early months of 2013 until new crop soybean supplies arrive from South America, it said.
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