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Higher food prices seem a certain result of the drought that has parched about one-third of the U.S. How high prices might go, which proteins will see the sharpest gains and when operators and consumers will feel the impact are the key questions, and there are disagreements and conflicting forecasts. Should burger-concept operators be concerned, panicky or just patient?
As a result of the drought, we should see wholesale chicken and turkey prices go up first. That could come as early as this fall with a fairly aggressive and quick liquidation of some of the flocks.
Pork prices at the wholesale level would not be expected to rise (because of the drought) until late next spring. This is because most of the sows in gestation today will be farrowed, with the pigs finished. That means the supply of pork is pretty well established for 10 months out (4 months gestation and 6 months grow-out). That means pork supplies will not drop sharply until early summer 2013, and then wholesale prices really start up. Some of that may be anticipated, which means spring 2013 could be the point where prices start up.
orry on the beef side: It will be a long time before we will see cheaper wholesale beef. If a heifer is retained late in 2013 (when profit prospects may return) then gestation is 9 months and grow out is 1½ years. That means it will be 2016 before there is any chance of increasing U.S. beef supply. So expect to see record high wholesale beef in 2012, with that record broken in 2013, and again in 2014, and once again in 2015.
In addition to short supplies in the U.S., rising world incomes have meant exports of U.S. meat products have been increasing. If that trend continues, per capita supplies of meats will drop to about 185 to 190 pounds in the next two years. That is down from about 220 pounds in 2007, to 198 pounds this year. Chicken and turkey have the opportunity to attempt to “secure” more consumers as they can increase poultry supplies much more quickly than pork and beef.