The U.S. will likely see another bumper corn harvest this year of 13.86 billion bushels because of near-perfect weather this season pushing futures down by one third in the past three months to hit their lowest point since 2010. These conditions are causing lower animal feed costs and higher profits for operations such as Tyson Foods and Pilgrim’s Pride, and have fueled a surge of high-profile mergers in the poultry industry. A boon for the poultry industry began last year with a previous drop in grain prices and tight supplies of beef and pork causing higher prices for competing proteins, and the continued slide could mean higher poultry profits through 2015. Producers however could use the current market conditions to increase chicken slaughter, flooding the market and depressing prices. The fall in prices could push profit margins for many farmers below the break-even point who will respond by cutting what variable costs they can – namely fertilizer, seed, and equipment purchases. In the first six months of 2014 U.S. retail sales of high-horsepower, two-wheel drive tractors fell 10.3% from the same period in 2013 and the industry will need to wait and see if this decline will stabilize at this point or if it will continue to lows seen in the late 1990’s.
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