As Turkeys Die U.S. Bird Flu Leaves Grain Market Unscathed
While 7.8 million U.S. turkeys and chickens have been killed by the spread of avian flu across the U.S. Midwest, the drop in demand for grain for poultry feed is not expected to have a significant effect on commodity prices and grain markets, according to Allendale Inc.
In a worst-case scenario, the spread of the virus would cause a 5% loss to the egg-laying chickens and turkey flocks, according to Rich Nelson of the Illinois-based market research company. This decline would cause a drop in demand for feed corn supplies by 23 million bushels, or less than 1% of total animal consumption, across chickens, turkeys and cattle for 2015. It would also cause a decline of less than 1% animal soybean consumption. However, in a recent report published April 27, Morgan Stanley analyst, Brett Meier states, “Even in the worst-case scenario of an unchecked spread of the disease, we would see such an event as more bearish for soybeans than for corn.”
This outbreak is proving to be the worst in three years, threatening the U.S.’s $44 billion poultry sector and causing buyers on multiple global markets to restrict U.S. shipments. Poultry production accounts for 34% of total U.S. feed grain use, and 57% of U.S. soybean meal and high protein ration use, according to Morgan Stanley, but so far avian flu has been the cause of only 1.4% of total turkey slaughter, and less than 1% of total chicken slaughter. The disease has primarily affected commercial turkey flocks, especially in Minnesota where scientist believe that migrating wild fowl are spreading the disease. Government officials, however, have recently revealed that the virus has also been detected in millions of egg laying hens in Iowa, the country’s top egg producing state.
Despite these unsettling developments, perspective must be maintained as senior market-adviser, Jacquie Voeks with Illinois-based Stewart-Paterson Group tells Bloomberg, “It’s a poultry farmer’s worst nightmare and an economic nightmare for states that are the hardest hit, but if it stops spreading now, it’ll hardly be a blip on the radar of grain.”