Corn prices in the US jumped to a record US$6 a bushel yesterday (3 April), driven up by a shortfall that looks set to further squeeze food manufacturers and exacerbate food inflation.
Corn prices have shot up by nearly 30% this year in the US, as demand has soared.
“The increasing cost of corn is undoubtedly the greatest problem facing the US food industry, especially the meat sector,” Richard Lobb of the National Chicken Council (NCC) told just-food.
According to Lobb, members of the NCC have spent $3.5bn in extra grain costs this year – that is over $80m each week.
“As costs rise, companies are squeezed. They start losing money and have to scale back production, damaging local economies,” Lobb said.
Last month, US poultry giant Pilgrim’s Pride cited soaring corn costs as it announced plans to close a chicken processing complex and six of its 13 distribution centres in the country – with the loss of 1,100 jobs.
Fellow poultry processor Fieldale Farms has also blamed more expensive corn for its decision to scale production back by 5%.
Demand has increased dramatically thanks, in part, to the US government’s biofuel targets. Another driving factor has been growing demand for protein from emerging markets like India and China.
At the same time, the US Department of Agriculture predicted earlier this week that US farmers would plant 8% less corn this year.