Feed ingredients are the No. 1 cost component of the protein business, followed by labor and energy. Oil prices are historically linked to feed-ingredient crops. A significant percentage of the corn and soybean crops are used in ethanol and bio-diesel production. History tells us the feed-ingredient markets are a game of speculation until we get to the final harvest numbers. We are all trying to determine what will really happen and evidence helps to predict that. Every year I do my best to help you predict the future to make the best business decision. Corn and soybeans are the key crops in feed ingredients for the protein industry in the United States. Wheat is a smaller player.
The 2020 growing season was delayed by an extended winter and wet planting season in 2019. Because of last year’s extremely wet spring, many farmers were unable to plant their crops until late June to mid-July. This resulted in a reduction in yield. Many crops did not get harvested before the first snow/freezing event. As a result, many acres were harvested in the spring of 2020 before planting could occur. This may result in some reduction of acres planted. A warm May, lots of moisture and near-perfect June weather leading up to July 1 in most growing regions may accelerate growth and yield. It will be a buyer’s market regardless of how it shakes out. As usual, there are pockets of drought but nothing that will have a significant impact on either the corn or soybeans supply.