MISSISSIPPI STATE -- Poultry companies are facing significantly higher production costs in 2007 as corn prices remain at historic levels without much relief in sight.

John Anderson, agricultural economist with Mississippi State University's Extension Service, said corn prices are about $1.25 per bushel higher than a year ago.

“Corn futures briefly reached $4.50 per bushel in February, but began to decline after the U.S. Department of Agriculture released the planting intentions report at the end of March. Now, corn futures are around $3.64 per bushel,” Anderson said. “Prices aren't just high, they are jumping around a lot from day to day.”

The annual prospective plantings report predicted record corn acreage in the United States. Mississippi is expected to increase its corn acreage by 279 percent to 950,000 acres.

“The large acreage is encouraging news for poultry producers, but that acreage amount only represents a potential crop,” Anderson said. “All livestock industries are dealing with the extreme volatility in feed prices. There was a very small carryover in corn supplies, so the price will depend greatly on how the 2007 crop develops.”

Anderson said the increased production costs will likely reduce broiler meat production this year. He cited a recent USDA report forecasting the national broiler meat production to be 35.6 billion pounds in 2007, which is a slight decrease from 2006.

“If this forecast proves accurate, it will be the first decrease in broiler meat production from one year to the next since 1973,” he said. “Broiler meat prices have been good and may provide enough incentive to maintain or increase production in spite of the higher costs.”

Michael Kidd, interim head of MSU's Poultry Science Department, said corn represents about 65 percent of the poultry diet. Other ingredients include soybean meal, vitamins and minerals, meat products, limestone and amino acid supplements.

“Energy requirements increase as birds age, and corn is a principal source of energy,” Kidd said. “In some parts of the country, producers have tried sorghum and wheat in place of corn, but each of these has lower energy values.”

In addition, Kidd said producers are more focused on efficiency in their operations.

“They are even more aware of the importance of making good contracts in their sales -- making sure the birds are selling for the best markets. Some have changed their market strategies, such as selling birds at different sizes,” Kidd said. “Companies will not be expanding this year at the rates they normally would.”

Kidd said producers have seen high feed prices before, but now they are competing with ethanol producers for available corn. The competition is adding to the feed price uncertainty.