Price of feed

Since 2000, the price of feed has trended up because of the rapid industrialization of China, India and Brazil. As the middle classes of these countries have accumulated wealth, they have become increasingly able to replace their grain-based diets with protein-based foods, such as meat and poultry products, which are seen as a symbol of status in most cultures worldwide. As the large populations of these newly industrialized countries demand more meat, the world prices for all inputs, including animal feed, have been pushed up.

The effect of oil prices on feed prices has increased significantly in the last decade in response to the increased use of corn-based ethanol as a gasoline substitute and soybean-based biodiesel as a diesel fuel substitute. With the high oil prices from 2007 through the first three-quarters of 2008, ethanol produced from corn and biodiesel made from soybeans became increasingly profitable, driving up demand for the two crops. In turn, the price of all corn and soybean products rose significantly. Corn is the largest feed input by weight, accounting for nearly 70.0% of total tonnage. However, other coarse grains, soy and wheat, also contribute significant amounts to the feed supply. Following the sharp increase from 118.7 in 2006 to 182.7 in 2008, feed prices slipped in 2009 and 2010 with the effects of the Great Recession in 2008 reaching the markets.

Reduced demand pushed down prices as demand for biofuels and feed fell sharply. The sharp incline in oil prices in 2009 also shifted demand for biofuels back to standard fuels. During the recovery, the rising price of oil and increased meat demand worldwide led to a 17.8% jump in the price of feed in 2011. In 2012, the price of feed increased by 10.3% to 223.04, mainly because of a significant drought in the Midwest and Great Plains of the United States, which diminished crop yields. The following years experienced a moderation of feed prices as production levels increased, pushing up supply and allowing prices to drop. Various declines in the price of grain, corn, soybeans and wheat led to price declines of 12.5% and 3.1% in 2015 and 2016, respectively. This price slump coincided with significant declines in oil prices, which put downward pressure on crop prices as demand receded for biofuels. Feed prices declined 1.2% in 2017, as commodity prices remained relatively low and production volumes remained high.

In 2018, this trend reversed as the feed price increased 4.1%. This resulted from a steep boost in the price of corn amid increased demand for corn as an input. In 2019, the price of feed declined 2.3%. However, the COVID-19 (coronavirus) pandemic reversed the trend, with prices increasing 2.3% in 2020 because of the effects of these factors on the price of feed. While producers operated under a more pressure market as production scaled back in response to mandates and lockdowns, feed prices remained elevated as factors such as drought conditions and other factors such as labor challenges. In turn, growth was hampered. But these trends inversed in 2021 as many downstream sectors reopened and grew their operations in response to a more active economy, which in turn contributed to expenditures in feed growing to account for 16.6% of total farm production, back to pre-pandemic levels according to data by the USDA. Feed prices grew at a record rate of 15.7% in 2021, primarily as input prices for soybeans and corn also grew in the year.

With these pressures growing in 2022, prices expanded by 13.9%, mainly as inflation and supply chain issues only contributed to production costs and prices of input goods from energy and grains rising. Despite inflationary pressures in 2023, feed prices fell 0.8% with a sizable drop in soybean prices, according to IBISWorld estimates, helping scale down feed prices. With prices dropping due to increased production, feed costs for 2024 have fallen by nearly 7.7%. This drop is largely because of a shrinking cattle herd, which means fewer animals consume feed. As a result, more feed inventory is available on the market, which drives down prices. This trend is expected to continue into 2025, as rebuilding cattle herd numbers will keep feed inventory high. Although tariffs remain a contentious issue, the US has signaled that tariffs on Mexico and Canada will not apply to items that comply with the USMCA rule of origin. This exemption is likely to help keep feed prices low heading into 2025.