Sharp increases in grain and oilseed prices during 2007 pushed catfish feed prices to historically high levels.

Graph 1 shows annual feed prices from 1987 to 2007. Over this period of time, annual average feed prices ranged from a low of $191 per ton (1999) to a high of $289 per ton (2007).

The average annual price of feed from 1987 to 2007 is near $235 per ton. These historically high feed prices have resulted in many questions related to managing a catfish farm given the current feed cost environment.

The primary plant protein sources used in catfish feeds are oilseed meals, such as soybean meal and cottonseed meal. Solvent-extracted soybean meal contains 48 percent protein and is the predominant protein source used in catfish feeds. Thus, soybean meal has been a key driver behind the increase in catfish feed prices.

Graph 2 illustrates the 60 percent — $137 per ton — increase in soybean meal prices seen since March 2007.

Since early March, soybean futures prices at the Chicago Board of Trade (now CME Group) have moved sharply lower. On March 20, May soybean futures were $3.52 per bushel under the March 3 close of $15.59. May soybean meal was also off $72.90 per ton to $310.30 since March 3.

What is the price outlook for soybean and soy meal prices? Answering this question may also provide some insight into the future direction of catfish feed prices.

In 2008 world soybean production is forecast to increase slightly to 229 million metric tons. This is up from the USDA projected 220 million metric tons in 2007-08.

Production in the United States is expected to increase as farmers switch some acreage out of corn and cotton. This is largely anticipated due to the high prices being offered for soybeans and the high input costs of crops that require nitrogen.

Early estimates indicate that U.S. soybean acreage will increase by 12 percent, or 7.7 million acres. South American soybean acreage is also expected to increase with some estimates indicating a 10 percent rise.

World soybean usage should continue upward with support from Chinese, South American and U.S. crush demand. However, the growth in world soy meal usage, supported over the past several years by increased meat consumption in Asia, is being tempered by competition from growing supplies of dried distillers grains (DDG) provided by the U.S. ethanol industry.

The rapid ethanol expansion combined with lower livestock prices may dampen price increases in the soy meal market.

Given the anticipated increase in soybean acreage and normal weather, 2008 new crop soybean prices have likely made their highs. Some analysts indicate that 2008-09 producer prices could decrease toward $9 per bushel, from the $10.40 per bushel projected for the 2007-08 marketing year.

Soy meal prices are projected to decrease to about $300 per ton under pressure from increased supplies, export competition from dried distillers grains, and increased South American production.