German poultry farms say high grain costs mean meat must go up

* Poultry farmers face bankruptcy on record grain price

* May cut poultry output on losses

HAMBURG Aug 20 (Reuters) - The surge in grain prices this summer means some German poultry farmers are facing bankruptcy and retail prices for poultry meat need to rise, the country's poultry industry association ZDG said on Monday.

"The dramatic rises in animal feed prices in past months is bringing the German poultry sector into great difficulties," the ZDG said. "As feed makes up the great majority of overall costs to rear the birds, this exorbitant price rise is pushing German poultry producers to the edge of ruin."

Corn and soybean prices have reached record highs this summer as the worst drought in 56 years ravaged crops in the U.S. Midwest and a heatwave slashed Russia's grain harvest.

The surge has caused concern the world is facing a sharp rise in food prices.

Compound feed prices have risen to their highest level since 1990 and soybean prices have risen by 75 percent above last year's levels, the ZDG said.

The association called on retailers to accept price rises for chicken and turkey meat to compensate farmers for higher feed costs.

If retailers reject price increases, farmers are likely to cut poultry meat production, it said. This could lead to tighter supplies of poultry meat into 2013, it said.

German flour mills have also warned rising grain costs could mean rising bread and flour prices. (Reporting by Michael Hogan; Editing by Anthony Barker)