Spate of bad news prompts retreat in shares of US meat companies

First, it was the high feed prices, then came the announcement from Russia, the biggest importer of US poultry that they would be slashing poultry imports.

 

Russia represented nearly a quarter of export volume, importing nearly US$394 million worth of poultry in the first half of the year.

 

The heavier blow however, was delivered by one of the top integrators in the US, 

 

However, approximately half of the quarterly loss was attributed to a non-recurring settlement of litigation.

 

The news prompted a sell-off of the company's shares which saw prices sliding 11 percent to close at US$35.21 

 

The Chairman, Joe F. Sanderson, Jr., ascribed the result to a combination of unprecedented rises in feed costs and a general escalation in energy prices.

 

Moreover, the unit prices from high-margin products including breast fillets and wings have declined sharply as the US economy hit the brakes.

 

News of Sanderson's plight also affected shares of Pilgrim's Pride, whose share price slid 11 percent as well as high feed prices and vanishing margins took their toll.

 

Shares of Tyson Foods, also slid 6 percent after investors dumped shares of meat companies following Sanderson's results.

 

The US broiler industry in recent weeks have been closing small operations and  consolidating operations while reducing output to cut costs.

 

One silver lining however, may be the 2008 grain harvest, which appears to be more promising than it looked a few months ago.

 

Brazilian and Mexican producers however, were relatively unscathed from the sell-off - Perdigao of Brazil saw share prices dip 0.5 percent to US$47.64 while Bachoco, the largest broiler producer in Mexico, was stable at US$29.81.