CPF expects stronger meat prices

Thailand's Charoen Pokphand Foods (CPF) has increased its fiscal year 2010 net profit forecast by 13% to reflect stronger-than-expected meat product prices and the anticipation of robust first quarter earnings.

CPF has upgraded its year-end DDM-based target price from THB12 (US$0.36) to THB13.50 (US$0.41).

The group expects strong earnings in the first half of 2010, underpinned by sustained robust meat product prices, cheap raw material prices locked in through to mid-2010, and a greater food portion in the sales mix.

Chicken prices have been sustained high at THB45 (US$1.36) from January to February to-date, the same record high in August 2008. Pork prices have climbed up to THB63 (US$1.9) per kg year-to-date, which is near its peak of THB65 (US$1.96) per kg in April 2009.

Rising demand for chicken exports and a more balanced chicken supply in the industry are driving domestic chicken prices, in addition to Chinese New Year.

The recent rally in pork prices is related to the ongoing supply shortage and the prevalence of Porcine Reproductive and Respiratory Syndrome (PRRS). Given the above factors, meat product prices are likely strengthen through to end-March.