June 10, 2008

US poultry company shares fall due to high corn prices and meat abundance
 

Shares of US poultry companies fell Monday (June 9, 2008) on news of higher corn prices.

Top producer Pilgrim's Pride Corp stock falling fell 12.4 percent, in reaction to higher corn prices and weak chicken prices, analysts said. The company's shares fell to US$18.99 early on Monday, their lowest in two months.

Kenneth Zaslow, a food analyst at BMO Capital Markets, predicted that Pilgrim's Pride would post a fiscal year loss of US$3.53 per share, higher than his previous forecast for a loss of US$2.72. Zaslow said in a note to clients that the chicken industry had not done enough to cut production at a time when feed costs were increasing.

Shares of No. 2 producer Tyson Foods Inc were down 3.6 percent and No. 4 Sanderson Farms Inc shares were down 5 percent.

Producers face high feed costs amid lower sales of chickens at the retail level, analysts said. An abundance of meat meant that chicken prices have been weaker than it was a year ago.

Heavy rainfalls in the Midwest are fueling speculation on a worse corn crop this year, giving further support to corn prices at a time when the grain is in demand from livestock producers and ethanol plants.

Corn for July delivery peaked at US$6.67-1/4 per bushel at the Chicago Board of Trade on Monday, up nearly 3 percent from Friday and up nearly 63 percent from a year ago.