June 12, 2017

Tyson, Sanderson largely unaffected by April floods

Crops and livestock in the US states of Arkansas and Missouri have been impacted severely by heavy rain in April this year, but Tyson Food Inc. assures that any disruption to its operations is "limited", The Arkansas Online reported. 

Still, it remains to be seen if the floods produce lingering effects on corn and soybean commodity prices. Weakened crops could boost prices "but it's too early to tell, Ken Shea, senior analyst of food and beverages at Bloomberg, said. "Crop prices haven't moved much, broadly speaking. (They) edged up very modestly."

Furthermore, based on Tyson's recent earnings, poultry-feed costs fell US$10 million over the six-month period ending April 1.

For its earnings from late April operations, Sanderson Farms, a competitor of Tyson, revealed that its feed costs are fixed while its supply sources are not significantly affected by the floods, according to Shea.

Sanderson's second-quarter earnings, ended April 30, showed that, for similar feed costs per pound of poultry products processed, corn and soybean prices declined 0.4% and 15%, respectively, compared to a year ago.

"Looking ahead to the second half of the fiscal year, we continue to expect grain prices to remain relatively benign," said Joe F. Sanderson Jr., chairman and chief executive officer of Sanderson Farms. "There are ample supplies of both corn and soybeans worldwide, and the planting progress of the 2017 corn and soybean crops remains close to average despite a wet spring in the United States Grain Belt."

Both Tyson and Sanderson Farms buy poultry feed from all over the US. Despite adverse weather conditions in April, Tyson's Arkansas chicken operations are not seriously disrupted, Worth Sparkman, manager of public relations for Tyson, said.

More inclement weather hit parts of Arkansas over Memorial Day and the following weekend. Farmers are forced to replant corn crops after weeks of flooding in Jefferson Country, according to the University of Arkansas System Division of Agriculture.

Storms also delayed production and planting in Poinsett and Desha counties.

- Arkansas Online