June 30, 2008

 

US chicken production to suffer two more rounds of production cuts
 
 

In addition to production cuts the poultry industry has taken in recent months, Sanderson Farms Inc. Chairman and CEO Joe F. Sanderson predicted another round of cuts in September, followed by still another in October or November.

 
Sanderson was speaking at a conference call to analysts Friday (June 27, 2008).


As for the company, Sanderson did not give explicit figures. Sanderson said traditionally the company's plants do not run at full capacity through the fall, typically going back to full capacity in February.

 

He said seasonal fall cuts are already in place, but it would be late fall before he would decide whether or not to go back to full capacity in February, 2009.

 
Explaining the decision announced Thursday to delay construction of a US$126 million plant in Kinston, N.C., Sanderson said the company already had considerations for higher grain prices built into their plans.
 
However, the extent of grain-price increase had exceeded expectations by US$60 million, making the plant investment too much of a risk.

 

Although Sanderson voiced his commitment to the plant, it appears the delay could be extended: the plant would not go ahead until he had a clear indication of grain prices in not only 2008 but 2009 as well.

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