October 29, 2003

Thailand's Poultry Price Surged By 35%; Expected to Escalate Further
 

Brisk tuna demand and rising chicken prices will boost third-quarter profits of Thai food firms. Their fourth-quarter fortunes also look rosy with the end of the year holiday season likely to boost sales, analysts say.

Hit by rising tuna prices but helped by the strong sales of U.S. subsidiary Chicken of the Sea, the third-quarter net profit of top Asian tuna exporter Thai Union Frozen Products PCL (TUF) could rise as much as 19% year-on-year but dip 22% quarter on quarter, they said.

Boosted by the rising price of chicken, Charoen Pokphand Foods PCL (CPF), Thailand's top chicken firm, could see a yearly third-quarter net profit jump of as much as 106% and a quarterly gain of 56%, they said.

Both exporters are likely to record steady gains in 2003 on robust food sales despite a strenghtening baht currency that has surged around 7% this year, fund managers say.

"People have been avoiding shares in food firms because of the stronger baht, which they are afraid will hurt profits in the short term," said Supakorn Soontornkit, strategist at MFC Asset Management, which oversees around 80 billion baht ($2 billion) of stocks and bonds.

Strong U.S. sales of Chicken of the Sea canned tuna, which generates a fifth of TUF's earnings, will keep its third quarter buoyant despite a stronger baht eroding margins as dollar sales translate into fewer baht.

A heatwave in Europe, Thailand's second-biggest market after Japan and where an estimated one million chickens perished, raised the poultry price around 35% in the third quarter.

An agreement among chicken producers to extend a 15% supply cut to early January will also keep prices high.

Chicken prices are expected to average around 27 baht per kg in the second half of 2003, from a first-quarter average of 18 baht per kg, analysts say.