"The worst probably is over," said J.P. Morgan analyst Ken Goldman in a report to clients, noting chicken prices seem to have bottomed and cheaper feed costs are coming.

Laurel, Miss.-based Sanderson Farms reported a net loss of $6.7 million, or 33 cents a share, in the first quarter ended Jan. 31, compared with net income of $6.2 million, or 30 cents a share, it earned a year ago.

Analysts, on average, expected Sanderson Farms to post a loss of 39 cents a share before items, according to Thomson Reuters.

Net sales for the quarter rose 7 percent to $388.9 million from the year-ago period. Sales also topped analysts' expectations for revenue of $365.0 million, according to Thomson Reuters.

While consumers are eating less meat in restaurants, demand for chicken at the grocery store has held steady, market prices have improved and grain prices were down compared with the fourth quarter, Sanderson Farms Chief Executive Joe F. Sanderson Jr. said in a news release.

Some of the company's plants are running 14 percent below capacity, executives said on a conference call with analysts.

"We do not plan to return to full production until we see an improvement in market conditions," Sanderson said.

The company predicted a positive operating margin for its live inventories in the second quarter and lower feed costs this year but said further production cuts still may be necessary for the chicken industry to reach normalized margins.

Sanderson Farms shares rose $3.00, or 10.6 percent, to $31.25 in midday trading on Nasdaq.

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