Source:  MEATINGPLACE.COM, 3/19/10

After a strong January but a slump in February, retail demand for chicken has rebounded this month, although food service demand hasn't budged, Stephens Inc. analyst Farha Aslam said in a report Friday.

Breast meat prices are up, hitting $1.52 a pound on tight supplies and one large player's aggressive buying, Aslam said. She predicted breast meat prices will improve seasonally through spring and into summer.

Aslam, who has an "equal-weight" rating on shares of Sanderson Farms, said the poultry producer is benefiting from favorable grain prices and industry production discipline. USDA projects 2010 broiler production to be up 1.2 percent this year, she noted.

The analyst, who rates Tyson Foods "overweight," bumped up her price target for Tyson shares by $2 to $20, citing reduced overall protein availability and cost reduction initiatives at the company. Total protein supply is down 7 percent to 9 percent from peak levels in 2007-08, she said.

Export scene

If Russia resumes imports of U.S. poultry, leg quarter prices could rise 8 to 10 cents, to 40 cents per pound, which would equal about $1 million per week for Sanderson's earnings, Aslam said.

Sanderson so far has been able to export to China without incurring punitive tariffs, she said. About 30 percent, or $53 million, of Sanderson's annual export sales are to China, she noted.

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