Source:  Lisa M. Keefe, MEATINGPLACE.COM., 7/21/10

While wholesale and retail prices have been all over the board in the last 12 to 18 months, pricing trends at the wholesale and retail level more recently are moving in ways that are positive for processors, equity analysts say.

In a report to investors, JPMorgan analyst Ken Goldman notes pork, beef and chicken all are seeing relatively high retail prices, compared with historical averages. Retailers, then, are likely to feel comfortable increasing what they are willing to pay for product. Besides, retailers’ margins on poultry and meat products still are fairly soft, and so store operators would be expected to want to firm those margins up, Goldman said.

Wider margins have prompted BB&T Capital Markets analyst Heather Jones to boost her estimates for Tyson Foods Inc. Her fiscal third-quarter estimate is upped to 57 cents per share, up from 50 cents per share. Her full-year fiscal 2010 estimate increases to $1.99 per share, up from $1.91 per share.
Jones boosted her fiscal 2011 estimates, as well, to $2.05 from $2.01.

Beef and pork margins are “well above year-ago levels,” Jones noted in a note to investors. A resurgence in breast meat and wing pricing also have improved chicken margins. As long as feed costs remain in check, Tyson’s margins should be strong, she wrote.

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