Source:  Rita Jane Gabbett, MEATINGPLACE.COM, 8/16/10

A Russian government official on Friday indicated Russia would start accepting poultry from 68 U.S. facilities starting Aug. 16, but U.S. officials said only eight of those are slaughter or processing plants and the rest are cold storage facilities, according to media reports.

Russia’s Interfax news agency quoted Russian Agriculture Ministry spokesperson Oleg Aksyonov as saying Friday that imports could begin Aug. 16 from 68 out of a total of 87 facilities proposed by the U.S. officials.

Reuters, however, quoted a statement from the U.S. government team as saying Russia’s new approval list only includes eight of the 27 poultry slaughter and processing plants USDA has determined should be eligible to ship to Russia, the rest of  the list being comprised of cold storage plants.

Neither report listed any of the facilities by name.

The reports are the latest in the saga since a deal was signed June 24 between President Obama and Russian President Dmitry Medvedev to lift an effective ban on U.S. poultry that began in January when Russia stopped accepting poultry treated with a chlorine rinse.

Under the terms of the June agreement, three other pathogen reducing rinses were approved and some U.S. poultry plants began using those for poultry processed to ship to Russia. Two weeks ago, however, Russian officials said they may now need to inspect those plants first, a move U.S. officials said was outside the terms of the agreement.

Implications
Chicken leg quarter prices hang in the balance of these discussions, as Russia is a major importer of these parts.

According to Stephens Inc. analyst Farha Aslam, a 1 cent per pound move in leg quarter prices has an impact of 15 cents to 20 cents per share on Sanderson Farms earnings and an impact of 3 cents to 5 cents per share on Tyson’s earnings.

In a note to investors, Aslam said there are also implications for Hormel Foods and Smithfield Foods if Russia starts importing poultry again, which would reduce overall protein supplies in the U.S. market.

“We are hearing that Russian demand (for leg quarters) is strong given the cold storage supplies in Russia are empty,” she wrote in a note to investors. Aslam predicted that once U.S. poultry starts shipping to Russia again, a premium on leg quarter prices could last a few months.

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