Source:  MEATINGPLACE.COM, 11/8/10

A surge in egg sets and news of Russia’s ban on frozen poultry this week are overshadowing optimism that a Republican-controlled House of Representatives will be able to curb support for ethanol production, poultry stock analysts said.

In the short run, higher egg sets will exert the greatest influence, said BB&T Capital Markets analyst Heather Jones. Eggs set for the week ended Oct. 30 soared 8.4 percent year over year to a total of 198.2 million. The increase follows a jump of 5.5 percent in the prior week.

The increase in egg sets could point to production increases of 10 percent or more heading into the new year, when chicken consumption typically is weak, Jones said.

“We believe these levels of production increases will likely result in significant pricing pressure later this year,” Jones said.

Stephens analyst Farha Aslam expressed concern that the increasingly negative headlines from Russia will begin to weigh on shares of Sanderson Farms, Tyson Foods, Smithfield and Hormel.

“The Russian move to chilled poultry from frozen poultry would amount to a non-tariff trade barrier for U.S. poultry products,” Aslam said. “U.S. processors would likely not be able to get chilled product to Russia in a timely manner and at a price that is suitable for value-oriented Russian consumers.”

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