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Rising grain costs will be hard to pass along: analyst
Story Date: 7/2/2012
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Source: MEATINGPLACE, 6/29/12
Poultry producers will not be able to pass along the recent sharp rise in grain prices to consumers due to weak demand, a poultry stock analyst said.
December corn futures have increased almost 14 percent over the past week and as much as 24 percent over the past month due to dry hot weather, noted Stephens Inc. analyst Farha Aslam in a note to clients.
Demand for poultry, particularly boneless, skinless breast meat, has been lackluster heading into the July 4 peak period, she said.
USDA’s quarterly grain stocks and acreage report, due to be released on Friday, will be critical for its impact on corn pricing, Aslam added.
She said trade expectations for corn inventory are 3.18 billion bushels, down from 3.67 billion a year ago. The acreage report is expected to be about flat with the March report at 96.0 million acres of corn planted.
“Any change to the USDA's acreage estimate will work to offset or possibly further enhance the impact of the outcome of the grain stocks report,” she said.
For more stories, go to http://www.meatingplace.com/.
Aslam maintained an “equal-weight” rating on shares of Pilgrim’s Pride, Sanderson Farms and Tyson, citing the high level of uncertainty.
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