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Retail trends look good for chicken: analyst
Story Date: 1/28/2013
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Source: Lisa M. Keefe, MEATINGPLACE, 1/25/13
An analysis of retail meat prices and spreads (a.k.a. retailers’ gross profits) indicates that the good times will continue to roll for chicken processors, according to Ken Goldman, an equity analyst for JPMorgan.
If you look at the data, he says in a note to investors, retail chicken prices are rising but the retailer’s margins from selling that chicken still are healthy. The longer the retailers can maintain margins while increasing retail prices, “the longer they will be willing to pay up for wholesale chicken,” Goldman says.
Meanwhile, at retail, chicken prices still are attractive compared with red meat prices. The differences have narrowed as chicken has become more costly, but it’s still higher than the 10-year average, Goldman notes.
Higher wholesale chicken prices bode well for producers such as Tyson, Sanderson Farms, Pilgrim’s Pride, Perdue and others.
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