|
Stars aligning for a banner year in the poultry industry: analyst
Story Date: 4/29/2013
| |
Source: MEATINGPLACE, 4/26/13
The signs were subtle at first, but now it looks like one of the best years on record is taking shape in the poultry industry, one Wall Street analyst is saying.
Feed costs continue to decline, a decent U.S. crop is becoming more certain, pricing is largely robust, demand has accelerated, and global grain production is set to swell, BB&T Capital Markets analyst Heather Jones told clients in a research report. Among her reasons to be upbeat on the U.S. poultry industry:
Mexican’s avian flu woes
The avian flu outbreak in Mexico is also having a significant impact. About 15 percent of the country breeder flock has been culled due to eradication efforts, Jones said.
“Prices have surged, and certain U.S. producers are aggressively exporting hatching and breeder eggs to the region,” she wrote. The situation is affecting U.S. egg sets and the breeder flock and is not expected to be back to normal until late 2013 or early 2014, she said.
Breast meat has taken off
Retail pricing for chicken has been robust, Jones noted, and a jump in prices for boneless, skinless chicken breasts dwarfs weakness in wing prices, Jones said. Two weeks ago, boneless breast prices were trending just 10 percent above year-ago prices; now, they are 20 percent higher, she said.
“We believe this reflects a partial shift from bone-in wings to boneless, very successful QSR introductions, and, finally, relatively restrained production,” Jones wrote. She said she believes more foodservice featuring is likely later this spring and in summer.
Outlook for Sanderson
A pricing misstep resulted in disappointing first-quarter earnings for Sanderson Farms, but those issues appear resolved, Jones said. The analyst raised her second-quarter earnings estimate for the company to $1.00 per share from 84 cents and raised her full-year forecast to $4.03 per share from $3.09. For 2014, her estimate increases to $4.45 per share from $3.75.
“Should new crop indications continue to be positive and if demand proceeds as expected, 2013 could prove to be one of the best years on record for the industry,” Jones concluded.
For more stories, go to http://www.meatingplace.com/.
|
|
|
|
