Source: MEATINGPLACE, 10/24/13

Chicken prices are falling faster than expected, offsetting the benefit of lower grain costs for chicken producers and prompting one Wall Street analyst to cut her earnings estimates for Pilgrim’s Pride and Tyson Foods.

An oversupply of leg quarters has caused weakness in the market despite healthy demand. In addition, breast meat prices are now 40 cents below August, a sharper decline than is typical for this time of year, Stephens Inc. analyst Farha Aslam said in a note to clients.

“The decline in pricing is steeper and sooner than we had anticipated and is significantly offsetting the benefit of lower grain,” Aslam wrote.

Leg quarter pricing is now 40 to 45 cents per pound, down 5 cents from last month. November pricing is expected to reach 35 cents, she said. Breast meat prices recently traded for $1.39 per pound, which is 20 cents above the five-year average.

Aslam said she now expects Pilgrim’s Pride to earn $1.80 a share in fiscal 2013, down from her previous estimate of $1.95. For Tyson Foods, she maintained her fiscal 2013 earnings estimate of $2.25 a share but cut her 2014 target to $2.80 from $3, citing the softness in leg quarter pricing.  

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