Today 7/6/2006 3:25:00 PM
US Poultry Companies, Beef Packers See Higher Returns; Pork Lags
KANSAS CITY (Dow Jones)--Processing margins and overall returns for U.S. poultry companies and beef packers are improved from earlier in the year on higher prices for chicken and beef and a rebound in export sales for chicken, but pork processing margins lagged through April, May and most of June, according to Merrill Lynch in an update on the food sector released Thursday.
The firm said higher broiler prices and reduced stocks of chicken in cold storage have been aided by cutbacks in production. Four of the industry's top five broiler chicken companies earlier announced modest reductions in broiler production.
Meanwhile, in the cattle/beef sector, larger supplies of slaughter-ready cattle along with improved capacity utilization at the plants due to the bigger supplies have helped beef packers, Merrill Lynch said.
The firm's analysts said conditions remain "tough" for pork packers due to the recent total protein oversupply and high hog prices that trimmed processing margins.
Merrill Lynch's analysts said hog prices have increased over the last several weeks, with an average of $73.29 per hundredweight in June, up 11% from May. They believe hog prices could remain above year-ago levels through the summer months before easing in the fall when supplies begin to pick up. Pork margins, which were negative in April and May, further tightened in June and are typically weak during the summer months, the firm said.
Source: Curt Thacker; Dow Jones Newswires; 913-322-5178;
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