Prices for poultry shares, and products, on the rise
Shares of the three largest poultry producers in the US traded higher
yesterday following an analyst upgrade saying that the troubled chicken business
has bottomed out.
Tyson Foods Inc saw its stock rise more than 5% to $17.33 at one point in the
session, Pilgrim's Pride Corp rose as much as 4.4% to $27.49, and Gold Kist Inc
gained as much as 5.6% to $15.47.
Merrill Lynch analyst Diane
Geissler upgraded the companies' shares to "buy" from "neutral", saying she
believes "the worst stage of the poultry cycle is behind the
"We have long argued that the time to buy the poultry
companies on normalised earnings is when the bottom has been seen and conditions
are improving. We believe that time is now," said Geissler in a note to
Poultry producers have been hurt by an oversupply of meat in
the marketplace that has pressured selling prices and eroded margins. Fears of
avian flu overseas are partly responsible, as they have dampened demand for
Poultry producers have responded by cutting
production ahead of the summer cookout season in a bid to bring supply more in
line with demand.
US market researchers believe that these steps are
already having a positive impact, with poultry prices expected to rise both in
the US and in export markets.
Wholesale prices for chicken legs in
the north eastern United States were 24-25 cents per pound ($0.53-$0.55 per kg)
last week, up 10 cents from March and early April. Prices for breast fillets
rose to $1.20 per pound ($2.66 per kg) on May 16, from $1.05 ($2.31) a week
earlier and $1-$1.05 ($2.20-$2.31) two weeks
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