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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 industry".


"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 clients.


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 exported chicken.


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 earlier.


Editor WorldPoultry

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