Sanderson Farms highlighted the vastly improved conditions
for US poultry producers as it unveiled a near-quintupling in earnings, helped
by falling grain costs - although these may in future be offset by lower meat prices.
The Mississippi-based group unveiled a jump to $45.3m in earnings
for the August-to-October period, the fourth quarter of its fiscal year, from
$9.35m a year before, on revenues up 12.1% at $717.1m.
The increase reflected a benefit from this year's decline in
grain markets reaching its feed bills, flagging cash prices down 33% year on year
for corn and 1.6% for soymeal.
The previous quarter, corn prices remained on the increase
year on year, up 8.1%, and rising 10.3% for soymeal.
The results highlight improved fortunes for US chicken
producers which have manifested themselves in increasing broiler meat
production, at 3.5bn pounds in October, up 4.1% year on year.
"Broiler meat production in October continued the strong
gains of the last three months," the US Department of Agriculture said in a
report overnight, highlighting that average broiler chicken slaughter weight
had reached 6 pounds for the first time.
And prospects looked upbeat for output ahead, with
placements of chicks for growing into broiler chickens continuing to show year
on year growth.
"The forecast of
relatively lower prices for both corn and soymeal in the remainder of 2013 and
into 2014 is expected to give broiler integrators incentive to continue
Sanderson Farms itself began work in October on a processing
plant in Texas which will raise capacity by 16%.
'Downward pressure on
However, the USDA briefing also cautioned over signs of
softness in chicken meat prices, undermined by the rising production, and an
increase in inventories.
Chicken leg prices have fallen by some $0.09 per pound over the
last two months, with wings last month averaging $1.23 per pound, down 35% on
"Higher broiler meat production has resulted in increases in
cold storage holdings, which, in turn, have placed downward pressure on many
broiler product prices," the USDA said.
"With higher year-over-year production expected in
fourth-quarter 2013 and into 2014, broiler prices are expected to continue to
be under some downward pressure."
Joe Sanderson, the Sanderson Farms chairman and chief
executive, said that the latest quarterly results "marked a strong finish to a
successful year for Sanderson Farms and the poultry industry.
With the group's enhanced prosperity having allow it to "significantly
reduce outstanding debt… we are well positioned to continue our growth strategy",