The sliding price of corn has helped Sanderson Farms to its best quarter since at least the 1990s, despite a continuing reluctance by consumers to splash out on restaurant meals.

The US poultry giant said that the cash market price of the corn bought to feed its chickens was 27% lower in the May-to-July quarter than a year before. The price of soybean meal for feed fell 1.2%.

The declines helped Sanderson cut its cost of sales by 9.0% to $413.8m, a drop which, combined with a 7.5% rise to $504.8m in sales, helped the group swing strongly back into the black.

The group's earnings hit $43.0m compared with a loss of $3.65m a year before, and were the best for a quarter since at least the three months ending January 2000, the earliest results readily available to Agrimoney.com.

At JP Morgan, analyst Ken Goldman said: "By our read, this may have been the best quarter in Sanderson Farms' history."

'Much higher margins'

Joe Sanderson, the group's chairman and chief executive, said that he was "pleased" with the group's performance.

"The combination of lower costs and improved market conditions resulted in much higher margins for the quarter," he said, adding that the corn market remained supportive to profits.

"We will continue to benefit from lower feed grains costs during our fourth fiscal quarter compared to last year."

The "greatly improved" market had been reflected in rising prices and resilient consumption by consumers, many of which have switched to chicken from more expensive red meat.

However, restaurant and food service demand "continues to be negatively affected" by the economic downturn, the group said.

Mr Sanderson added in comments to analysts: "We continue to believe we will not see a meaningful rebound in food service demand until well into 2010,"

Market reaction

"We were surprised by how strong the quarter was," Mr Goldman said.