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LIVESTOCK HIGHLIGHTS: Top Stories of the Day

10/29/2020 | 04:35pm EST

TOP STORIES

Pilgrim's Turns to Robot Meat-Cutters -- Market Talk

10:43 ET - Chicken supplier Pilgrim's Pride says it's investing in automation as the company shifts production to supply more supermarkets and fast-food restaurants, following consumers' pandemic purchasing. A Texas plant that Pilgrim's is revamping to focus on smaller chickens will also bring in automated deboning equipment, replacing the manual process currently in place, says CEO Fabio Sandri on Pilgrim's quarterly call. The company estimates the refit will cost around $25M. Meat companies are refocusing on automation after Covid-19 sickened thousands of plant workers last spring, forcing widespread plant shutdowns. Shares jump 6.1%. (jacob.bunge@wsj.com; @jacobbunge)

China Buying More US Chicken, Pilgrim's Pride Says -- Market Talk

0924 ET - Chicken supplies have been piling up in the US as many schools and restaurants remain closed due to Covid-19, but Pilgrim's Pride says China is picking up some of that slack. The Colorado chicken supplier's exports to China, which reopened its market to US chicken exports about a year ago, have climbed 14% versus a year ago, says Pilgrim's CEO Fabio Sandri. China has been working to replenish meat supplies after a hog disease cut into its pork production, but Pilgrim's still estimates that its chicken leg quarter inventories are climbing. (jacob.bunge@wsj.com; @jacobbunge)

Chicken Plants Pivot to Meet Supermarket Demand -- Market Talk

0950 ET - Pilgrim's Pride, the second-largest US chicken company, is shifting its slaughtering and processing operations in response to what the company sees as consumers' continued move toward grocery stores. Pilgrim's is revamping one of its plants to process smaller-sized chickens, better suited to shrink-wrapped trays for supermarket meat cases, while doubling production capacity at a Minnesota plant that produces its Just Bare retail chicken brand, says CEO Fabio Sandri. Pilgrim's percentage of sales made to grocery stores has climbed to 51% from 46% this year, and the company sees another 2% shift in that direction in 2021. (jacob.bunge@wsj.com; @jacobbunge)

STORIES OF INTEREST

Chicken Firm Sanderson Says It Rejected Low Offer -- Market Talk

1532 ET - Chicken giant Sanderson Farms says it rejected an approach from Durational Capital Management that valued the company at $142 a share, an offer the company said "substantially undervalues" the Mississippi-based poultry supplier. Sanderson, which earlier this week extended a stock repurchase plan, said the offer far undershot SAFM's 52-week high of $179.45, though the board gave "careful consideration" to the "highly conditional and opportunistic proposal." Sanderson shares up 3.5% after StreetInsider.com earlier reported an approach from Durational and rival meatpacker Tyson Foods; Sanderson says Tyson wasn't involved. (jacob.bunge@wsj.com; @jacobbunge)

Election Unlikely to Curb Chinese Appetite for Pork -- Market Talk

11:49 ET - China's appetite for US meat exports, particularly pork, is unlikely to be affected by the results of next week's presidential election, Dennis Smith of Archer Financials says. "China needs pork, lots of pork and whoever is president next year will not greatly influence their buying decisions," Smith says. China has been in the process of rebuilding its hog herd following last year's outbreak of African swine fever, but won't finish rebounding back to self-sufficiency until 2024-2025, according to a report from Rabobank, meaning that China will continue to purchase much of its protein needs from the export market. (kirk.maltais@wsj.com; @kirkmaltais)

Kraft Heinz Tags Food Affordability As Growing Issue -- Market Talk

09:27 ET - Food affordability is a rising issue for many consumers, executives at Kraft Heinz tell analysts on a call about 3Q results. That focus, coming after the coronavirus-related economic shock left millions of people out of work in the US and elsewhere, could pose a threat to demand for pricier branded products at Kraft and other packaged-food items if shoppers opt for lower-cost private-label brands offered by retail chains. Kraft executives say consumers want to buy big, trusted brands during recessions, as well as some private-label lines, but smaller food brands don't perform as well amid downturns. Shares up 1% ahead of the market open. (micah.maidenberg@wsj.com; @MicahMaidenberg)

FUTURES MARKETS

Hog Futures Finish Lower as Export Sales Weaken -- Market Talk

15:27 ET - Weaker export sales reported by the USDA Thursday appear to have dragged down lean hog futures on the CME, with the most-active contract finishing the day down 1.1% to 65.625 cents per pound. In its report Thursday, the USDA said that export sales of US pork for the week ending Oct. 22 totaled 29,000 metric tons - which is down 24% from the prior 4-week average. Sales of US pork to China totaled only 2,500 tons, only a sliver of total US pork exports. "Mandatory price reporting data, which is limited, has been signaling a slowdown in pork export sales and the update released this morning confirmed that," says Steiner Consulting Group. Meanwhile, live cattle futures finished up 3.2% higher to $1.07975 per pound. (kirk.maltais@wsj.com; @kirkmaltais)

CASH MARKETS

 
Estimated U.S. Pork Packer Margin Index - Oct 29 
 
All figures are on a per-head basis. 
 
Date     Standard Margin       Estimated margin 
         Operating Index         at vertically - 
                             integrated operations 
 
Oct 29       +$ 48.35            +$ 59.60 
 
Oct 28       +$ 40.42            +$ 52.70 
 
Oct 27       +$ 47.71            +$ 61.81 
 
* Based on Iowa State University's latest estimated cost of production. 
A positive number indicates a processing margin above the cost of production of the animals. 
 
Beef-O-Meter 
This report compares the USDA's latest beef carcass composite 
values as a percentage of their respective year-ago prices. 
 
                                  Beef 
          For Today              Choice   90.1 
      (Percent of Year-Ago)      Select   92.5 
 
USDA Boxed Beef, Pork Reports 
 

Wholesale choice-grade beef prices Thursday rose $1.53 per hundred pounds, to $207.32, according to the USDA. Select-grade prices rose $1.65 per hundred pounds, to $191.23. The total load count was 156. Wholesale pork prices rose $3.21, to $86.79 a hundred pounds, based on Omaha, Neb., price quotes.

(END) Dow Jones Newswires

10-29-20 1734ET

Stocks mentioned in the article
ChangeLast1st jan.
FEEDER CATTLE?FUTURES (GF) - CMG (ELECTRONIC)/C1 0.38% 139.125 End-of-day quote.-5.16%
LIVE CATTLE (LE) - CMG (ELECTRONIC)/C1 0.16% 111.35 End-of-day quote.-11.79%
SANDERSON FARMS, INC. -0.25% 137.73 Delayed Quote.-21.69%
THE KRAFT HEINZ COMPANY -2.54% 32.58 Delayed Quote.5.29%
TYSON FOODS, INC. 0.29% 64.97 Delayed Quote.-28.82%
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