TOP STORIES
Sanderson Farms 2Q Profit Surges As Poultry Markets Improve
Sanderson Farms Inc. reported a big rise in profit from a year earlier as net sales rose substantially amid an improvement in poultry markets.
Net income at the company rose to $96.9 million, up from $6.1 million a year ago. Earnings were $4.34 a share, up from 28 cents a share. Earnings beat estimates from FactSet.
Surging Commodities Could Delay Chicken-Wing Cavalry -- Market Talk
11:41 ET - US restaurants are clamoring for more chicken wings and breast meat, but one major supplier may hold off on ramping up production. Sanderson Farms, which has led rivals in building new plants in recent years, has another one in the offing--but CEO Joe Sanderson says the Mississippi chicken processor won't announce a construction schedule until the company gets a better read on feed grain prices over the next year, as well as any relief on lumber, steel and concrete costs. Sanderson's 2Q profits blew past analysts' projections, but its costs also jumped by nearly $110M in the quarter ended April 30. (jacob.bunge@wsj.com; @jacobbunge)
Amid Chicken Boom, Robots Get Costlier -- Market Talk
12:05 ET - Like other meat companies, Sanderson Farms is ramping up automation, preparing to debut an automatic deboning system in a Texas plant this summer. If successful the system will free up 75 workers at a time when Sanderson is tight on labor, and the $5M price tag is reasonable but CEO Joe Sanderson says the real cost is in efficiency. Robotic meatcutters can't yet match humans in terms of maximizing meat cut from carcasses, and with breast meat prices more than double where they were at the beginning of the year, even a 1% loss in meat yield adds up fast for a company like Sanderson, which produces 3.7B pounds of chicken annually. (jacob.bunge@wsj.com; @jacobbunge)
STORIES OF INTEREST
Restaurant Workers Shuffle to Better Opportunities Amid Hiring Spree -- Market Talk
11:24 ET - As restaurants fill up with customers again amid the pandemic's easing, businesses across the board are hiring, leading industry workers to make lateral moves to better opportunities. In Lubbock, Texas, recently opened national-chain restaurants have hired complete staffs, in some cases drawing workers away from local mainstays, says Loyd Turner, CEO of Caprock Restaurants, which owns four local restaurants in Lubbock. Other workers are leaving for third-party delivery companies, or dropping out of the industry entirely, cowed by the instability the restaurant business showed during the pandemic. "Restaurants by nature offer hard, demanding and stressful work," Turner tells WSJ. "A lot of people don't want that anymore." (matt.grossman@wsj.com, @mattgrossman)
Unilever Expands Alternative Foods Segment in Partnership With Enough
Unilever PLC said Thursday that it has partnered with sustainable-protein maker Enough in a bid to expand its plant-based meat and dairy alternatives business.
The Anglo-Dutch multisector retailer--which owns consumer brands such as Ben & Jerry's ice cream, Dove soap and Cif and Domestos cleaning products--said protein is a natural fit for its growing meat-alternative brand, the Vegetarian Butcher, which grew over 70% in 2020.
Sanderson Farms Expects 'Volatile' Feed Grain Market -- Market Talk
0916 ET - Poultry producer Sanderson Farms says in 2Q earnings that it expects to see volatility in grains prices throughout the year. "Looking ahead to the second half of the fiscal year, we continue to expect prices paid for feed grain to be significantly higher for the year compared to fiscal 2020," CEO Joe Sanderson Jr. says. "Supplies of both corn and soybeans worldwide relative to estimated demand remain tight." Prices for corn, soybeans, and wheat have all climbed close to all-time highs this year, but have relaxed in recent weeks. "We expect prices through the growing season to be volatile given that good crops of both feed grains are needed to rebuild inventories," Sanderson says. Grains futures are up in pre-market trading Thursday, with corn up 0.9%, soybeans up 0.1%, and wheat up 2%. (kirk.maltais@wsj.com; @kirkmaltais)
FUTURES MARKETS
Livestock Prices Inch Higher -- Market Talk
1504 ET - While grains futures made a big leap in trading Thursday, making up for weakness earlier this week, livestock futures did not get this strength - only inching higher. Most-active live cattle futures on the CME closed trading up 0.2% at $1.19875 per pound, while lean hog futures closed up 0.3% to $1.1685 per pound. "Feeder cattle demand was hurt by the sharply higher feed prices, while the live cattle and lean hog futures markets are more quietly mixed," says Arlan Suderman of StoneX. Stronger export sales reported this morning provided some support for livestock, despite the jump in feed costs. (kirk.maltais@wsj.com; @kirkmaltais)
CASH MARKETS
Estimated U.S. Pork Packer Margin Index - May 27
All figures are on a per-head basis.
Date Standard Margin Estimated margin
Operating Index at vertically -
integrated operations
May 27 +$ 23.87 +$120.63
May 26 +$ 16.36 +$115.68
May 25 +$ 17.82 +$117.90
* 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 87.3
(Percent of Year-Ago) Select 86.8
USDA Boxed Beef, Pork Reports
Wholesale choice-grade beef prices Thursday rose 49 cents per hundred pounds, to $329.98, according to the USDA. Select-grade prices rose 5 cents per hundred pounds, to $304.10 . The total load count was 102. Wholesale pork prices rose $2.30, to $124.51 a hundred pounds, based on Omaha, Neb., price quotes.
(END) Dow Jones Newswires
05-27-21 1737ET
