June 21 (Reuters) - Chicken producer Sanderson Farms Inc is exploring a sale, according to a source familiar with the matter, at a time demand for its products is on the rise as restaurants reopen for business.

The company's shares rose about 9% to $181 after the closing bell.

Sanderson Farms has drawn interest from buyers including agricultural investment firm Continental Grain Co, which owns a smaller chicken processor, Wayne Farms, the source said.

The deal would form a company producing about 15% of the country's chicken meat. The second largest company, Pilgrim's Pride Corp, produces about 16%, according to the Wall Street Journal https://www.wsj.com/articles/sanderson-farms-explores-sale-11624305575, which first reported the news.

Prices of chicken products, especially those of wings and breasts, have risen as easing restrictions are bringing consumers back to restaurants and more fast-food chains are battling to create fried-chicken sandwiches.

Last year, Sanderson Farms said it had rejected an unsolicited proposal from Durational Capital Management, a new shareholder, for $142 per share, as it undervalued the company.

The Laurel, Mississippi-based company has a market share of about $3.5 billion.

Sanderson Farms declined a Reuters request for comment.

(Reporting by Nivedita Balu in Bengaluru and Greg Roumeliotis in New York; Editing by Vinay Dwivedi)