Photo: Wikimedia Commons
The next shoe is dropping in the drought crisis.Higher corn prices are crushing the companies that make chicken, eggs, and other meats.
Big time poultry player Sanderson Farms fell 5% just today.
Over the past month, shares of chicken producer Pilgrim’s Pride (US:PPC) have tumbled 24%, while rival Sanderson Farms (US:SAFM) is down 20%. Tyson (US:TSN), which also sells beef and pork, is off 11% over the same period.
Corn shortages aside, higher prices are a margin killer.
With forecasters including AccuWeather Inc. predicting worsening conditions in the next month, corn traded in Chicago surged by $2.6525 a bushel since mid-June, or 52 per cent. The rally is adding to pressure on the livestock industry because cattle feedlots are already losing as much as $200 an animal. Sanderson Farms Inc. (SAFM), the third-largest U.S. poultry producer, said every 10-cent corn increase boosts costs by $2.21 million.
Business Insider Emails & Alerts
Site highlights each day to your inbox.