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Pilgrim's Pride Corporation Message Board

  • gavgavmd gavgavmd Jan 24, 2013 8:22 AM Flag

    Corn Cliff:

    South America getting some needed rain. Big Crop Coming. Ethanol production down to the lowest production level since records taken. US is net importer of Ethanol because corn cannot compete with sugar. Analyst who are not part of investment community say corn can go down it low $4 or high$3's if western corn belt gets rain and yields go to average. What does that do? Chicken companies cannot hedge since $2 potential drop cannot be risked. Buyers of chicken can't buy at a fixed cost because they don't want to be stuck with chicken that is eating $7.10 corn. cow herds are at a all time low and will take 2 years to build up. Cargill just closed a plant in TX. Can't find cows. Pig herds slightly increasing. Chicken has two years of profits. Pilgrims will be managing their business to minimize risk by working with buyers who also have risk because of increased corn prices and chicken prices. Pilgrims will be taking advantage of tax carryover and we will pay down 700 million in debt over 2 years. See you at 20 dollars per share.

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    • Corn has had a great rally this last decade, just look at mid-west farm land prices. With fewer beef cattle to feed this next year and potentially less demand / mandated ethanol need… maybe we don’t need 13 or 14 billion bushels of corn a year … maybe 11 or 12 billion bu. is just fine…. what happens then, if farmers produce 14 or even 15 billion bushels this fall? Land prices drop $5 or $6 thousand an acre … Monsanto … deere … fertilizer co.’s … Lindsay and all the other Ag suppliers see less demand for their products.

      I would argue $8 corn is not good for chicken producers and farmers and I would also argue $4 corn is not good for chicken producers or farmers. But all this uncertainty should make for a good year or two, and just maybe many more.

      Quote from a guy in the pork industry:
      "Most pork producers realize that the level of feed prices is both the biggest threat to those anticipated profits and the greatest opportunity for extraordinary profitability over the next two years," Hurt said.

 
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