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Pilgrim's Pride Corporation Message Board

netlosstoo 75 posts  |  Last Activity: Oct 20, 2014 3:19 PM Member since: Feb 24, 2003
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  • netlosstoo netlosstoo Oct 20, 2014 3:19 PM Flag

    !) those at retirement age should consider selling their land at $10,000 an acre (if they can still get it), instead of investing in new equipment hoping for a few more good years.
    2) not going to make much money this year if you have to pay $400/acre rents. taxes up, seed is still high, fertilizer costs have come down a bit, but break even overall is still very high.
    3) no taxable income ... no need for 179 deduction

  • Reply to

    CALM THE GREAT BEAR SCENERIO

    by netlosstoo Sep 24, 2014 1:51 AM
    netlosstoo netlosstoo Oct 18, 2014 12:10 PM Flag

    Part II - Obnoxious nest run pricing structure leads to expansion
    The current market system gives too much pricing power to the third party producer and not enough to CALM, who must manage the relationship with its large customers that want to squeeze margins IMO. To restore a balance of power, CALM is expanding production with “bolt on” production at various existing locations to reduce dependency on third party egg purchases. Unfortunately those who supplied CALM will have to find a new home for their eggs, which may result in downward pressure on egg prices.

    In CALM’s 10-K’s they note that a majority of shell eggs sold in the U.S. are based on Urner Barry (UB) Market quotes. For the year fiscal year ended 2014, CALM noted average Urner Barry Southeast Large quote was $1.43. CALM’s average selling price for non-specialty eggs for FYE 2014 was $1.22, twenty one cents below market. To buy eggs from third parties, UB notes in their daily quotation the price of graded loose eggs is 23 to 25 cents below the market quote and gradeable nest run are 37 to 39 cents below the market quote. CALM’s cost to grade and process nest run is about 15 cents so the cost of third party eggs is about 23 cents below market. So if CAM is buying those eggs for 23 cents below market and selling for 21 cents below market it leaves very little room to cover admin and other costs to get those eggs to its customer.

    IMO the UB marketing system has not adjusted for the tremendous pressure large retailers and food services are placing on CALM.

  • Reply to

    safm investor day

    by netlosstoo Oct 16, 2014 4:41 PM
    netlosstoo netlosstoo Oct 17, 2014 1:49 AM Flag

    I would agree with that ... I think the sell off was over done ... unfortunately SAFM may now be held in nervous hands and more volatility may be expected as we go into a slow season for chicken ... notice PPC sold off more .. as their valuation based on price to sales, book, earnings were over valued compared to SAFM

  • netlosstoo by netlosstoo Oct 16, 2014 4:41 PM Flag

    Was looking for a rosy outlook from Joe and friends but got just the opposite.... listened to the first two sessions and plan to listen to the others this evening ... it was after the second session that Joe said producers just might be sticking chicken in the freezer later this year ... producing chicken like they don't believe there will be a Xmas this year (chicken consumption is always lower over the holidays as people eat more turkey, ham and prime rib)

  • Reply to

    down 10% today why???

    by caymanmichael Oct 16, 2014 2:26 PM
    netlosstoo netlosstoo Oct 16, 2014 3:33 PM Flag

    Think Joe Sanderson is sinking our battle ship ... SAFM is having an investor conference in New Orleans today and Joe talked about producers making chicken like they don't think there will be a Christmas this year... basically predicting producers will be putting chicken in the freezer later this year ... you can check out the conference on SAFM's website .. I listened to the first two sessions and it was not too optimistic

  • Reply to

    CALM THE GREAT BEAR SCENERIO

    by netlosstoo Sep 24, 2014 1:51 AM
    netlosstoo netlosstoo Oct 15, 2014 5:33 PM Flag

    Part I - The counterintuitive corn – egg price relationship
    Tim Dawson, CALM CFO, made the point in a March 2014 UBS investor presentation that CALM has historically been more profitable when feed costs are higher. With feed costs being the largest cost of producing an egg, one would think low feed costs would be good for CALM and high feed costs bad, but history says it’s just the opposite.

    Back in CALM’s Q2 2004 EPS press release, Fred Adams talked about how the spike in grain prices that summer would put pressure on margins. CALM’s price dropped about five percent (about a dime back then) and it was the best buying opportunity in the history of CALM. Higher grain prices in FYE 1997, 1998, 2003, and 2007 to current have led to very profitable years. Since 2008 feed costs have been more than 33 cents a dozen. CALM recorded losses in FYE 1992, 1995, 2000, 2002, 2005, 2006 and in each of those years grain prices were relatively low (under 23 cents and as low as 18 cents per dz.)

    One reason for this is that egg producers have the ability to react quickly to changes in the egg price/feed cost margin. If feed prices go up, those hens that are late in the second or only lay cycle and are NOT producing an egg a day might be out the door early. If feed costs are low, it may be economical to lengthen the stay of those hens even if they are past optimal production stage. It can take the beef industry more than three years to react to a supply / demand change, and we are seeing that right now.

    A second reason is that a wide gross margin on producing eggs invites expansion and table egg laying hens have now topped 300 million for the first time in well over twenty years. And CALM will be adding more hens to that number in 2015.

  • Reply to

    Q1 2015 EPS guess

    by netlosstoo Sep 28, 2014 1:45 PM
    netlosstoo netlosstoo Sep 29, 2014 12:03 PM Flag

    Btw ... basis is the difference between the local cash price and the near term contract. Old beans were still somewhat scarce this summer resulting in a higher basis. That should all change as the new crop is harvested and we turn to larger / surplus corn and beans inventories. Someone can correct me on this as I don't have a great understanding of basis.

  • Reply to

    Q1 2015 EPS guess

    by netlosstoo Sep 28, 2014 1:45 PM
    netlosstoo netlosstoo Sep 29, 2014 11:52 AM Flag

    $1.14 just as I predicted!! AND only $2.5m off revenue!! I’m a genius!! Well … maybe not... more like a lucky guess.

    The good news was that non-specialty eggs averaged $1.197 which was about 2 cents more than I had expected. Bad news is it’s still too big of a spread from the Urner Barry quote. It appears that CALM has shifted a portion of their sales to “cost plus” pricing, where feed costs are a component of the sales formula. Based on the FS note I’m guessing maybe 15% of sales? but not sure. So with cost plus pricing CALM does better than expected if egg prices are low and it hurts them when prices are high as they have been for more than a year. It is a way to “smooth” out earnings. But basically CALM “smooth” away a bunch of profit. I like the bumpy returns which are higher over time than the smooth returns.

    Feed costs at 48 cents, a bit of a shocker. I don’t worry about that number much as I am fairly confident that CALM is the low cost producer in the industry. I have little doubt about this. If you look at beginning feed inventory, it was about $44 million which represents about a month and a half of feed costs. So basically half of CALM’s current Q feed was purchased at last Q’s prices, which were indeed higher. Also, at the end of the Q, feed costs are written down to market, so any feed on hand purchased at earlier prices (basically all of CALM’s feed) was written down to ending grain prices. CALM sites high basis on the SBM as the primary contributor to high feed. Definitely a factor, but when I tried to figure it out the SBM basis adjustment would have had to have been more than $70 per ton, which might be considered reasonable. I too am confused here.

    Feed costs is also affected by production mix. Hens fed a special diet to produce nutritionally enhanced specialty eggs (eggland best) are going to have higher costs. Cage free as well, as that process is not as efficient as the in-line cage systems.

    Overall a good Q IMO

  • netlosstoo by netlosstoo Sep 28, 2014 1:45 PM Flag

    EPS $1.14

    Revenue $354.6m
    CGS $270.8m
    SG&A 43.7m
    NI after tax $27.5m
    Non-specialty shell egg sales are guessed at $1.18 per dozen. This is about 21 cents in back of the average Urner Barry SE L quote. This is the key number in the Q1 financial statements. Any earnings beat or deficit will likely be from this number. This is also a key number for CALM future earnings, more so than the feed cost number or other temporary ups and downs. CALM is experiencing a widening of the spread between the UB quote and what they are able to sell their generic eggs for. This could be due to things like changes in pricing formulas and pressure from customers. We should be alarmed by this trend.

    Feed costs at 44 cents per dozen, down from 48 cents last Q. Expect further reductions this Q.

    Overall great Q, egg prices were great! Per capita egg consumption on the rise due to high prices for competing proteins. Bird numbers up and expected to rise into the holiday season (not great). Dozens produced up due to Delta and other acquisitions. CALM adding capacity to slim down those outside egg purchases, on which they make little to nothing.

  • Reply to

    selling is too deliberate

    by snogreen Sep 23, 2014 8:47 PM
    netlosstoo netlosstoo Sep 24, 2014 10:04 AM Flag

    Why in the world did SEB buy all those shares at $2,950? Doesn't matter the reason as whatever it was it has not changed since they made their purchase. We have a great company, with a great balance sheet selling a product that will have a growing demand over the next thirty years as the world population grows and more people in the world enter the middle class and want more protein. And what is the most popular protein product in the world?

  • In a world where eggs are golden and corn is cheap. A world where a pricing authority punishes the risk takers and rewards the passive and a state battles to keep eggs out. One company battles and is beaten down by regulators, activists, market makers, and commodity factors, only to rise more powerful, more dominating, and more awesome.
    CALM THE GREAT BEAR SCENERIO
    Coming soon

    CALM THE GREAT BEAR SCENERIO
    Part I - The counterintuitive corn – egg price relationship
    Part II - Obnoxious nest run pricing structure leads to expansion
    Part III – CA 2008 Prop 2, if they keep eggs out where do they go?
    Part IV – Chicken and Egg report, is 300 million plus the new norm?
    Part V – The cage fee movement, the difference between new and re-model
    Part VI – Cost plus pricing and artificial demand
    Part VII – Anyone still remember 2002?
    Part VIII – The Beef “halo”
    Part IX – TBA (haven’t thought of anything for nine)
    Part X - Conclusion

    This is more of a cautionary tale, as CALM THE GREAT BULL SCENERIO is not played out, nor will it be for maybe thirty years or so.

  • ... according to the National Chicken council.
    Who is eating the most chicken? …. 18 to 34 yo’s and also 35 to 44 y.o.’s.
    By region people who don’t live in the Midwest.
    So as the younger demographic ages and they feed a new generation of chicken lovers, we might have more chicken consumption.
    I am very positive on the chicken demand over the next thirty years.
    =====
    Chicken consumption is up 17 percent in the U.S., according to a national survey of consumers, and with health/nutrition, taste and price cited as top reasons for the uptick.
    The survey of 1,019 consumer households conducted for the National Chicken Council and co-sponsored by Elanco and WATT PoultryUSA tracked eating occasions of chicken purchased from supermarkets/grocery stores and foodservice during the two-week period. The survey was conducted from May 29 to June 1.

  • Reply to

    CALM, THE GREAT BULL SCENARIO - revisited

    by netlosstoo Sep 19, 2014 12:23 PM
    netlosstoo netlosstoo Sep 22, 2014 3:02 PM Flag

    CA Prop 2 - Part VIII
    “CA Egg Industry R.I.P.”

    There is still tremendous uncertainty how this proposition will affect the CA and U.S. egg industry. But CALM is making the necessary adjustments to position themselves for benefit. The purchase of the un-owned half of Delta egg, and the expansion of cage free eggs at their KS facility and their recent Hickman Egg venture are just a few of the moves.

    I believe this is a big part of what is driving CALM stock price right now.

  • Reply to

    CALM, THE GREAT BULL SCENARIO - revisited

    by netlosstoo Sep 19, 2014 12:23 PM
    netlosstoo netlosstoo Sep 20, 2014 1:01 AM Flag

    The Balance Sheet - Part II
    “CALM is solid. Not only will they make more in the up cycle and loose less in a down cycle compared to their competition, they can outlast most any producer in an extended down cycle.”

    As solid as they were five years ago, they are even more solid now.

    Management - Part III

    “While other producers were frozen with fear in the late 90’s and earlier this decade, CALM was acquiring companies at little cost, building additional capacity”

    Now, CALM management is wisely passing on overpriced offerings like Michael Foods and Mo-Ark and is expanding production at their own sites.

    Customers - Part IV
    “Bottom line, the positive dozens sold over produced provides security, flexibility, and adds off the books intangible value. “

    Unfortunately, CALM still makes very little on eggs they purchase and then re-sell. The U.B. pricing system still rewards the producer over the reseller, which is why CALM is being forced to add production at existing locations, as opposed to buying at a reasonable price and making a reasonable “spread” profit.

  • Reply to

    CALM, THE GREAT BULL SCENARIO - revisited

    by netlosstoo Sep 19, 2014 12:23 PM
    netlosstoo netlosstoo Sep 20, 2014 12:59 AM Flag

    The Cage Free Movement - Part V
    “The movement to produce eggs from cage free hens just might be the most significant industry change since producers put hens into cages.”

    Cage free or enriched colony cages will eventually be the norm for the U.S. and it will cost both the producer and the consumer. Many small producers might just quit or sell out, instead of spend a ton of dollars to upgrade. Niche cage free producers will lose their niche. There will be few eggs and CALM will have even greater control of the industry.

    CALM Bio-Tech!!! - Part VI
    “Rate of lay has continued to improve over the years due in part to science and technology.”

    No change, rates continue to gently rise.

    Barriers to entry - Part VII
    “Then after clearing all the environmental hurdles the producer needs to worry about changing legislation that might make their brand new investment obsolete in just a few short years.”

    It is still tough to get a new facility built and the uncertainty about future cage / cage free legislation makes it difficult for a producer to plan an expansion. CALM has a pretty good moat.

  • Reply to

    CALM, THE GREAT BULL SCENARIO - revisited

    by netlosstoo Sep 19, 2014 12:23 PM
    netlosstoo netlosstoo Sep 20, 2014 12:56 AM Flag

    Litigation effect - Part XI
    “Price fixing litigation is ridiculous IMO. Industry reduces hens to appease HS and PETA and then they get sued for price fixing?”

    I think the main complaint has been settled with some pain for CALM … and yes it is still ridiculous.

    Weak $ - Part XII
    “Weak dollar may be positive for egg exports.”

    Don’t have a good grasp on foreign currencies and how the help and hinder CALM.

    Aging facilities - Part XIII
    “Even poor producers should have a bunch of cash on hand after these last few fabulous years. Instead of taking a big risk building new facilities they may just remodel and/or modernize equipment in their older houses. Or after a nice five year run, they may just want to call it a day and sell out to CALM”

    Now make that ten years.

  • Reply to

    CALM, THE GREAT BULL SCENARIO - revisited

    by netlosstoo Sep 19, 2014 12:23 PM
    netlosstoo netlosstoo Sep 19, 2014 2:00 PM Flag

    Boardwalk - Part XIV
    “CALM, with its 28 million hens, have hotels on Boardwalk and Park Place, all the railroads and a stack of 500’s.“

    CALM has added Virginia and States Street and few more stacks of those gold 500’s

    Bird Flu Part - Part XV
    “The industry has become so vigilant around disease, it is hardly given a second thought. Two of CALM’s best years for earnings was 1989 and 1990 when bird flu took out a number of industry hens.”

    The U.S. continues to do a good job of prevention, but we have seen what the bird flu has done to the China poultry industry and what PEDV has done to the domestic pork industry.

  • Reply to

    CALM, THE GREAT BULL SCENARIO - revisited

    by netlosstoo Sep 19, 2014 12:23 PM
    netlosstoo netlosstoo Sep 19, 2014 1:58 PM Flag

    Puzzling Demand - Part XVI
    “This decade however, has seen demand stabilize and now trend lower. Demand will very likely continue to remain weak and may even further weaken”

    Per capita egg consumption is back on the rise thanks in part to high priced competing proteins like beef, pork and chicken.

    EU, The Thunder - Part XVII
    “But EU just might be short a bunch of eggs. How many and where will they come from is a big speculative question.”

    Honestly, I am not sure what kind of affect the European cage ban has had on the U.S. producer.

    Honestly, I am not sure what kind of affect the European cage ban has had on the U.S. producer.

  • Reply to

    CALM, THE GREAT BULL SCENARIO - revisited

    by netlosstoo Sep 19, 2014 12:23 PM
    netlosstoo netlosstoo Sep 19, 2014 1:56 PM Flag

    Conclusion - Part XX
    “but IMO in the vast land between a CALM Atkins/mad cow explosion and a Humane Society Vegan campaign implosion lays this wonderful and quite possibly amazing CALM bull scenario.”

    And here it is.

  • This was a series of twenty post back in 2009 as titled below. Of these part V, VIII and part XVII were going to have the biggest impact on the egg industry and CALM. I am not sure how much benefit U.S. producers have seen from the European cage free movement. Some benefit I’m sure, but not as much as had thought. But look at the moves CALM is making now. The CA Prop 2 and U.S. cage free movement is having a huge effect on the industry and I think it is a big part of what is driving CALM’s stock price right now.

    CALM, THE GREAT BULL SCENARIO

    Table of contents:
    CALM the Great Bull Scenario - Part I
    The Balance Sheet - Part II
    Management - Part III
    Customers - Part IV
    The Cage Free Movement - Part V
    CALM Bio-Tech!!! - Part VI
    Barriers to entry - Part VII
    CA Prop 2 - Part VIII
    Input Costs - Part IX
    Cap and trade - Part X
    Litigation effect - Part XI
    Weak $ - Part XII
    Aging facilities - Part XIII
    Boardwalk - Part XIV
    Bird Flu Part - Part XV
    Puzzling Demand - Part XVI
    EU, The Thunder - Part XVII
    Go Green - Part XVIII
    The Doubt - Part XIX
    Conclusion - Part XX

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