US chicken producers and the agribusiness processing sector are well positioned for long-term growth, investment firm Lehman Bros has said.
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In a note to investors, analyst Christopher Bledsoe wrote that the agribusiness processing sector is “well positioned to capitalise on long-term secular trends in favour of protein consumption and/or biomass-derived renewable energy alternatives.”
Currently, margins at the top US chicken processors – including Pilgrim’s Pride and Tyson – are being squeezed by high feed and fuel costs. An oversupply of chicken is also keeping prices on the US market low.
“With evidence of production cuts mounting, we anticipate counter-seasonal pricing power and profitability over the near-to-intermediate term, as several recent concrete examples lend to our conviction that the industry has, in fact, begun to put in place the appropriate responses to grain inflation,” Bledsoe wrote.
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