US poultry processor Sanderson Farms saw its shares fall after the company booked a net loss in its first quarter.

The company yesterday (24 February) saw its share price fall 3.1% to US$42.46 as it booked a US$33.6m net loss in its first quarter ended 31 January – against a $15.8m net profit in the same quarter of 2010.

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While sales over the quarter rose 1.8% to $427.7m, Sanderson’s bottom line were hit by increased feed costs and an oversupply of chicken due to decreased demand in the foodservice sector.

The company said that prices paid for corn and soybean meal, increased 42.9% and 4.4% respectively, compared with the first quarter of fiscal 2010.

Sanderson said market prices for poultry products were mixed during the first quarter of fiscal 2011 compared with the same period of fiscal 2010, “but were lower overall”. Boneless breast meat prices were approximately 3.1% down on the prior year period, while whole chicken prices were 3.5% higher. It said the average market price for bulk leg quarters increased approximately 2.8% for the quarter compared to the same period last year, “primarily due to higher export demand than a year ago”.

“We believe fiscal 2011 will be a challenging year for Sanderson Farms and our industry. We are already experiencing escalating grain prices, especially for corn, which are at near-record levels. The US Department of Agriculture (USDA) recently reported that corn supplies are at their tightest levels in 15 years,” the company said.

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It added: “Experience tells us that production adjustments will ultimately balance supply and demand and support market prices that will allow us, over time, to offset higher feed costs. Such adjustments will take time.”

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