The severe weather forced Sanderson Farms Inc. to euthanize 545,000 baby chicks at hatcheries in the state.(AFP / File Photo)
The severe weather forced Sanderson Farms Inc. to euthanize 545,000 baby chicks at hatcheries in the state.(AFP / File Photo)

Half a million US chicks euthanised after storm hits Texas

  • While it’s unclear how many chicken producers experienced losses, even small percentage changes in supply can move the market, and prices have already been gaining.
Bloomberg | | Posted by Kunal Gaurav
PUBLISHED ON FEB 26, 2021 08:50 PM IST

On top of power blackouts and burst water pipes, the disastrous snow and ice storm in Texas last week could mean higher chicken prices for Americans.

The severe weather forced Sanderson Farms Inc., the third-biggest US chicken producer, to euthanize 545,000 baby chicks at hatcheries in the state. Over 700,000 eggs were also destroyed. That means fewer pounds of chicken reaching grocery stores in the coming months.

The chicken struggles add to increasing costs to feed the animals, a signal that consumers likely will be paying more for poultry just as a nascent economic recovery boosts meat sales.

“It’s definitely going to take some production out away from us,” Chief Executive Officer Joe Sanderson said Thursday in an investor call, adding that the loss equals about 1% of the company’s output.

While it’s unclear how many chicken producers experienced losses, even small percentage changes in supply can move the market, and prices have already been gaining.

Shares for the company climbed as much as 4.5% after it reported better-than-expected fiscal first-quarter earnings of 42 cents a share, beating the average estimate of analysts for a 49-cent loss and a $1.76 loss a year ago. Shares have climbed about 18% so far this year.

Fast-food restaurants have been promoting new chicken sandwiches and other products, a strong point for meat producers. Prices for boneless chicken breast meat produced for restaurants moved “significantly higher” in January and February due to the trend, the CEO said.

Meanwhile, Sanderson is balking at prices for grains that it needs to feed chickens. The company delayed purchases of some corn and soybean meal, which are the most expensive in six years due to China ramping up American imports. The Chinese buying is leaving fewer supplies for domestic feeders such as Sanderson, and the higher prices are eating away at profit margins.

The company said it secured feed through March. The full impact of pricier feed will be felt in the coming months, the company said. In the meantime, they’re raising prices to offset the added costs.

Right now, “the price on poultry products is taking care of that higher feed cost,” the CEO said.

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