Pilgrim's Lovette addresses poultry market conditions
by Keith Nunes
GREELEY, Colo. – Strong domestic chicken demand combined with robust export markets and moderating input costs propelled Pilgrim Pride Corp.’s earnings to rise 175 percent in its fiscal second quarter, compared to the same period of the previous year.
“We are large enough to have breadth in our product offerings, but we are also very agile in adapting to rapidly changing market conditions to enable us to optimize mix and price impact,” said Bill Lovette, president and CEO. “Our results also reflect the continuing impacts of our relentless pursuit of operational excellence, especially in the areas of yield improvements and plant cost and efficiency gains.”
In the US market, Pilgrim’s Pride benefited from chicken breast meat pricing above $2 per lb. and wing prices that remained at $1.42 per lb. that contributed to a whole-bird equivalent price that created historic profitability for the company.
In the export market Lovette said Pilgrim’s Pride is pursuing its goal of 30 percent growth in value-added exports for 2013.
“We are accomplishing this through entering new markets and partnering with the top retailers in those regions,” he said. “We positioned Pilgrim’s as a premium brand and have found it to be very well accepted. We are also launching a new value-added brand called Savoro that we believe will position us with established exporters complementing our portfolio in international markets such as the Middle East, Africa, and Asia.”
The Savoro brand will feature cost-effective products that are intended to add value to the company’s export sales in cost-driven markets.
Lovette called the US chicken industry “disciplined” and noted that the supply-demand fundamentals in place have the potential to drive further profitability.
“The breeder supply continues to be managed with disciplined constraint, and while breeder supply is projected to increase in 2013, fully due to extending the age of the flock, early indications are that full expansion is unlikely, perhaps until later in 2014,” he said. “USDA data is forecasting somewhat higher chicken ready-to-cook pounds while forecasted exports are also expected to be higher at 7.5 billion lbs.
Export demand is growing, and the outlook is favorable into 2014, which should provide a counterbalance to maintain stable levels of chicken availability in the US.”
Lovette was also bullish about this year’s corn and soybean crops.
“While harvest is just now started, indications are strong that this will be a great crop,” he said. “There has also been abundant crop production coming out of South America leading us to believe that we can expect plentiful crops and reduced price volatility in the coming year.
“We don’t see a significant reduction in the feed-ingredient prices coming through our cost-to-goods sold in Q3, but we believe we will see the full benefit of the potential record crop in fourth quarter feed prices, giving the back half of 2013 the potential to be even better than the first. While industry fundamentals are currently strong, we don’t want to overlook the impact of our strategy in making strides that should continue to be reflected in our performance even as market conditions change.”