Grain and growth
Feb. 25, 2015
by Erica Shaffer
LAUREL, Miss. – Several items made Sanderson Farms Inc.'s "watch list". Joe Sanderson, chairman and CEO, said the company remains optimistic for 2015. But executives will focus on trends in grain production in the United States and abroad along with Sanderson Farms' plans for growth.
Sanderson said grain crops in South America are progressing well, and expectations are for a bumper crop. “We are watching the quality and quantity of the South American crops. A strong harvest in this region would take some pressure off US grain exports,” he said.
Sanderson said the company also will be watching for the US Department of Agriculture's Planning Intentions Report, scheduled for release on March 31. Sanderson noted that the USDA projected declines in the number of acres planted to both corn and soybeans. However, many are skeptical of USDA's lower soybean plantings. Sanderson added that slightly fewer corn acres are expected.
"It is not unusual for the USDA to significantly revise its outlook before the March 31 Planning Intentions Report, so we will be watching for that report,” Sanderson noted.
The USDA also projected poultry production to climb 3.6 percent during 2015. Pullet placements also have increased. Sanderson Farms will closely monitor trends in chicken production and consumer spending habits.
“In any event, financially healthy, more optimistic, fully-employed American consumers who continue to spend less at the gas pump, could easily absorb that increase,” Sanderson said. “We expect that chicken will be competing once again during 2015 with high-priced beef, although we expect pork prices will be lower than last year.”
Finally, Sanderson Farms will focus on efforts to grow the company. Sanderson said the Palestine, Texas facility is operational and the company expects the plant to reach full production capacity over the next year. Due diligence will continue on sites for the company's second plant in North Carolina, and the company hopes to announce a definite site and date to begin construction.
“We believe lower grain markets will give us an opportunity to make good margins with hard work and a little help from the chicken markets,” Sanderson concluded. “The chill pack environment is strong, and could improve even more seasonally as we move past Easter and into the summer.
“Foodservice demand is the wildcard for 2015, but recent signs of life in that market give us reason to be optimistic,” he added. “Lower gasoline prices help, and we have to believe that once consumers complete remaining deferred maintenance projects around the house, they will use gasoline money to take the family out to eat.”