US Food Companies' Shares Tumble as Costs Rise
Shares of U.S. food companies that sell everything from beef to bananas fell hard on Monday, some to multiyear lows, as they face higher costs for key feed crops and for fuel and fertilizers.
Analysts predict the worst is still ahead for these companies because it is not yet known how much of the U.S. corn and soybean crops, both key feeds, will be lost to widespread flooding in Iowa.
Banana distributor Chiquita Brands International and fresh produce company Fresh Del Monte Produce Inc also saw shares tumble. Chiquita said in a statement it expects higher costs for fuel and fertilizers.
Chiquita and Fresh Del Monte were among the top three percentage losers on Monday at the New York Stock Exchange, after Chiquita predicted it will post a "significant" third-quarter loss.
Shares of Pilgrim's Pride Corp, the largest U.S. chicken producer, tumbled nearly 13 percent to a four-year low, making it the fourth-biggest percentage loser, while shares at giant hog and pork producer Smithfield Foods Inc dropped as much as 7 percent to a 3-1/2-year low of $23.31, as both face higher feed costs.
"I don't think these companies have seen the worst of it yet. I think it is going to get really ugly across the board," John Urbanchuk, an economist with expert service firm LECG, said of the costs faced by meat companies.
"We are going to see unstable (grain) prices and higher grain prices throughout the growing season," he said.
Also down were shares of Tyson Foods Inc, the largest U.S. meat producer, and Sanderson Farms Inc, the No. 4 chicken producer.
In New York Stock Exchange trading Pilgrim's Pride shares were down $2.08, or 11.3 percent, at $16.31; Tyson Foods was off 15 cents , or 1 percent, at $14.81, and Smithfield Foods was off $1.09, or 4.35 percent, at $23.96.
Sanderson Farms' shares were down $2.06, or 4.8 percent, at $40.89 in Nasdaq trading.
Also in New York Stock Exchange trading Chiquita shares tumbled nearly 30 percent early and were down $6.76, or 29 percent, at $16.56 and Fresh Del Monte shares were off $4.39, or 13.8 percent, at $27.49.
Footnote: America is on a diet, it just doesn't know it yet - Kelloggs announced yesterday that they are reducing the size of some of their cereal packets. I read a report the other day of a New Yorker who regularly buys a chicken pitta bread from a well-known US takeaway service. He chucks (no pun) the pitta away & eats the chicken & salad at his desk. He says he's noticed recently that they amount of chicken in his pitta is considerably less than previously, some 20-25% less although the price of his lunch remains the same.
Analysts predict the worst is still ahead for these companies because it is not yet known how much of the U.S. corn and soybean crops, both key feeds, will be lost to widespread flooding in Iowa.
Banana distributor Chiquita Brands International and fresh produce company Fresh Del Monte Produce Inc also saw shares tumble. Chiquita said in a statement it expects higher costs for fuel and fertilizers.
Chiquita and Fresh Del Monte were among the top three percentage losers on Monday at the New York Stock Exchange, after Chiquita predicted it will post a "significant" third-quarter loss.
Shares of Pilgrim's Pride Corp, the largest U.S. chicken producer, tumbled nearly 13 percent to a four-year low, making it the fourth-biggest percentage loser, while shares at giant hog and pork producer Smithfield Foods Inc dropped as much as 7 percent to a 3-1/2-year low of $23.31, as both face higher feed costs.
"I don't think these companies have seen the worst of it yet. I think it is going to get really ugly across the board," John Urbanchuk, an economist with expert service firm LECG, said of the costs faced by meat companies.
"We are going to see unstable (grain) prices and higher grain prices throughout the growing season," he said.
Also down were shares of Tyson Foods Inc, the largest U.S. meat producer, and Sanderson Farms Inc, the No. 4 chicken producer.
In New York Stock Exchange trading Pilgrim's Pride shares were down $2.08, or 11.3 percent, at $16.31; Tyson Foods was off 15 cents , or 1 percent, at $14.81, and Smithfield Foods was off $1.09, or 4.35 percent, at $23.96.
Sanderson Farms' shares were down $2.06, or 4.8 percent, at $40.89 in Nasdaq trading.
Also in New York Stock Exchange trading Chiquita shares tumbled nearly 30 percent early and were down $6.76, or 29 percent, at $16.56 and Fresh Del Monte shares were off $4.39, or 13.8 percent, at $27.49.
Footnote: America is on a diet, it just doesn't know it yet - Kelloggs announced yesterday that they are reducing the size of some of their cereal packets. I read a report the other day of a New Yorker who regularly buys a chicken pitta bread from a well-known US takeaway service. He chucks (no pun) the pitta away & eats the chicken & salad at his desk. He says he's noticed recently that they amount of chicken in his pitta is considerably less than previously, some 20-25% less although the price of his lunch remains the same.