Company expects grain costs overall in 2020 to be flat
Sanderson Farms’ feed costs were up during the company’s first quarter of the fiscal year 2020, CEO Joe F. Sanderson Jr. said in an earnings call February 27.
“Cash market prices for corn were higher during the quarter compared to last year, while soybean meal prices were lower,” he said. “Our feed cost per pound of chicken process was higher by 1.5% per pound when compared to the first fiscal quarter of 2019. Both corn and soybean balance tables are healthy as we head into the 2020 planting season, but corn basis remains much higher than last year.”
Sanderson said the company expects its grain costs to be flat in 2020.
“Based on our calls through the first fiscal quarter and what we have priced so far, when combined with prices we could have locked in for the balance of the year and yesterday’s close, our grain cost for fiscal 2020 would be flat with fiscal 2019, based on 2019 volumes,” he said.
Sanderson said the upcoming South American harvest and March 31 planting intentions report will affect grain markets.
“The South American harvest is progressing very well, and expectations now are for good crops from the region,” he said. “At its 2020 agricultural outlook forum last week, the USDA (U.S. Department of Agriculture) estimated corn acres in 2020 will be 94 million acres versus 89.7 million acres last year and the acres planted in soybeans would be 85 million acres versus 76.1 million acres last year.”
However, Sanderson noted that it is not unusual for the USDA to significantly revise its outlook before March 31 report.
Sanderson Farms is one of the world’s largest poultry companies, according to WATTAgNet.com’s Top Poultry Companies database. It produces feed for its birds at nine feed mills.
Also in an earnings call this week, Pilgrim’s Pride CEO Jayson Penn discussed grain pricing and supplies and how they affect the company’s profitability.
