Tuesday, April 14, 2009

Investors favor U.S. meat

According to an article on www.reuters.com, people are increasing their investment in shares of Tyson, Smithfield, Hormel and Sanderson Farms.
With the recent overall rise in the stock market combined with impending warm weather encouraging people to cook meat on the grill, meat sales have increased.
Despite the meat industry losing money in 2008 due to high feed prices and meat production being down this year due to shrinking herds and flocks, prices should be driven up by smaller supplies once consumers start eating out again, according to the article.
As of now, consumers are sticking to homemade and lower-priced meat items because of the recession.
An explanation for the increased popularity of meat company stocks may be due to less favorable options elsewhere in the market, according to the article.
"They may be good compared with the alternatives," said Paul Aho, an industry economist, of meat company shares in the article.
"Would you put your money into GM right now or into a chicken company? I think food is going to be popular. People have to eat -- they may eat less, but they eat."
The stocks show the demand:
Tyson Foods shares have about doubled since November, to $11; Smithfield Foods reached $11.60, about doubling since March; and at Sanderson Farms, shares have increased since November to $40.77. Hormel Foods Corp. prices have not increased as sharply but have risen from the March low of $29.40 to about $31.63 as of April 13.

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