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Monday, March 30, 2015
Avian influenza worries hit poultry company stock prices
Share prices for the three largest broiler companies in the United States – Tyson Foods, Pilgrim’s and Sanderson Farms – have fallen after the news struck on March 11 that highly pathogenic avian influenza had hit a commercial turkey flock in the major poultry producing state of Arkansas.
Tyson Foods shares opened at $40.35 on March 9, but one week later on March 16, they closed at $38.09. Shares reached their lowest point within that week on March 13 at $37.10.
Pilgrim’s stock opened at $26.62 a share on March 9, bottoming out at $24.15 the day the Arkansas avian influenza case was confirmed. The cost of Pilgrim’s shares have since shown a slight recovery, closing at $25.06 on March 16.
Sanderson Farms stock opened at $82.33 on a share on March 9, but dropped to its lowest point in the week on March 12 at $76.80, despite the fact that earlier in the day Sanderson Farms CEO stressed to shareholders that the company has no operations or live inventory in Arkansas. Sanderson Farms shares closed at $78.59 on March 16.
Daniel Jones, an analyst with Seeking Alpha and manager of Avaring Capital Advisors, said he felt the market moves, particularly in Tyson Foods’ case, were irrational, according to The City Wire.
“While the source of the avian flu appears to be a flock of over 40,000 Butterball turkeys. Tyson processes around 40 million heads of chicken a week. Of its 106 food plants in operation in the U.S., 15 of these are located in Arkansas while one other seems to border Arkansas and Texas. Some 57 of its 106 food plants process chicken, 14 of which are based in Arkansas. Assuming that this data is correct and that each chicken processing plant produces the same amount of chicken per week, that's about 9.8 million chickens processed per week or 510.64 million chickens per year,” said Jones.