Question-and-Answer Session
Operator
(Operator Instructions) We’ll take our first question from Farha Aslam with Stephens Inc.
Farha Aslam – Stephens Inc.
Just a quick question on the processed and prepared foods, what were sales in that division for the quarter?
Joe Sanderson, Jr.
Percentage-wise, it’s about as it has been.
Farha Aslam – Stephens Inc.
At 10% of total?
Lampkin Butts
Yeah, just under that.
Joe Sanderson, Jr.
About the same.
Farha Aslam – Stephens Inc.
Joe, what would you think the industry needs to cut production to get profitability back to kind of mid cycle level?
Joe Sanderson, Jr.
I don’t know. We’re going to have to see if? There are two things. Farha, we kind of thought we were going to see reductions in July. We saw those three or four weeks of 213, I don’t remember what they were, 213/214 million eggs sets back in April and that really did not materialize. When you look at USDA slaughter numbers in July, they were at 100% and 101% and now we’re looking at egg sets of 206 and 207 million that are going to show up sometime in October or November. We’ll see when we get there. Those are barely impressive cuts.
My suspicion is, as I’ve told you in May, the industry typically make the cut and it’s tentative. We’ll have to see if it works. That’s a period of lower demand, just seasonally lower demand. I’m skeptical that that’s going to be enough. We’re headed into Thanksgiving and Christmas and my guess is they’re going to have to be some further cuts. I can’t give you a number or a percentage. I’m very skeptical that those cuts are going to be enough to return us margins to cover these grain costs.
Farha Aslam – Stephens Inc.
In terms of breast meat, what do you anticipate breast meat prices have to be to offset the current kind of $6 corn?
Joe Sanderson, Jr.
It’s going to be different for different people and for different sizes of chicken. But based on?. If you booked all your 2009 corn today and added a basis to it, corn would be, I’m going to use Mississippi and add $0.50 a bushel to it, that would be corn into Mississippi at around $6.75 a bushel, a little bit less, maybe $6.65; and soybean meal would be around $3.80 a ton. To us, you’d need to average somewhere for a year to average $3.85? I mean $1.85 to $1.90 for 12 months to get back to average margins.
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