Question-and-Answer Session
Our first question will be Farah Oslin, Stephens Incorporated.
Farah Oslin- Stephens, Inc.
Joe, could you share with us how the feed costs flowed through during the quarter? And how they relate to today’s costs in terms of did you have great hedges that you benefitted from in February, but kind of in April those ran our, and now you are pretty much experiencing the costs as they stand? Could you tell us how the costs of growing chickens today versus what they were during the months of the quarter?
Joe Sanderson
We had some beneficial feed cost advantages in the quarter, and our costs will be some higher in the next quarter, we believe, we will have some beneficial costs in this quarter versus the board, but they will be some higher in the third quarter versus the second quarter. But versus the board we believe that unless the board collapses there will be some beneficial versus the board. There will be some higher, but not significantly higher incoming ingredients in the third quarter versus the second quarter. We pretty much have the third quarter soy and corn priced. What we sell during the third quarter will have second quarter and third quarter incoming ingredients cost in it. So our live costs actually will reflect both of those ingredient prices, and the rate of increase should slow during the third quarter. The biggest increase in live cost should have already been seen and felt.
Michael Cockrell
As far as Lampkin said, the cost per dressed pound during our second quarter was up 6.5 cents. As he also said, if we priced all our needs out today that would reflect about a 7.5 cent increase. So we still have a little room to go to get to the full higher costs but most of it has been factored in.
Farah Oslin- Stephens, Inc.
That is very helpful. And when you look out to pricing for breast meat for the summer, can you give us some commentary for what you expect?
Joe Sanderson
I am cautiously not pessimistic. We expect based on egg sets, for supplies to be less and we would expect the market to improve beginning some time in June and for the market to be higher than it is today. Even with the consumer being under some stress from multiple sources we think that prices will be better.
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