Sanderson Farms CEO: Ethanol demand raises costs

Sanderson Farms, Inc. (Nasdaq: SAFM) CEO Joe Sanderson said ethanol demand will keep the grain market “high and volatile.” The chief executive said grain costs will add about $0.02 per pound to the poultry processor’s cost of producing a pound of dress chicken. Sanderson made the comments during a midday conference call.

“In order to offset this cost, the chicken market must move in tandem with this cost. While I have confidence that the fundamental rules of supply and demand in economics will work to maintain industry profitability over the long term, we recognize that short-term swings are inevitable,” Sanderson said. “However, we will manage our company as we always do, which is the same goal regardless of where we are in the chicken cycle.”

Before the opening, Sanderson Farms reported fourth-quarter net sales of $426.9 million, below analyst estimates of $429.2 million. Last year, Sanderson Farm’s fourth-quarter net sales totaled $291.7 million.

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