Tag - SAFM

Small-cap stocks went into free-fall mode into midday trading, pulled down by worries a collapse in the nation’s auto manufacturing business could sweep into a wider problem for an economy already in the throes of recession. In addition, money continues to move out of equities and into credit instruments as investors seek safe-haven outlets to try and ride out this storm. That safe-haven mentality also takes a deeper toll on small caps, which are seen as even riskier than large-cap companies. At 12:35 p.m. ET, the Russell 2000 (NYSE:IWM) was down 20.18, or 4.51% at 427.34, hitting the lowest price since May 2003.

General Motors Corp. (NYSE:GM) was down 15% on perceptions that this week’s lobby efforts by auto executives in Washington might not yield a rescue package for embattled automakers, or that an aid deal might not get there quick enough to stem a downward spiral through automakers, parts suppliers, etc. Ford Motor Co. (NYSE:F) tumbled 21%, but with the stock trading well below $2 a share, the percentage moves are easily magnified.

Yields on benchmark 10-year notes tumbled more than 3.5% at mid-session as investors made a stampede for Treasury products to try and park cash somewhere safe. The yield on five-year notes already hit five-year lows ahead of the opening this morning. The push for safe-haven outlets has extended into the gold market, where a report from the World Gold Council today said that global demand for the yellow metal soared 18% in the third quarter. While industrial metals such as copper have been pummeled by the economic crisis, which slows demand for building materials, gold stands to benefit by panic in financials and hope from long-term gold hoarders that all these bailout programs will eventually spark inflation.

However, any hope for inflation on the horizon seems like a far-off concern, especially after today’s CPI report showed that consumer prices notched the biggest decline in 61 years of data history. In fact, the deflationary environment right now just makes Treasury products even more attractive because inflation devalues fixed income investments.

Sometimes on days like today it’s interesting to see just what companies are doing well when the rest of the market is sinking. On the small-cap front, . . .

Small-cap stocks held in higher ground through midday trading, with commodity names bolstered by a rise in oil prices while money flow into stocks was supported by a strong U.S. dollar and soft credit instruments. At 12:50 p.m. ET, the Russell 2000 (NYSE:IWM) was up 3.58, or 0.50%, at 724.12. Small caps were outperforming other index products, buoyed by gains in small energy names.

Energy stocks were also providing the biggest boost to large caps, with Exxon Mobil Corp. (NYSE:XOM) up 0.9% and Anadarko Petroleum Corp. (NYSE:APC) surging 5% as the firm announced plans for a $5 billion share buy-back program.

This morning’s rush of economic data in the United States on housing and consumer confidence brought a mixed picture, with the housing market still sinking, but consumer confidence climbing above market expectations. Still, confidence is low historically, and likely got a lift from the pullback in gasoline pump prices in recent weeks. If crude oil starts to climb back above $120 and higher, then a new crisis of confidence could be just around the corner.

Speaking of crude oil, the market for black gold was up about $0.75 a barrel, slipping back below $116 dollars, down from the $117 level on the morning highs. The energy market is reluctant to get carried away on the sell side right now until they get a better picture of how Hurricane Gustav will track through the Gulf of Mexico in the coming days. Meanwhile, the U.S. dollar remained strongly higher against the euro, up about 0.8%, near the highest point since February.

It should be noted that volume on today’s stock market trading has been light, with many traders on holiday to enjoy the last few weeks of the summer season. In fact, the move so far today in the Russell has been confined to an inside session of the more dynamic decline from Monday … in trader parlance, it has something . . .

Chicken company Sanderson Farms, Inc. (Nasdaq: SAFM) said this morning that it swung to a net loss in the third-quarter, while analysts had expected the company to break-even. While the bottom-line missed, revenues narrowly beat.

Sanderson closed a tough quarter, as industry conditions remained soft. While retail and export demand for chicken remained relatively strong during the quarter, the company said casual dining and food service customers were hurt by a significant decline in restaurant traffic due to weak economic conditions and higher fuel prices. Higher feed costs, as corn prices remained volatile as served to drag down the bottom-line.

Shares skidded 10%, or $3.89, to $35.60 ahead of the opening bell. For detailed price information and news stories on Sanderson Farms, click SAFM.

Sanderson Farms Inc. (Nasdaq:SAFM) has a lot of pluck to plan a chicken processing capacity expansion while some struggling competitors are crying out for industry cutbacks to firm up prices.

While demand for poultry is healthy, producers face the big problem of higher costs, mainly for transportation and feed, as oil and other commodities including corn continue to rise.

The fourth-largest U.S. poultry producer, though, hasn’t hit the panic button, and Mississippi-based Sanderson Farms recently announced plans to open a new plant in North Carolina in late 2009, primarily to handle retail-packaged products. Last year, the company brought online a plant in Waco, Texas, to process 1.25 million chickens a week.

For the most part, analysts who follow Sanderson Farms are staying neutral, with four of the five recently polled by Thomson Reuters having the stock at “hold,” and the other deeming it a “strong buy.”

Sanderson Farms began as a rural feed store in the 1940s, started a hatchery to sell more feed to farmers, then began buying back the chickens and selling them. Now Sanderson has plants scattered across the South, producing chill-pack and frozen chicken for the retail market, big-bird processing for commercial use, and specialty foods manufacturing. Russia and China are growing markets for leg-quarter products.

The median price target for the company is $50, about 10% under its historical high of $55.18 in June 2004. On May 29, Sanderson hit a 52-week high of $50.45 and shares dropped as low as  $27.80 on Jan. 22. The stock closed Wednesday at $39.99.

Still, Sanderson executives have bluntly outlined the challenges in several recent presentations. During a June 4 presentation at the Stephens Inc. Spring Investment Conference, chairman and CEO Joe Sanderson explained why the company . . .

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.