Grains Oilseeds

[amarksp]

Russians ban meat from 23 U.S. sites
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Being the contrarian, picked up small, initial position in TSN. Will likely be looking to add on weakness, but buying TSN now puts this one on my radar screen.

Although he has not commented recently, Don Coxe believes the meat processors will be able to pass on grain feed prices to end consumers. I believe this as well.

Russians trying to get a lower price than $.45/lb, but believe they will soon find this to be a cheap price...
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Russian inspectors banned 23 U. S. facilities from exporting meat products to the Russian Federation this week, including poultry processing plants, pork slaughterhouses and several cold warehouses, the U. S. Department of Agriculture reported Friday.

The plants affected — including three Tyson Foods Inc. poultry plants and one plant owned by Siloam Springsbased Simmons Foods Inc. — will be prohibited from shipping to Russia starting Nov. 1.

Four U. S. pork plants were also affected, though none had ties to Northwest Arkansas. Russia offered no clear reason why the plants were banned, U. S. farm officials said.

Russia is by far the largest buyer of U. S. poultry. In 2006, Russia bought $ 645 million of broiler meat, compared with $ 235 million bought by Canada, the second-largest customer.

“We’re still gauging what, if any, impact Russia’s decision will have on our poultry operations,” Tyson spokesman Gary Mickelson said in an e-mail, noting that Springdale-based Tyson still has 13 plants eligible to ship to Russia.

Among the plants affected were Tyson plants in Clarksville, Ark., and Carthage, Miss.; a Choctaw Maid Farms plant owned by Tyson in Forest, Miss.; and a Simmons plant in Siloam Springs.

Mickelson said the Choctaw plant had already been shipping to other countries. Two messages seeking comment were not returned by Simmons Foods.

Laurel, Miss.-based Sand- erson Farms Inc. had two plants delisted. Sylvest Farms of Montgomery, Ala., had one plant delisted.

Industry analysts estimate that the poultry plants banned this week constitute about 10 percent of U. S. production capacity, though the ban is unlikely to further depress domestic chicken prices, which have been sliding since early September on high inventories.

The price of breast portions fell 22 percent in a month and a half, and leg quarters — the favorite chicken meat in Russia — decreased 11 percent.

Paul Aho, an economist at Connecticut-based Poultry Perspective, a consulting firm, said the lower domestic chicken prices, rather than the Russian ban, explains why stock values at large meat processors fell so sharply at the end of the week. Shares of meat processors steeply declined Friday amid a general market sell-off that led to a 367-point drop on the Dow Jones Industrial Average index.

Shares of Tyson Foods fell $ 1, or 5. 6 percent, to close at $ 16. 87 on Friday on the New York Stock Exchange. Sanderson’s stock fell 6 percent, and Pittsburg, Texasbased Pilgrim’s Pride, which had no plants delisted by Russia, lost 10. 4 percent of its share value.

Russia’s ban “is not good news, but it’s not horrible,” Aho said. “It’s the same game we’ve played for 20 years with them. We complain, and then they drop the bans.”

A Russian poultry import ban in 1996 led to negotiations between the two governments that resulted in the current trade rules. Russia banned all U. S. chicken products in 2002 after the discovery of salmonella in shipments, the Russian government said. Trade was re-established later that year.

However, it is still unclear why the Russians banned these poultry and pork plants this time.

This summer, a team from the Russian Veterinary and Phytosanitary Service audited the U. S. poultry industry.

“We find it curious that Russia would take such drastic measures in light of reported short supplies of meat and poultry in Russia,” Jim Sumner, president of the USA Poultry and Egg Export Council in Georgia, said in a statement.

Russia’s decision affected 10 poultry-processing plants, five cold warehouses that ship poultry products, four pork-slaughter operations, three pork-packaging facilities and one warehouse that ships pork products. A plant owned by Swift Pork in Worthington, Minn., and another owned by Hormel Foods in Austin, Minn., were affected by Russia’s decision. According to trade rules hammered out in 1996, Russia can periodically inspect and delist U. S. poultry plants, but the Food Safety and Inspection Service at the USDA can contact those plants and seek certification once guidelines are met, Toby Moore, spokesman for the poultry export council, explained. Russia also banned seven U. S. poultry plants in July.
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October 21, 2007 -- Americans may be paying less for poultry this winter thanks to a chicken war that has broken out between the U.S. and Russia.

Russia, the largest customer for U.S. chicken producers, buying 30 percent of all exports, has de-listed 17 U.S. poultry plants - meaning that as of Nov. 1 those plants will no longer be able to export to Russia. The drop in exports is expected to create a glut of chicken and drive down prices.

The price drop is expected to hit chicken legs the most, according to Kenneth Zaslow, an analyst with BMO Capital Markets, who in a report Friday noted that Russians are partial to chicken legs.

As wholesale and retail prices drop, profits of chicken producers - like Tyson Foods, Pilgrim's Pride and Sanderson Farms - could see some downward pressure, Zaslow said in his report.

Zaslow said the move by Russia to de-list the plants - which comprise 17 percent of the U.S. poultry plants- appears to be a swipe at the Bush administration and made in hopes of bringing down the price of chicken in Russia, which have hit 45 cents a pound .