“While market conditions improved during our third fiscal quarter compared to last year’s third quarter, the Company and our industry face a challenging environment going forward,” added Sanderson. “Market prices for grain are at historic highs, and ongoing drought conditions across much of the country have created considerable uncertainty regarding this year’s corn and soybean crops. While the quantity available and prices we will pay for grain during the coming months will ultimately depend on this year’s final crop performance, prices are certain to be much higher than those paid for grain this fiscal year. Based on current markets, cash paid for feed grains would be approximately $61.1 higher during fiscal 2012 compared to fiscal 2011. We have priced little of our grain needs going forward, and will remain on the market for our needs for now.”
“While market prices for chicken remain higher than they were last year and have strengthened over the past few weeks, they are not high enough to offset what we now expect to be significantly higher input costs during the coming months. In light of these costs, beginning August 6, 2012, we reduced our egg sets by two percent across all Company divisions to lessen the impact of the higher grain costs we are facing. This reduction was in addition to the four percent reduction started January 1, 2012, and we will run our plants at six percent below capacity until market conditions improve.”
“Despite challenging market conditions, we remain confident in the long term success of the Company and our industry,” added Sanderson. “We also remain confident in and committed to our growth strategy. Toward that end, we announced today we have selected Nash County, North Carolina, as the site for a future new poultry complex. We have purchased land near Rocky Mount, North Carolina, on which a new hatchery will be built, and we own options to purchase property on which spray fields that will form a part of a waste water treatment facility will be located. However, the timing of building that complex remains on hold until market fundamentals improve, including sufficient confidence that the global supply of feed grains will be adequate to meet world demand at reasonable prices. In addition to market conditions, construction of the Nash County facilities remains subject to other contingencies such as obtaining the land on which the processing plant will be built, obtaining the necessary permits to construct and operate the facilities, and obtaining acceptable economic incentive packages from the State of North Carolina and the local government.”
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