MEXICO-MEAT CONSUMPTION DOWN.
Consumption of pork of all kinds in Mexico is down 50 percent or more in the past week, and retailers in that country expect the aftereffects of the outbreak may last "for an extended period, and be far-reaching."
This according to a report by Stephens Inc. equity analyst Farha Aslam, summarizing the discussion on an investors’ conference call with Ken Moskal, director of supply chain and internal audit for Soriana, a major Mexican retailer, and Richard Fritz, a partner with Global AgriTrends.
The World Health Organization has said the issue could linger in Mexico for two to three months, Aslam wrote. Since beef is out of reach financially for many Mexicans during the current global recession, consumers are substituting chicken for pork, which has disrupted that sector, as well. Stores can’t keep poultry in stock.
This might represent an opportunity for U.S. poultry processors, but a decline in the value of the Mexican peso has raised the price of U.S. chicken in that country.
Stock rundown
In addition to summarizing the content of the conference call, Aslam updated her evaluation of protein company stocks in her report.
Sanderson Farms is expected to see an uptick in stock price because U.S. consumers are likely to switch to poultry from pork, at least temporarily. Tyson may benefit from this trend, as well.
Hormel’s balanced portfolio has held up well, but Smithfield Foods’ stock woes are not yet over.
