Jefferies Comments On Sanderson Farms F2Q Operating Loss

According to Jefferies, Sanderson Farms SAFM reported an F2Q operating loss of $0.56, a smaller loss than $0.84 Street expectation and in line with our $0.57. Jefferies said that COGS was 100% of sales in the quarter, driven by a 2% Y/Y increase in chicken prices and a previously disclosed inventory writedown, which were offset by an 80% jump in corn prices. “We're sticking with our thesis that F1Q11 represented the margin trough point. We continue to think that chicken prices will slowly improve in 2H11 and we would be buyers of SAFM shares ahead of improved pricing inflection point.” Sanderson Farms closed yesterday at $45.99.