Sanderson Foods Continues To Impress

BB&T Capital Markets recently hosted investor meetings with Sanderson Farms SAFM management. The bank remained bullish in the near-term but there is enough uncertainty with regards to supply and feed costs to keep them on the sidelines for now despite overall favorable disposition. August pricing has been outstanding reflecting tight supplies due to heat-impacted weights-foodservice demand remains sluggish. While temperatures remain somewhat high, pricing is expected to remain strong for much of September. Presently, pricing is more than sufficient to offset current cost pressures and once sales to Russia begin flowing through, it will be an even greater help. Feed cost uncertainty, high tariffs in China, and the specter of meaningfully higher supply combined with soft demand causes the bank to remain on the sidelines for now. BB&T has a Hold rating on SAFM. Sanderson Farms closed yesterday at $43.02