Shares of Sanderson Farms Inc. (SAFM) shot up 13% in active morning trading Monday, which puts the chicken processing company's stock on track for the best one-day performance in nearly 11 years, after Reuters reported late Friday (link) that China will lift a ban on U.S. poultry as part of a partial trade deal. Trading volume topped 550,000 shares, already well above the full-day average of about 320,000 shares. The stocks of other companies in the chicken business also rose, with Tyson Foods Inc. (TSN) up 3.2% and Pilgrim's Pride Corp. (PPC) climbing 5.2%. "While any agreement still needs to be finalized, we view this as a clear positive for the U.S. poultry industry...as a lift of the import ban would provide a significant export market for U.S. producers and could provide support to U.S. chicken prices," analyst Peter Galbo and Bank of America Merrill Lynch wrote in a note to clients. He said the lifting of the ban one one of four scenarios in which poultry producers could benefit from African Swine Fever (ASF) occurring in China, which led to theculling of millions of hogs (link), as consumers may switch consumption to chicken from pork (link). Stephens Inc.'s Ben Bienvenu said that while the report of the ban being lifted is a "clear positive" for all three chicken processors, "Sanderson has the most quantifiable benefit given the company's robust disclosures detailed in its filings (link)." The stock has soared 53.1% year to date, while the S&P 500 has gained 21.3%.
-Tomi Kilgore; 415-439-6400; AskNewswires@dowjones.com
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10-28-19 1020ETCopyright (c) 2019 Dow Jones & Company, Inc.