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USA - Russia lifts poultry ban but for how long

29 Jun 2010

 Shares of chicken producers Tyson Foods, Pilgrim's Pride and Sanderson Farms closed higher on Thursday following President Obama's announcement of a deal to restart exports of U.S. chicken to Russia.
Russia was once the largest overseas buyer of U.S. chicken but had banned the meat earlier this year, claiming a chlorine rinse used here violated its food safety rules.
 
The ban angered U.S. chicken producers, who argued that the rinse was safe. Prior to the ban, the U.S. annually shipped Russia about $800 million worth of chicken, said the National Chicken Council.
 
The announcement followed meetings on Thursday between Obama and Russian President Dmitry Medvedev. In addition, Obama said the United States would support Russia's bid to join the World Trade Organization.
 
"It should have an immediate effect on prices and demand for leg quarters," said Paul Aho, an Image provided by Prime Equipment Groupeconomist with the consulting firm Poultry Perspective. "They usually buy a lot."
 
Russia primarily buys the leg-quarter portion of the chicken.
 
"The Russian trade ban has been a large overhang on protein stocks. The market reopening should support protein prices due to a more favorable supply/demand balance," Farha Aslam, analyst with Stephens Inc, said in a note.
 
Chicken leg quarters have piled up in warehouses as chicken companies have been unable to divert all of Russia's share to other markets. As of May 31, U.S. Agriculture Department data showed 132.16 million pounds in storage, up 37 percent from April and up 89 percent from a year earlier.
 
"We do not know on which date Russia will start allowing U.S. chicken back into the country," JP Morgan analyst Ken Goldman said in a note. "The day that Russia says it can accept U.S. chicken is the day that the U.S. will start shipping."
 
At the New York Stock Exchange shares of top chicken producer Tyson Foods Inc (TSN.N) closed up 16 cents, or 1.0 percent, at $17.87 and No. 2 Pilgrim's Pride's (PPC.N) shares rose 37 cents, or 5.4 percent, to $7.23. In Nasdaq trading, shares of No. 4 Sanderson Farms ended up $2.04, or 4.0 percent, at $52.60.
 
Privately held Perdue Farms is the third-largest producer.
 
Brazilian meat company JBS SA (JBSS3.SA) owns a controlling interest in Pilgrim's Pride (Additional reporting by Christopher Doering, editing by Gerald E. McCormick, Bernard Orr)
 

Source: reuters

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