Corn’s Big Plunge Helps Chicken Producers, Hurts Farm Equipment

(Bloomberg) -- The steepest drop in corn prices in six years rippled through the equity market on Monday, pushing up shares in chicken companies while beating down tractor makers.

Poultry producers Sanderson Farms Inc. and Pilgrim’s Pride Corp. jumped after a U.S. government report showed bigger-than-expected planted acres for corn, causing a rout in futures that signals cheaper feed for animals.

Chicken companies are already benefiting from a hog-killing disease sweeping through Asia that’s setting up poultry as the prime protein substitute. Demand is also improving with U.S. fast-food restaurants gearing up for more chicken sandwiches on menus.

Sanderson gained as much as 4.3% while Pilgrim’s advanced 1.3%. Even Tyson Foods Inc., whose shares slumped after a fire at one of its major plants, recovered after the grain news. The Tyson fire pushed cattle futures down by the exchange limit.

Machinery stocks went the other way. Lower corn prices mean less farmer income, which can translate into less willingness to make major purchases, like a tractor that costs six figures. AGCO Corp. fell by the most in a year, while Deere & Co. lost as much as 5%.

--With assistance from Isis Almeida, Michael Hirtzer and Mario Parker.

To contact the reporter on this story: Lydia Mulvany in Chicago at lmulvany2@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net

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