Bob Evans files lawsuit against 19 processors for chicken price inflation
- Bob Evans Farms is suing 19 poultry processors for both restricting the supply of chicken and engaging in price manipulation.
- A few of the main processors being sued include Tyson Foods, Pilgrim’s Pride, Koch Foods, Sanderson Farms, House of Raeford Farms, and Perdue Farms.
- According to the lawsuit filing, Bob Evans is demanding a trial by jury to seek treble damages from the defendants, who are suspected of partaking in an “illegal conspiracy” from “at least as early as 2008 through at least as late as 2017.”
- This lawsuit is the latest in a number of high-profile illegal developments against the packing industry.
- Four current and former poultry industry executives were indicted in Denver in early June for price fixing and rig bidding. Not long after, the DOJ launched an investigation related to antitrust violations by the big four beef processors; Tyson, JBS, Cargill and National Beef.
Cash cattle slide backwards
- Lower packer inventory needs due to a holiday week caused cash cattle prices to decline again last week.
- For the past several weeks, packer participation has been somewhat limited in the cash market with only two packers participating, and the other two fulfilling their inventory needs with turn-in cattle.
- The South traded mostly at $102-$104, and the North’s cash market also ranged mainly from $102-$104.
- Packers taking on more inventory prior to the holiday week allowed them to sit out and leverage the extra volume to push the market lower with potential extended delivery periods.
Beef is proving more profitable than chicken in the pandemic
- According to analysts, U.S. and Brazilian chicken producers have been struggling amid oversupply, weak prices, and sluggish competition. Some analysts are even saying a production cut may be needed to prop up prices.
- Beef on the other hand has benefited from stronger demand and prices.
- Peter Galbo, an analyst of Bank of America, claims there will be a flood of red meat coming into the market this fall and retail features for beef are expected to rise significantly.
- Chicken, however, is experiencing such low prices and demand that retailers can’t justify advertising the protein.
- Brazilian poultry companies are facing weakness in both export and local sales.
- Export prices in August fell 20 percent from year-ago levels and chicken production margins were noted at a negative 5 percent compared to August 2019.
- Brazilian poultry producers have found themselves at a crossroads with weak export demand and rising costs. In order to lift prices and return to profitability, producers must lower supply.