NEW YORK — The announcement by Pilgrim’s Pride this week that it would close a North Carolina production facility along with six distribution centers is likely the first of many similar moves that will be made by poultry processors this year, as producers attempt to curtail supply to improve industry fundamentals. The ethanol boom has caused corn and animal feed prices to skyrocket during the past two years, significantly raising input costs for meat, poultry and egg producers. Yet with supply remaining relatively steady, producers have had trouble passing along price increases significant enough to keep pace with those costs. In research notes published by Dow Jones, analyst Robert Moskow with Credit Suisse said that Pilgrim’s Pride’s North Carolina facility represents about 1.5% of the company’s processing capacity, and about 0.4% of total industry capacity. Analyst Pablo Zuanic with J.P. Morgan Securities described the move as positive for the industry, and said he expected similar cuts at other processors to total about 3% of industry capacity by summer, based on historical trends.
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