LAUREL, MISS. – Sanderson Farms Inc. reported increased sales and a profit during the first quarter of fiscal 2021 driven by strong retail demand, improved pricing and product mix.

Joe F. Sanderson Jr., chairman and chief executive officer of the company, said average prices for tray pack products sold to retail grocery store customers were higher in the first quarter of 2021 compared with the same period in 2020, and prices continue to reflect a good supply and demand balance in the retail segment.

“Demand and prices for jumbo wings strengthened seasonally during the quarter, and market prices averaged above last year’s first quarter,” Sanderson said.

Quoted market prices for bulk leg quarters were approximately 26.4% lower in the first quarter of fiscal 2021, but overall market prices for poultry products were higher compared to last year. The average realized prices of the Sanderson’s retail tray pack products were approximately 3.1% higher, boneless breast meat quoted market prices were approximately 10.5% higher, tender quoted market prices increased by approximately 27.4% and jumbo wing quoted market prices were higher by 34.3%, Sanderson said.

Net sales for the first quarter of fiscal 2021 were $909.3 million compared with $823.1 million for the same period a year ago.

Net income for the first quarter was $9.5 million, or 42¢ per share, compared with a net loss of $38.6 million, or $1.76 per share, for the first quarter of fiscal 2020.

Sanderson Farm’s average feed cost per pound of poultry products processed advanced 1.3% compared with the first quarter of fiscal 2020. Prices paid during the first quarter for corn and soybean meal, the company’s primary feed ingredients, increased 8.9% and 27.5%, respectively, compared with the first quarter a year ago.

“Our results for the first quarter of fiscal 2021 reflect continuing challenges presented by the COVID-19 pandemic and higher feed grain prices, but we ended the quarter on a strong note amidst encouraging end-market trends and remain optimistic about the future,” Sanderson said. “While market prices for boneless breast meat produced at our plants that process larger birds for food service customers remained under pressure during the first two months of the quarter, we saw more favorable trends in January and February.”

Sanderson credited the company's employees for keeping operations running efficiently through the coronavirus (COVID-19) pandemic. But Mother Nature also proved a formidable foe.

Power outages brought on by record low temperatures and snow and ice, along with hazardous road conditions caused interruptions in the company's business. Sanderson Farms processing plants in Texas, Mississippi and Louisiana did not operate on Feb. 17 and the duration of severe weather caused officials to announce plans for Texas and Louisiana plants to remain closed Feb. 18 as well as plants in Collins, McComb, Hazlehurst and Flowood, Miss. The Laurel, Miss., plant’s first shift was canceled on Feb. 18.

Additionally, the company confirmed that at least four broiler houses in Mississippi had collapsed earlier in the week.

“ ...we were unable to operate our processing plants, deliver day old chicks to broiler farms on our regular schedule, pick up hatching eggs from breeder farms and place those eggs in our hatcheries, or manufacture and deliver chicken feed to the farms of our independent contract poultry producers,” Sanderson said. “Fortunately, none of our facilities were damaged, our employees remained safe, and we returned to normal operations at all our facilities on Feb. 22, 2021, except the Hazlehurst, Mississippi, processing plant, which resumed normal operations on Feb. 23, 2021.

“However, our live production supply chain experienced interruptions and losses similar to a hurricane,” he continued. “We lost 455,000 broilers in houses that lost power, water or feed, or had roofs collapse under the weight of snow and ice. We were forced to humanely euthanize 545,000 chicks in our Texas hatcheries and were unable to pick up and place 703,000 hatching eggs in our hatcheries. We deeply regret the losses incurred due to extraordinary circumstances beyond our control or our independent contract poultry producers’ control.”

Sanderson added that the company will have approximately 1.6 million fewer chickens to process at its Mississippi, Louisiana, and Texas processing plants over the next 10 weeks as a result of the interruptions. The losses represent just under one percent of the head Sanderson Farms expected to process during the second fiscal quarter. Additionally, breeder and broiler chickens exposed to extreme temperatures typically suffer some performance losses over their lives, Sanderson said.

But the company has many reasons to be optimistic, thanks to the foodservice segment which has struggled during the pandemic. Market prices moved significantly higher for boneless breast meat produced for foodservice, driven by demand from quick-service outlets that are promoting new chicken products. And foodservice operators seeking to meet demand brought on by food pick-up and delivery sales lifted market prices for chicken wings and tenders.

“We are optimistic that demand from foodservice customers will improve further once the COVID-19 vaccines are more widely distributed and consumers are more comfortable dining in restaurants,” Sanderson said. “We also expect to see continued favorable demand from our retail grocery store customers as US consumers continue to prepare more meals at home.

“With respect to the export markets, demand from customers in our traditional export markets has improved since December as a result, we believe, of higher crude oil prices, improved liquidity and favorable currency valuations,” he added. “This improved demand environment is reflected in higher market prices for dark meat.”