Sector Snap: Meat producers fall on Russia news

Shares of the nation's largest chicken producer, Pilgrim's Pride Corp., fell $1.21, or 8.2 percent, to $13.49 in midday trading, while shares of Smithfield Foods Inc., the nation's largest hog producer and pork processor, fell 45 cents, or 2 percent, to $21.46.

Russia's agriculture minister said Wednesday the country could cut poultry and pork import quotas by hundreds of thousands of tons.

"It is time to change the quota regime and reduce imports, which have unfortunately built up in recent years," Alexei Gordeyev told reporters, according to the ITAR-Tass news agency.

He said domestic producers could make up the shortfall.

U.S. producers, including Pilgrim's Pride and Smithfield, are seeing growth in Russia and other foreign markets. These international markets have been helping offset the weak U.S. economy, and producers are seeing much growth because of the weak U.S. dollar.

U.S. producers supply nearly 75 percent of the total poultry import quota set by Russia, which stands at 1.2 million tons. From January through June this year, Russia represented the largest export market for chicken broilers made by U.S. producers, accounting for 29 percent of all broiler exports, according to the U.S.A. Poultry & Egg Export Council.

Through the end of June this year, U.S. producers shipped $395.7 million worth of broilers to Russia, up 42 percent from the previous year, while volume grew 20 percent.

Jim Sumner, president of the council, said it was important to separate economics from politics.

"We recognize there needs to be a balance between imports and domestic production in Russia," he said.