Moody's considers downgrading Pilgrim's Pride

Moody's Investor Services on Wednesday said it is considering a possible downgrade on the rating of chicken producer Pilgrim's Pride Corp. over concerns about volatile grain costs and an uncertain domestic chicken market.

Pilgrim's Pride anticipates that its fiscal 2008 feed grain costs will rise by more than $900 million from the prior year, a $100 million increase over its previous estimate. Moody's also noted that chicken prices have not kept pace with input cost inflation.

Moody's said its review will focus on the Pittsburg, Texas-based company's ability to improve profitability and cash flow in the face of still high input costs, as well as on its management of liquidity sources and on likely covenant cushion.

The agency rates Pilgrim's Pride corporate family and probability of default ratings at "B1."

Pilgrim's Pride shares rose 81 cents, or 6.1 percent, to $14.14. Shares of the world's largest chicken company have fallen more than 66 percent during the past 52 weeks.