In what is being cleverly called a game of chicken, companies like Tyson Foods
This is a dangerous game to play. A briefing from Paragon Economics and Steiner Consulting recently warned that there may be bankruptcies before it all plays out. Earlier this month, Pilgrim's Pride announced a quarterly loss of $121 million, its worst since emerging from bankruptcy in late 2009.
Tyson also recently reported a terrible quarter, with a 68% drop in profits. Tyson cited rising grain costs as the problem, which crushed margins in its chicken segment, down 3.2 percentage points, to a bare 1.4%.
The pain is also being felt by egg companies like Cal-Maine Foods
There doesn't seem to be much hope for feed costs going back down soon. A month ago, when Goldman Sachs
This industry will be shaky for some time. While feed costs remain high, you can count on these chickens to have trouble hatching. Add these companies to your watchlist to keep up to date on the latest developments.
Fool contributor Jacob Roche would like to note that reading a poultry 10-K is like reading the annual report for The Jungle. He holds no position in any of the companies mentioned. Check out his Motley Fool CAPS profile or follow his articles using Twitter or RSS. The Motley Fool owns shares of Cal-Maine Foods. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.