Goldman Sachs analyst downgrades Sanderson Farms to sell from neutral, saying the chicken business will be squeezed by oversupply in the U.S., rising feed and corn costs; company shares fall

LAUREL, Mississippi , December 1, 2010 () – Shares of poultry company Sanderson Farms Inc. fell Wednesday after an analyst predicted a glut in U.S. chicken supplies in 2011 and hit the company with a "Sell" rating.

Goldman Sachs analyst Lindsay Drucker Mann downgraded Sanderson Farms from "Neutral" said the chicken business will be squeezed by two forces in the coming years. Heavy production should keep the U.S. market flooded with supplies even as exports stagnate. At the same time, rising feed and corn costs will eat into profit margins.

"... we do not yet see signs of the supply response we believe is needed to push chicken prices higher," Mann said in a note to clients. The best trade on that projection is to sell poultry-specific companies like Sanderson, according to Mann's report

Shares of Laurel, Miss.-based Sanderson fell $2.40, or 5.4 percent, to close at $41.86, bucking the broader markets which posted a strong rally on signs of economic growth.

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