Shares of poultry producers rose sharply Thursday as corn prices plunged.
Corn is one of the most expensive ingredients for chicken feed, and one of the biggest costs of production for companies like Tyson Foods Inc.
Poultry producers have been squeezed in recent years by rising corn prices. Companies can't always pass on the higher cost of grain, because consumer demand is relatively weak. That means the companies have to accept thinner profit margins.
The price of corn fell Thursday after the government said corn supplies were higher than traders expected. Investors had bid the price up, expecting tighter supplies because of weather damage to crops.
Corn for March delivery fell 40 cents a bushel, the maximum allowed by trading boards, to $6.115 per bushel. The price is down 24 percent from June, when corn traded for a record $7.99 a bushel. The price was high on worries about global shortages. But a big U.S. corn crop has eased those concerns.
With corn prices falling, investors are more optimistic that poultry companies will have bigger profits going forward.
Shares of Tyson Foods rose 22 cents, or 1 percent, to close at $19.96. Sanderson Farms Inc. gained $3, or 6 percent, to close at $50.41.
Pilgrim's Pride Corp. gained 42 cents, or 7.6 percent, to close at $5.96.