(AP) — Shares of a number of food producers fell in trading Monday as concern grew about how corn costs may weigh on the companies.
Corn commodity prices have soared in the past few weeks due to the hot, dry weather in much of the country. This weather comes at a key time in the corn's maturation period and has created a risk to the crop yields, BMO Capital Markets analyst Kenneth Zaslow wrote in a research note Monday.
When corn commodity prices rise, costs go up for feed for meat companies and ingredients for packaged food makers.
The price per bushel for corn closed at $7.30 Monday, up 33 percent since closing at $5.50 on June 21, according to FactSet
Smithfield Foods Inc., which makes fresh and packaged food products, was downgraded by Zaslow on these concerns. He lowered his rating to "Market Perform" from "Outperform," due to corn costs and tepid market for fresh pork. Smithfield's shares fell 93 cents, or 4.6 percent, to $19.15 in late afternoon trading.
Zaslow also downgraded his rating on chicken processor Tyson Foods Inc. to "Market Perform," from "Outperform," on concerns about corn costs, along with weaker demand for chicken from its foodservice customers. Tyson's shares fell 49 cents, or 2.8 percent, to $17.10 late in the session.
ConAgra Foods Inc., which makes both meat products such as Hebrew National hot dogs and packaged foods such as Orville Redenbacher popcorn, saw its shares fall 22 cents to $25.50.
The shares of some other corn-reliant food companies also dipped Monday. Shares of cereal maker General Mills Inc. declined 26 cents to $38.50. And shares of Ralcorp Holdings Inc., which makes private-label products for supermarkets, gave up 76 cents to $66.94. Kellogg Co.'s shares fell 49 cents to $48.64.