Sanderson posts loss on lower chicken prices

NEW YORK (Reuters) - Sanderson Farms Inc (SAFM.O) reported a quarterly loss, hurt by lower market prices for poultry and rising feed costs, and the chicken producer said grain costs should be higher for the rest of 2011.

Sanderson said boneless breast meat prices, a key revenue item, were down 22 percent from a year earlier in the quarter ended July 31, while jumbo wing prices fell 27.5 percent.

The No. 4 U.S. chicken producer said demand at grocery stores for its products held steady during the quarter, but demand in its food service unit, which serves restaurants and other institutions, was "sluggish" and will remain so as long as unemployment remains high.

Sanderson said it would keep a production cut already planned for November and December in place into 2012 until demand improves.

It said it incurred "significantly higher" costs for corn and soybean mean, the main ingredients in its feed.

Fiscal third-quarter sales rose 4.5 percent to $511.2 million, just below analysts' average forecast of $512.9 million, according to Thomson Reuters I/B/E/S.

Sanderson reported a net loss of $55.7 million, or $2.51 per share, compared with a profit of $36.1 million, or $1.55 a share, a year earlier.

(Reporting by Phil Wahba; editing by John Wallace)