Halftime Pt. 2: Bullish Signs for Meat Packers?

Does your portfolio need some "meat?"

Bullish news came last week for ranchers and meat packers, as Russia announced it would lift a six-month ban on US chicken.

On Monday's Fast Money Halftime Report, Sanderson Farms' CEO Joe Sanderson says Russia is a large consumer of chicken, especially dark meat. That's good news for the Laurel, Miss.-based company, which produces 12 million pounds of dark meat each week.

The USDA is expected to release regulations on Russia in the next few weeks, he says, so US players could begin packing for Russia "sooner than later." He expects dark meat to cost ten cents per pound.

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Sanderson notes another positive sign for those in meat products: Expectations of low feed costs, a large input cost to the industry. Of course the crops haven't come in yet, he says, but a low price is anticipated.

Brian Kelly of Kanundrum Capital asked Sanderson about a recent letter by Morgan Stanley, indicating that production is being curtailed because of tight credit conditions.

"Credit has restrained a lot of participants in our industry," Sanderson says, adding that the credit market tightened up in fall 2008. His company, however, hasn't had difficulty with credit.

What's the Trade?

With low feed costs and the Russian market opening up, Kelly is bullish on Sanderson Farms. Jon Najarian of optionMONSTER.com agreed.

But where can Sanderson grow their top-line, asked Tim Seymour of EmergingMoney.com, especially since the company is competing with large players in China and Brazil. Seymour likes SAFM, but prefers Brasil Foods because "they are really the ones taking global marketshare."

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CALL THE CLOSE

Tim Seymour of EmergingMoney.com thinks the market is capped at the 1085 level in the S&P 500.

"Terrible start to the day," Kelly says. "I think it ends lower."

Because of the quarter's end, Steve Grasso of Stuart Frankel expects late week pressure.

Jon Najarian of optionMONSTER.com thinks the markets sell off Monday. He thinks there might be a bounce-back on Wednesday, but is sitting on his hands until then.

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Trader disclosure: On June 28, 2010, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Jon Najarian owns (AAPL) call spreads; Jon Najarian owns (MU) call spreads; Jon Najarian owns (SNDK) call spreads; Jon Najarian owns a seat and stock in (CME); Jon Najarian owns a seat and stock in (CBOE)’ Jon Najarian owns a seat and stock in (NYX) Grasso owns (ASTM), (ABK), (BAC), (BGP), (C), (DYN), (JPM), (LPX), (NDAQ), (PRST) Seymour owns (INTC) Kelly owns (BP) puts; Kelly owns (FCX) puts; Kelly owns (GLD); Kelly owns (GDXJ); Kelly is short (GS).

For Steve Grasso:
Stuart Frankel & Co and it’s partners own (BAX)
Stuart Frankel & Co and it’s partners own (COG)
Stuart Frankel & Co and it’s partners own (CUBA)
Stuart Frankel & Co and it’s partners own (DHR)
Stuart Frankel & Co and it’s partners own (DYN)
Stuart Frankel & Co and it’s partners own (GERN)
Stuart Frankel & Co and it’s partners own (HSPO)
Stuart Frankel & Co and it’s partners own (IP)
Stuart Frankel & Co and it’s partners own (MERC)
Stuart Frankel & Co and it’s partners own (NWS.A)
Stuart Frankel & Co and it’s partners own (NYX)
Stuart Frankel & Co and it’s partners own (PDE)
Stuart Frankel & Co and it’s partners own (PFE)
Stuart Frankel & Co and it’s partners own (PRST)
Stuart Frankel & Co and it’s partners own (RDC)
Stuart Frankel & Co and it’s partners own (SYMC)
Stuart Frankel & Co and it’s partners own (TBT)
Stuart Frankel & Co and it’s partners own (TLM)
Stuart Frankel & Co and it’s partners own (TRV)
Stuart Frankel & Co and it’s partners own (XRX)
Stuart Frankel & Co and it’s partners own (SDS)
Stuart Frankel & Co and it’s partners are short (QQQQ)
Stuart Frankel & Co and it’s partners are short (AAPL)

Brian Kelly
Accounts managed by Kanundrum Capital own (AUY)
Accounts managed by Kanundrum Capital own (GFI)
Accounts managed by Kanundrum Capital own (GDX)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own Gold
Accounts managed by Kanundrum Capital own Treasuries
Accounts managed by Kanundrum Capital own US Dollars
Accounts managed by Kanundrum Capital is short (AMZN)
Accounts managed by Kanundrum Capital is short (RCL)
Accounts managed by Kanundrum Capital is short (XLY)
Accounts managed by Kanundrum Capital is short (XLE)
Accounts managed by Kanundrum Capital is short (AFL)
Accounts managed by Kanundrum Capital is short (CME)
Accounts managed by Kanundrum Capital is short (EWI)
Accounts managed by Kanundrum Capital is short (EWO)
Accounts managed by Kanundrum Capital is short (GS)
Accounts managed by Kanundrum Capital is short (HIG)
Accounts managed by Kanundrum Capital is short (RKH)
Accounts managed by Kanundrum Capital is short (XLF)
Accounts managed by Kanundrum Capital is short (XLI)
Accounts managed by Kanundrum Capital is short (FCX

Accounts managed by Kanundrum Capital is short (GFI)
Accounts managed by Kanundrum Capital is short (JOYG)
Accounts managed by Kanundrum Capital is short (XLB)
Accounts managed by Kanundrum Capital is short (XLK)

For Dennis Gartman
Funds managed by Dennis Gartman own Gold

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