A recent Markit report details what could be behind the rise in poultry producer short interest.
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"In an environment where input costs have come down but selling prices have increased," this could "indicate investors are anticipating an increase in supply and associated pricing pressure after a recovery in supplier pricing power," according to the report.
If poultry prices are expected to fall, producer pricing power could reverse—a "scenario (that) could be devastating for marginal producers and may be behind the recent shorting activity," the report adds.
Indeed, the USDA expects broiler prices to moderate somewhat during the second quarter of next year.
"That's because we're calling for higher production growth in 2015, which would put a downward pressure on prices," USDA economist David Harvey said.
Still, amid the runup in short interest, 83 percent of analysts have a "buy" or "overweight" rating on Tyson Foods stock, with Wall Street expecting 17 percent future upside. Meanwhile, 40 percent of analysts have a "buy" or "overweight" rating on Pilgrim's Pride shares.