Cherkizovo (CHEq.L) (GCHE.MM), Russia's biggest meat producer, is counting on higher poultry prices from the second quarter, thanks to cuts in import quotas, a knock-on effect from surging grain costs and falling stocks.
Cherkizovo, which on Tuesday reported a 5 percent rise in poultry sales to 194,100 tonnes, also forecast solid volume growth this year.
Russia -- seeking to develop the economy's non-energy sectors, including agriculture -- has cut poultry import quotas for this year to 350,000 tonnes from an initial 600,000 tonnes.
The cut is a boon for local producers like Cherkizovo, who have seen costs surge after the summer 2010 drought -- the worst in over a century -- wiped out a third of Russia's grain crop.
"The group expects the pricing environment for our products to recover towards the second half of the year, supported by reduced imports and rising costs resulting from grain price increases, as well as by a shortage of supply driven by the reduction of stock," Cherkizovo said.
It added that it expected upward trends in poultry prices to begin from the second quarter after a weak start to the year.
There have been some reports of smaller poultry farms slaughtering their stock as higher feed costs push them into bankruptcy.
Cherkizovo said prices for its poultry inched up by 1 percent in dollar terms to $2.37 per kilogram, but fell 3 percent in rouble terms to 71.89 roubles -- reflecting a stronger Russian currency.