Commodity Fund Managers on the Run from Grains

The food analysts at Credit Suisse issued a note on Monday observing that commodity funds are fleeing from "the grain complex" thanks to, among other things, the burgeoning dollar and falling oil prices.

The funds' withdrawals are driving prices down, just as their rabid investments had driven prices up earlier in the year, the analysts argue.

But don't expect meat and poultry processors to see any big benefits any time soon. Higher feed costs "will continue to flow through the protein processors' earnings" until toward the end of next year, the analysts, led by Robert Moskow, predict. For one thing, though grain supplies are more bountiful than had been feared (or hoped), there are still plenty of demand pressures, as from government-backed biofuels producers and from emerging markets.

Moskow and company specifically cited Pilgrim's Pride as particularly vulnerable. The poultry producer has implemented massive cutbacks in response to odious input costs, especially feed. If such cutbacks succeed in boosting prices for chicken meat, Pilgrim's Pride might come out of this OK. If not, there could be more, and bigger, trouble down the road. So far, according to the Credit Suisse analysts, prices for breast meat remain "shockingly low." And the company's cutbacks have been undermined, if not totally offset, by increases in production by rival Tyson Foods.

At least we know there's no chicken cartel.