Commodities Watch: Silver Miner Misses Targets; Food Producer Also Misses, Raises Prices; Copper Prices Recovering (CDE, SIL, SLV, TSN, SFD, FCX, JJC)

Today’s commodities watch looks at a silver miner’s and a food producer’s quarterly earnings. And a quick look at how copper is coming back today.

Silver and gold miner Coeur d’Alene Mines Corp. (NYSE: CDE) reported record sales, production, and cash flow for the first quarter of 2011. But analysts were expecting more, and Coeur’s shares are taking a dive following the earnings report.

Coeur reported revenue of $199.6 million, compared with expectations of $234 million, and adjusted EPS of $0.42, compared with expectations of $0.61. The company produced 4.1 million ounces of silver in the quarter and more than 53,000 ounces of gold. The realized price for silver was $31.27/ounce and for gold, $1,374/ounce.

Coeur’s problem was costs. Total production cost/ounce for gold was $1,384.30. For silver, total production cost was $19.02/ounce. When production costs for gold are $10/ounce higher than the realized price, that will have an nasty impact on revenue. And the total production costs for silver are more than 60% of the company’s realized price for the gray metal.

The company’s shares are down about -4% in the early afternoon, to $26.63, within a 52-week range of $13.96-$37.59. The Global X Silver Miners ETF (NYSE: SIL) is up more than 2%, to $25.30, within a 52-week range of $12.90-$31.34. Silver itself is back up today, after a significant correction last week. Silver futures are trading at $37.22, up about 5.5%. The iShares Silver Trust (NYSE: SLV) is also up about 5.5%, to $36.40, in a 52-week range of $16.94-$48.35.

Food producer Tyson Foods, Inc. (NYSE: TSN) reported flat earnings this morning and the shares are taking a beating on a drop in operating margin in its chicken segment from 4.6% in the same period a year ago to 1.4% this year.

Tyson got hit with rising feed costs that also lowered its beef segment margins from 4.5% a year ago to 2.8% this year. Only its pork business grew, with margins rising from 6.3% a year ago to $10.5% this year. Unfortunately, pork provides just 17% of Tyson’s revenue, and the company doesn’t expect margins in its pork group to stay at their current elevated levels for the rest of the year.

Tyson will raise prices to help offset its increasing costs for feed, but the company is expecting to pay about $500 million more for feed in 2011 than it did in 2010. Still, the company expects to generate more than $32 billion in revenue in fiscal 2011 due primarily to higher prices.

Competitor Smithfield Foods Inc. (NYSE: SFD) is expected topost EPS for its fourth quarter ended in April of $0.77 on revenue of $3.22 billion. But Smithfield shares are down today on Tyson’s report. Smithfield shares are down about -3%, at $21.24, within a 52-week range of $13.34-$24.93. Tyson’s shares are down -6%, to $17.75, in a 52-week range of $14.59-$20.12.

Finally, copper prices are also rising again, back above $4/pound. Copper has fallen from highs around $4.60/pound, but fundamentals still point to a demand shortfall primarily due to projected demand from China. Freeport-McMoran Copper & Gold Inc. (NYSE: FCX) is up more than 2.5%, to $51.47, within a 52-week range of $28.36-$61.35. The iPath DJ-UBS Copper Total Return Sub-Index ETN (NYSE: JJC) is up more than 1.5%, to $53.15, with a 52-week range of $36.60-$61.69.

Paul Ausick