This morning, Pilgrim's Pride Corp. (PPC: sentiment, chart, options) announced that it filed for Chapter 11 bankruptcy protection to address short-term operational and liquidity challenges. The company said that it expects normal operations to continue, and that operations in Mexico and certain U.S. operations were not included in the filing. Pilgrim's Pride said it received a commitment for up to $450 million in debtor-in-possession financing arranged by the Bank of Montreal. Before the shares were finally halted, the stock was down 45.77% at 62 cents per share.

In addition to high feed costs, the company was on the wrong side of grain hedges and was hurt by debt obligations from its 2006 acquisition of smaller rival Gold Kist Inc.

The news has not helped its rivals in the poultry sector. Tyson Foods (TSN: sentiment, chart, options) has dropped more than 7% this afternoon to hover at the $6.25 level. However, the equity is holding above former support in the 5 region.

Meanwhile, Sanderson Farms (SAFM: sentiment, chart, options) has retreated more than 9.5% this afternoon and tagged a new annual low at $12.55. Today's breakdown in SAFM puts the shares below recent support at the 30 level. In fact, the stock is now trading at its lowest levels since May 2003.