March 8, 2007

Meat margins improve for Tyson Foods
 

Although consumers are pressured from the higher meat prices, it's a positive boost for Springdale-based Tyson Foods Inc, the world's largest protein company.

Last week, the Bureau of Labour Statistics reported the unadjusted consumer price index for food items rose 2.4 percent from a year ago. Food prices are expected to rise higher in the coming months as corn costs are passed through from food companies like Tyson Foods and Smithfield Foods.

The US Department of Agriculture estimates corn prices above the US$4 range will push meat prices up another 3 to 5 percent in the coming months at the local retail grocery level, said Matt King, agricultural economist with the Arkansas Farm Bureau.

The prices for some poultry and dairy products have already gone up but it will take longer for the cost of pork and beef to increase because of their longer lifespan before slaughter, said agricultural economist Rob Hogan, with the University of Arkansas.

Pork pricing has also improved for packers like Tyson Foods and Smithfield. The average margin per head improved to US$6.02 from a loss of US$4.48 a year ago. Tyson Foods' pork margins benefited from an 18 percent boost in cut-out value even though live pig prices have risen 9 percent. Tyson management does not believe that grain prices have impacted the pig markets yet, while pig producers may be feeling the higher costs, pork processors have not yet felt the crunch.