June 4, 2008

Tyson's shares drops 7.8 percent on news of low pathogenic bird flu

Shares of Tyson Foods dropped 7.8 percent after news broke that the company has identified low pathogenic bird flu in a flock of 16,000 chickens at an Arkansas poultry producer. 

USDA spokeswoman Angela Harless said Tuesday (June 3, 2008) the strain was "very low risk" and posed little threat to either humans or other animals. The birds showed no signs of illness at the time of test, but will be destroyed as a precaution, she said.

Earlier Tuesday, Bloomberg News reported that the chickens were owned by Tyson Foods Inc. (TSN). Tyson shares were 7.8 percent lower at US$17.01 in afternoon trading.

Exposure to the virus was identified during a routine preslaughter test, Harless said. She said relatively mild strains of avian influenza such as the one that the flock was exposed to are very common in US chickens and have so been for decades.

However harmless the incident turns out to be, it may have an outsized economic effect if other countries ban US poultry as a result, BMO Capital Markets analyst Kenneth Zaslow also said in a research note Tuesday.

He said the flock was one that is hatched and slaughtered in one location, and thus the exposure won't likely spread beyond Arkansas.

Zaslow said although the destruction of the birds would only have a marginal effect on US poultry production, Russia would likely ban chicken exports from Arkansas as it has done in the past.

Arkansas is the second-largest poultry producing state in the US, after Georgia.

The greater risk to the US poultry industry is if Russia responds to the positive test by banning all US poultry, or if other countries such as Japan join Russia in banning poultry from Arkansas, Zaslow said.