Fitch Ratings downgraded Tyson Foods Inc's credit standing to junk status on the possibility of a further deterioration of the company's credit statistics.

According to Fitch, Tyson's credit statistics will likely get worse in the near term due to lower-than-anticipated operating earnings and cash flow.

High grain costs and pricing issues are reducing the profitability of Tyson's poultry operations as well, Fitch said.

The agency warned of further cuts if the company experiences a long period of higher-than-expected leverage.

In the first half of fiscal 2008, Tyson's consolidated cash flow from its operations decreased 58 percent to US$144 million due to higher grain costs in the chicken segment and increased inventory requirements.

Tyson expects grain costs to rise to US$600 million in fiscal 2008 and predicts a US$400 million increase in the cost of ingredients.