July 18, 2007

US meat sellers' stocks slide as China restricts imports

Stock prices of several major US meat producers fell on Monday after news that China had banned some of their imports.

Shares of Tyson Foods (TSN) -- the world's largest processor and marketer of chicken, beef and pork -- fell 0.5 per cent Monday to close at US$23.78. Shares of Sanderson Farms, the No. 4 poultry producer, lost 2.7 per cent to US$46.58.

However, the impact is likely to be slight unless the restrictions are long-lived, expand or fall victim to increasing tensions between the two countries over food-safety concerns.

The ban would only become a big issue if it is sustained, said Parr Rosson, an agricultural economist at Texas A&M University.

Tyson and Sanderson said they already learnt about those suspensions in early June. One of Tyson's plants was banned because raw chicken reportedly contained salmonella, and one pork-processing plant's products allegedly contained ractopamine, a feed additive approved for use in the USA but banned in China.

In fiscal 2006, China accounted for 8 percent of Tyson's international chicken sales and 4 per cent of its international pork sales.

Two of seven plants from Sandersons were suspended from shipping frozen chicken feet to China because officials there in May detected residues of a chemical that battles parasites. Sanderson has been working with China to rectify the situation, says Mike Cockrell, chief financial officer.