January 30, 2007

Tyson fears corn prices raising food costs
 

Tyson Foods Inc has warned rising corn prices could mean consumers would have to pay more for chicken, beef and pork this year.

The world's largest beef producer and second-largest poultry company reported a net income of US$57 million, or 16 cents a share, compared with US$39 million, or 11 cents a share, a year earlier. Sales rose 1.6 percent to US$6.6 billion from US$6.5 billion.

President and chief executive Richard Bond said that while the current quarter would be challenging, they expect it to be profitable.

Tyson has been particularly concerned about the skyrocketing prices of corn due to increasing demand for ethanol.

Bond said while Tyson supports efforts to increase the supply of renewable energy, there was a need to consider the negative and unintended consequences of over-using grains.

Earlier this month, Tyson made its first entry into the international market with a joint venture in Argentina with a cattle-feeding company called Cactus Feeders Inc and Cresud SACIFyA, an Argentinean agribusiness.

The deal will allow Argentineans to buy Tyson products and give the company a springboard to other beef markets.

According to a Deutsche Bank analyst, although chicken prices have improved somewhat recently, the rising costs of feed and grain might create problems for the chicken producer in the Q1.

The company might have been able to hedge against any damage from corn prices, which rose 84 percent during the quarter from last year but the intermediate term outlook looked questionable given the run-up in feed costs, he added.