May 18, 2011

Tyson Foods states that beef prices affect consumers' spending

Although beef prices may have peaked too high for some US consumers, those shoppers are still keen to purchase chicken and pork, Tyson Foods Inc. (TSN) said on Tuesday (May 17).

Noel White, Tyson's senior vice president for its fresh meats segment, added in a presentation to investors that prices for beef, chicken and pork will all climb through 2011 as the company and retailers pass along high commodity costs.

Cattle and hog futures have hit record highs this spring, driven by rising grain costs and tightening supplies.

Chicken prices have struggled by comparison as supplies are more plentiful, but Chief Executive Donnie Smith said that overall domestic supplies of meat are expected to fall for the fourth year in a row, which will boost chicken. Tyson officials have said they expect chicken consumption will rise as some cost-conscious consumers switch from beef or pork.

"We believe ultimately chicken pricing is dependent on domestic availability of protein," Smith said.

White added that after weak April meat demand caused in part by lousy weather, demand has been much improved in May.

Tyson is the largest US chicken producer. It is tied with privately-held Cargill Inc. as the nation's largest beef producer, and is the second-biggest pork producer behind Smithfield Foods Inc (SFD).

Tyson shares were unchanged at US$18.51 a share pre-market. They are up 7.5% year-to-date.