Beef Market Conditions Threaten Tyson Foods Profits
US - Beef sales represent 48 percent of the total revenue earned by Tyson Foods Inc.
24 September 2007
2 minute read
"It is highly unusual for packers to lose this kind of money in the summer months,"
Jim Robb, vice president of the Denver-based Livestock Marketing Information Center.
In the first nine months of the year, the Springdale-based meat giant posted $9.4 billion in beef sales compared to $8.8 billion a year earlier. Operating revenues over the same period were $34 million versus losses of $44 million the year before.
Now it looks as if those gains are in jeopardy as the company winds down its fiscal year on Sept. 30.
Earlier this month, Tyson Foods CEO Dick Bond told investors he expects to report profits in all four of the company's operating segments in the quarter that ends next week. He plans to do this despite deteriorating beef margins and export disruptions to South Korea.
Some industry experts doubt it can be done in the beef segment given the sustained increase in live cattle prices that have magnified beef margin losses to an average of $26 per head this week, according to HedgersEdge.com.
"It is highly unusual for packers to lose this kind of money in the summer months," said Jim Robb, vice president of the Denver-based Livestock Marketing Information Center.
TOUGH TIMES AHEAD
The entire industry faces lean quarters ahead, Robb said, which should be difficult for large and small players alike as cattle supplies are apt to be lower in 2008. He predicts more plant reductions and possible plant closures if beef margins do not improve.
Rancher's Beef, one of Tyson Food's competitors in Alberta, Canada, closed its doors in August because of a lack of labor and low cattle supplies.
Source: Springdale Morning News
