Meat margins improve for Tyson Foods

07-03-2007 | |

Although consumers feel pressure from the higher meat prices, it’s a positive boost for Springdale-based Tyson Foods Inc., the world’s largest protein company.

Last week, the Bureau of Labor Statistics reported the unadjusted consumer price index for food items rose 2.4% from a year ago. Food prices are expected to rise higher in the coming months as corn costs are passed through from food companies like Tyson Foods and Smithfield Foods.

Higher pork prices

The U.S. Department of Agriculture estimates corn prices above the $4 range will push meat prices up another 3 to 5% in the coming months at the local retail grocery level, said Matt King, agricultural economist with the Arkansas Farm Bureau. The prices for some poultry and dairy products have already gone up but it will take longer for the cost of pork and beef to increase because of their longer lifespan before slaughter, said agricultural economist Rob Hogan, with the University of Arkansas.

Improvement for packers

Pork pricing has also improved for packers like Tyson Foods and Smithfield. The average margin per head improved to $6.02 from a loss of $4.48 a year ago. Tyson Foods’ pork margins benefited from an 18% boost in cut-out value even though live pig prices have risen 9%. Tyson management does not believe that grain prices have impacted the pig markets yet, while pig producers may be feeling the higher costs, pork processors have not yet felt the crunch.

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