Tyson Foods Inc. slumped the most in more than six months after the largest U.S. meat processor said margins narrowed in its beef and pork units.
Tyson fell 3.7 percent to $22.40 at the close in New York, the most since Aug. 6.
Wholesale beef prices are coming down from their highest level in at least eight years, while the most-active cattle futures in Chicago have climbed 14 percent in the last 10 months as the worst U.S. drought since the 1930s led the cattle herd to shrink.
“Margins have been compressed throughout the past month as the value of beef has fallen more than the price of cattle,” James Lochner, chief operating officer of Springdale, Arkansas-based Tyson, said at the Goldman Sachs 17th Annual Agribusiness Conference today.
Margins for Tyson’s pork business also narrowed in the current quarter, he said.
The company expects “strong performance” for the chicken business, especially in the second half of the fiscal year that ends in September, according to a statement today.
“Demand is strong, and we’re seeing signs of consumers trading from beef to chicken,” Lochner said. “Even with pricing up substantially year over year, chicken is a good value for consumers, and food service continues to promote chicken heavily.”