Bachoco Falls as Bird-Flu Outbreak Confirmed: Mexico City Mover

Industrias Bachoco SAB, Mexico’s biggest chicken producer, fell for a second day after the nation’s Agriculture Ministry said bird flu cases were confirmed on seven of the company’s farms.

Bachoco fell 1.5 percent to 30.50 pesos at the close in Mexico City, bringing the two-day drop to 3.6 percent. The IPC SmallCap Index, of which Bachoco is a member, fell 0.2 percent today.

The government’s Feb. 15 confirmation of Celaya-based Bachoco’s warning the prior day fueled concern that the company will have to kill chickens to contain the threat. As many as 582,000 birds may have been exposed to the flu on the farms in the central Mexican state of Guanajuato, the government said in an e-mail.

“You have to be cautious, because we don’t yet know the magnitude of the damage from this outbreak,” Gerardo Copca, an analyst at Metanalisis SA, said in a telephone interview from Mexico City. “That’s what’s affecting the shares.”

The Mexico City-based newspaper La Jornada reported today that the outbreak had now spread to 12 farms.

Bird flu in the Mexican state of Jalisco last year helped fuel a pickup in inflation across Latin America’s second-biggest economy as the slaughter of birds drove up egg and chicken prices.

The Agriculture Ministry as of last week hadn’t determined whether the flu is the same strain that infected poultry farms in Jalisco state last year. Guanajuato has 2.4 percent of Mexico’s egg-laying chickens, the ministry said.

Sanitary Authority

There’s no threat to the supply of poultry products in the Mexican market, Bachoco said today in a statement, citing the country’s sanitary authority.

“The company is working with sanitary authorities to control the outbreak by taking necessary actions, such as applying a vaccination program, among others,” Bachoco said today in a statement to the Mexican stock exchange.

Bachoco’s risks are contained because the company has diversified its production into about 100 poultry farms, Gustavo Teran, an analyst with Mexico City-based Corp. Actinver SAB, said in a telephone interview before the government’s announcement. He rates the stock a buy.