Tyson Foods, the world's largest meat processor, expects beef, chicken and pork prices to increase as feed-grain costs rise.
At a conference sponsored by J.P. Morgan Securities, James Lochner, Tyson's senior group vice president for fresh meats, pointed to competition between livestock producers and ethanol for corn. "As fuel competes for feed we will see an increase in prices," he said.
Tyson has already has taken "a couple of price increases in recent months...and we will continue to do that," said Wendy Davidson, another Tyson senior officer. "You will see a lot of pricing discipline going forward."
Tyson has announced cuts in chicken production, as have some of its competitors, at least in part due to rising feed costs. The eventual result, they said, will be that consumers will pay more for chicken in supermarkets and at food-service outlets.
Adding to the bill is past fuel cost increases, and new higher price levels. For example, "beef is a dime per head per mile to move," said Lochner, "so regional capacity utilization is critical." He also predicted that cattle and hogs coming to market are likely to weigh less as feed prices rise, since the most expensive gain is the last 100 pounds on beef and 20 pounds on pork.
Source: Market Watch