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[SFD] Russia poultry deal lifts U.S. meat company shares
August 23, 2002 1:28:00 PM ET

By Bob Burgdorfer

CHICAGO, Aug 23 (Reuters) - Shares of major U.S. meat companies rose after a deal was announced on Friday that will restart U.S. poultry shipments to top buyer Russia.

The agreement is expected to help pare the huge meat supply that developed after shipments were interrupted earlier this year.

Shares of Tyson Foods Inc. (TSN), Hormel Foods Corp. (HRL) and Smithfield Foods Inc. (SFD) were all higher on the New York Stock Exchange Friday afternoon.

"It should benefit all of the livestock processors," Christine McCracken, a food industry analyst with Midwest Research, said of the Russian deal. "The whole protein market has been depressed by the oversupply of chicken."

The deal was reached after the two countries agreed to new health certificates that include testing, inspection and documentation of U.S. poultry shipments, a U.S. Agriculture Department official said.

Shares of Tyson Foods, the largest U.S. producer of beef, chicken, and pork, were up $1.17 or 11 percent at $11.81.

"It is a huge part of Tyson's business," McCracken said. "About 10 percent of its chicken production goes to Russia."

The flow of poultry to Russia, which had bought about 1 million metric tons a year, was disrupted for much of this year because Moscow demanded new health and safety standards.

The chicken and turkey meat, mainly low-priced leg quarters, that normally would have been exported to Russia was diverted into U.S. markets, inflating supplies and depressing prices for all meats.

"This agreement comes at a critical time for the U.S. poultry industry and will allow trade flows to resume with much greater certainty," Agriculture Secretary Ann Veneman said in a statement.

Shares of Hormel Foods, the maker of Spam luncheon meat and Dinty Moore stew, were up 83 cents or 4 percent at $22.38. Smithfield Foods, the nation's largest pork producer, was up 83 cents or 5 percent at $18.35.

"American chicken companies will move immediately to implement the agreement and rebuild the trade, which has been subject to cutoff and regulatory uncertainty for the past six months," George Watts, president of the National Chicken Council, said in a statement. REUTERS