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U. S. meat shares drop amid talk of slowing exports

Shares of leading U. S. meat companies fell sharply Oct. 28 amid increasing talk that the global credit crisis is slowing exports of beef, pork and chicken, analysts said.

“That news might be starting to trickle through to the people,” Paul Aho, economist for Poultry Perspective, said of slowing meat exports.

Exports of beef, pork, and chicken have been strong this year, but recent turmoil in the global financial and credit markets has slowed that business, analysts said.

The price of corn, an important feed, was higher Oct. 28 after the U. S. Department of Agriculture reduced its estimate for this year’s crop, but analysts doubted that was the primary reason investors were aggressively selling meat company shares.

Stephens Inc. analyst Farha Aslam, in an Oct. 27 research note, lowered her fiscal-year earnings estimate for meat giant Tyson Foods, “largely reflecting weakness in protein prices due to weakness in exports as the credit crunch limits the amount of U. S. protein products that can be shipped overseas.”

Tyson is the largest U. S. meat company, producing beef, pork and chicken.

Aslam also reduced her fiscal-year 2009 earnings estimate for No. 4 chicken producer Sanderson Farms and expects a first-quarter loss for that company due to a slowdown in meat exports.

“The global financial crisis that has dragged down stock markets is causing a flight to quality, which is strengthening the dollar. The rise of the U. S. dollar will likely pressure U. S. leg quarter exports,” she said. Leg quarters are the main export i tems of the U. S. chicken industry.

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