Tyson Foods adjust profit forecast
The trade disputes initiated by the US administration with some of the country's major importers of agricultural goods, such as China and Mexico, is reducing the profits for the companies that are exposed in this markets.
One example came from Tyson Foods that already announced that profit this year will be less than it previously forecast due to trade wars escalation.
"The combination of changing global trade policies here and abroad, and the uncertainty of any resolution, have created a challenging market environment of increased volatility, lower prices and oversupply of protein," Chief Executive Officer Tom Hayes said in a statement.
Besides tariffs imposed by China and Mexico on American pork products, the domestic market seems to be "sluggish" when it comes to chicken, another sector where Tyson operates.
Tyson said its earnings in fiscal 2018 excluding one-time items will be about $5.70 to $6 a share, compared with a previous view of $6.55 to $6.70.
The shares slumped as much as 8.2%, the biggest intraday drop since November 2016. Rival poultry producers Pilgrim’s Pride Corp. and Sanderson Farms Inc., and Hormel Foods Corp., which processes pork, declined, reports Drovers magazine.
The American farm sector is one of the few areas of the economy that typically operates with a trade surplus, and agriculture groups have sounded off against the trade war’s potential toll on exports. Net farm income is poised to reach a 12-year low in 2018, and challenges for meat demand may offset some of the benefits of cheaper feed-grain prices. The Trump administration last week announced a plan to provide $12 billion in assistance to U.S. farmers.
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