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Tyson Foods Increases Forecast for Complete Year Profit

Tyson Foods Inc, the largest meat processor in the United States has increased its profit forecast for the full year thanks to a sharp decline in its livestock and feed costs sending its shares on Friday to a new record high.

Shares of Tyson, which also posted a quarterly profit with a better than expected increase, were up 12% in Friday a.m. trading to reach $58.14.

Costs of feed have dropped in the U.S. as a worldwide glut of soybeans as well as corn have kept the prices of grain depressed for three consecutive years.

However, revenue at Tyson was down by 15.4% to end the quarter at $9.15 billion as the higher availability of domestic cattle as well as hogs pushed down the average price of sales during the first quarter.

U.S. retail prices of beef dropped seven straight months until December as the healthy pastures, less expensive corn and record high prices of cattle one year ago encouraged ranchers to increase their herds.

Cattle herds have also recovered following drought that reduced their numbers, leading to a low of 63 years in head count in 2014.

Donnie Smith the CEO at Tyson said the worst has ended with regard to the country’s cattle supply.

Tyson’s beef business, which is the largest of the company by sales, posted an operating profit of over $71 million, in comparison to a $6 million loss for the same period one year ago.

The operating margin in Tyson’s chicken business was also higher for the quarter as it was helped by a drop of $60 million in costs of feed.

Rivals such a Pilgrims Pride and Sanderson Farms Inc are expected as well to benefit from the lower costs of feed. Shares of their stock were up near 3.5% on Friday.

Cost of goods sold at Tyson dropped by close to 20% to just over $7.94 billion during the quarter that ended on January 2.

Net income that was attributable to Tyson increased by 49% to end the quarter at $461 billion equal to $1.15 a share, which beat analysts’ estimates handily of 89 cents a share.

The company posted that is expects its adjusting earnings to be between $3.85 and $3.95 a share for its full year that ends in September.

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