April 21, 2015 / 11:46 PM / 3 years ago

UPDATE 2-Hormel Foods, other meat company shares fall as bird flu concerns mount

(Adds Mexico bans poultry, egg imports from Iowa)

By P.J. Huffstutter

CHICAGO, April 21 (Reuters) - The spread of a deadly strain of bird flu into an Iowa egg farm accelerated market concerns over how big a bite the current outbreak could take from the United States’ egg and poultry businesses, sending shares of several leading meat companies’ down on Tuesday.

Hormel Foods Corp shares closed down 2.3 percent after the Minnesota-based company said the impact of the virulent strain of avian influenza may drag its fiscal 2015 earnings toward the lower end of forecasts.

The virus has been identified at a facility west of Minneapolis that is owned by a subsidiary of Hormel. Minnesota, the largest turkey-producing state in the country, has been the hardest hit so far, followed by farms in Arkansas, Missouri, the Dakotas, Wisconsin and Iowa.

On Tuesday, Mexico, the biggest buyer of U.S. chicken, halted imports of live birds and eggs from Iowa.

Bird flu was found in millions of hens at an egg-laying facility in Iowa on Monday, the worst case so far in the United States.

Mexico’s agriculture ministry said it and the country’s animal health body, SENASICA, had tightened controls and the monitoring of migratory wild birds. It said they were in contact with bird farms in Mexico to detect any domestic cases.

Migratory ducks are believed to be spreading the virus, veterinarians have said.


Wisconsin declared a state of emergency on Monday over the bird flu outbreak, and Governor Scott Walker authorized the state’s National Guard to help contain the disease.

Walker declared the emergency because three flocks have become infected in the past week, his office said. Guardsmen will help clean infected sites.

Wisconsin is among 12 states where the H5N2 flu has been found in poultry since the beginning of the year. The other states are Arkansas, Idaho, Iowa, Kansas, Minnesota, Missouri, Montana, North Dakota, Oregon, South Dakota and Washington. Another strain, H5N8, has been found in California.

On Saturday, the Canadian Food Inspection Agency said preliminary testing had confirmed H5 avian influenza on a second Ontario farm.

Earlier this month, Canada confirmed H5 avian influenza on a turkey farm near Woodstock, Ontario.

Hormel’s chief executive officer, Jeffrey M. Ettinger, said in a statement on Monday that the company was seeing “significant challenges” to its turkey supply chain because of the highly pathogenic avian influenza outbreaks in Wisconsin and Minnesota, where its Hormel and Jennie-O Turkey Store units are based.

The company said that while it expected the outbreak to potentially ease as the weather turned warmer, tight meat supplies and operational challenges in its turkey business as a result of the bird flu outbreak would put pressure its earnings.

The company said it now expected its fiscal 2015 non-GAAP adjusted earnings to be toward the lower end of its $2.50 to $2.60 per share outlook.

Shares of Pilgrim’s Pride, Tyson Foods Inc and Sanderson Farms closed down less than 1 percent on Tuesday.

Reporting by P.J. Huffstutter; Writing by Toni Reinhold; Editing by Chizu Nomiyama and Leslie Adler

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