Sunday, March 15, 2015

Avian (bird) flu stocks

Poultry producers:
  • Tyson Foods Inc. (TSN): the largest chicken producer in the U.S and the supplier for many restaurants like Yum! Brands, Inc’s (YUM)  KFC division and McDonald's Corp. (MCD
  • Pilgrim's Pride Corp. (PPC): the second largest producer in the country.
  • Sanderson Farms, Inc. (SAFM), 
  • Hormel Foods Corp. (HRL)


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Restaurant companies that source chicken from these poultry suppliers:
  • Buffalo Wild Wings Inc. (BWLD), 
  • Domino's Pizza, Inc. (DPZ), 
  • McDonald's (MCD)
  • Wendy's (WEN) 
  • 11 March 2015: The USDA confirmed that highly pathogenic avian influenza H5N2 was found in a commercial turkey flock in Arkansas. Arkansas is the third-largest turkey producer in the well as the headquarters for Tyson Foods. These companies are concerned that the discovery would further limit U.S. exports to Asia and Latin America.
  • 3/15:  Over the last two months, there have been several confirmed cases of bird flu in poultries in Minnesota, Oregon, Washington, Idaho and even California. This prompted countries like Japan Philippines, Taiwan, Singapore and Nicaragua to restrict the import of U.S. poultry. Nevertheless, the USDA stated that no human infections have been identified so far.

Will the Outbreak Further Increase Food Costs?

Food costs began rising dramatically in 2014, thus creating margin pressure across the restaurant industry at large. Chicken prices increased due to widespread drought conditions and supply shortage and are expected to increase further in 2015. The recent avian influenza outbreak in Dec 2014 and some other macroeconomic factors would result in shortage of chicken. The situation is therefore not expected to improve in the near term.

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