Tyson Pauses Production at Two IBP Plants

Production was suspended on Dec. 3 at two IBP Inc. beef plants and was reduced at two other company beef plants because of market conditions, a press release from the unit of Tyson Foods Inc. said.

The news came the same day that securities giant Credit Suisse First Boston downgraded its investment rating on the poultry and beef leader from “buy” to “hold.” The decision, a CSFB release said, was based on lower chicken demand and other commodity uncertainty including a third case of mad cow disease recently discovered in Japan.

All four plants were expected to resume normal operations later in the week.

Beef plants at Emporia, Kansas, and Lexington, Nebraska, were closed that day and the plants at Amarillo, Texas, and Finney County, Kansas, operated at reduced hours, the company said.

The drop in production became evident on the afternoon of Dec. 3 when USDA estimated that day’s cattle slaughter at 109,000 head. That was down from 120,000 head the previous week. Analysts had expected the Dec. 3 slaughter to be 120,000 to 126,000 head.

Profit margins at beef plants narrowed late last week in reaction to lower cash beef prices. Late on Nov. 30, HedgersEdge.com LLC estimated average beef plant margins at $1.90 per head of cattle, which was down dramatically from $25.10 on Nov. 28.