Mexico’s move to start allowing some imports of American chicken and turkey from states with commercial bird- flu cases signals that the disease’s threat to U.S. poultry exports is starting to subside.
Mexico will accept shipments of some poultry from the states if the products are destined for further domestic processing, according to an update Tuesday on the website for the U.S. Department of Agriculture’s Food Safety and Inspection Service. Other nations may follow suit, according to Farha Aslam, a New York-based analyst for Stephens Inc.
“Over time, China and South Korea will likely lift their trade restrictions, but no actions are expected in the near term,” Aslam said in an e-mail Tuesday. “The increased access to Mexico is a positive for U.S. poultry companies.”
Shares of Tyson Foods Inc., the biggest U.S. chicken processor, and Sanderson Farms Inc. have recouped most of their losses over the past two weeks after plunging on March 11 on signs that the disease was spreading toward the nation’s southeast region, the heart of the domestic poultry industry. Both companies have said they were reinforcing precautions for their flocks. Mexico’s decision comes as there are still restrictions in place for shipments to China, the European Union and more than a dozen other countries.
California, Missouri, Arkansas and Minnesota this year reported detections of the highly contagious variety of avian influenza in commercial flocks. To fight the spread of the disease, state officials have been testing backyard poultry flocks and quarantining areas. Mexico is the top buyer of U.S. turkey and chicken.
“We’re seeing countries as important as Mexico as being willing to be a little more nimble with their policies,” Will Sawyer, an Atlanta-based vice president of U.S. animal-protein research for Rabobank International, said in a telephone interview. “The industry is feeling a lot better about the whole situation.”
This is the biggest U.S. bird flu outbreak since records begin in 1997, according to the Centers for Disease Control and Prevention. Avian-influenza cases started being reported in December, with the disease at the time limited to wild birds and backyard flocks in western states. The disease then spread into commercial poultry and other migratory routes including flyways along the Mississippi River and over the Great Plains.
The products now allowed for shipment to Mexico from the four states with commercial cases are raw chicken and turkey meat, whole turkeys, and chicken and turkey cuts, the USDA said. The eased restrictions don’t apply to whole chickens, the agency said. The shipments are eligible only if they are destined for more processing in Mexico.
“We are pleased we can continue to ship product to this important customer and market for our product,” Mike Cockrell, the chief financial officer of Laurel, Mississippi-based Sanderson, said in an e-mail Tuesday.
Shares of Tyson on March 11 fell the most in nine months after a report of bird flu in its home state of Arkansas. Shares of JBS SA unit Pilgrim’s Pride Corp. and Sanderson Farms also declined.
“We won’t speculate on the impact any single country’s decision may have on our company,” Worth Sparkman, a spokesman for Tyson, said in an e-mail. “Domestic and international demand for poultry continues to be strong and Tyson Foods has the ability to ship products from multiple states. So, we believe we can meet demand for both domestic and global markets.”
Minnesota and Arkansas were the two largest turkey producers last year, based on the number of young birds slaughtered, USDA data show. Arkansas was the third-biggest chicken producer.
“Our sense is that the market anticipated much greater downside earnings risk when the bird flu announcement initially hit the tape,” Tim Tiberio, a New York-based analyst for Miller Tabak Co., said in a report on March 17.