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China's Bird Flu Sinks Food, Sparks Biotech

Stocks in this article: YUM TSN PPC SFD FBT

NEW YORK ( TheStreet) -- The bird flu scare in China was driving food and food processing stocks lower Monday afternoon as the death toll from the sudden outbreak rose.

"Food producers will not be helped by the destruction of animal stocks and the increased regulations and precautions regarding containment of this disease," said Michael Pento, president of Pento Portfolio Strategies based in Plymouth, Mass. "I'm avoiding food producers here like Tyson and suggest buying biotechnology through the ETF FBT."

Tyson Foods (TSN) was falling 2.24% to $23.49, Smithfield Foods (SFD) was shedding 3.04% to $25.44 and Pilgrim's Pride (PPC) was unchanged at $8.85.

Yum! Brands (YUM), whose KFC restaurant chain is heavily present in China, was down 0.14% to $66.85, as wholesale and retail poultry markets were shut down in Shanghai and Nanjing, animals were culled and chicken consumption looked to have declined due to fears of being infected.

The outbreak of a new strain of avian flu, H7N9, has already killed seven people in China and infected 24 people as of Monday evening, according to Chinese reports.

Chinese officials have started researching the development of vaccines for H7N9, but it could take up to six to eight months before a product can be brought to the market. "To satisfy demand" in the present situation, China's Food and Drug Administration on Friday said it expedited its approval of the BioCryst Pharmaceuticals' (BCRX) anti-influenza drug Peramivir. The stock was surging 13.54% to $1.93.

Pento said the avian bird flu outbreak compounds the pain food producers have been feeling due to rising commodity prices like gas and feed stocks.

Written by Andrea Tse in New York

>To contact the writer of this article, click here: Andrea Tse.

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