Tyson Drops Earnings Guidance

Higher grain and lower prices squeeze profits.
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The chicken industry was again in turmoil Monday morning after

Tyson Foods

(TSN) - Get Report

said ineffective hedging against a rise in grain prices will leave earnings in the year ending Oct. 2 well below estimates.

Tyson expects to post adjusted earnings of $1.26 to $1.33 a share for the year, figures that exclude charges totaling about 18 cents a share. Analysts surveyed by Thomson First Call were forecasting earnings of $1.45 a share for the year.

"We presently expect our fourth quarter to be more difficult, primarily due to unfavorable results from grain hedging activity, combined with weaker-than-expected demand in our chicken and beef segments," the company said. "Additionally, raw material costs for our prepared foods products did not decline as we expected."

The warning is nearly identical to

the one issues last week by

Sanderson Farms

(SAFM) - Get Report

, another chicken husbandman.