CHICAGO (Reuters) –

Top U.S. meat producer Tyson Foods Inc

(TSN.N) reported lower-than-expected quarterly profit on Monday

as higher feed prices produced a loss in its chicken unit,

while $75 million in hedging and forward pricing losses pared

profits in its beef business.

The company, whose shares fell 10.7 percent before the

bell, said it paid $140 million more for grain during the

quarter to feed its chickens than a year ago and it expects

grain costs to be up $550 million this fiscal year.

Tyson raises the chickens its processes into meat, but buys

the cattle and hogs for its beef and pork operations.

Tyson has been raising meat prices, but those increases

have not completely offset the higher cost of grain.

Corn soared past $7 a bushel this year amid strong demand

from livestock producers, exporters, and makers of the biofuel

ethanol. In addition, widespread rain and flooding this spring

in key growing areas pushed corn prices higher.

Springdale, Arkansas-based Tyson reported a third-quarter

profit of $9 million, or 3 cents per share, compared with $111

million, or 31 cents, a year earlier.

The results included $13 million in charges, or 2 cents per

share, for flood damage at a Wisconsin prepared foods plant and

impairment of unimproved property in Tennessee.

Analysts on average expected net earnings of 12 cents per

share, according to Reuters Estimates.

Tyson shares fell to $14.50 in premarket trading.

Revenue for the fiscal quarter ended June 28, was $6.85

billion, compared with $6.62 billion a year earlier.

“The chicken segment remains under pressure from higher

input costs, although we have been able to offset some losses

through pricing and risk management activities,” Tyson Chief

Executive Richard Bond said in a statement.

Tyson’s beef unit, its largest, earned $3 million versus

$36 million a year ago. The decline was largely due to $75

million in losses on cattle hedging activity and forward beef

sales.

“Although we will profit from this risk management activity

over the coming months, it disguises an otherwise solid

performance in our beef operations this quarter,” Bond said.

The pork unit earned $54 million on an operating basis, up

from $37 million a year earlier, due to lower hog prices and

higher pork sale prices.

Its prepared foods unit earned $6 million, down from $26

million a year ago, due in part to higher costs for such inputs

as wheat, dairy products and cooking ingredients. Costs related

to flood damage at a Wisconsin plant also impacted earnings.

(Reporting by Bob Burgdorfer, editing by Dave Zimmerman)