Tyson Foods unveiled lower-than expected quarterly results, and cut its estimate for full-year sales, blaming a double whammy of higher grain costs and "softer-than-expected" demand for meat.

Shares in the US protein giant closed down 8% at a two-year low, wiping more than $400m off its stockmarket value.

The group lowered by $1bn to $33bn its forecast for sales for the year to the close of September, the end of its financial year, thanks to "weak domestic protein demand".

Analysts had pencilled in sales of $34.0bn.

The soft market, coupled with grain prices which "have been increasingly significantly and rapidly", swelled for fears for US production following Midwest drought, were "likely to pressure earnings" in the 2012-13 financial year, Donnie Smith, the Tyson chief executive, said.

Wall Street has been expecting earnings of $737.8m for 2012-13, up 5% from the $702m expected for the current financial year.

Sales for the next year were forecast rising to $35bn thanks to higher prices enabled by "expected decreases in domestic availability of protein", but a figure also a little below market forecast.

Profits fall

The forecasts represent the latest in a series of cautions over the impact of higher grain prices on the protein industry, fears which have fuelled demands for curbs on US ethanol product to free up corn for livestock producers.

They came as Tyson unveiled a 62% slide to $76m in earnings for the April-to-June quarter.

This equated to earnings of $0.50 per share, excluding a one-off charge, also below Wall Street expectations, of a $0.54-per-share result.

The group's operating profits in chicken soared five-fold to $153m, reflecting the impact of production cuts last year in restoring the industry's pricing power, a boost offset in part by a $25m increase in feed costs.

However, profits fell in pork, hurt by "reduced domestic pork demand" evident in a 4.5% drop in sales, and in particular in beef.

"Operating income decreased… as the result of higher fed cattle costs and reduced demand for beef products."

'Can't make it rain'

Mr Smith said that the group was seeking sanctuary from the poor conditions in foreign and higher-value meat markets, including international and value-added poultry.

Pork exports "should remain strong in fiscal 2013", Tyson said, forecasting divisional operating margins "at or above" typical levels.

"We can't make it rain, but we can execute against our strategy by producing high quality foods using innovative and cost effective processes," Mr Smith said.

A recovery in Tyson shares from a late-July nadir, when they hit a 21-month low, stalled in New York, where the stock closed at $14.17, the lowest since February 2010.