"While the beef cuts are positive, the chicken cuts are truly significant," Aslam wrote in a note to investors. "This is the first time in the 12-month industry downturn that there is any indication that Tyson is willing to rationalize production."

Aslam notes Tyson has a 20-25 percent market share, meaning its cuts could have a significant impact on the overall poultry industry's supply and pricing. She estimates Tyson is cutting chicken production by 5 percent, as industry estimates indicate demand is down 4 percent to 6 percent.

"While we would rather not share details of our current poultry production levels, we can tell you we continue to closely evaluate market conditions in an effort to match customer demand with our supply," Tyson spokesman Gary Mickelson told Meatingplace.com, noting Tyson has made reductions in recent years through the closing or sale of poultry plants and by running the company's remaining operations at reduced capacity utilization.

A 5 percent production cut by Tyson would amount to 1 percent to 2 percent fewer poultry pounds produced for the industry, augmenting industry production cuts that range from 6 percent to 8 percent, based on egg sets. "The industry has never cut production to this degree before, but demand for chicken has never contracted to this degree either," Aslam notes.

The net effect, Aslam contends, is that shares of Tyson and Sanderson Farms will rise. Better discipline in the poultry market also is favorable for the profitability of the beef and pork markets, she said, boding well for companies such as Smithfield Foods and Hormel Foods.

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