(Reuters) - Tyson Foods Inc (>> Tyson Foods, Inc.), the biggest U.S. meat processor, raised its full-year profit forecast, helped by a sharp drop in feed and livestock costs, sending its shares to a record high on Friday.

Shares of the company, which also reported a better-than-expected rise in quarterly profit, were up 12 percent at $58.15 in morning trading.

Feed costs have fallen in the United States as a global glut of corn and soybeans has kept grain prices depressed for three straight years.

However, Tyson's revenue fell 15.4 percent to $9.15 billion as higher domestic availability of cattle and hogs drove down average sales prices in the first quarter.

Retail U.S. beef prices declined seven months in a row till December as healthy pastures, cheaper corn and record high cattle prices a year ago encouraged ranchers to bolster their herds.

Cattle herds are also recovering after years of drought reduced supplies, which had fallen to a 63-year low in 2014.

"The worst is over in terms of the cattle supply," Tyson's Chief Executive Donnie Smith said on a conference call.

Tyson's beef business, its largest by sales, reported an operating profit of $71 million, compared with a loss of $6 million in the year-earlier period, due to lower livestock costs.

Operating margin in its chicken business also rose, helped by a $60 million drop in feed costs.

"We were particularly impressed by the 13.6 percent EBIT margins in the Chicken segment given the margin compression the chicken industry has experienced recently," Jefferies & Co analyst Akshay Jagdale wrote in a note.

Tyson's rivals Sanderson Farms Inc (>> Sanderson Farms, Inc.) and Pilgrims Pride Corp (>> Pilgrim's Pride Corporation) are also expected to benefit from lower feed costs. Their shares were up as much as 3.5 percent on Friday.

Tyson's cost of goods sold fell nearly 20 percent to $7.95 billion in the first quarter ended Jan. 2.

Net income attributable to Tyson rose 49 percent to $461 million, or $1.15 per share, handily beating analysts estimates of 89 cents per share, according to Thomson Reuters I/B/E/S.

The company said it expected adjusted earnings of $3.85- $3.95 per share for the year ending September, up from its previous forecast of $3.50-$3.65.

However, Tyson, which will also hold its annual shareholder meeting on Friday, cut its full-year sales forecast to about $37 billion from about $41 billion.

(Reporting by Sruthi Ramakrishnan in Bengaluru, Editing by Anil D'Silva)

By Sruthi Ramakrishnan