Core Summary

  • Tyson Foods lowered its full-year profit forecast, acknowledging that high beef prices are unlikely to fall in the short term.
  • The Arkansas-based company's beef division reported in its third-quarter earningsan operating loss of $138 million, with sales volume down 15.9% year-over-year while prices rose 12.1%.
  • Chief Financial Officer Curt Calaway said during theearnings callthat the "industry environment is challenging." Tyson's efforts to close beef plants and optimize its network have not been enough to offset profit pressure.

In-Depth Analysis

Beef supply remains tight, with ranchers facing historic livestock shortages that have pushed beef prices to record highs.

To increase supply, the Trump administration announced last week that it wouldlift the import ban on live cattle from Mexico. Tyson CEO Donnie King said Monday that the move only offers "the possibility of some improvement in 2027 and beyond."

"To be clear, reopening the Mexican border does not fully solve the beef business loss gap we currently face," King said. "We are not passively waiting for the cattle cycle to turn; instead, we continue to focus on improving the variables within our control."

As beef prices continue to surge, consumers have begun shifting to other meats. In April, the average retail price of beef in the U.S. reacheda record high of $9.64 per pound. According toCircana data, total meat department sales fell 2.3% in June, as high prices pressured consumers already sensitive to grocery inflation.

This dynamic is creating a significant profit drag for meat companies like Tyson. Despite strong performance in other categories such as chicken and pork, Tyson's overall sales remained roughly flat. The company narrowed its full-year sales growth forecast to 2.5% to 3.5% year-over-year and expects its beef division to post an operating loss of up to $650 million for the full year.

Tyson executives also noted that the recovery of cattle supply is slower than the recovery following the 2014 low. Most live cattle imported from Mexico are feeder cattle, meaning it will take at least six months before they enter the food supply chain.

The cattle shortage has prompted several meat processors to close plants or cut production to save costs and improve efficiency. In June, the world's largest meat companyJBS closed two beef plantsin response to declining profits.

Tyson closed one of itslargest beef processing plantsin Nebraska last fall and reduced shifts at another plant in Texas.

"The beef business has not performed as expected, and we do not deny that," King said. "But we are controlling what we can control and will not passively wait for the cycle to turn."