US reduces beef exports as cattle herd shrinks, squeezing Tyson Foods

US reduces beef exports as cattle herd shrinks, squeezing Tyson Foods

Record amounts of beef are being imported by the United States this year, while exports have decreased. This is due to a decrease in the nation’s cattle herd, which is at its lowest level in decades. As a result, meat companies like Tyson Foods are facing tighter margins. The decline in cattle numbers is a result of years of drought, which has affected pasture lands used for grazing. The scarcity of cattle has led to soaring beef prices in the U.S., incentivizing companies to import cheaper beef and discouraging purchases of U.S. beef by countries like China, Japan, and Egypt.

Analysts predict that the lower demand for U.S. beef and higher costs for cattle will result in negative quarterly margins for Tyson’s beef business, its largest unit, for the first time this year. The U.S. Department of Agriculture (USDA) expects the U.S. to drop to the fourth-largest beef and veal exporter in the world this year, down from second place in 2022.

Government data shows that U.S. beef exports are projected to decrease by 14% this year compared to 2022, reaching the lowest level since the disruptions caused by COVID-19 in 2020. The decline is expected to continue in 2024, with exports forecasted to reach an eight-year low of 2.8 billion pounds. U.S. beef exporters, including Tyson, Cargill, and JBS, are facing challenges from higher prices and the strength of the U.S. dollar, which makes American products less attractive to other countries.

According to Texas-based cattle producer Pete Bonds, the future of the beef industry is not in the United States but offshore. Tyson is experiencing margin pressure from higher cattle prices and the loss of U.S. export business, as U.S. beef exports typically command higher margins than domestic shipments.

Goldman Sachs analysts predict that Tyson’s beef business margins will swing from positive 8% a year ago to negative 1.1%. The company has been reducing staff as its beef, chicken, and pork units struggle due to high prices, leading some Americans to eat less beef. Tyson recently announced the closure of two plants in Florida and South Carolina.

Meatpackers are using imports to manage through low margins and high-priced U.S. cattle. They import lean beef from countries like Australia and New Zealand to blend with fattier U.S. supplies for hamburger production. The USDA has raised its forecasts for beef imports in 2023 and 2024, and the United States will reopen its doors to Paraguayan beef after a 25-year hiatus.

From January to September, total U.S. imports have increased by about 6% compared to the previous year, with Australian shipments climbing by 49%. The Livestock Marketing Information Center projects that U.S. beef imports will reach a record 3.7 billion pounds in 2023 and rise to 4.2 billion pounds in 2024.

The increase in imports is helping alleviate potential price increases, as domestic supplies of beef are facing significant declines this year. Imports of live cattle from Mexico have also rebounded. However, U.S. ranchers have not started rebuilding the domestic herd, as more than half of the nation’s cattle are in abnormally dry areas. The slow rebuilding process will likely keep a lid on exports.

In conclusion, the United States is importing record amounts of beef this year due to a decrease in the nation’s cattle herd. This has led to higher beef prices domestically and a decrease in U.S. beef exports. Meat companies like Tyson Foods are facing tighter margins as a result. The future of the beef industry may lie offshore, and the rebuilding of the domestic herd is expected to be slow.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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