Tyson to Close or Sell Three Beef Facilities Amid Cattle Shortage

Meatingplace’s Chris Moore reported that “Tyson Foods will close two beef-related facilities and seek a buyer for a third as the company restructures its beef operations in response to historically tight U.S. cattle supplies.”

“The company said it will end operations at its Joslin, Ill., beef plant and Eagle Mountain, Utah, case-ready facility. Tyson also is pursuing the sale of its Pasco, Wash., beef facility,” Moore reported. “Tyson will consolidate its beef business around three centrally located slaughter facilities in Dakota City, Neb., Holcomb, Kan., and Amarillo, Texas. Capacity from the closing facilities will be shifted to other Tyson locations with room for additional production.”

“The company plans to ramp up a second shift at its Amarillo facility as cattle supplies become available. Tyson said the restructuring will allow it to maintain a similar level of cattle harvesting across a smaller, more efficient network,” Moore reported. “Tyson attributed the changes to the prolonged contraction in the U.S. cattle herd. Recent USDA inventory data continued to show limited heifer retention, indicating that cattle supplies are likely to remain constrained and that a significant expansion of the herd has yet to take hold.”

Agri-Pulse’s Noah Wicks reported that “in a statement, National Cattlemen’s Beef Association CEO Colin Woodall said his organization is ‘troubled’ by the Joslin closure, noting that ‘for many years, the plant has played a vital role in the Midwest beef supply chain.’ He also called the Pasco, Wash., facility ‘critical for cattle producers in the Northwest.'”

“‘These decisions underscore the significant challenges that historically-low cattle inventories continue to create across the beef cattle industry,’ Woodall said,” according to Wicks’ reporting. “‘While we are disappointed by these developments, they also reinforce the importance of rebuilding the nation’s cow herd and maintaining adequate processing capacity to support cattle producers, strengthen market opportunities, and ensure a resilient beef supply chain for the future.'”

Reuters’ P.J. Huffstutter reported that “the plant closures could affect cattle prices regionally, because there will be fewer people bidding for animals, said independent livestock trader Dan Norcini. ‘But on a national level, I don’t think it’ll make much of a difference on livestock prices, in part because the locations that are being closed are not where there’s ​a ton of concentration of cattle,’ he ​said.”

Retail Beef Prices Continue to Climb

RFD-TV’s Tony St. James reported that “retail beef prices climbed sharply in July even as wholesale Choice beef values fell below year-ago levels, widening the downstream spread consumers are paying. USDA Economic Research Service data show Choice beef averaged $10.49 per pound at retail, up from $9.69 last July.”

“Wholesale Choice beef averaged about $5.58 per pound, down from $5.72 a year earlier,” St. James reported. “That pushed the wholesale-to-retail spread to roughly $4.91 per pound from $3.97, an increase of about 24%.”

“Cattle producers are still receiving stronger prices. Five-market steer prices averaged about $240.80 per hundredweight, up roughly 5% from last year, while the farm-to-wholesale spread narrowed to about 21 cents from 56 cents,” St. James reported. “The retail spread is not the same as retailer profit. It also includes labor, transportation, refrigeration, packaging, shrink, merchandising, and other downstream costs.”

“Still, July’s divergence is notable: cattle prices were higher, wholesale beef was lower, and retail beef was substantially higher,” St. James reported. “The farmer’s share of the Choice retail dollar slipped to 51.1% from 53.3% a year ago.”

Reuters’ Huffstutter reported that “facing pressure to lower consumer costs, the Trump administration said it plans to start lifting the (Mexican cattle) import ban this month. The average retail price of one pound of lean and extra lean ground beef hit a record $8.65 in June, according to federal data.”