**Tyson Foods Plans to Rebuild US Cattle Herd by 2024**
Tyson Foods Inc. is set to initiate a significant effort to rebuild the U.S. cattle herd starting next year, although the meat producer does not anticipate seeing benefits from this initiative until 2028. CEO Donnie King highlighted that ranchers are beginning to retain heifers for breeding, which bodes well for Tyson’s struggling beef sector. However, it will take a few more years for this strategy to result in an increase in the supply of slaughter-weight cattle.
The rebuilding of the U.S. cattle herd is crucial for beef producers, as ranchers have been reducing herd sizes for years due to high interest rates, expensive feed, and ongoing drought conditions. This has led to the most severe cattle shortage in decades, driving prices to record highs and squeezing profit margins for processors who find it challenging to pass on increased costs to consumers. King expressed optimism during a conference call with analysts, stating, “We’re poised to capitalize on tremendous opportunity ahead of us. Cattle availability should improve in coming years.”
Tyson’s outlook aligns with that of its larger competitor, JBS NV, although recent data from the U.S. Department of Agriculture has yet to fully validate this optimistic perspective. Despite the tight cattle supply, Tyson has managed to mitigate some of the impact through increased demand for chicken. The company raised its full-year earnings forecast by $100 million, primarily due to a more favorable outlook for its poultry business, which has benefited from lower feed costs. King noted, “I don’t think we have peaked in chicken. We have capacity to add, to produce more value-added, branded products within our portfolio.”
Tyson, known for its Jimmy Dean sausages and Hillshire Farm hams, reported quarterly adjusted earnings per share that exceeded even the highest analyst estimates, with its chicken division achieving its best results since 2016. Following this announcement, shares rose by as much as 5.7% in New York, marking the largest intraday gain since November, although the stock remains down for the year.
The company reported a loss of $151 million in its beef segment for the three months ending in June, marking the seventh consecutive quarter of losses for this division, which is the largest in the company’s history, excluding a goodwill impairment charge of $343 million. To enhance efficiency, Tyson has been shifting more processing back to slaughter facilities and has reduced controllable costs by $100 million this year.
In conclusion, while Tyson Foods is preparing for a long-term recovery in the cattle market, the immediate future remains challenging for its beef operations. The company’s strategic focus on poultry and cost management may provide a buffer as it navigates these turbulent times in the beef industry.
**FAQ**
**Q: When does Tyson Foods expect to see benefits from rebuilding the cattle herd?**
A: Tyson Foods does not expect to see benefits from rebuilding the cattle herd until 2028, despite starting the initiative in earnest next year.
