CASH live cattle prices and boxed beef cutout advance due to tight supplies of market-ready cattle and reduced slaughter/beef production levels. Little cattle trade had occurred though Thursday last week but cattle prices looked set to being close the new records of the prior week. The 5-area steer prices for the week ended August 3 averaged $243.17 per cwt live and $383.68 per cwt dressed. These were up $3.79 per cwt and $4.18 per cwt dressed, respectively, from the prior week. Packers again reduced their steer and heifer slaughter in response to deeply negative operation margins. But the reduced slaughter had no impact on live cattle prices as cattle feeders are selling only the cattle they need to.
Cattle feeders continue to have a firm grip on their offerings and have thus far won every standoff with packers in doing so, says Andrew Gottschalk, HedgersEdge.com. So prices are likely to remain at record high levels for some time. The cash live cattle trade was typically slow to develop last week. The reported volume through Wednesday was only 969 head while the volume by early Thursday afternoon was 393 head. These cattle sold up north at $245 per cwt live.
Supply Side Remains Positive Into Future
The supply side of the price equation for fed cattle remains positive for the foreseeable future, reflecting prior levels of reduced placements, says Gottschalk. January-June placements declined by 383,000 head versus the 2024 levels. Marketings have also been reduced, encouraged by the economics of adding additional pounds. As previously noted, it is cheaper to add additional pounds to existing inventory rather than replacing them, given the high purchase prices and higher projected break-evens. Demand will continue to be challenged going forward, although some recovery for Labor Day purchasing is expected. Near term, the 6-10 day temperature outlook would favor lighter food consumption. Also near-term, reduced weekly harvest levels are likely to continue. These lower levels will be necessary to advance beef cutout values, he says.
Carcass weights in the latest reported week ended July 26 all remained well above year ago levels but steer wight increased sharply from the prior week. Steer weights averaged 941 lbs, up 6 lbs on the week before and up 20 lbs from the same week last year. Heifer weights averaged 851 lbs, down 1 lb from the week before but up 16 lbs from last year. Overall weights averaged 865 lbs, up 1 lb from the week and up 19 lbs from last year. Also of note is that cattle continue to grade a high percentage of Prime and Choice after setting a new record high of 85.35% the week ended May 10. Their combined percentage in the latest reported week ended July 26 was 84.32%. In contrast, cattle are grading below 13% Select.
The national boxed beef comprehensive cutout (cuts, grinds and trim) the week before last averaged $363.69 per cwt, down $5.51 per cwt from the prior week. The Choice cutout averaged $366.49 per cwt, while the Select cutout averaged $345.37. Formula-priced sales accounted for 55.9% of the total volume of 6529 loads. Spot market sales accounted for 27.9%, forward sales accounted for 16.3% and export sales accounted for 11.7%. Boosted by reduced slaughter levels, the Choice cutout the first four days of last week increased by $15.74 per cwt to $378.94 per cwt and the Select cutout increased by $13.25 per cwt to $353.75 per cwt. The four-day volume however was light at 267 loads of cuts. Cutout values are expected to continue to strengthen as buying for the September 1 Labor Day holiday picks up, although the holiday is mostly a hamburger/hot dog day.
TYSON CHICKEN SOARS BUT BEEF CRASHES
IT was a picture of stark contrasts for Tyson Foods’ chicken and beef results in Tyson’s fiscal third quarter ended June 28. Its chicken operating income soared to $367M from $244M a year earlier. In contrast, beef reported a $494M operating loss, a record for any quarter, which even exceeded the $244M loss Tyson Beef suffered in all of fiscal 2006. The huge quarterly loss went against a loss of $69M a year earlier. Beef’s loss for nine months was $816M versus a $310M loss in 2024. It now anticipates an adjusted operating loss in the Beef segment for 2025 to be between $375 to $475M. The quarterly loss came despite sales increasing to $5.603 billion from $5.241 billion a year earlier. Volume was down 3.1% but the average sale price was up 10.0% Tyson’s cattle costs rose by $560M in the quarter versus a year ago.
With cattle availability at record lows, Tyson continues to experience industry market headwinds, president and CEO Donnie King told analysts. but even in this difficult environment, Tyson is improving its fundamentals with increased prioritization on efficiencies, reducing costs and bringing innovative new products to market. While the cattle supply is tighter than a year ago, consumer demand is resilient, and Tyson is controlling what it can across the supply chain to meet the needs of customers. Tyson is also seeing benefits from the network optimization efforts that shifted further processing volumes back into its harvest facilities. At the same time, Tyson is enhancing its value-added mix with the help of new data and analytics capabilities that support smarter, faster decision making. These steps are helping fortify the foundation for a more resilient and agile beef business today and over the long term, he said.
The US cattle herd is showing signs of improvement, said King. Tyson believes heifer retention has likely now begun and cattle availability should improve in coming years. The fact that beef cow slaughter was down by 16% in the period from January to June serves as an early indicator that heifer retention is beginning. Beyond that, Tyson thinks herd rebuilding will begin in earnest in 2026. He anticipates the herd rebuilding will be going on for the next couple of years, estimating it will likely be 2028 when the benefit of holding back heifers for breeding purposes is fully realized. In the meantime, Brady Stewart, group president of Prepared Foods, Beef and Pork and chief supply chain officer, said Tyson Beef has reduced some of its line speeds to allow it to capitalize on the highest possible yield performance in its plants and it likes that strategy moving forward. It will continue to add value to its products and go to market where it sees consumers going in the future, which is convenience and protein, said Stewart.
Tyson Is Back In The Chicken Business
As noted above, chicken income soared in the quarter. This and a big profit increase in its Prepared Foods segment meant Tyson reported stronger than expected earnings for the quarter. Net income for the quarter ended June 28 was $61M or $0.17 per share attributable to Tyson. This contrasted with 2024’s third quarter income of $191M. Sales for the quarter rose to $13.884 billion from $13.353 billion the year before. Tyson now projected that 2025 sales will be up 2-3%. In a previous outlook, revenues were expected to be flat to up 1% for 2025. In its Chicken segment, Tyson raised its adjusted operating income guidance to between $1.3 and $1.4 billion, based on its growth of 33% at the midpoint of the year. King said there is plenty to be optimistic about today and looking forward to in the segment. “Let’s just say it this way: We are back in the chicken business and executing at a very high level,” he said.
Sales, adjusted operating income and adjusted earnings per share all grew year-over-year in the quarter, marking Tyson’s fifth consecutive quarter of year-over-year growth across each of these key metrics, King told analysts. This was no accident. Tyson is driving efficiencies across all businesses by delivering growth with world-class service and value for its customers and with innovation for consumers. Adjusted operating income for the entire company was $505M for the third quarter, up 3% compared to $491M during the same period the year before. In the Chicken segment, quarterly sales ticked up 1.1% to $4.220 billion from $4.076 billion the year before. Continued profit growth in the segment is the result of what King said are incremental efficiencies that have been unlocked across the company’s processing plants as part of a multi-year, operational focus. Chicken continued to be the biggest bright spot in Tyson’s portfolio, providing significant growth that helped offset some of the challenges facing the other segments, said King. With grain costs remaining flat compared to last year, value-added product category volume grew at more than 3.5 times the rate of the segment’s total volume, fueling what was the third consecutive quarter of year-over-year growth, he said.
Prepared Foods’ Sales Move Higher
Tyson’s Prepared Foods segment saw its third quarter sales reach $2.515 billion from $2.43 billion the year before. Segment operating income also increased to $302M compared with $203M the year before. Prepared Foods delivered a strong third quarter with adjusted operating income up more than 21% and margins expanding by 150 basis points, said King This reflected continued progress on Tyson’s multi-year plan to enhance profitability in the business. Importantly, the segment returned to top line growth in the quarter, successfully navigating higher raw material costs and improved product mix within and across channels, he said.
Prepared Foods’ adjusted operating income in 2025 is expected to be between $925M and $1 billion, as the company’s multi-year improvement plan execution is offsetting significantly higher raw material costs in the segment. King estimated that during the quarter there were approximately $60M in unplanned raw material cost increases. Despite the headwinds, King and his team said they anticipate 2025 will be the segment’s best year ever.
Pork Moves Into Black
Tyson’s Pork segment reported an operating income of $36M, compared to a $62M loss during the same period in 2024, on sales of $1.506 billion during the quarter, up from $1.462 billion the year before. Volume was up 1.5% and the average sales price was down 1.6%. Officials said the segment delivered its strongest third quarter for adjusted operating income in four years, the result of purposeful actions to improve its operations. Tyson increased its capacity utilization by optimizing its network and enhancing its value-added mix, said King. It has improved labor and asset efficiency through operational excellence, it has built a fundamentally better pork business and this quarter’s results reflect that progress, he said.
Tyson’s International segment reported sales of $557M million for the third quarter, down from $582M from the previous year. Operating income was $49M in the third quarter compared to $25M. Adjusted operating income for 2025 is expected to be approximately $125M, fueled by effectively managing costs, lower conversion costs and maximizing efficiencies, said Tyson. The company also estimated capital expenditures to be at or below $1 billion for fiscal 2025, which includes investments in facilities, equipment and maintenance expenses.
SHAREHOLDERS APPROVE BRAZIL MERGER
SHAREHOLDERS of two major Brazilian corporations, Marfrig and BRF, approve on Tuesday the proposed merger between the two global food processors, the firms said in a joint securities filing last Tuesday. The approval placed the deal one step closer to completion, although it still lacks necessary regulatory approvals. The firms had announced in May a plan for Marfrig, already the holder of a controlling stake in BRF, to purchase the remaining shares of BRF in a share-swap deal, forming a global food company called MBRF. However the merger still has to face some significant hurdles, such as the Administrative Council for Economic Defense, CADE, which is the competition regulator and market dominance in Brazil. Marfrig already controlled some 60% of BRF assets, and with the new merger expects to reach an annual production capacity of 8M metric tons, including beef, pork and poultry. MBRF will then have operations in 117 countries and a work force of some 130,000, with annual sales of approximately $28 billion.
Meanwhile, Cargill continues to advance its growth strategy in the Brazilian market. It announces its binding offer to acquire 100% of the operations of Mig-Plus, a family-owned company specializing in animal nutrition solutions for multiple species, primarily swine and ruminants, with a product portfolio that includes premixes, feed concentrates and complete feeds. The agreement between the parties has been formalized, and the completion of the transaction is subject to regulatory approval CADE, as well as the fulfillment of customary closing conditions.
EXPORTS FALL TO FIVE-YEAR LOW
U.S. beef exports in June dropped to their lowest June volume in five years, according to data released by the US Department of Agriculture and compiled by the US Meat Export Federation (USMEF). However, U.S. pork exports saw a rebound, finishing the first half of 2025 on a high note. June pork exports totaled 239,304 metric tons (mt), up 7% from last year, while value increased 3.5% to $682.6m. Supporting pork’s comeback was the second highest value on record for shipments to Mexico at nearly $250m, says USMEF. Pork exports to Mexico, Central America and Colombia continue at a record pace.
Exports also increased year-over-year to the Caribbean and Vietnam, said USMEF. Vietnam remains a highly competitive market. President Trump recently secured a trade deal with Vietnam and USMEF says it is essential that tariff and non-tariff barriers are eliminated. The U.S. is at a disadvantage to most competitors because of various trade agreements. In addition to the deal made with Vietnam, Trump announced trade frameworks with the Philippines and Indonesia although the details have yet to have been finalized. Furthermore, USMEF expects agreements to be made with Thailand and Malaysia in the near future.
June pork variety meat exports jumped 10% from 2024 figures, partly due to improved relations with China on the pork front, said USMEF. It anticipated a June rebound for pork, following the de-escalation of trade tensions with China after the negotiations held in Geneva in May, said Dan Halstrom, USMEF president and CEO. China still tariffs most U.S. pork items at 57% but at least the industry can move some pork variety meats at that rate. Elsewhere, June was another terrific month for U.S. pork in Mexico, and demand was outstanding in Central America and Colombia. These critical free trade agreement partners continue to shine, as U.S. pork underpins consumption growth across the region, he said.
Beef Exports Fell 15%
In contrast to pork, June beef exports totaled 93,928 mt, a 15% decline from a year ago and the lowest since June 2020. Export value fell 18% to $769M, the lowest in 17 months. Bright spots for beef included significant increases in exports to Central and South America. Variety meat demand strengthened in Egypt as well as several emerging markets in Africa. Shipments to Korea and Mexico held steady with year-ago levels. Despite certain gains for beef, they were not enough to offset the steep decline in exports to China and lower shipments to Japan. Although Trump entered a trade agreement with Japan, USMEF said no major changes in beef market access are anticipated. Japan’s tariff rate on U.S. beef currently sits at the highest of any major import market at 21.6%. The US-Japan Agreement signed in 2020 dictates a phasing out of such high tariffs to 9% by 2033.
The market loss in China is partly due to the expiration of the vast majority of beef plants seeking to renew registration with China, said USMEF. Lack of access to China not only results directly in lost business and missed opportunities but the U.S. beef industry is also losing the premiums generated when Chinese buyers compete for cuts that are especially popular throughout Asia, such as short plate, top blade, chuck rolls and short ribs, said USMEF. Without exports to China, USMEF estimated the U.S. beef industry would lose $150 to $165 per head of fed slaughter, which equates to approximately $4 billion annually.
The June export results really underscore the urgent need to resolve this impasse with China, said Halstrom. said. China’s tariff rate on U.S. beef is currently 32%, which is too high but not insurmountable. The problem is, with only a few plants eligible to ship to China, the tariff rate becomes irrelevant. Consistent and transparent plant approvals without expiration were among the most important components of the 2020 Phase One Agreement with China, and it’s time for China to return to those commitments. USMEF remains hopeful that access to China will be soon restored. But the current situation highlights the importance of diversification and further development of emerging markets such as Central America and Southeast Asia, said USMEF.