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US Reduces Beef Exports as Cattle Herd Shrinks, Squeezing Tyson Foods

The United States is importing record amounts of beef this year and exporting less after ranchers slashed the nation’s cattle herd to its lowest level in decades, tightening margins for meat companies like Tyson Foods (TSN.N).

The decline in cattle numbers, after years of drought fried pasture lands used for grazing, led to soaring U.S. beef prices. Higher prices incentivize companies to import cheaper beef and discourage U.S. beef purchases by buyers like China, Japan and Egypt.

Analysts expect lower demand for U.S. beef and higher costs for cattle to translate into negative quarterly margins for Tyson’s beef business, its largest unit, for the first time this year. The company, one of four processors that slaughter about 85% of U.S. grain-fattened cattle, reports fourth-quarter earnings on Monday.

The U.S. Department of Agriculture (USDA) expects the U.S. to drop to the ranking of world’s fourth-largest beef and veal exporter this year, down from second in 2022.

U.S. beef exports are projected to sink 14% this year from 2022 to 3 billion pounds (about 1.4 million metric tons), the lowest since COVID-19 roiled meat processing and international trading in 2020, government data show. In 2024, when USDA expects U.S. production to decline further due to tight cattle supplies, exports are forecast to hit an eight-year low of 2.8 billion pounds.

U.S. beef exporters such as Tyson, Cargill (CARG.UL) and JBS (JBSS3.SA) face a “double whammy” from higher prices and strength in the U.S. dollar, which makes American products less attractive to other countries, said Pete Bonds, a Texas-based cattle producer.

Source : Reuters