The beef business is facing huge losses. Tyson Foods, Inc. Class A (TSN.US) has closed its largest beef processing plant.

In the face of rising processing costs and shrinking profits in the beef business, Tyson Foods, Inc. Class A (TSN.US) announced the closure of its beef processing plant in Lexington, Nebraska, with the aim of "adjusting the scale of the beef business to lay the foundation for long-term success." The company announced that it will cease operations at the Lexington plant, one of its largest beef processing plants, and adjust its plant in Amarillo, Texas to operate at full capacity. To meet customer demand, other plants will increase production to optimize the production capacity of the entire network. At a time when ranchers are facing high feed prices, droughts, and parasitic issues south of the border (leading to restrictions from importing cattle from Central and South America), the United States is experiencing a historic cattle shortage, causing beef prices to soar for consumers. Since mid-2024, this impact has driven beef prices up by 45%. Despite a slight decrease from the peak a year ago, prices have steadily increased since July, nearly doubling compared to the levels during the pandemic. Despite the high prices, Tyson Foods, Inc. Class A CEO Donnie King acknowledged that the beef sector is "our only weak spot." "Due to drought, potential cattle herd rebuilding, and the impact of the Mexican Shanghai New World screw fly, cattle supply is at historic lows. These factors have created headwinds in the market this quarter. Despite these challenges, we are strengthening our fundamentals by prioritizing efficiency, reducing costs, and launching innovative products," King said during the company's latest earnings call. Meanwhile, Chief Financial Officer Kurt Kalawey predicts that the adjusted losses in the beef division will be between $4 billion and $6 billion, with annual cattle costs increasing by $20 billion as of September. Meanwhile, the Trump administration is attempting to provide some relief for consumers by canceling a 40% tariff on beef imports from Brazil, opening up federal grazing lands, and calling on the Justice Department to investigate potential price manipulation in the meatpacking industry.