Meatpackers built their business on selling whatever protein consumers want most. Right now, the market is punishing them from two directions at once.
Beef is scarce and expensive while chicken is abundant and cheap. For companies that process both, there's no easy place to hide.
The cattle shortage isn't easing fast
The US cattle herd is at its lowest level in over 70 years. Years of drought forced ranchers to sell off cattle rather than feed them through dry spells.
A ban on live cattle imports from Mexico (imposed to contain the spread of New World screwworm, a flesh-eating parasite) further tightened domestic supply.
The result is a beef market where procurement costs have climbed faster than meatpackers can recover through higher retail prices. Ground beef is up 12.4% year over year. Steaks are up 11.4%. Yet processors are still losing money on every animal they buy.
Tyson Foods now expects a beef segment operating loss of $500M to $650M for fiscal 2026, wider than its prior forecast of $350M to $500M.
In the most recent quarter, the beef unit posted an adjusted operating loss of $138M. Sales volumes in that segment dropped 15.9% even as prices rose 12.1%.
The USDA recently announced it will resume some cattle imports from Mexico through a port in Douglas, Arizona, starting with livestock from Sonora and Chihuahua.
Tyson's outgoing CEO Donnie King said the move shows potential improvements to long-term cattle availability but acknowledged it won't materially help results before the fiscal year ends in September.
Chicken companies overshot demand
While beef tightened, poultry producers bet big on a consumer shift toward cheaper protein. They ramped up flock sizes and adopted new chicken breeds that grow faster on less feed. Cobb-Vantress, owned by Tyson, rolled out one such breed this year.
The bet didn't land. Beef demand stayed strong even as prices hit records. Retail beef sales volumes were up 2% for the 52 weeks ended July 12. Consumers didn't substitute chicken at the scale processors anticipated.
At the same time, favorable weather kept more birds alive through the grow-out cycle. Disease outbreaks like bird flu, which have historically thinned flocks, weren't a major factor this summer in key raising regions. Chicken supplies were up ~4.5% in Pilgrim's Pride's most recent quarter.
"The industry shot themselves in the foot this year. All you had to do was just be disciplined around production."
Pooran Sharma, Stephens
Wholesale boneless, skinless chicken breast prices are down ~37% from a year ago. Pilgrim's Pride, the second-largest US poultry processor, saw second-quarter profit fall 96% to $13.4M.
Who's more insulated and who isn't
Not every company is absorbing the chicken glut equally. Tyson has spent years shifting its poultry business toward branded, frozen, precooked products sold directly in grocery stores. Most of its chicken now moves through that channel, where demand is growing and pricing holds better than at the wholesale level.
Pilgrim’s Pride is further behind on that shift, though it has been building out its branded business. Its Just Bare label grew from 1% to 13% of the chicken market in three years, but the company still relies more heavily on wholesale pricing.
For Tyson, chicken is actually a bright spot. The segment posted $488M in adjusted operating income last quarter, up from $448M a year earlier, with margins expanding to 11.2% from 10.6%. Chicken has now posted seven straight quarters of growth for the company.
The problem is that gains there aren't big enough to offset a beef segment losing hundreds of millions.
Meatpackers don't have the overseas escape valve that other consumer brands are finding right now. Kraft Heinz, Colgate-Palmolive, and Mondelez are all leaning on emerging market growth to offset soft US demand.
Meatpackers' supply chains are tied to US livestock markets, and their margins move with domestic cattle cycles and feed costs.
For investors, the sector is caught between a beef supply crunch with no near-term fix and a chicken oversupply that requires industry-wide production discipline to resolve. Neither condition looks likely to correct quickly.
