US cattle shortage deepens beef losses as BTG keeps sell rating on Tyson
Shrinking US cattle supplies, record beef prices and weak processing margins are increasing pressure on meatpackers. BTG Pactual expects Tyson Foods’ beef division to post a $635 million adjusted EBIT loss in 2026 and sees rising chicken supply as an additional risk.
US cattle herd falls to a seven-decade low
The downturn in the US cattle cycle has further to run, creating sustained cost and margin pressure for the country’s meatpackers, according to a BTG Pactual assessment reported by EXAME. The bank reiterated its sell recommendation on Tyson Foods with a $56 price target and maintained a neutral rating on Pilgrim’s Pride with a $36 target.
BTG analysts Guilherme Guttilla and Thiago Duarte identified beef as Tyson’s principal risk, despite greater-than-expected resilience in its chicken business. US processors are paying more for increasingly scarce cattle while struggling to pass the full increase through the supply chain, leaving processing spreads under pressure.
The number of beef cattle has fallen 13% since 2019 to 27.9 million head. The total US cattle herd is now at its lowest level since 1952, according to US Department of Agriculture data cited by EXAME. Prolonged drought in the western United States raised feed costs, reduced available pasture and encouraged producers to liquidate animals to protect cash flow.
Lower output and higher prices reshape trade conditions
US beef production declined 4% year on year in 2025 to 11.8 million tonnes. The contraction allowed Brazil to overtake the United States as the world’s largest beef producer, changing the supply balance for international buyers and strengthening Brazil’s position in global trade.
Restricted domestic supply has also pushed US beef prices to repeated records. Prices have risen 75% since 2020, based on Federal Reserve Bank of St. Louis data cited by EXAME, and the USDA says beef is 16% more expensive than a year earlier. Higher prices benefit suppliers able to place product in the US market, but they increase procurement costs for importers, retailers and food-service companies.
Tyson had been expected to improve margins after announcing a partial reduction in processing capacity. BTG said that recovery has not materialized: the company’s volumes fell faster than those of the broader industry, while margins remained under pressure. Even the summer grilling season, which traditionally supports beef spreads, failed to produce the expected improvement.
Chicken supply adds another margin risk
BTG considers the sharp second-half improvement required for Tyson to reach the lower end of its guidance unlikely. The bank projects negative adjusted EBIT of $635 million for the company’s beef division in 2026 and believes Tyson may revise its forecasts when it next reports results. For cattle suppliers, plant utilization and processor purchasing strategies will be important indicators as packers try to control losses.
The outlook for chicken is less severe but is also deteriorating. Strong profitability encouraged US producers to expand output, and BTG expects chicken supply to grow about 3% in 2026. Additional volume is likely to weigh on prices and industry margins, limiting the benefit Tyson receives from its more resilient poultry operation.
BTG kept Pilgrim’s Pride at neutral, judging it relatively more attractive than Tyson but not yet offering a favorable entry point. Its regional operations are diverging: excess chicken supply has pushed Mexican margins close to the bottom of the cycle, prompting BTG to reduce its estimates, while European margins remain high and resilient. For exporters and buyers, the contrast points to tighter beef availability in the United States alongside increasing poultry competition in the US and Mexico.
