The favorable backdrop in cattle will help Tyson as it faces thinner returns in chicken and pork. Ranchers fared relatively well during the supply chain disruptions of the pandemic, but hog farmers were forced to cull thousands of animals, poultry producers destroyed eggs and dairy farmers dumped milk. That’s resulted in tighter pork and chicken supplies.
Meanwhile, cattle farmers are getting left out of the beef profits, and more headwinds are coming, namely high grain prices. Hog herds have been expanding in China as professional farms replace backyard operations. That’s boosting demand for feed grains because smallholders tended to feed pigs table scraps, while the farms use corn and soy meal. As China makes massive grain purchases off world markets, prices are soaring to eight-year highs.
“Looking ahead, we are increasingly concerned about the cattle industry reducing supply, particularly now that corn is approaching $8 a bushel and pasture conditions are the worst in years.,” Goldman and Naughton said. “For the time being, however, cattle remain plentiful, particularly with packers struggling to find labor to run at full capacity.”
High-quality journalism isn’t free. Please consider subscribing to Crain’s.