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Smaller U.S. Cattle Herd Squeezing Meatpacker Profits

America’s beef cow herd hasn’t been this small since 1962. Drought and the high cost of feed forced producers to cut their herd sizes instead of keeping animals for breeding.

Livestock producers who fatten cattle suddenly have leverage over meatpackers as they negotiate cattle prices with organizations like Tyson Foods, JBS, and Cargill. U.S. News says meat processors are assessing the future of consumer demand should beef prices rise, along with cattle supplies and margins, to determine how many animals to slaughter in the months ahead.

Cargill says it expects cattle prices will rise further and beef prices to rise as well. “The unknown factor is demand: how much will consumers be willing to pay,” says Tom Windish of Cargill.

The amount of money that meatpackers make buying cattle and converting them to meat dropped under $40 per head in April. That’s after reaching over $700 a head in May 2020.

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