(Zero Hedge)—One of America’s largest beef processors has spotted an inflection point in the industry’s brutal multiyear margin squeeze, saying the “worst part of the cycle” is over as cattle futures and supermarket ground beef prices retreat from their highs.
“We do believe we are through the worst part of the cycle,” National Beef CEO Tim Klein told reporters on Thursday, Bloomberg reported.
Klein pointed out that reduced US slaughter volumes helped improve processing margins, while robust consumer demand supported elevated beef prices.
The Missouri-based company, controlled by Brazil’s MBRF Global Foods SA, reported an earnings margin before items including interest and taxes of 2.1%, its highest since 3Q24.
National Beef’s earnings results follow improving earnings at JBS NV’s US beef business, potentially showing more evidence that margin pressure across the industry could be easing. Years of contraction have reduced the US cattle herd to its smallest size in decades, driving livestock prices sky-high and crushing beef processors’ margins.
Lower cattle costs and improving margins could eventually translate into cheaper ground beef at the supermarket through more promotions. That hasn’t happened yet, but upward price momentum may already be slowing.
Some of that could be due to the Trump administration’s moves to increase foreign ground-beef imports and resume live cattle shipments from Mexico, helping processors address tight supplies. This move by the administration has angered mom-and-pop ranchers.
US live cattle futures are well off their highs seen in late April. Upside momentum has slowed dramatically.
Supermarket ground beef prices tracked by the USDA remain slightly below their highs but upside momentum slowed.
Sara Senatore, a BofA Securities research analyst covering restaurants, protein processors, and food and beverage, spoke this summer with Oklahoma State University agricultural economist Derrell Peel. He suggested that the cattle cycle has bottomed and the rebuilding phase is likely approaching, although that cycle could take several years (read the report).
