By Tom Polansek
CHICAGO (Reuters) -Tyson Foods will close a major beef plant in Lexington, Nebraska, with about 3,200 employees in January after U.S. cattle supplies dropped to their lowest level in nearly 75 years, the meatpacker said on Friday.
The closure in the heart of cattle-feeding country signaled that supplies will remain tight, forcing meatpackers to pay steep prices for cattle to process into steaks and hamburgers.
Beef prices have set records due to low supplies and strong demand, raising
costs for consumers. President Donald Trump said last month that he was working to bring down prices.
Tyson said it will also reduce operations at a beef plant in Amarillo, Texas, to a single, full-capacity shift, affecting about 1,700 workers.
"Tyson Foods recognizes the impact these decisions have on team members and the communities where we operate," the company said in a statement.
Tyson said the changes were expected around January 20 and that it will increase production at other facilities to meet customer demand.
BEEF BUSINESS LOSES BIG
Beef prices soared this year as cattle supplies dwindled and meatpackers increasingly competed for limited supplies of livestock.
Ranchers slashed their herds after a years-long drought burned up pasture lands and hiked feeding costs. Some have slowly started to rebuild their herds, though it takes at least two years to raise full-grown cattle.
Tyson's beef business suffered adjusted losses of $426 million in the 12 months ended on September 27 and $291 million over the previous year. The meatpacker projected the unit will lose $400 million to $600 million in the 2026 fiscal year.
"We all expected a plant to be closed at some point in 2026," said Rich Nelson, chief strategist for Allendale. "I'm a little surprised they're doing it preemptively."
Losses in Tyson's beef business were a turnaround from the fat profits it and other processors reaped during the COVID-19 pandemic, when meat prices soared as infections among plant workers slowed output.
CLOSURE THREATENS LOCAL ECONOMY
The Lexington plant can process roughly 5,000 cattle per day, or about 5% of total U.S. slaughtering, but it has already been operating below capacity, said Matt Wiegand, commodity broker for FuturesOne in Nebraska. Its closure will shock the city of about 10,000 residents and hurt local feedyards that fatten cattle, he said.
"Tyson's announcement will have a devastating impact," said U.S. Senator Deb Fischer of Nebraska. "It's no secret that just a few years ago, packers like Tyson were making windfall profits while the rest of the industry was continuously in the red."
In Amarillo, Tyson's plant can slaughter roughly 6,000 cattle per day, according to industry estimates.
The White House had no immediate comment.
Trump has sought to boost beef imports from countries such as Argentina to ease prices for U.S. consumers, angering American ranchers. On Thursday, he removed 40% tariffs he had imposed this summer on Brazilian food products that slowed imports of beef used to make hamburger meat.
Trump has also accused meatpacking companies of driving up U.S. beef prices through manipulation and collusion, and ordered the Justice Department to investigate.
(Reporting by Tom Polansek; Editing by Nia Williams and Bill Berkrot)
