Despite reporting record US beef sales, meat giant JBS has outlined the excess processing capacity challenges that led rival Tyson Foods to close a plant.
Discussing the Brazilian company’s fourth quarter and annual results, Wesley Batista, CEO of the firm’s US unit, did not go so far as to suggest any beef facility closures of its own are imminent but flagged the risks for the industry.
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A shortage of cattle for slaughter linked to a decline in US herds has seen beef volumes drop at Tyson Foods of late, while retail prices have shot up. Batista told analysts yesterday (26 March) that conditions are not likely to improve in the short term after what he described as a challenging 2025.
Addressing analysts alongside group CEO Gilberto Tomazoni, Batista was asked if the industry could be facing “some capacity adjustments” due to the imbalance between cattle supply and processing capacity.
“It’s very difficult for me to respond on that. It’s clear that there is more capacity in the US than there is cattle available,” he responded.
“In the US not too many years ago, four years ago, you had a capacity to process 33 million head and now we’re going be around 27 million. That in itself shows there is excess capacity. Having said that, it’s very difficult for me to respond about something regarding other companies.”
Tyson Foods announced the closure of its Lexington, Nebraska, beef facility in November, alongside a plan to scale back operations at its site in Amarillo, Texas.
In February, Tyson’s president and CEO Donnie King said he expected cattle supplies to remain tight throughout 2026 and 2027.
Explaining the Nebraska and Texas decisions, he said they were implemented as a means to “right-size our beef operations with a smaller and more efficient footprint, higher capacity utilisation, and stronger alignment with the long-term outlook for the US cattle herd”.
He added: “Continuing to absorb losses like we have been seeing for the past two years is simply unacceptable.”
JBS, which is the world’s largest processor of meat, including beef, did not break down individual volumes for beef, which posted net sales in North America last year of $28.14bn, an increase of 15.9%.
Group protein sales across the Brazilian company’s global operations rose 12% to $86.18bn, also a record.
In terms of US slaughter rates last year, Batista said JBS processed 2.3m head, down from 3.9m in 2022. However, the company is facing a new challenge – an ongoing strike at its beef facility in Greeley, Colorado.
“We hope this gets resolved as soon as possible,” Batista told analysts.
Now in the new fiscal year, Batista said: “It’s common knowledge that given the market data the beginning here of the first quarter has been really tough, really difficult, very challenging. Probably the most challenging we’ve seen in this industry in a very long time.
“I don’t know if there is any other time that we had such a negative spread for January and February ever. March data is showing that it’s going to become better, sharply better than where we were from January to February.”
However, he added: “One of the things that has happened in this scenario, that we have very low cattle availability and very low processing volumes is that the market has become more volatile than we were used to in this market. You see big fluctuations in cutout, big fluctuations in cattle, more so than what we’re used to.”
Group CEO Tomazoni suggested Brazil and Australia are taking up the sales slack.
“The country [Brazil] recorded the highest beef-processing volume in its history at around 42 million head. This reflected a total gain in production and reinforces Brazil’s growing role in a global supply,” Tomazoni said in his opening remarks yesterday.
“Our Australian business benefitted from the current imbalance between global supply and demand of beef, combined with the strong execution and supported solid profitability and reinforces the role of the region in balancing our global results.”
