BY COMFORT OGBONNA

U.S. meatpacker Tyson Foods reported quarterly earnings that exceeded market expectations on Monday, as rising demand for its chicken products helped counter heavy losses in its beef business, which continues to struggle under the weight of record-high cattle prices and tight supplies.

Beef prices have surged to historic levels after ranchers sharply reduced the U.S. cattle herd to its smallest size in 75 years. A prolonged drought scorched grazing land across key regions, forcing ranchers to thin herds while also driving up feeding costs. While consumer demand for meat has remained relatively resilient, soaring beef prices have increasingly pushed households toward more affordable alternatives, particularly chicken.

That shift in consumer behavior has become more pronounced as financial pressures mount. In January, U.S. consumer confidence fell to its lowest level in more than 11-and-a-half years, reflecting growing anxiety over elevated food prices and signs of weakness in the labor market. Against that backdrop, Tyson executives said chicken demand is likely to remain strong, especially as cattle supplies are expected to stay tight for several more years.

Tyson Chief Executive Officer Donnie King told analysts that constrained cattle availability could persist through 2027, reinforcing the company’s view that consumers will continue gravitating toward lower-cost protein options. Chief Operating Officer Devin Cole echoed that sentiment, noting that shoppers are increasingly choosing value-oriented protein choices as they try to manage household budgets.

Tyson shares rose after initially slipping earlier in the trading session, as investors focused on the company’s stronger-than-expected earnings and solid performance in chicken, even as challenges in beef remained significant.

Beef prices set new records in December, keeping pressure on both consumers and processors. U.S. President Donald Trump has faced growing calls to address food affordability and pledged in October to lower beef prices. Despite those assurances, prices for steaks and ground beef have continued to climb. Analysts say relief may not come quickly, given the structural issues facing the cattle industry.

Raymond James said it may be too early to assume beef prices have peaked, pointing to limited evidence that ranchers have begun rebuilding herds. Historically, when herd rebuilding starts, supplies often tighten further before eventually expanding, which can push prices even higher in the near term. According to data from the Bureau of Labor Statistics, retail ground beef prices in December were up 19% from a year earlier, reaching a record $6.69 per pound.

While meatpackers can benefit from higher beef prices at the retail level, they are also paying significantly more for cattle. Tyson said its cattle costs rose by $850 million in the quarter ended December 27 compared with the same period a year earlier, sharply squeezing margins in its beef segment. King described beef as the company’s biggest current challenge and said management is exploring solutions beyond factors it can directly control.

The company has already taken steps to adjust capacity, announcing in November that it would close a major beef plant in Nebraska and scale back operations at a facility in Texas in response to difficult market conditions.

Overall, Tyson’s quarterly net sales increased 5.1% to $14.31 billion, surpassing analysts’ average estimate of $14.09 billion. Adjusted earnings per share came in at 97 cents, topping expectations of 94 cents.

Chicken remained a key bright spot in the quarter. Sales in the segment rose 3.7%, though adjusted operating income edged down to $459 million from $471 million a year earlier, reflecting higher costs. In contrast, Tyson’s beef segment continued to deteriorate. Sales volumes fell 7.3% as prices jumped 17.2%, and the unit posted an adjusted operating loss of $143 million, a sharp reversal from income of $6 million in the same quarter last year.

The results underscore how shifting consumer preferences and structural supply challenges are reshaping the U.S. meat industry, with chicken gaining momentum as beef remains constrained by forces unlikely to ease anytime soon.