Cattle futures fell to a three-week low after Tyson Foods Inc., the largest U.S. meat producer, said it will close beef operations permanently at an Iowa plant.
The Denison plant will close because of a decline in cattle supplies, the Springdale, Arkansas-based company said in a statement Friday. Cattle futures for October delivery slid as much as 1.5 per cent on the Chicago Mercantile Exchange after the news and touched $1.45625 a pound, the lowest for a most-active contract since July 28. Prices closed at $1.4685.
The closing “would slow up the demand of meatpackers needing to buy cattle,” Lane Broadbent, president of KIS Futures Inc. in Oklahoma City said in a telephone interview. “It’s not a great big deal, but it’s not good news.”
At the start of 2014, U.S. cattle supplies were the smallest in more than six decades after years of drought in the southern U.S. forced producers to trim herds. Inventories at the start of this year rose 1.4 per cent, government data show.
The plant, which employs 400 workers, was originally operated by Iowa Beef Packers when it opened in 1961.
Sao Paulo-based JBS SA, the world’s biggest meat producer, shut six beef plants in Brazil this year on the reduced cattle supply and weaker demand, Chief Executive Officer Wesley Batista told investors Friday on an earnings conference call.
Marfrig Global Foods SA, Brazil’s second-largest beef producer, also shut five of 15 domestic beef plants, CEO Martin Secco Arias said Wednesday. The closures reduced Marfrig’s domestic slaughtering capacity by 29 per cent.
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