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Tyson shutting Nebraska plant with 3,200 employees

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Closure will hit city of about 10,000 residents

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Tight cattle supplies raise costs for US meatpackers

(Adds details on Tyson's beef unit losing money, paragraph 9,

quotes from US senator and analysts, paragraphs 10, 12-13)

By Tom Polansek

CHICAGO, Nov 21 (Reuters) - Tyson Foods ( TSN ) 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 ( TSN ) 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.