National Beef Calls Bottom of US Cattle Cycle as Margins Hit Two-Year High

Why National Beef Believes the Cattle Downturn Has Bottomed

National Beef Inc. has told the market that the worst of the long US cattle downturn may be behind it. The Missouri-based meatpacker, controlled by Brazil's MBRF Global Foods SA, reported a margin of 2.1% on an earnings-before-items basis — its strongest result since the third quarter of 2024. Chief Executive Officer Tim Klein said on a call with journalists that the company believes it is through the most difficult phase of the cycle.

The improvement rests on two forces pulling in the same direction. First, overall slaughter volumes in the US have fallen, which has tightened the supply of beef and supported the margins that packing plants earn on each animal processed. Second, consumer demand has held up well enough to keep beef prices elevated, meaning packers are not being squeezed between expensive cattle and weak retail pricing.

The backdrop is a US cattle herd that has shrunk to its smallest level in decades, the result of drought and high operating costs that pushed ranchers to reduce breeding stock. That contraction drove cattle prices sharply higher and compressed meatpacker margins for an extended period. Recent earnings from peers — including JBS NV, which reported improving results in its US beef unit on Monday — suggest the pressure is easing across the industry, not just at National Beef.

Policy has also played a role. Beef supplies have become a focus for the Trump administration because beef prices are an outsized contributor to food inflation. Washington has encouraged more foreign ground beef imports and resumed live cattle shipments from Mexico, both of which improve the flow of animals and meat into US plants. At the parent level, MBRF benefited from growing US sales and higher poultry exports, even as Brazil continues to face trade restrictions with Europe; a resumption of those shipments is expected soon. MBRF's CEO, Miguel Gularte, also said a recent outbreak of Newcastle disease has not significantly affected Brazilian poultry exports.

What a 2.1% Margin Reveals About the US Beef Chain

Why a 2.1% Margin Is a Meaningful Signal

Meatpacking is a thin-margin, high-volume business, so a move to 2.1% EBIT margin matters more than the headline number suggests. The gain reflects a straightforward mechanism: when fewer cattle are slaughtered, processing capacity is less crowded relative to available animals, and packers regain some pricing power over the beef they sell. National Beef's CEO framed the shift as a cycle bottom — a claim now supported by JBS's improving US beef results, which suggests the dynamic is industry-wide rather than company-specific.

The Cattle Herd Math Behind the Turn

The US herd fell to its smallest in decades because drought and elevated input costs made cattle rearing uneconomic for many ranchers. Rebuilding a herd is slow — it requires retaining breeding females rather than sending them to slaughter — so the supply tightness that lifted cattle prices will not reverse quickly. For packers, that means the current relief comes mainly from managing slaughter volumes and securing alternative supply, not from a sudden surge in domestic animals.

How Washington's Beef Policy Feeds Into Packer Economics

The Trump administration's interest in beef is driven by food inflation: beef prices carry disproportionate weight in the consumer basket. Encouraging more foreign ground beef imports and restarting live cattle shipments from Mexico effectively supplements domestic supply, easing the cost pressure on packers and helping keep retail prices from spiking further. For context, this kind of import-led supply management is a familiar tool in agricultural policy, but it also exposes US packers to trade and animal-health risks abroad — a factor MBRF is already navigating in its European poultry trade.

What This Means for MBRF and Its Peers

For MBRF Global Foods, the National Beef result is a stabilising data point after a difficult stretch. Growth in US sales and higher poultry exports are offsetting the group's European trade restrictions, and management's comment that Newcastle disease has not materially hit Brazilian poultry exports removes one near-term overhang. The read-across for competitors such as JBS is that the US beef segment is no longer the drag it was — though the recovery remains margin-thin and dependent on continued consumer demand at current price levels.

What the Cattle Cycle Turn Means for Packers, Producers and Buyers

The clearest signal here is that US beef packing margins have turned, but the recovery is thin and supply-driven rather than demand-led.

• For meatpackers and processors: the 2.1% margin at National Beef and JBS's improving US beef results suggest the worst of the cattle-cost squeeze has passed. The lever now is slaughter volume management and securing imported supply — particularly Mexican live cattle and foreign ground beef — rather than waiting for domestic herd rebuilding, which takes years.
• For food retailers and foodservice buyers: beef prices are being supported by strong consumer demand and tight supply. The administration's import push is the main mechanism that could soften prices, so procurement teams should track ground beef import volumes and Mexican cattle shipment data as leading indicators.
• For MBRF Global Foods investors: watch the timing of the expected resumption in European trade, since that is the identified offset to Brazil's current restrictions, and monitor whether Newcastle disease remains contained, as management claims.
• For ranchers and cattle producers: a packer margin recovery does not automatically translate into better cattle prices — in fact, tighter slaughter volumes are part of what is helping packers. Herd rebuilding decisions should be based on feed costs and drought conditions, not on packer earnings.

Metrics worth watching: National Beef's next quarterly margin print, JBS's US beef segment results, US ground beef import volumes, Mexican live cattle shipment levels, and any further USDA or White House action on beef supply.