National Beef’s 2.1% Margin Signals a Cattle-Cycle Bottom

National Beef Inc. reported a 2.1% margin based on earnings before items such as interest and taxes, its highest since the third quarter of 2024. The Missouri-based beef producer posted its best margin in two years. On $100 of sales, that equals $2.10 before those expenses.

Tim Klein, National Beef’s chief executive officer, told journalists on Thursday: “We do believe we are through the worst part of the cycle.” National Beef linked the improvement to lower overall slaughter, which aided its beef plant margins. Strong consumer demand also kept beef prices elevated.

The recovery follows a severe contraction in the cattle supply available to processors. The U.S. herd has shrunk to its smallest size in decades, according to National Beef. Drought and high operating costs drove that decline, and cattle prices have surged as a result.

On Monday, JBS NV also reported improving results in its U.S. beef unit. Together, the two processors’ updates provide early evidence for Klein’s view that the industry’s downturn is bottoming.

What does this change for meatpackers?

For packers, Klein’s account points to more room between what they pay for cattle and what they earn on beef. Lower slaughter eased pressure on plant margins, while firm beef prices supported selling prices. The improvement comes despite a herd at its smallest size in decades, not because those conditions have disappeared.

Policy has supplied some relief as well. Beef supplies have become a key concern for the Trump administration, with prices for the protein an outsize driver of food inflation. The administration encouraged more foreign ground beef imports and resumed live cattle shipments from Mexico. National Beef said both moves helped meatpackers.

The trade changes address the supply problem without reversing the domestic herd’s decades-low scale. National Beef linked the herd’s decline to drought and high operating costs. Those pressures, rather than a recovery in cattle numbers, explain the cycle’s damage to packer margins.

MBRF Global Foods SA, the Brazilian group that controls National Beef, also benefited from growing sales in the United States and higher poultry exports. Those gains supported its results even as Brazil faces restrictions on trade with Europe. MBRF expects to resume the affected shipments soon.

The poultry side has so far avoided a major disruption. Miguel Gularte, MBRF’s chief executive officer, said a recent outbreak of Newcastle disease “hasn’t significantly affected poultry exports out of Brazil.” That leaves the group’s poultry export growth intact while the European trade restrictions remain in place.

For National Beef, the next test is whether the 2.1% margin holds as scarce cattle, additional imports and strong consumer demand shape the next round of results. Klein’s bottom call has early support from the company’s results and JBS NV’s improving U.S. beef unit.