The stickiness of US inflation is most intuitively reflected! Tyson Foods, Inc. Class A (TSN.US) beef prices are up + strong demand for chicken performance far exceeds expectations.

Tyson Foods, Inc. Class A's latest financial report for the first quarter of the fiscal year 2026, ending on December 27, 2025, shows that the company's performance in the first quarter and its future outlook are both better than the consensus expectations of Wall Street analysts. This highlights the significant increase in beef pricing compared to the same period last year, as well as the continued strong demand for chicken among consumers. The upward trend in beef prices and excessive demand for chicken are also the most direct manifestations of long-term inflation in the United States. The latest financial data shows that Tyson Foods, Inc. Class A's profit for the first quarter, excluding special items, was slightly higher than the average expectations of Wall Street analysts. The financial report of Tyson Foods, Inc. Class A shows that the rise in beef prices and the continued strong trend in chicken demand have offset the significant operational pressures caused by limited beef supply. The management of Tyson maintained its outlook range for the current year's performance, but significantly narrowed the expected operating losses for the beef business segment from the previously forecast range of $4 billion to $6 billion to $2.5 billion to $5 billion, reflecting the long-term upward trend in beef prices. In terms of overall revenue, Tyson Foods, Inc. Class A achieved a total revenue of $14.313 billion in the first quarter, well above Wall Street's average expectations, and a 5.1% year-over-year increase. Among them, the beef business segment achieved a revenue increase of 8.2% to $5.771 billion, with beef prices in the first quarter seeing a significant 17% year-on-year increase. This was followed by the chicken business segment, which achieved a revenue increase of 3.6% to $4.212 billion, with prices remaining relatively stable compared to the same period last year. As the largest meat processing company in the U.S., Tyson Foods, Inc. Class A reported an adjusted earnings per share of about $0.97 for the first quarter, a 15% year-on-year decrease but higher than the analysts' average expectation of $0.95. Despite the higher beef prices supporting overall sales, Tyson's largest business segment is still facing significant struggles due to the ongoing shortage of beef supply. The beef business segment under Tyson Foods, Inc. Class A recorded an adjusted operating loss of $143 million for the quarter, which appeared soft compared to the average analyst expectations. However, a 17% increase in pricing supported the year-on-year increase in sales and exceeded overall revenue expectations. In an effort to turn around this business segment, the company announced the closure of a beef plant in Nebraska and the reduction of a basic food facility in Texas to a single shift. The management of Tyson Foods, Inc. Class A maintained its strong full-year performance outlook given last year, but significantly narrowed the annual operating loss range for the beef business segment from the previous $4 billion to $6 billion range to $2.5 billion to $5 billion. Continuous decrease in beef supply Why has the U.S. seen a significant decrease in beef supply in recent years? Primarily, it is due to a prolonged cycle of typical "beef cycle" downturn, which has been impacted by multiple factors, mainly from the supply side. For example, major cattle-raising states in the U.S. (especially in the Great Plains and the South) have experienced prolonged droughts, poor pasture conditions, and expensive hay. Many ranches have chosen to cull/slaughter cows before their intended time to reduce the feeding pressure, directly reducing future capacity (fewer cows -> subsequently fewer calves). Additionally, under the pressure of inflation and tariff policies, high feed and input costs, as well as high financing costs, have led to a lack of willingness among ranches to expand their herds. Faced with costs and interest rate pressures, ranches are more inclined to "sell cattle for cash" rather than "keep cows and replacement heifers" to expand herds. Expanding herds typically require a long cycle (reproduction - rearing - fattening - market entry), and once the cow base decreases, supply recovery will be slow. The shortage of beef supply in the U.S. has forced meat processors to pay higher prices for cattle to maintain the minimum operation of their factories, even though the Trump administration has accused the meat processing/slaughtering industry of significantly raising meat prices, their overall profit margins are still under pressure. The U.S. Department of Agriculture expects that Tyson's factory closures will attempt to lower beef prices by reducing competition in the supply market. However, beef prices are still predicted to continue to rise compared to the previous year. In an environment where beef supply in the U.S. is scarce, live cattle prices are often pushed higher, one reason being the "grabbing of cattle" between processors. When a major plant shuts down a key facility or reduces shifts, it is equivalent to reducing a strong buyer/reducing their purchasing strength, resulting in fewer upstream ranches/feedlots facing buyer competition, which may naturally cool down the bidding for live cattle. The U.S. Department of Agriculture stated on Friday that as of January 1, the size of the U.S. cattle herd is at its lowest level in 75 years, almost unchanged from the previous year. Meanwhile, measures to continue suspending the shipment of live cattle from Mexico to prevent the spread of a fatal parasite have also significantly restricted supply. Nevertheless, meat companies are still benefiting from the broader "protein trend" among consumers, and with the new version of the U.S. Dietary Guidelines adjusting the food pyramid to prioritize protein, this trend is expected to accelerate. Record-high beef prices at the retail end are partly supported by demand and have not declined significantly as feared; at the same time, consumers are also turning to chicken as a more affordable protein choice, and this long-term strong demand will also stimulate chicken prices to enter a growth trajectory. Despite unexpected flat chicken prices in the Tyson chicken business, the segment still achieved a significant year-on-year increase in sales volume and revenue, driven by stronger market demand. CEO Donnie King stated in a statement, "With the continuous growth in protein demand, our stable market share increase indicates that we are in a favorable position to capitalize on this strong growth momentum." The most direct manifestation of U.S. inflation stickiness The strong performance and outlook of Tyson Foods, Inc. Class A suggest that "U.S. food/protein inflation stickiness (especially beef)" is increasing, and food inflation can be considered an important component of the U.S. inflation indicator CPI and consumption expenditure index in the U.S. GDP calculations, and it is also the most direct feeling of inflation stickiness or continued upward trend for U.S. residents. Tyson Foods, Inc. Class A is a large protein food (meat/protein) processing and brand food company in the U.S., with core businesses covering beef, chicken, pork, and value-added/ready-to-eat foods, supplying to retail, foodservice, and food distribution channels. The company states that its production of beef/pork/chicken in the U.S. accounts for approximately "about 20% (about one-fifth)" of the market size. Therefore, Tyson Foods, Inc. Class A's strong performance can be seen as representing "food inflation stickiness." Firstly, the tight supply structure background will make Tyson Foods, Inc. Class A's overall beef prices more "sticky." Secondly, the combination of Tyson Foods, Inc. Class A's "high beef prices + continuing beef shortage + strong chicken demand" is more likely to indicate to the market that the downward trajectory of U.S. food (protein) inflation is not smooth, especially beef prices are more likely to show strong sticking characteristics of "high levels for a longer period." A recent strategy report from the Wall Street financial giant Morgan Stanley shows that the Federal Reserve implemented a "dovish pause" at its FOMC meeting in January. Despite keeping interest rates unchanged, the signal from the Federal Reserve indicates that the future path of rate cuts will change, no longer relying solely on weakness in the labor market, but more on the performance of inflation data. The economic team at Morgan Stanley believes that the FOMC monetary policy committee is currently inclined to lower policy rates only after seeing more clear signs of a slowdown in inflation. Based on the expectation that evidence of anti-inflation may appear later this year, the bank maintains its outlook that the Federal Reserve will cut rates in June and September.