Packers may cut production to recoup margins.
U.S. beef packing companies are suffering the largest losses in two years as tight supplies of cattle have them paying near record high prices for them.
The losses could cause beef companies like industry leaders Tyson Foods Inc. and JBS USA to cut back on the number of cattle they slaughter, which could eventually lead to higher retail beef prices, analysts say.
"The cattle market ended last quarter with a bang. It was certainly a victory for the producer, but not for the packer whose margins are at their narrowest levels of the year," says Elaine Johnson, an analyst with CattleHedging.com.