Tyson Foods is taking a meat cleaver to its beef-processing network as one of the worst U.S. cattle shortages in decades continues to squeeze margins. For investors, the retrenchment may be painful evidence that the downturn will last -- but it could also remove one of the biggest drags on Tyson's earnings.

Tyson said Thursday it will close its beef plant in Joslin, Ill., and a case-ready facility in Eagle Mountain, Utah, while pursuing the sale of its Pasco, Wash., plant. The moves follow the meatpacker's previously announced closure of its Lexington, Neb., plant and its decision to cut production at its Amarillo, Texas, plant.

The company said it will concentrate operations around facilities in Dakota City, Neb., and Holcomb, Kan. It also plans to restore shifts at the Amarillo facility as cattle supplies improve. Management says the firm can offset the closures by processing more cattle at its remaining plants, keeping its overall slaughter volume roughly unchanged.

Tyson shares were up about 3% on Friday afternoon near $58, suggesting investors welcomed the restructuring.

The move could be positive for Tyson's earnings. The meat processor has been racking up losses amid historically low U.S. cattle supplies, as years of drought and high feed costs pushed ranchers to shrink their herds. Tight supply has pushed up beef prices, but not enough to offset higher cattle costs.

The New World screwworm -- a flesh-eating parasite -- has added another complication to an already tight cattle market. The U.S. has suspended imports of Mexican cattle for more than a year. Mexico normally supplies roughly one million animals annually.

The pest has since reached the U.S., prompting quarantines and restrictions on moving cattle out of affected areas. Those measures can further disrupt the flow of already scarce cattle to feedlots and processors. USDA plans to begin reopening one Arizona port to Mexican cattle on Aug. 24, but imports will resume gradually and remain subject to screwworm controls.

Tyson has said the planned reopening of some ports to Mexican cattle won't immediately solve its beef-supply problem because imported calves still need to be raised and fattened before they reach processing plants. CEO Donnie King said on the latest earnings call that increased imports could provide some relief in 2027 and beyond.

With fewer cattle available, meatpackers don't have enough animals to keep all their plants running efficiently, while competition for cattle has pushed up what they pay. Closing some plants and processing the same number of cattle at fewer locations can help Tyson cut costs and make better use of the facilities that remain.

The numbers show the scale of the problem. Tyson's beef unit lost $142 million in its latest quarter, while cattle costs jumped $525 million from a year earlier. Although beef prices rose nearly 12%, volume fell 16%. Tyson now expects the segment to post an adjusted operating loss of $500 million to $650 million in fiscal 2026, versus its previous forecast for a $350 million to $500 million loss.

Because cattle take years to breed and raise, supplies are likely to remain tight even as ranchers begin rebuilding. U.S. beef cow numbers were down 1% from a year earlier as of July, according to the USDA, while the 2026 calf crop is expected to be 2% smaller.

Thursday's announcement makes one thing clearer: management is no longer waiting for the beef market to fix itself. If cattle supplies eventually recover, Tyson could process more animals through fewer plants, lowering costs and helping beef profits rebound more quickly.

Still, the restructuring won't be an immediate earnings cure for Tyson. The company raised its fiscal-2026 adjusted operating income guidance in May, but lowered it again in conjunction with its Aug. 3 third-quarter earnings, largely reflecting the worsening outlook for the beef segment.