A fire that shut down a Tyson slaughterhouse is having profound effects on the U.S. beef market, driving up profit margins for processors while paradoxically depressing prices for cattle.

The Aug. 9 fire caused substantial damage to a Tyson slaughter facility in Holcomb, Kansas. The facility processed 6,000 cattle a day, or roughly 5% of the total U.S. beef slaughter.

The effect of the Holcomb facility’s loss is intensified by longstanding trends of increased demand for beef combined with a dro in the number of slaughterhouses. Prices for boxed beef went up 10% this week, according to USDA figures.

However, cattle raisers saw prices for their animals decline by about 5% due to the loss of a major buyer.

Processors, and their foodservice and retail customers, are scrambling to shore up supplies in advance of the Labor Day weekend, a major event for beef consumption. Reuters reports that, while processors are enjoying an immediate spike in their margins, it may be difficult for them to pick up the slack by increasing production due to labor shortages. Tyson told Reuters that it may be months before the Holcomb plant returns to full production.

By Pan Demetrakakes, Senior Editor

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