Following the USDA's announcement that it will begin lifting the year-long ban on Mexican live cattle imports on Aug. 24, BMO Capital Markets senior equity research analyst Andrew Strelzik called the decision a "key positive" for publicly traded meatpackers Tyson Foods and JBS.
The restrictions were imposed to combat the New World screwworm, a flesh-eating parasite that threatens livestock. Restoring Mexican cattle flows should gradually ease tight U.S. supplies, improve slaughterhouse utilization, and support beef-processing margins.
"A combination of recent beef plant closures and the recovery of Mexican cattle imports should create a path to U.S. beef packer margin improvement," Strelzik wrote in a Monday morning note, identifying a potential new tailwind for Tyson Foods and JBS.
Strelzik outlined more color:
Combination of recent beef plant closures and recovery of Mexico cattle imports should create a path to U.S. beef packer margin improvement.
Specifically, TSN's/ JBS's previously announced beef plant closures remove ~6% of industry slaughter capacity, while a full Mexico border re-opening would add an incremental ~5% of cattle supply. The 10%-11% improvement in cattle supply/slaughter-capacity balance would raise industry plant utilization closer to normal historical levels, though Mexican imports will take time to flow through the supply chain to slaughter, especially given the USDA's phased reopening strategy.
Notably, we estimate Douglas, AZ typically accounts for ~15% of Mexican cattle imports to the U.S. (note the closest active screwworm case is over 300 miles from the port).
There are uncertainties that will impact the pace and magnitude of beef margin recovery, including the rate at which cattle imports ramp and the type of cattle imported (e.g., fat cattle, feeder cattle). That said, the pace of imported Mexican cattle could materially accelerate with the reopening of New Mexico port of entries. In fact, we estimate the two New Mexico ports of entry combined account for just over half of all cattle imports from Mexico to the U.S. While timing is unconfirmed and hurdles will need to be cleared, we would not be surprised if New Mexico ports of entry were to re-open by early fall if the Arizona reopening is successful. Re-opening can be paused if the USDA identifies increased risk via post-opening audits or other observations/ information.
Border re-opening is a clear positive for Outperform-rated TSN and JBS, as meaningful inflection in U.S. beef margins could finally be on the horizon. Every $100mm change in TSN's beef performance has an ~$0.20 EPS impact (~5% of our FY27 EPS estimate), while every $100mm change in JBS's beef EBITDA is equivalent to ~2% of our 2027 EBITDA estimate. While heifer retention has been slow, the combination of plant closures and Mexico re-opening can create a bridge to underlying herd rebuilding. We note that heifers as a percent of slaughter decreased to 36% in June (from 40% previously), falling below the historical average.
Shares of both meatpackers have been pressured in recent months as New World screwworm detections in Texas and elsewhere have intensified concerns about already tight cattle supplies.
Mexican cattle represented about two-thirds of U.S. live cattle imports between 2020 and 2024, but most are lightweight feeder animals that require additional feeding before slaughter. The Aug. 24 reopening will begin at only one Arizona border crossing, meaning additional supply will enter gradually.
The immediate benefit should be lower cattle procurement pressure and improved margins for the meatpackers.
Related:
Yet beef prices are likely to stay elevated rather than enter a bear market. The U.S. herd remains near multidecade lows, and Bank of America's recent interview with a cattle expert suggested that elevated retail prices could persist for several years. Read the report.
We suspect the Trump administration's decision to restore live cattle imports from Mexico is part of a broader effort to ease food inflation and improve affordability ahead of the midterm elections.
Tyler Durden Mon, 07/27/2026 - 15:45ASML Holding NV shares in Amsterdam suffered their steepest decline in more than a year, breaking below the crucial 50-day moving average after The Information reported that a Chinese state-backed company had begun producing immersion deep-ultraviolet (DUV) lithography machines.
The Information did not cite the Shanghai-based company that plans to manufacture about five DUV machines this year and roughly 20 in 2027. The firm reportedly assembled teams from other Chinese chip-equipment firms, including Shanghai Yuliangsheng Technology.
ASML builds lithography machines that print transistor patterns onto silicon wafers. Its DUV machines are considered the workhorses of the semiconductor industry, producing highly advanced chips ranging from DRAM and NAND memory to logic and AI chips, as well as smartphone and automotive processors.
Only three weeks ago, we reported that China's leading memory-chip companies are quickly closing the technology gap with their South Korean chip-producing rivals faster than expected, raising concerns that expanding Chinese production could eventually spark a global memory glut.
First reported here on July 6
China CXMT Testing Production Line for Next-Gen Bonded DRAM, Closing Tech Gap With Korea "Far Faster Than Expected"https://t.co/oHI5VEVDRD https://t.co/93ks5sQAf2
China's largest memory company, CXMT, is reportedly testing a pilot line for bonded DRAM in Hefei (the heart of China's semiconductor industry), a technology that manufactures memory cells and peripheral circuitry on separate wafers before joining them. This process could deliver higher density and performance using older deep-ultraviolet lithography equipment, allowing China to reduce its dependence on advanced EUV machines restricted by US export controls.
The company is also developing HBM3 and HBM3E products, pursuing next-generation CXL memory, and preparing for a potential Shanghai listing. Its reported share of the global DRAM market reached 8% during the first quarter of 2026, and Apple is said to be considering CXMT as a supplier.
The US has been probing ASML for many months out of concern that one of its lithography machines ended up in Chinese hands despite US-led export controls.
Bank of America analyst Didier Scemama commented on The Information's report, telling clients:
According to The Information, China may have started production of DUV immersion litho tools. The article suggests that China have brought together immersion DUV development teams from other Chinese companies but warns that DUV advances are still "at an early stage". Yuliansheng Tech allegedly intends to produce 5 DUV tools this year and 20 next year for domestic Chinese customers, including SMIC, CXMT and Hua Hong. Of note, the article indicates that the immersion tools may be using components from both China and Japan, potentially violating export control restrictions.
Scemama continued:
China is a major market for ASML but threat likely modest
The leading domestic player, SMEE, has yet to demonstrate ArFi systems in high-volume production at 28nm or below, while reports of a Chinese EUV breakthrough have not resulted in a commercial product. China remains an important market for ASML, accounting for roughly 20% of group sales and 44% of DUV revenue in 2026. Replacing ASML would require a domestic alternative with comparable productivity, overlay and cost of ownership. That remains a high hurdle. ASML's NXT:1980Fi already delivers 330 wafers per hour and 2.5nm machine-matched overlay, while successive generations have further improved overlay performance. In leading-edge Chinese logic manufacturing, where EUV is unavailable and multiple patterning is required, even modest reductions in scanner performance could materially lower yields and increase cost per die.
. . .
We think today's weakness is an over-reaction and see current levels as an attractive opportunity.
Domestic DUV machines could eventually increase DRAM and NAND production in China, strengthening suppliers such as CXMT and YMTC while helping alleviate the global memory crunch. The report also suggests that ASML's long-term competitive position could face growing pressure, while the leverage exerted by US and Western export controls over China's access to advanced chips and chipmaking equipment could erode.
Tyler Durden Mon, 07/27/2026 - 15:30