May 28 (Bloomberg) -- National Beef Packing Co., a U.S. meat processor being acquired by Brazil's JBS SA, plans to reduce the cattle slaughter at three plants starting this week as rising costs erode profit.

Operations at plants in Liberal and Dodge City, Kansas, and Brawley, California, will be reduced to five days a week from six, cutting the slaughter weekly rate by 15,000 head of cattle, Kansas City, Missouri-based National Beef said today in a statement. The company's daily capacity was 13,900 head in 2007, based on estimates by industry magazine Cattle Buyers Weekly.

Profit margins for National Beef, the fourth-largest U.S. meatpacker, have fallen after the cost of cattle rose faster than the price of beef, spokesman Keith Welty said. Meatpackers including Tyson Foods Inc. had increased capacity too much in past years, while cattle and beef exports haven't kept pace, according to JBS Chief Executive Officer Joesley Batista, who agreed in March to acquire National Beef for about $560 million.

``There was a lot of irrationality in the industry, calling for capacity adjustments,'' Joesley said in an interview last month.

JBS reported its third quarterly loss earlier this month, citing record prices for corn and soybeans used as animal feed that boosted the cost of raising animals to slaughter weight. Cattle futures have gained 11 percent in the past year, while wholesale beef is unchanged, government and exchange data show.

Springdale, Arkansas-based Tyson, the biggest U.S. meat processor, earlier this year scaled back production at a plant in Kansas, shedding 1,700 jobs.

Rebounding Profit

Production cuts and increasing demand for U.S. beef in Russia and Asia will help revive profit in the industry, Batista said.

Profit margins for U.S. meatpackers have already climbed since the end of March, rising to a 20-month high of 7.47 cents per pound on April 24 from a loss of 0.97 cent per pound on March 26, according to data compiled by Bloomberg.

Wholesale choice-grade beef in the U.S. will climb 16 percent to a record average of $1.86 a pound next year, the biggest gain since 2003, said Len Steiner, an analyst at Manchester, New Hampshire-based food-industry research company Steiner Consulting Group.

Last month, National Beef reported a first-quarter loss of $10.1 million compared with a loss of $2 million a year earlier. Sales were little changed at $1.31 billion.

JBS, the world's biggest beef producer, on Feb. 29 agreed to pay about $465 million cash and $95 million in stock for National Beef, according to U.S. Securities and Exchange Commission filings. The purchase by the Sao Paulo-based company awaits U.S. antitrust approval.

To contact the reporter on this story: Carlos Caminada in Sao Paulo at at ccaminada1@bloomberg.net

Last Updated: May 28, 2008 13:35 EDT