By Tom Polansek and Granth Vanaik

Tyson Foods Inc shares plunged 16% to a three-year low on Monday as the U.S. meatpacker posted a surprise second-quarter loss and cut its full-year revenue forecast following a decline in prices for its beef and pork.

The weaker-than-expected results indicate cash-strapped consumers are cutting back on meat spending in a high-inflation environment while a shrinking cattle herd forces Tyson to pay more for livestock, eroding margins.

CEO Donnie King, who is seeking to cut costs, said Tyson remains in an unusual position of facing challenges in its beef, pork and chicken businesses at the same time. The company cut its forecast for fiscal year 2023 sales to $53 billion to $54 billion from $55 billion to $57 billion.

"This quarter was definitely a tough one," King said on a conference call.

Average sales prices for beef and pork fell 5.4% and 10.3%, respectively, in the quarter ending April 1, after meatpackers hiked prices last year to offset inflation.

Graphic: Tyson Foods' segment average sales prices - https://www.reuters.com/graphics/TYSON%20FOODS-RESULTS/TYSON%20FOODS-RESULTS/zdpxdgxjypx/chart.png

Sales volumes in Tyson's beef segment also fell 3% in the quarter, putting overall sales down 8.3% at $4.62 billion.

Elevated feed costs and a U.S. drought have driven cattle producers to send animals to slaughter instead of keeping them for breeding.

Tyson said costs to buy live cattle increased $305 million and reported operating margins of 0.2% for the beef business, down from 12.7% a year earlier. The company pegged full-year beef margins at negative 1% to positive 1%, compared with its previous forecast of 2% to 4%.

Graphic: Tyson Foods' segment operating margins - https://www.reuters.com/graphics/TYSON%20FOODS-RESULTS/TYSON%20FOODS-RESULTS/lgpdkgoxavo/chart.png

Beef margins were Tyson's worst since 2015, while pork margins were the worst in more than two decades at negative 2.2%, JPMorgan analysts said. In Tyson's chicken business, margins were negative 3.7% as feed costs jumped by $145 million.

"Industry fundamentals would have suggested much better numbers," JPMorgan's analysts said. Higher feed costs for the chicken business were a "particular disappointment," they said.

Tyson posted an adjusted loss of 4 cents per share, compared with analysts' expectations for an 80-cent profit.

"Many of the headwinds experienced are likely to persist for the remainder of the fiscal year," Chief Financial Officer John R. Tyson said.

(Reporting by Granth Vanaik in Bengaluru and Tom Polansek in Chicago; Editing by Kirsten Donovan, Mark Potter and Jonathan Oatis)