CHICAGO, Feb 2 (Reuters) - U.S. meatpacker Tyson Foods TSN.N reported bigger-than-expected quarterly earnings on Monday, as strong demand for its chicken products overshadowed hefty losses in its beef business.

Beef prices have climbed as ranchers slashed the size of the U.S. cattle herd following a persistent drought that burned up pastures and hiked feeding costs, shifting some demand to lower-cost chicken.

The cattle herd shrank to a 75-year low as of January 1, the U.S. Department of Agriculture said on Friday.

Although meatpackers including Tyson benefit from high prices, they have paid increased costs to buy cattle to slaughter due to limited supplies.

Tyson's chicken unit's sales gained 3.7% for the quarter while beef sales volumes fell 7.3% as prices jumped 17.2%.

The Springdale, Arkansas-based company's net sales rose 5.1% to $14.31 billion in the first quarter, beating the average analyst estimate of $14.09 billion. Its adjusted earnings per share of 97 cents topped expectations of 94 cents.

Tyson forecast sales to be up 2% to 4% in fiscal 2026, compared with last year, the midpoint of which is higher than analysts' estimates of 2.8%, according to data compiled by LSEG.

The company raised its adjusted income outlook for chicken, pork and prepared foods for fiscal 2026 and reduced its projected loss for beef.

For chicken, Tyson anticipates segment operating income of $1.65 billion to $1.90 billion on an adjusted basis in fiscal 2026. Previously, it expected adjusted operating income of $1.25 billion to $1.5 billion.

The meatpacker began mass layoffs in January at a major beef plant it is closing in Lexington, Nebraska, that once employed about 3,200 people. The company has also said it would reduce operations at a beef plant in Amarillo, Texas.

(Reporting by Tom Polansek and Angela Christy M in Bengaluru; Editing by Maju Samuel)

((Thomas.Polansek@thomsonreuters.com))