December 3, 2013

In the quarter ending October 27, Hormel Foods Corporation reported its earnings 18% higher on a per share basis, helped by a rise in retail pork profits, according to AgriMoney.

Hormel Foods Corp. ended its fiscal year on a high note, crushing Wall Street profit expectations. However, the food giant cautioned that higher beef costs and "uncertainty" in hog supplies could potentially erode the boost to margins from lowers grain prices.

The relatively resilient hog price and low grain costs encourage products to rebuild, with the US breeding herd projected to expand by as much as 3% over the next year, as reported by Purdue University. However, porcine epidemic diarrhoea virus (PEDv) is raising questions – and doubts – over this growth.

Broker US Commodities warned that "new cases of PEDv remain a concern for the bears" on lean hog prices.

Hormel reported a 30% increase in operating profits for the company's refrigerated food business, its biggest earning, which has reflected enhanced margins in their retail bacon business, along with improved pork operating margins as compared to last year's challenging pork operating environment.