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Packaged-Food Companies' Revamp Efforts Fall Short for Investors
Trouble for packaged-food companies is deepening.
Smaller companies such as J.M. Smucker Co. and Hormel Foods Corp. are the latest to face investor pressure as volatile commodity prices hurt margins and consumers gravitate away from the older brands that have anchored many established food-makers. Shares of the jam and Spam makers fell about 10% and 6%, respectively, on Thursday, dragging down the broader S&P 500.
Poor Outlook Decreases Appetite for Hormel Foods -- Market Talk
7:17 ET - Shares in Hormel Foods (HRL) dropped 4.9% premarket as the foodmaker reported a lackluster quarter and lowered its full-year guidance. Record-high pork and beef costs continued to stymie HRL in its fiscal 3Q, even as sales of non-meat items such as guacamole dip picked up pace. HRL lowered its full-year EPS guidance by more than 10c to $1.54 to $1.58. Its 3Q EPS of 36c was 1c less than analysts expected. (firstname.lastname@example.org; @CaraRLombardo)
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Hormel to Buy Brazilian Meat Company for $104M -- Market Talk
8:12 ET - Hormel Foods (HRL) will continue its acquisition streak by purchasing Cidade do Sol, the Brazilian company behind Ceratti-branded meats, for about $104M. HRL, the Spam-maker, has been scooping up companies that specialize in simpler, less processed foods to refresh its portfolio amid changing customer preferences. HRL also says the Cidade do Sol purchase, its first in South America, will facilitate international expansion. HRL shares are down 5.6% premarket after record-high meat costs hurt the company's F3Q earnings and prompted it to lower its full-year guidance. (email@example.com; @CaraRLombardo)
STORIES OF INTEREST
Grocer Shares Fall on Plan to Cut Whole Foods Prices -- Market Talk
14:43 ET - Shares of grocery store companies fell after Amazon (AMZN) said it planned to cut the prices of top-selling grocery staples at Whole Foods (WFM) after its $13.7B deal including debt for the premium grocery chain closes Monday. Kroger (KR) is down 7.2%, Wal-Mart Stores (WMT) fell 2.1%, Costco (COST) slips 4.3%, Sprouts Farmers Markets (SFM) falls 4.6%, Supervalu (SVU) down 4.8% and Target (TGT) declines 4.1%. Grocers and investors are concerned that AMZN's move might start a price-war as it works to broaden the reach of Whole Foods. AMZN also said Prime members will receive in-store benefits and that it will continue cutting prices over time. Amazon shares are down 0.2%. (firstname.lastname@example.org; @austenhufford)
Livestock Futures Turn Higher
Hog futures reversed course to close higher, ending several consecutive days of losses.
Lean hog futures for October delivery rose 0.4% to 63.775 cents a pound at the Chicago Mercantile Exchange, halting a six-day slump.
Cattle futures also rose after initially trading lower. The market has recently been in a slump similar to that weighing down hog prices, with meat and slaughter-ready cattle prices falling on growing supplies.
Some analysts say, however, that cattle futures may be reaching their seasonal low and are due for an upturn. CME most-active October live cattle contracts rose 0.6% to $1.06825 a pound.
Zumbrota, Minn Hog Steady At $46.00 - Aug 24
Barrow and gilt prices at the Zumbrota, Minn., livestock market today are steady at $46.00 per hundredweight.
Sow prices are $2.00 lower. Sows weighing under 450 pounds are $48.00-$50.00, 400-450 pounds are at $48.00-$50.00, 450-500 pounds are $48.00-$50.00 and those over 500 pounds are $53.00-$55.00.
The day's total run is estimated at 100 head.
Prices are provided by the Central Livestock Association.
Estimated U.S. Pork Packer Margin Index - Aug 24
All figures are on a per-head basis.
Date Standard Margin Estimated margin
Operating Index at vertically -
Aug 24 +$34.06 +$55.83
Aug 23 +$33.76 +$58.19
Aug 22 +$31.99 +$59.76
* Based on Iowa State University's latest estimated cost of production.
A positive number indicates a processing margin above the cost of production of the animals.
This report compares the USDA's latest beef carcass composite
values as a percentage of their respective year-ago prices.
For Today Choice 95.7
(Percent of Year-Ago) Select 97.4
USDA Boxed Beef, Pork Reports
Wholesale choice-grade beef prices Thursday fell 58 cents per hundred pounds, to $191.75, according to the USDA. Select-grade prices fell 81 cents per hundred pounds, to $188.66. The total load count was 157. Wholesale pork prices fell $1.10, to $86.37 a hundred pounds, based on Omaha, Neb., price quotes.
(END) Dow Jones Newswires
August 24, 2017 17:40 ET (21:40 GMT)