Officials at Seaboard Corp. said second-quarter profit nearly tripled, reflecting industry-wide profitability after hog prices nearly doubled in the past year.
Seaboard’s net earnings for the three months ended July 3 rallied to $77.6 million from $26.9 million a year earlier. In an Aug. 10 statement, the Shawnee Mission, Kan.-based Seaboard reported revenue at $1.048 billion, up 20 percent from $870 million a year earlier.
Hog prices climbed this year after high feed costs and last year’s export setback prompted producers to cut herds. In May, hog futures reached 90.15 cents a pound, up from a near-seven-year low of 43.575 cents in August 2009.
Pork prices also rose as the herd shrank, boosting profit prospects for other producers. For example, BB&T Capital Markets analyst Heather Jones earlier this month raised her rating on Smithfield shares to “buy” from “hold.”
“On the heels of much tighter supplies and relatively strong export demand, pork prices have been very strong,” Jones wrote in an Aug. 6 report. “Consequently, current and projected hog production margins are strong. Packer margins are robust as well.”
In June, Smithfield said its quarterly loss narrowed to $4.6 million from $81.2 million during the same period last year.
“Finally, the hog market has turned,” said C. Larry Pope Smithfield chief executive officer, in June. “The hog production side has sharply improved.”
Seaboard’s latest statement didn’t provide details on the quarterly results and a company spokeswoman didn’t respond to messages. In early Wednesday afternoon trading, Seaboard shares rose $32.89, or 2.1 percent, to $1,640.18.
The company raises about 4 million market hogs a year and operates a slaughter plant in Guymon, Ok., that processes about 18,500 pigs a day.
China banned meat from the Guymon plant, according to an Aug. 5, report from USDA’s Food Safety and Inspection. That means that pork packed after June 21 was not eligible for export. USDA did not provide further explanation.
Overall, pork prices remain high, raising concern that the weak economy may lead consumers to cut back on more-expensive foods. Also, some market watchers believe the hog market spark is beginning to burn out as slaughter numbers will begin to climb higher into the fall.
Carcass cutout values averaged 87.82 cents a pound on Tuesday, down $2.56 from the previous day but up 55 percent from 56.65 cents a year ago, according to USDA data. Cutout values reached a 21-month high of 91.81 cents in May.
At today’s close, lean hog futures for October delivery fell 0.125 cent to 73.95 cents a pound.