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Smithfield Says Despite Price Surge No Reduction In Pork Consumption

Tyler Durden's picture


While many commodities are experiencing a long-overdue correction as the inflation trade takes a breather, lean hogs continues to surge higher, and at last check were just off record highs. Which is why many are following the presentation the company is currently conducting at the JP Morgan global protein conference to get a sense of whether consumers are finally balking at protein purchases. Apparently the answer is no. As Reuters reports, "U.S. consumers have not yet slowed purchases of pork at grocery stores and casual dining restaurants despite this year's much higher prices, U.S. pork producer Smithfield Foods Inc said Wednesday." And why should they: with millions living mortgage free, since the average mortgage delinquency length is now 537 days, that many more people can afford it, and everything else, at virtually any price. Ironically the Fed, by indirectly cutting out on this key expense (not to mention the FASB's ongoing MTM freeze which permits banks to mark mortgages, even delinquent ones, at whatever price they want) is allowing the population to experience an effect comparable to wage growth. Which is one of the key aspect ignored by the media and those who perceive deflation as imminent: while wage growth is surely a key component to stimulating pernicious inflation, eliminating key consumer overhead ends up having the same net effect. And since banks are in no rush to kick squatters out, expect to see increasing price pressure not only on pork but on all other commodities too.

More from Reuters:

"At this point we have not seen a dramatic amount of consumer fatigue due to pricing," Bo Manly, Smithfield Foods's chief financial officer, said during a presentation at the J.P. Morgan Global Protein Conference.

However, he said there could some consumer reaction later if prices continued to rise, particularly for higher-priced premium brands of meat.

Look for many other retailers to realize just how much more resilient the consumer is, and to continue passing on through prices in lieu of now obsolete mortgage paymanets.

Smithfield's full presentation link:

Smithfield JPM Presentation

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Wed, 03/30/2011 - 10:26 | 1116765 Alcoholic Nativ...
Alcoholic Native American's picture

I only buy the finest meat cuts with my food stamps.

Wed, 03/30/2011 - 10:38 | 1116821 Ray1968
Ray1968's picture

Must be that sophisticated diet Ben tells us we have.

Wed, 03/30/2011 - 11:24 | 1117054 nkktwotwozero
nkktwotwozero's picture

It is true. My iPad is now twice as delicious.


Brought to you by Carl's Junior.

Wed, 03/30/2011 - 10:49 | 1116871 the mad hatter
the mad hatter's picture

with so much cheap energy available in the past century, we've grown accustomed to eating meat.

guess why we're in Libya? its to help ensure cheap oil keeps powering Smithfield's pig farms.

capitalism is going to leave the earth raped and sodomized like a catholic choirboy. a sliver of its former self.

fuck what a depressing world.

Wed, 03/30/2011 - 13:08 | 1117670 curbyourrisk
curbyourrisk's picture

junk +1000

Wed, 03/30/2011 - 17:40 | 1119027 buster bucani
buster bucani's picture

Food for thought for bacon lovers;

learn how to improve your diet by reading The China Study here;

You are welcome ZHers and keep up the great work. Thanks Tyler for what you do! Also high plains drifter, cossack55, ORI, CD, buzzsaw 99, taraxis, tmosley and the rest of the erudite crew! You all Kick Ass...



Wed, 03/30/2011 - 10:27 | 1116766 GOSPLAN HERO
GOSPLAN HERO's picture

When you dine eat swine!

Wed, 03/30/2011 - 10:30 | 1116773 GOSPLAN HERO
GOSPLAN HERO's picture

Ben does not eat pork.



Wed, 03/30/2011 - 10:27 | 1116774 A Man without Q...
A Man without Qualities's picture

Bacon vs iPad - sorry Steve, there could only ever be one winner in that one....

Wed, 03/30/2011 - 10:30 | 1116792 ss123
ss123's picture

Yes. Bacon is even more perfect than the shiney iToys. In fact, bacon is perfection.

Wed, 03/30/2011 - 10:35 | 1116806 Mae Kadoodie
Mae Kadoodie's picture

I'm makin' the bacon.

Wed, 03/30/2011 - 10:58 | 1116908 Rogerwilco
Rogerwilco's picture

Even though I love my iPad, I have to agree on that one.

Wed, 03/30/2011 - 10:27 | 1116775 Coldfire
Coldfire's picture

Certainly no reduction in pork production in the District of Corruption.

Wed, 03/30/2011 - 10:31 | 1116785 LawsofPhysics
LawsofPhysics's picture

Mark to fantasy forever, rally on! <sarcasm off>

Wed, 03/30/2011 - 10:31 | 1116787 TruthInSunshine
TruthInSunshine's picture

It's all good. CEO Confidence Index has hit a record high.

Rally and Party On, bitchez!

CEO confidence hits record high: Roundtable



  • 23 minutes ago
    The Business Roundtable's quarterly CEO Economic Outlook index surged to 113 -- the highest in the nearly 10 years the group has been doing the poll
  • Wed, 03/30/2011 - 11:07 | 1116959 ghostfaceinvestah
    ghostfaceinvestah's picture

    Why not?  As Obama has clearly cemented America's Fascism once and for all, corporations are the clear winners.

    Wed, 03/30/2011 - 10:33 | 1116793 SDRII
    SDRII's picture

    WTI invetory #s are a joke

    Wed, 03/30/2011 - 10:32 | 1116796 assumptionblindness
    assumptionblindness's picture

    Don't we have to acknowledge that Americans will continue to spend every dollar they have (cash) or can borrow (debt) until they simply can't any more?  The delusion factor among 'consumers' has reached a Category 5 on the Chairsatan-Simpson Scale.

    Wed, 03/30/2011 - 10:32 | 1116798 Bob
    Bob's picture

    With 45M or so people eating on Food Stamps, I think you'll find retail demand for staple foods surprisingly price elastic until it gets severe. 

    Wed, 03/30/2011 - 10:34 | 1116800 LFMayor
    LFMayor's picture

    It's because pork is the cheapest meat... real meat, that is.  Chicken a close second.

    Wed, 03/30/2011 - 10:45 | 1116802 AN0NYM0US
    AN0NYM0US's picture

    there's some BS in this report, I mean PS - unless Pigs can fly there is not a chance that consumers are ponying up 5 bucks for a package of bacon and making such a purchase with the same frequency, my guess is that costs have not fully filtered through the supply chain


    I'd read the presentation but just like I don't watch CNBS I won't use SCRIBD  - it totally sucks - I'll find a PDF


    update according to swineweb

    The U.S. retail price of pork averaged $3.28 per pound in February up 13% from last year.  Higher despite 1% more pork available.  A strong indicator of demand.  In February packers and retailers made good money, while producers mostly sucked air.  We expect that U.S. weekly hog marketing’s could drop 150,000 a week from 2,150 million ranges to 2 million in the next 6 weeks.  When that happens we have supercharged hog price increases of $40 per head.  It will be the producer’s turn to have some extra cash!


    (and one look at the ads on that site and you'll likely never buy Pork again)

    Wed, 03/30/2011 - 10:59 | 1116909 goldfish1
    goldfish1's picture

    The stench alone from the pig farms is enough to turn your stomache.

    Hogs are being essentially force fed with GMO corn products.


    Wed, 03/30/2011 - 10:39 | 1116815 quasimodo
    quasimodo's picture

    Oink Oink

    In these parts we have a couple finishers for every section of ground. Many will go tits up if this market goes in the shitter, so to speak.

    Wed, 03/30/2011 - 10:39 | 1116817 PhattyBuoy
    PhattyBuoy's picture

    The guy behind me has been squatting in his house for more than 2 years.

    He deliberately keeps the front of his house disheveled, so the bank will not think consider it easily marketable ... and he eats pork !

    Wed, 03/30/2011 - 10:52 | 1116875 TruthInSunshine
    TruthInSunshine's picture

    Guy that used to do subcontract work for me lives in a home he built on 100% finance loan in 2005 for 800k has not made a mortgage payment in what will soon be 4 years.

    House probably hit a value of 1.4 million in 2006 or 2007.

    BofA is noteholder. They tried to do a short sale at 450k, and no takers.

    They have only filed notice of delinquency and intent to do a foreclosure. They haven't even begun foreclosure proceedings.

    Wed, 03/30/2011 - 11:09 | 1116968 ghostfaceinvestah
    ghostfaceinvestah's picture

    The more underwater you are, the greater the mark-to-market hit when it is foreclosed, so the less likely the bank will foreclose.

    At 350K+ underwater, he could have another 4 years of free living.

    Wed, 03/30/2011 - 11:50 | 1117209 MachoMan
    MachoMan's picture

    Bingo.  Strategic defaulters who have equity in their homes are not very strategic ;)

    Wed, 03/30/2011 - 10:40 | 1116819 bob_dabolina
    bob_dabolina's picture

    You got it Tyler.

    And what happens when you don't have to even worry about looking for work?

    ...well, maybe you become so obese over a period of time that your skin fuses to the chair your fat ass has been sitting in for over two years.

    Wed, 03/30/2011 - 10:40 | 1116820 RobotTrader
    RobotTrader's picture

    Meanwhile, crude prices are crashing after the "glut" reported at Cushing.

    And the XRT is now printing new, 2-year highs as we speak.

    Just as Bernanke says, he can snuff out inflation with a flick of the switch.

    Just put out some bogus crude inventory report, and long specs flee for the exit doors.

    Just like that.

    There is nothing that can't be solved by pushing out a few paper contracts with electronic digits.

    Wed, 03/30/2011 - 10:42 | 1116825 redpill
    redpill's picture

    "There is nothing that can't be solved by paper contracts."


    How about junks?  Can you solve those with paper contracts?

    Wed, 03/30/2011 - 10:45 | 1116827 SheepDog-One
    SheepDog-One's picture

    That is a $1 move in oil Catfishmouth, and totaly misleading as latest quote shows $104.20....God youre pathetic. How about a 5 min gold chart this morning?

    Wed, 03/30/2011 - 10:46 | 1116861 d00daa
    d00daa's picture

    Have you ever seen markets behave like this for such an extended period of time Robo?  EVER???

    I'll admit it.  I am beyond stunned.

    Wed, 03/30/2011 - 11:18 | 1117019 ghostfaceinvestah
    ghostfaceinvestah's picture

    Were you in the markets in the late 90s?  Remember it was 96 when Greenspan uttered his "irrational exuberance" remark.  Market didn't start tanking until 03/2000.

    This is very similar, and should start tanking similarly in June, if the Fed is truly going to stop printing.

    Think about this - the Fed printed ANOTHER $7B today.  Not a week goes by they don't print $7B+ on multiple days.  What happens when that support is gone?

    What the Fed is doing is truly without precedent - monetizing 70% of the deficit.  There is no smooth transition from that.

    Wed, 03/30/2011 - 10:55 | 1116895 lieutenantjohnchard
    lieutenantjohnchard's picture

    meanwhile, the catfish mouth robo uber bull bear wannabe poster known as robottrader has perfected the trade whereby one can trade against the 98% (his words) losers in the market, and win. and how is this done? ... by buying home depot and abbott labs.

    for real! you too can be part of the 2% market winners if only you will buy hd and abt.

    the guy is a clown wrapped in a goober inside a buffoon.

    Wed, 03/30/2011 - 11:21 | 1117027 ghostfaceinvestah
    ghostfaceinvestah's picture

    Agreed, as I have said multiple times, ZH should pull his ability to post charts, his posts really cheapen the site.

    Wed, 03/30/2011 - 10:39 | 1116823 SheepDog-One
    SheepDog-One's picture

    Throw another chop on the barbie for Allah! As pro Gadaffi forces this morning kick the crap out of NATO led Al CIAda US backed forces. Its all goooooood!!

    Wed, 03/30/2011 - 10:42 | 1116829 redpill
    redpill's picture

    I'd spend my last ounce of silver on bacon.

    Wed, 03/30/2011 - 10:42 | 1116830 g3h
    g3h's picture

    ZH or anyone,


    Do you have some quantifiable figure about how living mortgage free helps retail sales?  That is, how much money is saved and used to spend in retail?


    Wed, 03/30/2011 - 10:43 | 1116839 redpill
    redpill's picture

    Tough to say, but your taxes sure as hell go up.   It's the government's way of saying "fuck you" for not playing their endless debt game.

    Wed, 03/30/2011 - 11:27 | 1117067 ghostfaceinvestah
    ghostfaceinvestah's picture

    Just back of the envelope - according to LPS there are roughly 7M noncurrent mortgages.  Figure each mortgage has a PITI payment of $1200 per month, that is 8.4B per month of non-payments, or about $100B a year.  It's a big nut, but if you are wondering what is propping up this artificial recovery in this artificial economy, 100B a year pales in comparison to 1.7T in deficit spending which is 70% monetized by the Fed.

    Put another way, Bernanke already this week has printed more than the 7M delinquent mortgage holders save by non-payment in a month.

    Wed, 03/30/2011 - 12:48 | 1117570 g3h
    g3h's picture

    That's a good analysis.

    Wed, 03/30/2011 - 10:43 | 1116831 gordengeko
    gordengeko's picture

    They don't call us, excuse me, it swine for nothing.

    Wed, 03/30/2011 - 10:43 | 1116837 New_Meat
    New_Meat's picture

    Will the atrocities never end? - Ned

    Wed, 03/30/2011 - 10:43 | 1116841 DarkAgeAhead
    DarkAgeAhead's picture

    Go long on Smithfield if you enjoy MRSA in your pork.  Then your skin and internal organs.  With the amount of antibiotics we inject in animals to force growth, doctors might as well prescribe pork and other factory meat as antibiotics.

    Wed, 03/30/2011 - 10:48 | 1116847 Ignorance is bliss
    Ignorance is bliss's picture

    I tried to buy a bank short sale 2 years ago. The bank just gave that house back to the original owner. Apparently, there was a lawsuit and the owner won. Lucky bstard. I paid for the house down the road, in what use to be a $600K neighborhood. Now houses go for $20 and a prayer.  I know of at least 5 homes in this community of 33 where the owners don't pay thier mortgage or HOA fees.


    I only eat organic chicken. I use to eat fish, but am concerned about toxins in the ocean. Organic beef is very pricey. I rarely see organic pork available. Its all full of stuff I wouldn't feed a rabid dog.

    Wed, 03/30/2011 - 11:11 | 1116975 kaiserhoff
    kaiserhoff's picture

    Iggy, do you mean the banks are actually financing new owners in your area instead of cashing out?  That would be new and a sensible solution.  I've sold a few properties on contract for deed.  A potential owner is always better than a renter.

    Wed, 03/30/2011 - 10:58 | 1116906 repete
    repete's picture

    Stop paying your underwater $2000 mortgage and buy silver with the savings..  By the time they throw you out you have at least $36,000 plus the property tax you have saved so say $46,000.  Wait until that turns into $200,000 and and pay cash for a forclosed home.  Fuck the bankers!  "ZHHOP" motherfuckers! zero hedge home ownership program.

    Wed, 03/30/2011 - 11:04 | 1116945 kaiserhoff
    kaiserhoff's picture

    Me likey;)

    Wed, 03/30/2011 - 11:53 | 1117228 MachoMan
    MachoMan's picture

    Note: may require lying to authorities and may not work in recourse states.

    Wed, 03/30/2011 - 11:02 | 1116938 kaiserhoff
    kaiserhoff's picture

    ZH has the best stats available, but as the government becomes more oppressive and manipulates markets, more money goes over seas and underground.  Stats mean less, and everything becomes more volatile.  This will only get worse until we get rid of Obummer, and there is some clear direction for the country.

    Local Kroger:

    Ham on sale  99 cents per pound

    Cheapest sausage 2.00 per pound

    Go figure.

    Wed, 03/30/2011 - 11:08 | 1116966 fuu
    fuu's picture

    Smithfield better keep hoping people continue eating pork. Hormel has been salivating at the hopes of picking that corpse clean for years.

    Wed, 03/30/2011 - 11:11 | 1116970 unclebigs
    unclebigs's picture

    The women I date are still consuming as much of my pork as ever.  Female demand for pork appears high.

    Wed, 03/30/2011 - 11:15 | 1116994 lamont cranston
    lamont cranston's picture

    Arnold Ziffel is nervous. He saw Fred sharpening his axe yesterday.

    Wed, 03/30/2011 - 11:21 | 1117028 johngaltfla
    johngaltfla's picture

    When I saw the headline, I just asssumed the pork consumption was in Washington, D.C., Springfiled, IL, and Sacramento, CA were the areas Smithfield was referencing.

    Of course once the average consumer sees 16 oz. packages of bacon for $10.99, that will be the end of that......

    Wed, 03/30/2011 - 13:21 | 1117741 TruthInSunshine
    TruthInSunshine's picture

    You forgot Manhattan.

    And before anyone gets into the kosher argument, there are many Italians on Wall Street and plent of Jews, too, who eat pork.

    Manhattan is waaaay more special and bailout worthy than any other part of the country, and it's entitled beyond all.

    Wed, 03/30/2011 - 11:28 | 1117060 Eureka Springs
    Eureka Springs's picture

    " And why should they: with millions living mortgage free,"


    WTF?  Most of these people are victims, even more so patriots if they are not paying a  bullsh8it mortgage... and yes, perhaps a few con wo/men... but at least their con is doing us all a favor by putting pressures on the biggest of our criminal fish in the systemic ponzi.

    Millions in trouble (none of them banksters or politicians) and what, over 13 percent of all houses vacant? The only thing wrong is abrogation of rule of law and the fact all these people are not in a reasonable and affordable mortgage.

    Wed, 03/30/2011 - 11:55 | 1117244 MachoMan
    MachoMan's picture

    so patriotism is stealing tax money from your neighbor?

    Wed, 03/30/2011 - 12:10 | 1117360 ghostfaceinvestah
    ghostfaceinvestah's picture

    i wouldn't call strategic defaulters patriots, or victims for that matter, i would call them rational, putting morals aside, it is a contractual right to exercise your put option to the note holder, these are collateralized loans after all.

    As for tax money, taxes have the most senior lien on the property, ahead of mortgage holders.  No tax money is being lost.  The banks/servicers are paying the taxes, and tacking it on to the loan balance to be written off when the foreclosure happens.  It is the banks/investors who will take the ultimate hit, not the taxing authorities, and the banks are covered by the Treasury and the Fed.

    In many cases the investors will be Fannie/Freddie, meaning the Federal Govt takes the hit, but Bernanke is monetizing the debt to cover that.

    In the end it all comes back to the Treasury/Fed ponzi scheme, as long as that keeps going, all is well.  As soon as it ends, massive fail.

    Wed, 03/30/2011 - 14:16 | 1118085 MachoMan
    MachoMan's picture

    Right...  just depends on whether you're in a recourse state and whether you have any additional assets and are OK with filing BK...

    If you want to make a hypertechnical argument that we can simply repay ourselves with monetized monopoly money, then go right ahead, but I think you'd be arguing form over substance.  In the end, all governmental money comes from taxing our capital or the promise to do so in the future...  If strategic default ultimately causes outlays by the taxing authority, then capital is necessary destroyed outright or through devaluation...  In other words strategic default, in our present environment, causes all taxpayers to take a hit...  In short, it is impossible to dissociate governmental expenditures from the ultimate saps footing the bill.

    PS, does tax money get lost when the fed gives PDs a reach around by buying the most expensive bonds? 

    Wed, 03/30/2011 - 11:37 | 1117130 tekhneek
    tekhneek's picture

    What's next? Credit expansion leads to more borrowing? Jesus Christ these guys are fucking idiots.

    Wed, 03/30/2011 - 11:55 | 1117245 TruthInSunshine
    TruthInSunshine's picture

    This is highly bullish for Countrywide, Indymac, Merrill Lynch & Levitt Brothers.

    Wed, 03/30/2011 - 12:04 | 1117318 Predator
    Predator's picture

    Smithfield is full of shit.  I pass up the $6 bacon packages every time I shop where I used to be on autopilot.  If I can't find a sale, no bacon 4 me. 

    Wed, 03/30/2011 - 12:29 | 1117476 -Michelle-
    -Michelle-'s picture

    We're finishing out what's in our freezer and then switching to a CSA for our produce, pork, beef, chicken, and eggs.  Smithfield and the rest of Big Food can rot.

    Wait.  They already do...

    Wed, 03/30/2011 - 12:43 | 1117544 wisefool
    wisefool's picture

    Not with the ammount of nitrates/trites they pump into that stuff. But beware. Once you go to more natural stuff it is really difficult to go back, you taste buds change. I have a very hard time eating commercial eggs any more. Including the whole foods type.

    Wed, 03/30/2011 - 14:02 | 1118015 -Michelle-
    -Michelle-'s picture

    It's a risk I'll gladly take.  We're voting with our (rapidly decreasing in value) food dollars.  I've got to do it now while our kids are still little so they don't get used to processed stuff and balk at the change. 

    Wed, 03/30/2011 - 13:01 | 1117627 grunk
    grunk's picture

    Scrapple - pork's final frontier.

    Do NOT follow this link or you will be banned from the site!