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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Alcoholic Native American's picture

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

Ray1968's picture

Must be that sophisticated diet Ben tells us we have.

nkktwotwozero's picture

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


Brought to you by Carl's Junior.

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.

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...



GOSPLAN HERO's picture

When you dine eat swine!

GOSPLAN HERO's picture

Ben does not eat pork.



A Man without Qualities's picture

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

ss123's picture

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

Coldfire's picture

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

LawsofPhysics's picture

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

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
  • ghostfaceinvestah's picture

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

    SDRII's picture

    WTI invetory #s are a joke

    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.

    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. 

    LFMayor's picture

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

    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)

    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.


    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.

    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 !

    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.

    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.

    MachoMan's picture

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

    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.

    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.

    redpill's picture

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


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

    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?

    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.

    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.

    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.

    ghostfaceinvestah's picture

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

    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!!

    redpill's picture

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

    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?


    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.

    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.

    gordengeko's picture

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

    New_Meat's picture

    Will the atrocities never end? - Ned

    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.

    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.

    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.

    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.