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Make Me Smart with Kai and Molly

Meat processors consider long-term outlook

Queena Kim Aug 23, 2012
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Stacey Vanek Smith: Good news for Spam Fans: Shares of Hormel are up 0.3 percent this morning. The company saw strong quarterly earnings, and sales up 5 percent. The company is the third-largest seller of meat in the U.S. And with the drought in the Midwest pushing food prices up, investors are looking to this purveyor of processed meat for hints about the food industry’s long term health.

Marketplace’s Queena Kim has the story.


Queena Kim: When you hear Hormel, you think of Spam, Dinty Moore or canned foods. But today, Hormel’s biggest moneymaker is turkey.

Tim Ramey: Turkey breasts, turkey burger, turkey franks.

And they sell whole turkeys too. Tim Ramey is an analyst at D.A. Davidson.

About 30 percent of Hormel’s business comes from Jennie O, its turkey brand. Ramey says with the Midwest drought driving up corn prices, turkey prices will rise too.

Ramey: You make turkey out of corn. There’s no doubt that will be expensive going forward.

But don’t worry about Thanksgiving dinner, says Akshay Jagdale, a food and beverage analyst at Key Banc. Hormel has been been smart about buying corn in advance. The question is: Has the company locked in prices for next year?

Akshay Jagdale: It’s more likely we see it next year than immediately in this Thanksgiving.

So, you might want to put an extra bird in the freezer for next Thanksgiving.

I’m Queena Kim for Marketplace.

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