SMITHFIELD, Va. (AP) -- Higher raw material costs, particularly in pork and packaged meats, will reduce margins at Smithfield Foods during the fourth quarter, the nation's largest hog producer said Wednesday.
Smithfield is focusing on its consumer packaged meats business, cost cuts and better commodity pricing in hog production to offset those effects.
However, it added that its hog production segment will also be hurt by a charge to account for the loss in value of its lean hog hedged position, due to a "sizable and unexpected" increase in the futures curve for lean hogs for the summer and fall months of 2010.
Hog production numbers should improve in 2011, the company said.
Meat companies have struggled for two years with a mix of high feed prices and low demand, yet there are signs of recovery.
Smithfield Foods Inc. last month reported a profit in its third quarter after more than a year of losses.