Jennie-O Turkey Store has suffered because of an oversupply of turkey and subsequent low prices, but the company does see signs that those problems will come to an end.
Speaking at the Barclays Consumer Staples Conference on September 6, Hormel Foods CEO Jim Snee discussed the current business climate in the turkey industry. Jennie-O Turkey Store, the second largest turkey company in the United States, is a business unit of Hormel Foods.
“Coming out of the avian influenza impact last year, there were a number of producers who were really building production and building back supply, in anticipation of perhaps another avian influenza outbreak that never materialized,” explained Snee.
Snee said he is often asked when turkey supplies and, more significantly, prices will normalize. He said he has “no crystal ball,” but the company has been keeping its eyes on two leading indicators: turkey poult placements and the levels of turkey breast meat in cold storage.
Poult placements
The first indicator Snee mentioned are poult placements. Poult placement figures are released monthly by the U.S. Department of Agriculture.
For all of 2016, Snee said, Hormel saw a significant increase in poult placements nearly every month. However, over the last four months, Snee said he has seen a “very positive trend” in that poult placements have reduced.
“That bodes well for the future of the supply and we expect it to come back more in line,” said Snee.
Turkey in cold storage
USDA also publishes a monthly Cold Storage report. Presently, turkey breast meat in cold storage is “well above historical five-year averages,” Snee said.
However, he has noticed that the rate of growth of the cold storage inventory has slowed, another encouraging sign.
Jennie-O Turkey Store’s third-quarter results
Snee spoke at the conference less than two weeks after Hormel Foods released its quarterly financial results. During a conference call in which Snee discussed its third quarter of fiscal year 2017, Snee reported that Jennie-O Turkey Store saw a 20 percent decline in earnings when compared to the third quarter of fiscal year 2016. He also reported that sales were down 9 percent and volume was down 7 percent.
