After Doubling the Price of Beef, Chicken, and Pork, Food Prices Soar to a Record High.

Stock of Tyson Foods, the world's second largest processor and marketer of poultry, beef, and pork behind Brazil's JBS S.A., is rising 9 percent , setting an all time high and is one of the S&P's top firms this morning...

... after the firm reported blowout earnings (due to passing on increasing food prices) and revealed that it is boosting prices even more as it grapples with a tight labor market and fewer animal herds. According to the research, beef prices soared by 32 percent in the quarter, with chicken up ~20 percent and pork 13 percent .

This helped Tyson's operating margin expand to 11.3 percent , up from 6.7 percent , a year earlier. The rising meat costs has, however, got the Biden administration scrambling as profits continue to grow at meatpackers, but runaway inflation continues to smash Biden's plummeting approval rating.

This is what the firm reported:

Beef: Sales volume dropped owing to the consequences linked with a challenging labor market and increasing supply chain restrictions, somewhat offset by robust worldwide demand Average sales price climbed as input expenses such as live cattle, labor, freight and transportation costs increased while demand for our beef products remained strong
Pork: Sales volume was up marginally as robust worldwide demand was offset by the difficulties associated with a challenging labor market. Average sales price increased as input prices such as live hogs, labor freight and transportation expenses grew and demand for our pork products remained strong somewhat offset by unfavorable mix linked with labor shortages
Chicken: Sales volume grew mostly owing to increased live output and a robust demand environment. Average sales price increased owing to the consequences of an inflationary cost environment
Prepared Foods: Sales volume dropped owing to the disposal of our pet treats business in the fourth quarter of fiscal 2021 as well as lower production throughput principally related with a tough labor and supply situation Average sales price increased mostly due to the consequences of revenue management in an inflationary cost environment

Overall sales for beef jumped roughly 25 percent to $5 billion, helping Springdale, Arkansas-based Tyson's revenues rise 23.6 percent to $12.93 billion in the first quarter ended Jan. 1. Analysts on average were anticipating sales of $12.18 billion; net income attributable soared to $1.12 billion and excluding adjustments, Tyson earned $2.87 per share, again surpassing predictions of $1.95 per share.

As Bloomberg's Felice Maranz notes, consumer goods companies keep showing they can boost how much they charge customers, who bizarrely don’t seem too stretched to pay up despite complaining about inflation at every possible opportunity (and hammering both Joe Biden and the Democrats' approval ratings). That’s alleviating margin fears and raising share prices for some of the biggest U.S. corporations.

And speaking of food inflation, brace for more, much more: recent statistics indicated the American cow herd decreased more than predicted, meaning consumers faced further sticker shock. Amazon’s stock surge last week was a striking example. The rally came with an increase in the price of Prime membership.

The durability of such benefits, according to Maranz, is an unresolved subject. Consumer products company Kimberly-Clark boosted prices too, but confronts growing costs of its own, combined with supply-chain difficulties - contributing to a collapse in its stock price. And, while Friday’s employment data showed average hourly earnings climbed, salaries have failed to keep pace with inflation. That’s expected to impact on how far corporations can keep raising prices... and will eventually weigh on risk assets.

Meanwhile, an even larger concern for equities is that rates are growing, too, with U.S. Treasuries down from belly to long-end, steepening crucial yield-curve spreads from lowest levels in months. Yields on 10-year Treasuries are exceeding 1.93 percent with inflation worries boosting bets on the Fed, while European periphery bonds are getting dragged to the woodshed as described before.