Smithfield Foods, cursed by the hog sector downturn to more than two years of losses, has been caught out by the revival too - losing $58m through wrong bets on weak prices.

The group said its hog production business, America's biggest, came near in the three months to May 2 to reporting its first quarterly profit since autumn 2007.

"Results dramatically improved," the group said, as live hog prices hit $52 per hundredweight, a 23% rise year on year, taking them just $1 per hundredweight short of rearing costs.

Futures losses

However, hopes of coming within a step of breakeven, after nine quarters of losses totalling more than $1.1bn, were dashed by a futures positions taken to lock in hog sales months in advance – but which were left far below market when prices more than doubled between August last year and May.

"A sharp rise in hog futures… created a $58.1m unfavourable mark-to-mark adjustment," the group said.

The loss dragged the group into a loss of $4.6m for the quarter, disappointing investors who sent Smithfield shares down 5.9% to $16.49 in afternoon trade in New York.

Shareholder strain 

The announcement came a day after Continental Grain, a major Smithfield shareholder with which the company has been on strained terms, revealed it was in talks with the group over "hedging policies, sale of non-core assets and certain governance matters".

Paul Fribroug, the head of Continental, quit the Smithfield board last year in anger at plans for a $250m cash call.

Larry Pope, the Smithfield chief executive, on Thursday said that the group would cut its reliance on futures markets for selling hogs.

"We will live closer to the cash market," Mr Pope told analysts.

"We will not be seeking large positions in the commodity markets to cover these hogs."

Talking turkey 

The group also announced that its was bringing the ownership of its Butterball joint venture to a head, offering to buy partner Maxwell Farms out of the turkey business for $200m.

Under the terms of their shareholder agreement, Maxwell Farms must either accept the offer for its 51% stake, or buy out Smithfield's 49% holding.

"Purchasing the remaining ownership interest will afford Smithfield the opportunity to build the Butterball brand," Mr Pope said.

"On the other hand, if we are the seller we will have exited at a price that we believe fairly values the operations.

"Either way, we will be pleased with the outcome."