Jim Snee: Yes, it’s a great question. And really, the biggest thing, and we’ve seen it very recently in terms of the market performance is we’ve had significant volatility in 2 very important inputs. You think about what’s happened in the belly market, the run-up and now the softening of the market. We have seen strength in 72 lean trim. So there’s been a lot of volatility there. And then probably the detailed answer that I gave a little while ago is how does turkey come back and at what rate. And then the other thing is you got the market conditions, but we’ve had pretty strong volume as well. So I think when you put those 2 things together, it’s important for us just to have that range.
Peter Galbo : Got it. Okay. That’s helpful. And you touched on this a little bit, Jim, but I think in the context of bellies and this may have been in the prepared remarks as well, give us a sense, something maybe in real time there. The July move was outsized even relative to seasonality. You played a role in that. But just — you saw that run up a decent amount. It’s come back a bit. Just what are you seeing in real time given that it does impact a meaningful part of the business?
Jim Snee: Yes. I mean, I guess what we’re seeing in real time is what you’re seeing in the marketplace and that it does have an impact in terms of how we are pricing the product. And as you know, as markets run up, you’re always lagging a little bit further behind. And then as markets come down, you’re catching up that way, too, but you probably see a little bit of expansion. And so the volatility is the thing that really as you know, leads to the unpredictability in what we’re talking about.
Operator: Your next question comes from Ben Bienvenu from Stephens.
Ben Bienvenu : I want to — if you would discuss these drivers that are negatively impacting 4Q results that have kind of evidenced themselves intra-quarter during the third quarter, what is your view at the moment on the duration of these impacts. So thinking about more challenged exports, increased promotional activity at retail and then weaker China results would — I would think that those would have more duration in the fourth quarter, but how would you expect these things to play out based on what you’ve seen in the past?
Jim Snee: Yes. Ben, that’s a good question. And that’s really what we’re focused on is we know we’ve got some of these near-term challenges in Q4. A couple of things that we talked about that are really, we think, immediate or more closer in improvement, so when we talk about the SPAM business in International, we’re seeing that improved offtake. And so we expect that business to be better in Q1. We talked about the lean ground turkey business. And so that really is just that continued acceleration. And we’ve seen recent improvement in that business. So that’s only going to continue to get better. We’re in the middle of the whole bird thing and that will shake out here between the end of Q4 and early Q1 given the timing of the holidays.
The competitive dynamics in the domestic retail business outside of what we’ve talked about, I think our team is doing a really good job in terms of marketplace execution. We are now seeing some cost favorability trends. I think our innovation pipeline that we’re seeing is really robust. So there is a lot to like outside of some of the things that we’ve talked about. The part that is still a wildcard is the macro issues in China. Obviously, we’ve said earlier, we thought there’d be an inflection point, and we were wrong. So we’re going to continue to do our work there in terms of driving distribution, the focus on innovation, getting our Foodservice business to continue to grow. And so we are optimistic about what the future holds. But clearly, we’ve got some of the short-term challenges that we’re addressing.
Ben Bienvenu : Okay. Fair enough. On thinking about the Jennie-O business, there’s a number of puts and takes. The International business segment seems to be negatively impacted by it, while some of the other segments are positively impacted by it. When you think about the runway over the next 6 to 12 months, we have declining turkey prices, but meaningfully stronger volumes as you regain distribution and the flock comes back, your production comes back. You should also be rotating into considerably lower feed prices over the next year. So what would you expect the net benefit or detriment of all of those various factors to be as we look out over the duration of this next 6 to 12 months?
Jim Snee: Yes. I think your — the things that you’re talking about are the things that are going to drive that business into 2024. And again, when we talk about the nuances of the turkey business. And this is going to get it a little bit in the weeds here, Ben. But when we think about how maybe our lean ground business didn’t accelerate as quickly as we thought, while there was some turkey that international had to sell, and those market conditions were depressed. And so as our lean ground business regains distribution and accelerates, there’ll be less of that commodity type sale that they’ll have to endure. And so that’s a positive for us. You’re right on the feed costs. I mean, we expect that to be favorable as we head into 2024 and breast meat prices should be more in line with more historical levels.
So we haven’t done the math yet to say how is that going to shake out in total but I think the bottom line, and we said this a couple of times throughout the year, is that turkey is an important part of this portfolio. When we think about it from a Foodservice perspective and we have it in our Retail portfolio. It’s good to have turkey back. And for us to be able to operate in a more normalized environment over time, I mean, that’s really where we’re at our best, and that’s what we want to get to.
Operator: Your next question comes from Rupesh Parikh from Oppenheimer.
Rupesh Parikh : I know it’s a little early, but just curious if you can give any puts and takes as you guys look to FY ’24. And would you expect at this point to return to growth next year?
Jim Snee: Rupesh, I think we’ll probably tag team this one a bit because I think as we look into ’24, it applies to — everyone’s going to have a point of view. I do think it’s important to go back to some of those internal dynamics that we addressed early on in the year and that we are in a better spot on those near-term challenges or we’ll call them key priorities. When we think about the state of the Planters business today, the work that we’ve done on inventory, the margin improvement that we’ve seen. And there’s more work to come in that area, but we’ve done some really nice work and then really leveraging more of the Go Forward benefits in year 2, right? Year 1 is always feeling things out a bit, but we know that there will be more benefit in year 2.
But Ben mentioned feed costs. We do expect feed costs to be a tailwind as we head into 2024, further leveraging and capitalizing on those investments that we’ve made and then we’ve also talked about the recovery in volume — turkey volume. And so having that volume at more normalized market conditions is a good thing. The offsets, obviously, we talked about China, the China economy, what happens there? What does inflation do with labor is a big component of that. So we feel really good about the core business, the things that we can control. It’s the things that are always out there that are outside your control that can be some potential headwinds. But by and large, continued strength in Food service. Retail continue to be competitive, but we expect to hold shares in our categories, I’ve mentioned already, strong innovation pipeline that’s really exciting.
And then International should improve offtake, I mean, obviously, a significantly lower base. And so Jacinth, I’ll let you add your two cents word.
Jacinth Smiley: Yes, certainly. Rupesh, Jim has talked about a lot of the headwinds and some of the tailwinds here and things that we’re working through from a market and customer consumer standpoint, there are a lot of other things we’re also doing in parallel here as we think about getting back to the margin structure that we have talked about before. And so we’re heavily focused from a project standpoint, working through how do we get our portfolio more healthy. And so there are a couple of projects I’ll just throw out here that we’ll talk more about in Investor Day as we think about portfolio segmentation and optimization, continuing on with Project Orion as we think about our supply chain and the effectiveness there and building out the right infrastructure to support this business as we continue to evolve and modernize and just also thinking through advancing on different areas from an end-to-end planning standpoint and continuing the transformation and getting the cost out of our system internally from an effectiveness and efficiency standpoint.
So there is a lot of work going on in parallel as we deal with the tactical to operate the business. We’re also thinking about long-term growth and setting this business up as I said, to continue to return to a margin structure and expanding margins from where we are today.
