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DERIVATIVE FINANCIAL INSTRUMENTS
 6 Months Ended
Jun. 28, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVE FINANCIAL INSTRUMENTS DERIVATIVE FINANCIAL INSTRUMENTS 
Our pork production operations use various raw materials, primarily live hogs, corn, soybean meal and wheat, which are actively traded on commodity exchanges. We also use fuel and other energy commodities in our operations. We hedge these commodities when we determine conditions are appropriate to mitigate price risk. While this hedging
may limit our ability to participate in gains from favorable commodity fluctuations, it also reduces the risk of loss from adverse changes in raw material prices. We attempt to closely match the commodity contract terms with the hedged item. We also periodically enter into interest rate swaps to hedge exposure to changes in interest rates on certain financial instruments and foreign exchange forward contracts to hedge certain exposures to fluctuating foreign currency rates.
We record all derivatives as either assets or liabilities at fair value on the balance sheet, with the exception of contracts that qualify for the normal purchase and normal sale scope exception, which are expected to result in physical delivery. Accounting for changes in the fair value of a derivative depends on whether it qualifies and has been designated as part of a hedging relationship. For derivatives that qualify and have been designated as hedging instruments for accounting purposes, changes in fair value have no net impact on earnings, to the extent the derivative is considered perfectly effective in achieving offsetting changes in fair value attributable to the risk being hedged, until the hedged item is recognized in earnings (commonly referred to as the “hedge accounting” method). For derivatives that do not qualify or are not designated as hedging instruments for accounting purposes, changes in fair value are recorded in current period earnings (commonly referred to as the “mark-to-market” method). We may elect either method of accounting for our derivative portfolio, assuming all the necessary requirements are met. We have, in the past, availed ourselves of either acceptable method and expect to do so in the future. We believe all of our derivative instruments represent economic hedges against changes in prices and rates, regardless of their designation for accounting purposes.
When cash flow hedge accounting is applied, derivative gains or losses are recognized as a component of other comprehensive income (loss) and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. The initial fair value of hedge components excluded from the assessment of effectiveness is recognized in earnings on a straight-line basis over the life of the hedging instrument and is presented in the same income statement line item as the hedged item. Any difference between the change in fair value of the hedge components excluded from the assessment of effectiveness and the amounts recognized in earnings is recorded as a component of other comprehensive income (loss).
When fair value hedge accounting is applied, derivative gains and losses are recognized in earnings concurrently with the change in fair value of the hedged item attributable to the risk being hedged.
A portion of our derivatives are exchange traded futures contracts held with brokers, subject to netting arrangements that are enforceable during the ordinary course of business. Additionally, we have a portfolio of over-the-counter derivatives that are held by counterparties under netting arrangements found in typical master netting agreements. These agreements legally allow for net settlement in the event of bankruptcy. We offset the fair values of derivative assets and liabilities, along with the related cash collateral, that are executed with the same counterparty under these arrangements in the condensed consolidated balance sheets.
Changes in commodity prices could have a significant impact on cash deposit requirements under our broker and counterparty agreements. Additionally, certain of our derivative contracts contain credit risk-related contingent features, which would require us to post additional cash collateral to cover net losses on open derivative instruments if our credit rating were sufficiently downgraded. As of June 28, 2026, the net liability position of our open derivative instruments subject to credit risk-related contingent features was not material.
The size and mix of our derivative portfolio vary from time to time based upon our analysis of current and future market conditions. The following table presents the fair values of our open derivative financial instruments on a gross basis.
AssetsLiabilities
June 28,
2026		December 28,
2025		June 28,
2026		December 28,
2025
(in millions)
Derivatives using the “hedge accounting” method:
Commodity contracts$38 $26 $24 $2 
Derivatives using the “mark-to-market” method:
Commodity contracts5 2 7 1 
Total fair value of derivative instruments$44 $28 $31 $3 

The following tables reconcile the gross amounts of derivative assets and liabilities to the net amounts presented in our condensed consolidated balance sheets and the related effects of cash collateral under netting arrangements that provide a legal right of offset of assets and liabilities.
June 28, 2026
Gross Amount of Derivative Assets/ LiabilitiesNetting of Derivative Assets/ LiabilitiesNet Derivative Assets/LiabilitiesNetting of Derivative and Cash Collateral
Net Amount Presented in the Condensed Consolidated Balance Sheet (1)
(in millions)
Assets:
Commodity contracts$44 $(22)$21 $7 $29 
Liabilities:
Commodity contracts$31 $(22)$9 $(6)$3 
________________
(1)Net assets are recorded in prepaid expenses and other current assets. Net liabilities are recorded in accrued expenses and other current liabilities. These balances include $17 million in excess collateral paid to and held by our brokers, which represents initial margin that exceeded the value of related open derivative positions.

December 28, 2025
Gross Amount of Derivative Assets/ LiabilitiesNetting of Derivative Assets/ LiabilitiesNet Derivative Assets/LiabilitiesNetting of Derivative and Cash Collateral
Net Amount Presented in the Condensed Consolidated Balance Sheet (1)
(in millions)
Assets:
Commodity contracts$28 $(3)$25 $3 $28 
Liabilities:
Commodity contracts$3 $(3)$— $— $— 
________________
(1)Net assets are recorded in prepaid expenses and other current assets. Net liabilities are recorded in accrued expenses and other current liabilities. These balances include $7 million in excess collateral paid to and held by our brokers, which represents the initial margin that exceeded the value of related open derivative position.
Hedge Accounting Method 
Cash Flow Hedges 
We enter into derivative instruments, such as futures, swaps and options contracts, to manage our exposure to the variability in expected future cash flows attributable to commodity price risk associated with the forecasted sale of fresh pork and the forecasted purchase of grains, hogs, and energy. In addition, we enter into interest rate swaps to manage our exposure to changes in interest rates associated with our variable interest rate debt and the forecasted issuance of fixed rate debt. Lastly, we enter into foreign exchange contracts to manage our exposure to the variability in expected future cash flows attributable to changes in foreign exchange rates associated with the forecasted purchase or sale of assets denominated in foreign currencies. As of June 28, 2026, substantially all of our commodity-related cash flow hedges were for transactions forecasted through December 2026.
As of June 28, 2026, the notional volumes associated with open derivative instruments designated in cash flow hedging relationships were as follows:
VolumeMetric
Lean hogs717,702,000 Pounds
Corn26,164,000 Bushels
Soybean meal323,000 Tons
Natural Gas1,100,000 Million BTU
Diesel504,000 Gallons

The following tables present the effects on our condensed consolidated financial statements of pre-tax gains and losses on derivative instruments designated in cash flow hedging relationships for the periods indicated:
Gains (Losses) Recognized in Other Comprehensive Income (Loss) on DerivativeGains (Losses) Reclassified from Accumulated Other Comprehensive Loss into Earnings
Three Months EndedThree Months Ended
June 28,
2026		June 29,
2025		June 28,
2026		June 29,
2025
(in millions)
Commodity contracts$31 $(82)$30 $(3)
Gains (Losses) Recognized in Other Comprehensive Income (Loss) on DerivativeGains (Losses) Reclassified from Accumulated Other Comprehensive Loss into Earnings
Six Months EndedSix Months Ended
June 28,
2026		June 29,
2025		June 28,
2026		June 29,
2025
(in millions)
Commodity contracts$22 $(38)$34 $(14)
Interest rate swaps— — (1)(1)
Total$22 $(38)$34 $(14)

Deferred gains on closed derivative contracts included in accumulated other comprehensive loss as of June 28, 2026 were not material. We are unable to estimate the amount of deferred gains or losses related to open derivative contracts to be reclassified into earnings within the next twelve months as their values are subject to change. 
Fair Value Hedges 
We enter into derivative instruments (primarily futures contracts) that are designed to hedge changes in the fair value of firm commitments to buy grains and hogs. As of June 28, 2026, the notional volumes associated with open derivative instruments designated in fair value hedging relationships were as follows:
VolumeMetric
Lean hogs21,840,000 Pounds
Corn10,640,000 Bushels
Soybeans1,485,000 Bushels
The carrying value of hedged firm commitments designated in fair value hedge relationships as of June 28, 2026 was $6 million, which is classified in accrued expenses and other current liabilities on the condensed consolidated balance sheet. The carrying value as of December 28, 2025 was not material. When the underlying inventories are acquired, the hedge relationship is discontinued and the fair value hedge adjustment is reclassified to inventories. As of June 28, 2026 and December 28, 2025, the amounts of fair value hedge gains remaining in inventories for which hedge accounting has been discontinued were not material.
Mark-to-Market Method 
As of June 28, 2026, the notional volumes associated with open derivative instruments using the “mark-to-market” method were as follows:
VolumeMetric
Commodity contracts:
Lean hogs31,949,000 Pounds
Corn11,372,000 Bushels
Soybean meal230,000 Tons
Soybeans205,000 Bushels
Wheat295,000 Bushels
Natural gas109,000 Million BTU
Diesel84,000 Gallons
Foreign currency contracts20,551,778 U.S. Dollars
Derivative Impact on the Condensed Consolidated Statements of Income
The following table presents the effect of derivatives on the condensed consolidated statements of income for the periods indicated.
Three Months EndedSix Months Ended
June 28,
2026		June 29,
2025		June 28,
2026		June 29,
2025
(in millions)
Sales:
Cash flow hedging—commodity contracts
$26 $(6)$25 $(14)
Mark-to-market—commodity contracts
7 (20)3 (13)
Total derivative gain (loss) recognized in sales33 (25)27 (27)
Cost of sales:
Cash flow hedging—commodity contracts
4 2 10 1 
Fair value hedging—commodity contracts:
Change in fair value of derivatives14 (15)7 (14)
Change in fair value of related hedged items(13)15 (7)13 
Gain (loss) on closed derivatives (1)
4 (2)3 — 
Mark-to-market—commodity contracts
(2)4 (7)8 
Total derivative gain recognized in cost of sales6 4 6 8 
Selling, general and administrative expenses:
Mark-to-market—foreign currency contracts
1 (1)1 (1)
Interest expense:
Cash flow hedging—interest rate contracts
— — (1)(1)
Total derivative gain (loss)$39 $(23)$34 $(22)
________________
(1)Represents the amount of fair value hedge adjustment applied to the carrying amount of hedged assets that is recognized in cost of sales as the underlying hedged assets are relieved from inventories and charged to cost of sales.