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Higher Prices, Lower Costs Help Chiquita Narrow Loss

Like several other food producers this earnings season, Chiquita reported Thursday that higher retail prices and falling costs have improved its third-quarter results.

picheader.jpgThe question is, how long will suppliers be able to maintain their high prices, which they have been jacking up for months, citing high commodity costs? Grains, soybeans and fuel have all fallen big time from their mid-summer highs, but, as is usually the case, retail food prices have yet to follow. Hence the improved results of food producers like Kraft, Kellogg, and Chiquita, the latter of which specifically cited lower fuel costs as a reason for its greatly narrowed losses. It also cited high retail prices.

Chiquita reported a loss of $5.5 million, down from $28.2 million in the same period last year.

Unlike in previous instances where prices were hiked in response to higher costs, only to stay hiked even when costs came down, retailers have a bit more power this time. Mostly, that's thanks to Wal-Mart, which is the world's largest grocer and which has built up an unprecedented power over its suppliers. The Wall Street Journal on Thursday reported that grocers â€" many of which are hurting -- are trying to "pressure" suppliers to lower their prices.

Whether that pressure will be enough will be revealed in the next quarter or two.

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