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DERIVATIVES AND HEDGING
 3 Months Ended
Jan. 25, 2026
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
DERIVATIVES AND HEDGING
NOTE G - DERIVATIVES AND HEDGING

The Company uses hedging programs to manage risk associated with various commodity purchases and interest rates. These programs utilize futures, swaps, and options contracts to manage the Company’s exposure to market fluctuations.

Cash Flow Commodity Hedges: The Company uses futures, swaps, and options contracts to offset price fluctuations in the Company’s future purchases of grain, lean hogs, natural gas, and diesel fuel. These contracts are designated as cash flow hedges; therefore, the related gains or losses are reported in Accumulated Other Comprehensive Loss (AOCL) and reclassified into earnings, through Cost of Products Sold, in the periods in which the hedged transactions affect earnings. The Company typically does not hedge its grain, natural gas, or diesel fuel exposure beyond two fiscal years and its lean hog exposure beyond one fiscal year.

Fair Value Commodity Hedges: The Company designates the futures it uses to minimize the price risk assumed when fixed forward priced contracts are offered to the Company’s lean hog and grain suppliers as fair value hedges. The programs are
intended to make the forward priced commodities cost nearly the same as cash market purchases at the date of delivery. Changes in the fair value of the futures contracts and the offsetting gain or loss on the hedged purchase commitment are marked-to-market through earnings and recorded as a Current Asset and Current Liability, respectively. Gains or losses related to these fair value hedges are recognized through Cost of Products Sold in the periods in which the hedged transactions affect earnings.

Cash Flow Interest Rate Hedges: In the second quarter of fiscal 2021, the Company designated two separate interest rate locks as cash flow hedges to manage interest rate risk associated with anticipated debt transactions. The total notional amount of the Company’s locks was $1.25 billion. In the third quarter of fiscal 2021, the associated unsecured senior notes were issued with tenors of seven and 30 years and both locks were lifted (See Note L - Long-term Debt and Other Borrowing Arrangements). Mark-to-market gains and losses on these instruments were deferred as a component of AOCL. The resulting gain in AOCL is reclassified to Interest Expense in the period in which the hedged transactions affect earnings.

Other Derivatives: The Company holds certain futures and swap contracts to manage the Company’s exposure to fluctuations in grain and pork commodity markets for which it has not applied hedge accounting. Activity related to derivatives not designated for hedge accounting was immaterial to the consolidated financial statements during the quarters ended January 25, 2026, and January 26, 2025.

Volume: The Company’s outstanding contracts related to its commodity hedging programs include:
In millions
January 25, 2026October 26, 2025
Corn28.3 
bushels
27.4 
bushels
Lean Hogs201.4 
pounds
188.6 
pounds
Natural Gas3.6 
MMBtu
3.6 
MMBtu
Diesel Fuel
8.3 
gallons
7.5 
gallons

Fair Value of Derivatives: The gross fair values of the Company’s derivative instruments designated as hedges are:
January 25, 2026October 26, 2025
In thousands
Assets
Liabilities
Assets
Liabilities
Gross Fair Value of Commodity Contracts
$19,482 $(4,336)$9,862 $(4,243)
Counterparty and Collateral Netting Offset(1)
(6,854)4,336 304 4,243 
Amounts Recognized in Prepaid Expenses and Other Current Assets
$12,629 $— $10,166 $— 
(1)    Per the terms of the Company’s master netting arrangements, the gross fair value of the Company’s commodity contracts was offset by the obligation to return net cash collateral of $2.5 million (including cash payable of $4.4 million and $1.9 million of realized gain) as of January 25, 2026, and the right to reclaim net cash collateral of $4.5 million (including cash payable of $5.5 million and $10.1 million of realized gain) as of October 26, 2025.

Fair Value Hedge - Assets (Liabilities): The carrying amount of the Company’s fair value hedged assets (liabilities) are:
In thousands
Location on Consolidated Statements of Financial Position
January 25, 2026October 26, 2025
Commodity Contracts
Accounts Payable(1)
$(288)$(157)
(1)    Represents the carrying amount of fair value hedged assets and liabilities, which are offset by other assets included in master netting arrangements described above.

Accumulated Other Comprehensive Loss Impact: As of January 25, 2026, the Company included in AOCL pre-tax hedging gains of $14.9 million on commodity contracts and gains of $10.3 million related to interest rate settled positions. The Company expects to recognize the majority of the gains on commodity contracts over the next twelve months. Gains on interest rate contracts offset the hedged interest payments over the tenor of the associated debt instruments.

The pre-tax gains (losses) recognized in AOCL related to the Company’s derivative instruments are:
Quarter Ended
In thousandsJanuary 25, 2026January 26, 2025
Commodity Contracts
$11,631 $19,134 
Excluded Component(1)
10 (87)
(1)    Represents the time value of commodity options excluded from the assessment of effectiveness for which the difference between changes in fair value and periodic amortization is recorded in AOCL.
The pre-tax gains (losses) reclassified from AOCL into earnings related to the Company’s derivative instruments are:
Location on Consolidated
Statements of Operations
Quarter Ended
In thousandsJanuary 25, 2026January 26, 2025
Commodity Contracts
Cost of Products Sold
$2,194 $(2,141)
Interest Rate Contracts
Interest Expense
247 247 

See Note I - Accumulated Other Comprehensive Loss for the after-tax impact of these gains or losses on Net Earnings.

Consolidated Statements of Operations Impact: The effect of pre-tax gains (losses) related to the Company’s derivative instruments are:
Quarter Ended
In thousands
January 25, 2026January 26, 2025
Net Earnings Attributable to Hormel Foods Corporation$181,801 $170,575 
Cash Flow Hedges - Commodity Contracts
Gain (Loss) Reclassified from AOCL2,194 (2,141)
Amortization of Excluded Component from Options(227)(208)
Fair Value Hedges - Commodity Contracts
Gain (Loss) on Commodity Futures(1)
(92)1,704 
Total Gain (Loss) on Commodity Contracts
1,876 (645)
Cash Flow Hedges - Interest Rate Contracts
Gain (Loss) Reclassified from AOCL247 247 
Total Gain (Loss) on Interest Rate Contracts
247 247 
Total Gain (Loss) Recognized in Earnings$2,123 $(398)

(1)    Represents gains or losses on commodity contracts designated as fair value hedges that were closed during the quarters ended January 25, 2026, and January 26, 2025, which were offset by a corresponding gain or loss on the underlying hedged purchase commitment. Additional gains or losses related to changes in the fair value of open commodity contracts, along with the offsetting gain or loss on the hedged purchase commitment, are also marked-to-market through earnings with no impact on a net basis.