Smithfield Foods Inc. (SFD), the biggest U.S. hog and pork producer, Monday said preliminary quarterly earnings were stronger than expected, as it benefited from rising hog prices and demand.

Smithfield shares rose nearly 4 percent initially, hitting their highest level in more than five years.

Hog prices were about 49 percent higher in the third quarter than the year-earlier quarter, a Smithfield spokesman said.

At the same time, export demand for pork has been strong as beef exports waned following the December 2003 discovery of a mad cow disease (search) case in the United States.

Smithfield said earnings from continuing operations for the recently ended fiscal third quarter would be either 86 cents or 87 cents per share, up from 38 cents a year earlier. It will report full results on March 1.

Wall Street analysts, on average, had been expecting 61 cents per share, according to Reuters Estimates.

Smithfield said in November it expected earnings to be up substantially in the third quarter, and that it has benefited from higher hog prices and strong pork exports in recent months.

"It's really all about live hog prices and periods of stronger prices for the production piece for their business and lower feed costs," said Christine McCracken, analyst at FTN Midwest Research (search). She rates the Smithfield shares a "buy."

Smithfield shares were up 68 cents, or 2.2 percent, at $31.59 on the New York Stock Exchange (search) Monday, off an earlier high at $32.10.