Egg-News Happy Memorial Day

Editorial


Ominous Words Expressed During Walmart Conference Call

Following the May 17th Walmart Q1 release, analysts questioned CEO, Doug McMillon, and John R. Furner, President and CEO of Walmart U.S., during the subsequent conference call.  McMillon noted that, “We want customers to have lower prices on food and we will partner with suppliers on the food and consumable side to bring those costs down.”

 

McMillon believes that customers will be under pressure as a result of inflation opining, “They need our help” adding, “We will stay focused on opening price-point food items to assist customers at the lower end of the income scale to be able to afford to feed their families.”   Furner stated, “We’ve got to make sure we’re doing everything we can with our suppliers to manage our costs so that we can keep food pricing in a great spot for our customers.”  Furner committed the company to, “work together with our supply base in proteins and dairy to keep costs low”.

 

As the largest food retailer, Walmart will set the standard for a retail environment in which higher costs for food items cannot be passed onto consumers.  Analyst, Robert Moskow, of Credit Suisse, believes that Walmart will be less flexible with vendors on food pricing and that suppliers will be under considerable pressure to keep prices low so that Walmart can maintain revenue but at the same time, achieve acceptable gross margins.  This presumably will be at the expense of suppliers.  It is noted that for the first quarter of FY 2022, ending April 30th, Walmart gross margin fell by 3.2 percent to 24.5 percent and that operating margin was down by 24 percent to 3.8 percent compared to the corresponding quarter in FY 2021.

 

There was no mention in the conference call of the inflationary pressures experienced by suppliers.  Feed costs have risen and there is every prospect of future increases as a result of geopolitical events, late planting of the corn crop and continued demand for soybeans by China.  In addition, labor, power and fuel costs have increased. The USDA benchmark production cost of 84.5 cents per dozen for April understates fixed costs for new cage-free facilities, and does not include costs for processing, packaging and distribution.  The current high wholesale prices resulting from the depletion of 30 million hens due to HPAI has obscured in large measure, inflation in production costs.  Based on the events during the HPAI epornitic of 2015, supply of shell eggs will increase in relation to demand, reducing prices and hence, margins.

 

It is evident that Walmart will lead other retailers in aggressive purchasing, placing margins in jeopardy.  Shell egg producers will have little flexibility in negotiation under conditions of moderate over-production.  The current relationship between producers and chain buyers is based on a single price discovery system representing an impediment to a free market.  It is clear that the benchmark price amplifies both downward and upward swings as at present. Over the long-term the single benchmark price functions to the detriment of the industry. Grain-based pricing is not generally beneficial to all producers. EGG-NEWS has consistently advocated for a CME quotation on Midwest large as a more representative and equitable basis for pricing.  Analysts expect that Walmart will use their volume to pressure suppliers and adopt what Robert Moskow characterizes as an “inflexible stance” on pricing.


 

Egg Industry News


Crop Progress

Status of 2022 Corn and Soybean Crops

 

The USDA Crop Progress Report released on May 23rd documented a substantial increase in planting of both corn and soybeans from the previous week as farmers were able to access their fields. Corn is now 72 percent and soybeans 50 percent in the ground but lagging the 4-year average and behind the corresponding week in 2021 when farmers in 18 states had completed sowing of 89 percent of corn and 73 percent of soybeans by May 22nd. The delay in 2022 is attributed to wet field conditions. During the week ending May 8th 2021 an average of 2.3 days were suitable for field-work among IL, NE, IA, MN and OH. Comparable days available over the two most recent weeks averaged 4.5 days. There were also delays due to availability of seed and fertilizer or late decisions on selection of crop.

 

Topsoil and subsoil moisture levels were comparable with the corresponding weeks in 2021 although some areas will continue to experience difficulty in planting due to local extremes in topsoil moisture. EGG-NEWS will report on the progress of the two major crops as monitored by the USDA through the end of the 2022 harvest in October.

 

WEEK ENDING

 

Crop

May 15th

May 22nd

4-Year Average

Corn Planted (%)

Corn Emerged (%)

49

14

72

39

79

51

 

 

 

 

Soybeans planted (%)

Soybeans emerged (%)

30

9

50

21

 

55

27

 

Egg-News

Crop Condition

To be recorded in June.

V. Poor

Poor

Fair

Good

Excellent

Corn 2022

Corn 2021

 

 

 

 

 

 

 

 

 

Soybeans 2022

Soybeans 2021

 

 

 

 

 

 

 

 

 

 

 

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture: Past Week

11

20

57

12

Past Year

11

21

58

10

Subsoil moisture: Past Week

14

21

55

10

Past Year

13

23

57

7

Egg-News

Reference is made to the May 12th WASDE Report #624 retrievable under the STATISTICS Tab.


 

COMMODITY REPORT

Egg-NewsWEEKLY COMMODITY REPORT: May 26th 2022.

 

Over the past five trading days prices for corn and soybeans again fluctuated with a consistent upward trend but with lower intensity compared to the previous week with inter-day ranges of up to one percent in value for corn and soybeans. The market is still dominated by the consequences of the invasion of Ukraine and reinforced by the effects of drought in Brazil and neighboring producer nations. Prices were also influenced by decreased orders from China coupled with moderate domestic U.S. demand.

 

Factors influencing commodity prices in either direction included:-

  • Geopolitical tensions threatening wheat, corn, oilseeds and oil exports from Ukraine following the invasion together with evident restriction on Black Sea shipping. Russia has allegedly stolen in excess of 400,000 metric tons of grain from the Eastern occupied regions and is destroying agricultural infrastructure including elevators and crushing plants and placing landmines in fields. (upward pressure on corn and wheat and an indirect effect on soybeans)
  • Release of the May 12th WASDE #624. Projections for corn and soybean yield, acreage to be planted and production were revised based on the March Prospective Planting Report. Corn ending stocks were reduced 5.5 percent (neutral on corn price) and soybean ending stocks were raised 19.2 percent. (downward pressure on soybeans and meal)
  • Drought affecting Argentina, Paraguay and Brazil especially in that nation’s Southern states due to a prolonged La Nina The USDA-FAS projects that collectively the three Southern hemisphere nations will be short 8.7 million metric tons of soybeans in 2022. (upward pressure of intermediate intensity).
  • Planting is slower than in 2021, although now gaining in momentum, due to inclement weather and delays in delivery of fertilizer. (diminishing effect on corn but neutral on soybeans)
  • Decreased orders from China for soybeans consistent with projections of reduced domestic demand due to COVID restrictions and economic slowdown. (transitory downward pressure on soybeans)
  • Demand for soy oil to be diverted to biodiesel, exacerbated by concerns over shortages of sunflower oil from Ukraine but easing with lifting of restrictions on export of palm oil by Indonesia (variable upward pressure on soybeans and meal)
  • Higher weekly ethanol demand coupled with an increase in production. Year-round E-15 has been authorized but with minimal uptake. (moderate pressure on corn)
  • Purchase of commodities by hedge funds amid speculation in fluctuating equity and bond markets (upward pressure)

 

Based on CME quotations U.S. farmers are now receiving and conversely livestock producers and ethanol refiners in the Midwest will pay above $7.70 per bushel for corn delivered in July, up 2.1percent from the May 19th quotation for July delivery. Crushers will pay $17.20 per bushel for soybeans plus transport and basis for July delivery, up 2.2 percent from the May 19th quotation for July delivery. Soybean meal was up 0.7 percent or $3 per ton, for July delivery, reflecting a higher soybean price, with current crush volume, responding to both domestic and export demand for soy oil.

 

  • The FAS Export Report released on May 26th for the week ending May 19th reflecting market year 2021-2022, confirmed that outstanding export orders for corn for the new market year amounted to 14.36 million metric tons (564.2 million bushels) with 44.72 million metric tons (1,760 million bushels) actually shipped. During the past week orders for the 2021-2022 market year amounted to 0.15 million metric tons (6.0 million bushels) with 1.82 million metric tons (71.6 million bushels) shipped. For the current market year shipments of corn to date are 8.9 percent lower than at the corresponding week a year ago. For market year 2022-2023 outstanding sales this week amounted to 5.64 million metric tons (221.9 million bushels), with 0.06 million metric tons (2.3 million bushels) ordered for the following market year.

    (Conversion 39.36 bushels per metric ton)

 

  • The FAS Export Report released on May 26th 2022 for the week ending May 19th reflecting market year 2021-2022, recorded outstanding export orders for soybeans amounting to 10.22 million metric tons (373.6 million bushels) with 49.26 million metric tons (1,810 million bushels) actually shipped. Weekly soybean orders attained 0.28 million metric tons (10.2 million bushels) with 0.54 million metric tons (19.8 million bushels) shipped. For the current market year to date shipments of soybeans are 15.0 percent lower than for the corresponding week a year ago. For market year 2022-2023 outstanding sales amounted to 11.82 million metric tons (434.2 million bushels), with 0.44 million metric tons (16.3 million bushels) ordered this past week)

    (Conversion 36.74 bushels per metric ton)

 

  • For the week ending May 19th 2021, 159,600 metric tons of soybean meal and cake were ordered for the market year 2021-2022, down 45.6 percent from the previous week. During the past week 187,500 metric tons of meal and cake combined was shipped, down 2.4 percent from the previous week and representing 2.4 percent of the total 7,839,400 metric tons shipped during the current marketing year to date. This quantity is 1.9 percent lower than the previous market year.

 

  • Projected harvests and ending stocks were documented in the May 12th WASDE #624,retrievable under the Statistics TAB. The anticipated WASDE #625 will be reviewed in the June 25th edition of EGG-NEWS with projections on quantities harvested and the effect of trade and domestic consumption on ending stocks of corn updated from the May report. Data should take into account the late planting of corn in the U.S. and the predicted consequences of the invasion of Ukraine by Russia. These events will affect world trade and the negative effect on spring planting in the Ukraine currently in progress.

 

The following quotations for delivery for the months of delivery as indicated were posted by the CME at 14H00 on May 26th 2022, compared with values posted at 14H00 on May 19th 2021 (in parentheses):-

 

COMMODITY

Corn (cents per bushel)

July 766 (782).

Sept. 734 (749)

Soybeans (cents per bushel)

July 1,728 (1,691).

Sept. 1,584 (1,558)

Soybean meal ($ per ton)

July 429 (426). 

Sept. 417 (415)

Changes in the price of corn, soybeans and soybean meal over five trading days this past week were:-

 

Corn: July quotation up 16 cents per bushel (+2.1 percent)

Soybeans: July quotation up 37 cents per bushel (+2.2 percent)

Soybean Meal: July quotation up $3 per ton (+0.7 percent)

 

The NASDQ spot prices for feedstuffs per short ton for May 25th 2022 with prices for the previous week were:-

  • Corn (ZC): $276 was $275. 52-week range $177 to $292
  • Soybean Meal (ZM): $424 was $414. 52-week range $311 to $488

 

Values for other common ingredients per short ton:-

  • Meat and Bone Meal (ruminant, Central U.S.): $500 to $550 (wide range for this ingredient according to source and location)
  • DDGS, (MO.): $285 (was $310)
  • Wheat Middlings: $205 (was $204 reflecting surge in wheat price due to invasion of Ukraine)
  • Bakery Meal (MO): $180 (unchanged)
  • For each $1 per ton (2.8 cents/bushel) change in corn the cost of egg production would change by 0.11 cent per dozen
  • For each $10 per ton change in the price of soybean meal the cost of egg production would change by 0.35 cent per dozen

 

The respective changes in the prices of corn and soybean meal for May 25th spot prices compared with May 19th would raise nest-run production cost for eggs by 0.5 cents per dozen.

*(rounded to 0.1cent)

 

According to the May 12th WASDE #624, corn harvested in calendar 2022 will attain 14,460 million bushels with ending stocks projected at 1,360 million bushels down 5.5 percent from the April 2022 WASDE Report. Total corn stocks on December 1st 2021 amounted to 11.6 billion bushels up 3 percent from December 1st 2020.

 

The social restrictions imposed in the U.S. as a result of COVID-19, that are now being eased, were projected to reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2020-2022 requirement, accepting a nominal ten percent addition (E-10) to gasoline. This past week 89.2 percent of the U.S. ethanol fermentation volume was operational, based on the September 2021 U.S. Energy Information Administration (U.S. EIA) capacity data. The outlook for increased production will depend on higher domestic demand in addition to increasing the proportion of production that is exported.

 

According to the U.S. EIA, for the week ending May 20th 2022 the industry produced on average 1,014,000 barrels of ethanol per day. This was up 2.3 percent from the week ending May 13th 2022, rising above the one-million gallon per day benchmark after six consecutive weeks. On May 20th ethanol stock was down 0.4 percent from the previous week to 23.7 million barrels, representing an approximately 19-day reserve and suggesting slightly increased demand given a small decrease in stock relative to increased production. The White House has allowed all-year round 15 percent addition to gasoline. Given that many light vehicles cannot use more than E-10 and drivers are curtailing mileage due to high fuel cost and with restraints imposed on fuel station storage and dispensing, the short-term prospects for increased domestic consumption are unfavorable. 

 

Ethanol quoted on the CBOT (EH) at close of trading on May 25th was priced at $2.14 per gallon, down 2 cents per gallon from the previous week and compared to a 52-week range of $2.13 to $2.48 per gallon. Concurrently RBOB gasoline traded on NASDQ (RB) at $3.73 per gallon on May 25th unchanged from the previous week. The 52-week range for RBOB gasoline is $1.90 to $3.96. The CME WTI crude price of $110.99 per barrel at close of trading on May 25th was 0.7 percent higher than the previous week. Gasoline is now $1.59 per gallon more expensive than ethanol but with a 63 percent higher BTU rating.

 

With most plants among the 197 that were operational on January 1st 2021 now functioning, DDGS is freely available but commands a higher price consistent with the escalation in corn. A Missouri plant priced a branded DDGS at $285 per ton on May 25th 2022 but wide price variation exists depending on supplier and location. It is anticipated that the cost of DDGS will reflect changes in the price of corn. Generally DDGS is currently incorporated at low inclusion levels in egg-production formulas based on price relative to the nutrient contribution of corn and other ingredients. This may change as corn and hence DDGS fluctuates in price

 

Soybeans continue to be the beneficiary of export demand by China although lower than the previous market year. Exports are maintained by supplying other nations in addition to domestic livestock production and demand for soy oil. The USDA projected a harvest of 4,640 million bushels in the May WASDE #624. Ending stocks were increased 15.4 percent from 260 to 310 million bushels. Total soybean stock on December 1st 2021 amounted to 3.15 billion bushels down 14 percent from December 1st 2020 indicating the extent of exports during the 2020-2021 market year.

 

The CME soybean price for July delivery at 14H00 on May 26th 2022 was higher by 37 cents per bushel to 1,728 cents compared to 1,691 cents per bushel for July delivery quoted last week. The increase in the price of soybeans continues a trend from the previous week and is attributed to the invasion of Ukraine with disruption of the winter harvest and spring planting. Predictions of lower yields in Argentina, Paraguay and Brazil vary but Dan Basse of AgResource recently estimated a 2.9 billion bushel shortfall (116 million metric tons). This is more extreme than the conservative USDA estimate of 0.66 billion bushels (24 million metric tons).

 

Egg-NewsAccording to a release on May 15th by the National Oilseed Processors Association 169.8 million bushels of soybeans were crushed in April 2022. The April crush value was down 6.5 percent from March 2022 at 181.5 million bushels and up 5.9 percent from the April 2021 quantity of 160.3 million bushels.

 

Soybean oil moved lower to 80.6 cents per lb. on May 26th from 81.1 cents per lb. last week. This is despite the realization that world oilseed supply will be limited by a sharply diminished crop of sunflower from Ukraine, the world’s largest exporter with restrictions on export imposed by Russia. Indonesia has lifted a disruptive short-term moratorium on the export of some palm oil products. For calendar 2022, it is anticipated that 43 percent of U.S. soy oil will be diverted from fuel to biodiesel.

 

On May 25th 2022 soybean meal was quoted on NASDAQ at $424 per ton, $10 per ton higher than the spot price last week and compared to a 52-week range of $312 to $500 per ton.

 

On May 25th 2022 Ruminant Meat and Bone meal was priced over a range of $500 to $550 per ton quoted from Central U.S. plants but with a wide range of prices based on composition, source and location. Price fluctuation reflects changes in soybean meal and other oilseed meals.

 

On May 25th the conversion of the CNY to the BRL was 0.72 BRL, up 0.01 BRL from the previous week. The conversion of the US$ to the CNY was CNY 6.71, up CNY 0.05 from the previous week.

 

For consecutive calendar years 2017 through 2019 the U.S. supplied 34.4 percent of soybean requirements for China amounting to 95.5 million metric tons. This was followed by a decline to 16.9 percent of 88.5 million metric tons in 2018 and 16.6 percent of 88.0 million metric tons in 2019. The USDA anticipated that soybean imports by China would attain 95.0 million metric tons during the 2020-2021 market year but in reality only 60.3 million tons was shipped through August 2021.

 

For the 2019/2020 market year China imported 2.1 million metric tons of corn from the U.S., 4.8 percent of total exports of 43.3 million tons, but 12 percent less than in the 2018/2019 market year. The USDA-FAS documented sales of U.S. corn to China through late August 2021 comprising the 2020/2021market year amounting to 73 million metric tons (2,876 million bushels) with 93 percent shipped.

 

For 2021 the U.S. exported corn to the value of $17,473 million, 112 percent more than in 2020 and comprising 10 percent of the value of all U.S. agricultural exports.

 

For 2021 the U.S. exported soybeans to the value of $26,476 million 48 percent more than in 2020 and 15 percent of the value all U.S. agricultural exports.

 

COMMENTS

Subscribers are referred to the May 12th 2021 WASDE # 624 and the USDA quarterly Grain Stocks Report available under the STATISTICS tab.


 

Egg Week

USDA Weekly Egg Price and Inventory Report, May 26th 2022.

Market Overview

  • Average wholesale unit revenue for Midwest Extra-large and Large sizes was lower by 14.8 percent from the past week. Mediums were down 17.1 percent. This follows depletion of more than 29.7 million hens including 12 large complexes in nine states since the last week in February. The decrease in price for all sizes and breaking stock this past week occurred concurrently with a 2.5 percent decrease in industry shell-egg inventory compared to a 2.4 percent increase last week. This suggests larger orders by chains to replenish the retail pipeline. Lower demand is projected over the short term with declining prices through the remainder of May. In the unlikely event of additional cases of HPAI, availability will be more severely impacted especially in the breaking sector. Industry inventory decreased overall this past week to 1.80 million cases due to a 1.4 percent decrease in shell eggs contrasted with a 2.3 percent increase in breaking stock. Retailers are expected to maximize shelf prices in relation to demand. Wholesale unit prices during the 1st quarter of 2022 and the subsequent two months contrasted favorably with the corresponding periods in both 2020 and 2021 that were characterized by low ex-plant unit revenue. Wholesale Midwest prices are still yielding unusually high positive margins, despite the higher combined costs of nest-run, (feed, chicks, labor and fuel), grading, packaging and delivery.
  • Total shell inventory was 2.5 percent lower after a 2.4 percent increase during the previous week. It is now apparent that the inventory held by chains and other significant distributors may be more important in establishing wholesale price than the USDA regional inventory figures published weekly, especially over the short term. The seasonal strategy of retailers is to adjust purchases only in response to retail demand and to hold down inventories in their DCs and stores while marking up shelf margins and pressuring suppliers for rapid replenishment of stocks to DCs and through DSD. Market data suggests that chains have priced generic white eggs in response to prevailing demand and are infrequently featuring generic Large or Extra large.
  • Due to the depletion of more than 29.7 million hens (through May 15th) due to HPAI, unseasonal unit revenue will now be a reality through the remainder of May, even without the unlikely extension of HPAI to additional complexes. The current relationship between producers and chain buyers based on a single price discovery system constitutes an impediment to a free market. The benchmark price amplifies both downward and upward swings as at present and functions to the detriment of the industry over the long term. A CME quotation based on Midwest Large, responding to demand relative to supply would be more equitable.
  • According to the USDA the U.S. flock in production was recalculated to 293.4 million hens during the week ending May 25th. This figure presumably reflects the loss of 29.7 million hens to date depleted as a result of HPAI in twelve large egg-production complexes and additional losses on smaller farms. The producing flock includes about 2.0 million molted hens resuming production during the past week. Wholesale margins declined over the past two weeks despite attaining the highest level for the corresponding weeks in May since the 2015 epornitic. The current price for all sizes and categories is a response to flock depletion coupled with sustained demand. The USDA reports include recent diagnoses in Pennsylvania, Utah and Colorado flocks. In April.
  • There is some prospect of a return in the food service sector and with frozen and dried egg prices higher over the past two weeks. The ex-farm price for breaking stock on average was lower this past week at 176.5 cents per dozen (down 8.3 percent compared to 24.5 percent lower during the previous week). Checks delivered to Midwest plants were down 9.4 percent to 173.0 cents per dozen. The disparity between the fall in shell inventory and a rise in breaking stock suggests lower demand for egg products. Prices for breaking stock will remain high in relation to season for the duration of the current epornitic and will be moderately elevated through the recovery period as replacement flocks are reared, reminiscent of 2015-2016. The U.S. economy is clearly reopening despite increased COVID incidence rates in some areas but with and hospitalizations declining in the nation.

 

Week in Review

 

Prices

 

According to the USDA Egg Market News Reports released on May 23rd, the Midwest wholesale price for Extra-large was down 14.8 percent to 203.5 cents per dozen; Large size was down 14.8 percent to 201.5 cents per dozen; Mediums were down 17.1 percent to 185.3 cents per dozen as delivered to DCs. Prices should be compared to the USDA benchmark average 6-Region blended nest-run cost (excluding provisions for packing, packaging materials and transport) of 84.5 cents per dozen during April 2022. The progression of prices during 2022 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

 

 The May 23rd 2022 edition of the USDA Egg Market News Report documented a USDA Combined Region value rounded to the nearest cent, of $2.48 per dozen delivered to warehouses for the week ending May 15th 2022. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $2.37 per dozen. At the high end of the range, price in the South Central Region attained $2.56 per dozen. The USDA Combined Price last week was approximately $1.75 above the 3-year average. This past week Midwest Large was approximately also $1.65 above the corresponding week in 2021. Prices fell sharply this week despite the depletion of close to 30 million hens due to HPAI by the second week of May. The future incidence of avian influenza is unknown but there have been no outbreaks in large egg complexes for two weeks. Confirmed diagnoses in backyard flocks denote continued shedding by migratory waterfowl in segments of the Central and Pacific Flyways and sectors of the Mississippi Flyway. Spillover to commercial egg, turkey and broiler flocks may continue as isolated sporadic infections that hopefully will be contained. In the unlikely event that HPAI impacts additional large shell egg-production or breaking complexes, prices will follow the pattern of the 2015 epornitic.

 


 

Jim Sumner Undergoes Bypass Surgery

Jim SumnerEarlier this week Jim Sumner, an indefatigable worker for our industry underwent multiple bypass surgery from which he is making a steady recovery. We wish him well and should hold him in our thoughts and prayers. His knowledge, experience, diplomatic skills and guidance are still needed even though he has planned to hand over responsibilities to Greg Tyler and a dedicated and well motivated team at USAPEEC


 

USDA and Congress to Address Issue of a Shortage of Infant Formula

Egg-NewsThe USDA is advising States to make full use of flexibility in relation the Special Supplemental Nutrition Program for Women, Infant and Children (WIC) to supply available infant formula to program participants. USDA directives includes relaxation of restrictions on sizes and brands of infant formula and to allow stores to accept exchanges of formula purchased under the WIC benefit program. It is noted that almost half of infant formula sold the U.S. is under the WIC program.

 

The USDA is cooperating with the FDA to provide information relating to the safety of formula now on the market. Manufacturers have all sharply increased production rates although the Sturgis, MI. plant operated by Abbott Nutrition is still offline.

 

Congress will consider regulatory relief to relieve the shortage.  Funds will be allocated to purchase formula from other nations with excess supply. The House Oversight Committee has announced it will investigate the causes of the shortage of infant formula.  Letters have been addressed to Abbott Nutrition, Mead Johnson Nutrition, Nestle USA and Perrigo requesting specific information on plant capacities and utilization.  These four companies supply approximately 90 percent of the total U.S. market. Abbott Nutrition was requested to provide records relating to safety condition at the Sturgis, MI plant.  Reponses from the companies will be submitted by May 26th.  The Committee is also investigating price gouging and has instructed the Department of Justice and the Federal Trade Commission to monitor the situation and to respond accordingly. The principal concern of the Oversight Committee will be to determine the factors responsible for the shortage and to prevent a recurrence in the future.

 

Egg-News

According to market research, there was nationwide out-of-stock level of 50 percent during the first week of May resulting in considerable inconvenience and additional cost to parents. The shortage of infant formula is characterized by Senate Minority Leader, Mitch McConnell (R-KY) as an “outrageous unacceptable situation that has been unfolding in slow motion over several months.”

 


 

NPIP Conference Scheduled for June 7th-10th

Egg-NewsThe 2022 Congress of the  National Poultry Improvement Plan is scheduled to take place in Dallas, TX. June 7th through June 10th.  The General Conference Committee (GCC) has not met since 2020 due to COVID restrictions and the NPIP 45th Biennial Conference was also postponed.

Egg-News

The GCC meeting on Tuesday June 7th is scheduled for13H30 to 18H00. The General Session starts at 07H30 the following day proceeding to termination before 14H30 on June 10th.


 

Cencosud Purchases Majority Share In The Fresh Market

Egg-NewsCencosud, based in Chile, has announced acquisition of two-thirds of the equity of The Fresh Market chain in a transaction valued at $617 million.  The Greensboro, N.C. company operates 160 stores in 22 states. Cencosud operates 900 stores under numerous banners in Argentina, Brazil, Peru and Colombia.  The Fresh Market purchase is the first foray of the company in North America.

 

In a statement, Cencosud noted, “This partnership provides Cencosud with access to the U.S. market where there is much greater depth of capital available.  Our company will be able to leverage best practices across existing Latin American businesses helping to drive increased performance and efficiencies.”

 

According to Supermarket News in 2021, The Fresh Market attained revenue of $2,000 million and is widely recognized as an efficient company operating within the Apollo Global Management portfolio.

Egg-News


 

Crashed Semi Dumps 700 Cases On I-30

Egg-NewsA West-bound semi on I-30 collided with an overpass, resulting in the load of 700 cases of eggs being spread across the interstate lanes.  The accident occurred at 03H50 on May 17th near the Interstate 45 interchange adjacent to Dallas, TX.

 

The driver was not injured but the accident resulted in extensive delays for cleanup.

Egg-News


 

China COVID Shutdowns Reduce Port Congestion

Egg-NewsLowered export volume from China to the U.S. has resulted in cancellations of sailings during the first part of Q2 with a consequential reduction in rates.  The FDX Asia-West Coast charge fell 25 percent to $12,000 per FEU container between May 2nd and May 11th.  This was approximately 33 percent lower than the all-time high in September 2021.

 

Egg-NewsShip queues off West Coast ports have declined with 29 container vessels near Long Beach during mid-May.  The number of container ships waiting for berths at Gulf and East Coast ports has dropped by half from February 2022 with 45 vessels in queues.


 

McDonald’s to Withdraw from Russian Federation

In early May EGG-NEWS reported that McDonald’s Corporation has suspended operation in the Russian Federation but was paying company employees in accordance with an April 28th statement. Leases and wages cost $55 in April for the 85 percent of the 850 restaurants owned by the Company. Egg-News

 

Egg-NewsOn Monday May 16th McDonald’s Corporation announced an irrevocable decision to withdraw completely from Russia and to dispose of assets in that nation confirming the intent indicated in the early May posting. Alexander Govor a franchisee has agreed to acquire the McDonald’s assets for an undisclosed sum and the Company is expected to take a $1.5 billion charge in the second quarter of FY 2022. The McDonalds iconic golden arches have been flipped for the new logo. Saves time and money but will be a symbol of Russian Perfidity

 

The action by McDonald’s will be followed by other multinationals including Yum Brands and Starbucks. Manufacturers including  Nestle and Unilever will cease operations  to the detriment of the economy of the Russian Federation.

 


 

Walmart Initiates Training Program for Store Managers

Egg-NewsIn a May 17th posting of Q1 results, Walmart, Inc., pointed to inflation as a reason for an unexpectedly lower bottom line.  CEO, Doug McMillon, noted inflation affecting transport, cost of goods and especially wages.  The ability of a company such as Walmart, one of the nation’s largest non-government employers to recruit workers, is evidenced by hiring close to 500,000 people over six weeks between March and May of 2020 at the onset of COVID.  Many of these workers have since been deployed to stores, distribution centers and other company facilities.

 

Walmart has recognized that store managers are critical to profitability.  The majority of those responsible for the approximately 4,700 U.S. stores have worked their way up from hourly employment assisted by in-company training.

 

Egg-NewsFaced with the reality that many managers will have to be replaced due to retirement and attrition, Walmart has initiated the College2Career program.  The intent is to appoint recent college graduates at a starting annual wage of approximately $65,000 and train them during a two-year program to manage a store.  The initiative was initiated with two recruits, with the intention to expand to 1,000 appointees on a fast track to a position that, with seniority, can pay $200,000 annually.

 

Regional executives of Walmart have been requested to establish relationships with local colleges in order to recruit trainees.


 

Change in Sustainability Policy in the E.U. to Impact U.S. Wood Chip Exports

In accordance with the European Union Renewable Energy Directive, organic materials including biomass and wood received a subsidy to displace coal in generating plants. Critics of the policy pointed to the fallacy inherent in the program noting that even if benefits accrued to the E.U., deforestation in exporting nations would add to release of carbon dioxide impacting the entire world.

 

Egg-News

On Tuesday, May 10th a Special Committee of the European Parliament voted to change the subsidy on biomass. The decision will be submitted to the E.U. Parliament for ratification.     Eco-activist, Martin Pigeon quoted in a May 17th report in the New York Times noted, “This vote is a historic breakthrough.”  He added, “For the first time a major E.U. regulatory body has made clear that one of the E.U. most climate-wrecking policies of the last decade incentivizing the burning of forests in the name of renewable energy has to stop.”

 

Egg-News

Following the introduction of the Renewable Energy Directive, companies in the Carolinas established enterprises harvesting timber that was processed into wood chips for export to the E.U.  If the European Parliament accepts the recommendations of the Committee, which is highly likely, woodchip processing in the U.S. and other supplying nations will cease with obvious impact on local communities, but also benefits to the environment.

 


 

McDonald’s Corp and Wendy’s International Face Lawsuit over Alleged Deceptive Advertising

Egg-NewsA resident of New York has filed a class-action federal lawsuit against both McDonald’s Corporation and Wendy’s International claiming deceptive advertising through their illustrations of sandwiches.  The plaintiff claims that sandwiches as served are smaller than depictions of a Big Mac at McDonald’s and a Bourbon Bacon Cheeseburger at Wendy’s.

 

Egg-News

The plaintiff claims that advertised versions appear 15 to 20 percent larger than the beef patties that are actually served, although the illustrations and accompanying literature do not specify the actual weight of patties.

 

In the 35 page complaint, the plaintiff claimed that illustrations were based on undercooked and therefore “plump” patties as used by photographers. The complaint claims that consumers are damaged by “receiving food that is lower in value than what is promised”.

 

Egg-News

The class action lawsuit appears to be a typical shakedown of two large corporations since they seek financial compensation for the class that was allegedly deceived by the two defendants. The demand that the two QSRs correct or discontinue deceptive advertising is a red herring. Since the defendants are sure to settle, the beneficiaries will be the law firm involved. The apparent consumers within the class will receive a pittance if at all.


 

CDC Reports Salmonellosis From Peanut Butter

Egg-NewsThe Centers for Disease Control and Prevention (CDC) has identified the source of an outbreak of Salmonella Senftenberg involving 14 cases in 12 states.  Illnesses commenced in mid-February 2022 extending through the beginning of May.

 

Some versions of Jif brand peanut butter, produced at a J. M. Smucker plant in Lexington, KY, were contaminated as confirmed by whole genome sequencing. Studies have shown that heating used during manufacture of peanut butter is frequently inadequate to destroy Salmonella.

 

Egg-NewsThis outbreak is reminiscent of the extensive national event in 2009 involving the Peanut Corporation of America.  The resulting outbreak comprised 714 confirmed cases requiring 171 hospitalizations with 9 fatalities. The Salmonella Typhimurium infection was attributed to deteriorated facilities and installations, mismanagement and deliberate falsification of records. Subsequent criminal cases resulted in extensive prison terms for the Parnell brothers, owners of the company and QC personnel who participated in fraudulent activities.

 

In the present case rapid identification of the outbreak through FoodNet, trace-back and application of whole genome sequencing identified the source and expedited a recall of potentially contaminated product.

 


 

Salmonella Outbreak due to Chocolate Expands

Egg-NewsCases of infection with Salmonella Typhinurium have expanded to include 324 patients in 16 nations including Canada and the U.S. Chocolate products manufactured in a Ferrero plant in Arlon in Belgium are the source of infection.

 

Investigation disclosed contamination in 81 samples among finished and intermediate products and raw materials. Environmental swabs tested positive for Salmonella reflecting production dates from December 2021 through January 2022. Two strains of monophasic Salmonella Typhinurium have been implicated in the outbreak. Both are multi-drug resistant and apparently refractory to QAC sanitizers used in the facility.

 

Egg-News

Officials in Belgium issued a ban on production in April 2022 and the plant will only reopen subject to demonstrating freedom from contamination. An extensive multinational recall is in effect with the cost exceeding $60 million.  The European Food Safety Agency considers that infection was present in the plant prior to December 2021 based on the first case identified in the U.K. on January 7th with a sampling date of December 21st 2021.


 

Labor Market Easing?

Egg-NewsThe Department of Labor (DOL) announced that initial claims for unemployment benefits increased to 218,000 for the week ended May 14th.  For March, DOL 2022 posted a low of 166,000 claims suggesting easing over the past month.  At the end of March, the DOL recorded 11.5 million job openings significantly higher than the 6.1 million vacant positions in April 2020 at the onset of the COVID pandemic.

 

Despite the increase in claims, wage gains continue with implications for ongoing inflation.

Egg-News

 

U.S. Secretary Of State Accuses Russia Of Weaponizing Food

Egg-NewsIn an address to the U.N. Security Council, Secretary of State, Antony Blinken, outlined how actions by Russia have devastated agriculture in Ukraine and created the potential for famine in nations reliant on Black Sea grain shipments.

 

Egg-News

There is a complete embargo on shipping in the Black Sea with Ukranian ports blocked.  Twenty million tons of grain is currently held in elevators in the southeastern quadrant of Ukraine. Russia disputes the claims relating to blockades and has offered to export 25 million tons of wheat from their crop to be harvested in August.

 

Blinken blames Russia for the current global food crisis attributed to actions including deliberate destruction of agricultural installations including elevators and crushing plants, stealing farm equipment and grain from silos and distributing landmines on cropland.

 

Egg-NewsThe U.N. Administrator responsible for food, David Beasley noted that escalating food prices have already resulted in riots and the invasion of Ukraine will add at least 15 million people to the populations facing starvation in 43 nations. The Soviet Holomodor (contrived famine) of 1932 is being revisited but now on an international scale.


 

Starbucks Divesting Stores In Russian Federation

Egg-NewsFollowing the lead of McDonald’s Corporation, Starbucks will divest businesses in Russia to licensee and oligarch Alexander Govor.

 

Egg-NewsIt is expected that the brand image will change following the comments expressed by the acquirer who is now the successor to the McDonald’s Corporation in the Russian Federation.

 

Multinational QSRs recognize the potential for erosion of brand image if they continue operating in the Russian Federation that has become an international pariah.


 

Indonesia Ends Embargo On Palm Oil Exports

Effective Monday, May 23rd, Indonesia will allow export of palm oil after a three-week ban that roiled vegetable-oil markets.  Indonesia produces 60 percent of the world’s palm oil. The restriction on export of designated palm oil products was taken to reduce domestic inflation and to ensure an adequate supply for consumers, considered a political necessity.

 

Egg-News

On Monday, May 23rd, Malaysian palm oil traded at 65 cents per pound at close compared to 88 cents per pound for soy oil.

 

Egg-News

The precipitous action by the Government of Indonesia resulted in disruption of the palm oil industry. Farmers experienced a 70 percent drop in the price of palm fruit since refiners shuttered refining plants as storage capacity was filled.


 

Vaxxinova Announces Release of Vaxxon® SRP® E.coli-SE Combination Vaccine

Egg-NewsVaxxinova US has received approval for a combination E.coli-SE vaccine developed to reduce erosive colibacillosis mortality and effectively suppress systemic and intestinal colonization with Salmonella Enteritidis.

 

Egg-NewsAccording to Dr. Jim Sandstrom, Managing Director of Vaxxinova US, the Vaxxon® SRP® E.coli-SE vaccine applies innovative SRP® technology. Lipopolysaccharides (LPS) present in conventional oil-emulsion bacterins that represent endotoxins are removed from the vaccine during manufacture. Siderophore receptor proteins serve as immunogens, stimulating both cellular and humoral immune response.

 

Egg-NewsSandstrom added, “The removal of the LPS reduces the risk for adverse effects commonly observed with whole-cell bacterins.”

 

 For additional information on Vaxxon® SRP® vaccines, access the company website, www.Vaxxinova.US.com.


 

Surveys Show Diners Prefer Small, Local Restaurants

Egg-NewsA survey conducted by NEXT Insurance has demonstrated preferences for small, local restaurants as life returns to a semblance of normality after COVID restrictions. As a result of the pandemic, it is estimated that 80,000 restaurants in the U.S. closed either temporarily or permanently despite Federal emergency support.

 

The survey that involved 1,000 consumers showed a willingness to return to in-store dining with 94 percent of respondents planning to try local restaurants.  Seventy percent of consumers have Egg-Newsalready eaten inside a restaurant with a third of the respondents seated outside.  Those surveyed demonstrated a preference for local establishments based on perceptions of quality and ambience.

 

In commenting on the survey, Suzanne DuFore, Director of Research at NEXT Insurance stated, “Many Americans are feeling more comfortable returning to daily activities, and we are excited to see the ripple effects it will have on small businesses all around the country.”


 

Hotraco Agri Unveils Innovations At VIV Europe

VIV Europe 2022 was selected as the occasion for Hotraco Agri to release innovations benefitting producers. Items that will be featured include:-

Egg-News
Egg-News
  • iHotraco farm data system.  This program will record and organize data to provide a centrally stored and retrievable record of production parameters.  The iHotraco system offers security through Portus encryption and reliability with preservation of data even in the event of an interruption in connection.
Egg-News
  • Responsive egg flow control incorporating the eggXact egg counter. Responsive egg flow control provides smooth and regular conveying of eggs with accurate counting.  The control system adjusts the speed of belts to allow continuous flow from collecting belts to the grader for in-line packing systems.  In addition to accurate egg counts, responsive egg flow reduces shell damage and increases yield and optimizes revenue.

Products exhibited at VIV Europe 2022 will be available in the U.S. from VAL-CO.  For further information, access both the Hotraco Agri and Val-Co websites by clicking on to the respective logos on the right side of the welcome page.


 

Welcome to Sponsor, Bröring Technology

Broring is a sponsor of Egg-NewsBröring Technology GmbH., was established in 1995 by Dr.-Ing. Stefan Bröring following requests to develop a range of instruments providing quantitative measurements of egg quality.  In addition, the Company has supplied equipment, electronic installations and circuitry useBroring is a sponsor of Egg-Newsd by primary breeders to measure parameters that are incorporated in index-selection breeding programs.

 

Bröring has developed a suite of instruments to characterize shell and internal quality used extensively by primary breeders and the operators of hatcheries and egg-packing plants.  The current range of instruments with their accessories includes: -

 

  • FEST breaking strength instrument.  The integrity of an egg shell can be determined in two seconds with up to 900 determinations per hour.
  • Haugh-unit Instrument to characterize internal quality. Combined with the readout from an accurate electronic scale it is possible to determine the Haugh-unit measurement.  The formula for Haugh units is incorporated into software that provides a printout and visual display of weight, albumen height and the Haugh unit score for an egg.

Broring is a sponsor of Egg-News

  • Yolk color can be determined using a Bröring instrument. An egg is broken onto a glass table allowing  the instrument to measure L*a*b data. Red-green and blue ratios  are analyzed to provide a standard value corresponding to the units on the DSM/Roche yolk- color fan.
  • Shell thickness micrometer - This electronic hand-held instrument has measuring surfaces to accommodate to the curvature of a shell and provides a digital readout.
  • Bröring can apply microprocessor technology to develop electronic circuitry customized for specific QC applications.

 

Broring is a sponsor of Egg-NewsBröring supplies individual instruments or their combination to equip a complete QC laboratory for eggs.

 

Bröring has agents in all major egg producing nations. The U.S. contact is Tim Wittek, available at  <tim.wittek@broeringtech.com>.

 

The Bröring Technology website can be accessed at <www.broeringtech.com> or by clicking on to the logo on the right side of the Welcome page.


 

CoBank Webinar

Egg-News
Egg-News

JOIN US FOR A WEBINAR ON JUNE 1

Influence of Energy and Food Prices on U.S. Inflation

You are invited to an interactive webinar featuring economists from BP and CoBank’s Knowledge Exchange Division. These experts will weigh in on inflation, unpack the role of rising food and gas prices, and discuss what it all means to agriculture and rural America.

Featured Speakers:

Egg-News Michael Cohen
Chief U.S. Economist and
Head of Oil Analysis
BP
Egg-News Dan Kowalski
Chief Economist and
Vice President
CoBank Knowledge Exchange
Egg-News Teri Viswanath
Lead Economist
Power, Energy and Water
CoBank Knowledge Exchange

Register now to join the conversation.


 

OVO-Vision To Unveil Software At VIV

Egg-NewsOVO-Vision will demonstrate a comprehensive egg management system based on Microsoft™ Dynamics BC with specific features to promote efficiency in the management of egg production.

 

The system facilitates supply and demand planning, integrates aspects of flock-management systems allowing access and review of data without reference to numerous spreadsheets.

 

OVO-Vision specialists will be in attendance on the OVO-Vision booth during the VIV Europe Exhibition from May 31st through June 2nd.

 

Egg-News


 

Commentary


Abbott Nutrition Executives Should Face Criminal Penalties Over Contamination of Infant Formula

Following a preliminary investigation following the inspection of the Abbott nutrition plant in Sturgis, MI., the U.S. Department of Justice has filed a complaint on behalf of the Food and Drug Administration alleging that products were adulterated. The legal definition of "adulterated" includes the presence of any poisonous or deleterious substance which may render injurious to health or a product prepared, packed or held under insanitary conditions whereby it may have become contaminated or rendered injurious to health".

 

Based on a review by William Marler, a prominent plaintiff's attorney specializing in foodborne infection, Abbott in agreeing to a Consent Decree has effectively admitted liability. On his law- firm website, Marler posted the 2021 inspection report, the document prepared by the Whistleblower as submitted to the FDA in October 2021, the Department of Justice Complaint and the Consent Decree.

 

To support a felony violation, the Department of Justice would have to demonstrate that the adulteration occurred with intent to defraud or mislead by placing a food product in interstate commerce.  A misdemeanor violation would involve negligence through failure to prevent adulteration but does not require proof of fraudulent intent or willful conduct.

 

Marler makes the case that any producer of food should face penalties for marketing adulterated food whether willfully or not, a position endorsed by EGG-NEWS.  Penalties for both misdemeanors and felonies include substantial fines and the possibility of incarceration.

 

The responsibility of owners or executive management involved in foodborne outbreaks is exemplified by long prison terms handed down to the Parnell Brothers following the extensive outbreak of salmonellosis in 2009. Their company, The Peanut Corporation of America was responsible for 714 cases, 172 hospitalizations and nine fatalities. Paul Kruse then the CEO and majority shareholder of Blue Bell Creameries is under indictment for his actions in an outbreak of listeriosis in 2017. In both instances there were allegations of concealment of results of assays and falsification of records. Despite a self-exculpatory article in the Washington Post, Abbott Laboratories Chairman and CEO, Robert Ford will be subject to DOJ investigation with the inevitable questions of “what did he know and when did he know it”

 

The bar for CEOs and senior management of food companies is much higher since passage of the FDA Food Safety Modernization Act. In addition to civil penalties imposed by the DOJ and civil lawsuits executive officers now face criminal action with even misdemeanor violations carrying the threat of incarceration.


 
Dr. Simon M. Shane
Simon M. Shane
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