The overriding conclusion from the COP27 Climate Conference that ended on November 19th is that limiting global warming to a target of 1.5 C (2.7 F) above pre-industrialization levels is unlikely to be achieved.  The target was adopted at the COP21 Paris Conference and has been successively reaffirmed as recently as the 2021 COP26 Glasgow Climate Pact. 

The Intergovernmental Panel on Climate Change reported on the effects of a rise of 2.0 C compared to the target 1.5 C.  The difference of 0.5 C would represent severe impacts on the ecosystem with an additional half a billion people exposed to excessive heat, inundation of islands and low-lying coastal areas, an ice-free Arctic and a succession of floods, droughts and severe hurricanes.  Recent studies have shown that global warming will severely decrease yields of corn, coffee and rice in areas traditionally devoted to these crops.  Wheat and potatoes will, however, potentially increase in production as they are planted at higher latitudes. Increased rainfall could raise production of rice in India and West Africa.  Equatorial nations including Brazil Indonesia and Nigeria would be most affected with sharply reduced corn and rice harvests.

Concern over global warming and the need for international action emerged in 1992 with many nations accepting the United Nations Framework Convention on Climate Change.  Notwithstanding a series of COP meetings, including the Paris Summit in 2015, there has been minimal progress on a worldwide basis to achieve the 1.5 C goal.  It appears that if carbon dioxide emission cannot be reduced from power generation, cement and steel production temperatures will rise to 3.5 C above the pre-industrial level. 

Progress has been made in displacing coal to generate power using renewables and less environmentally destructive natural gas.  Building design and construction materials have improved the energy efficiency of buildings.  Some progress has been made in developing technology to remove carbon dioxide from the atmosphere.  Agriculture could contribute to stabilization of the upward temperature gradient.  The USDA, under the current Administration, has assigned $3.1 billion in a Partnership for Climate-Smart Commodities.  It is questioned whether expending public funds on numerous, small projects will be beneficial either to the U.S. or to the world.  USDA Secretary, Tom Vilsack, announced at COP27 that $300 million would be assigned to 65 projects focusing on small and underserved producers and minority-serving institutions, demographics favored by the current Administration and the Secretary.

There has yet to be a final communique from COP27 but it is clear that sensitive issues including the 1.5 C target and continuing use of hydrocarbons to generate energy will be framed to the advantage of industrialized nations. These include the U.S. and China who have renewed negotiations on environmental rehabilitation. There was no commitment to phase out fossil fuels despite demands from developing nations impacted by global warming and rising sea levels. These countries will be provided with “loss and damage” grants to compensate for deprivation of land and productive capacity.

The USDA Crop Progress Report released on November 21st documented continued progress in harvesting corn and completion of the soybean harvest.

Corn is 6 percent ahead of the 4-year average having advanced 63 percent during the past week. The harvest in 2022 is two percent ahead of the corresponding week in 2021.

The soybean harvest advanced four percent to completion, six percent ahead of the 4-year average and two percent ahead of the corresponding week in 2021.

EGG-NEWS has now concluded reporting on the 2022 harvest.

Crop October 16th October 23rd 4-Year Average Corn Dented (%) Corn Mature (%) Corn Harvested (%) 100 100   93 100 100  96     100            100  90 Soybeans Setting Pods (%) Soybeans Dropping Leaves (%) Soybeans Harvested (%) 100 100 100       100 100 100 100 100  100

The November 9th WASDE #630 estimated the average U.S corn yield at 172.3 bushels per acre (176.7 bushels per acre in 2021) with a 2022 harvest of 13,930 million bushels. The soybean yield was projected at 50.2 bushels per acre (51.7 bushels per acre in 2021) with a 2022 harvest of 4,346 million bushels.

The November 9th WASDE #630 estimated the average U.S corn yield at 172.3 bushels per acre (176.7 bushels per acre in 2021) with a 2022 harvest of 13,930 million bushels. The soybean yield was projected at 50.2 bushels per acre (51.7 bushels per acre in 2021) with a 2022 harvest of 4,346 million bushels.

The November WASDE #630 is retrievable under the STATISTICS Tab.
 

WEEKLY COMMODITY REPORT: November 24th 2022.

OVERVIEW

Over the past five trading days commodities were little changed. December corn was down 0.5 percent to 663 cents per bushel for December 2022 delivery. In contrast soybeans were up 1.4 percent compared to the previous week to 1,436 cents per bushel for January 2023 delivery. The market has adjusted to the projections of crop size and ending stocks as projected in the November 9th WASDE #630. Despite fluctuating economic sentiment, restoration of shipping from Black Sea ports has reduced price pressure on wheat and other grains although revocation by Russia or some adverse marine incident is always possible. Commodity prices in the U.S. were influenced by a lower Dollar Index and orders placed by China and other importers.

Factors influencing commodity prices in either direction over the past

 weeks included:-

• Renewed fears of a U.S. recession due to an aggressive Federal Reserve  FOMC, followed the September 13th CPI release and the fourth successive monthly 0.75 percent upward rate adjustment on November 2nd.  A rebound in equity markets was evident during the past three weeks albeit with inter-day fluctuations. (Transitory upward pressure on markets)
• A reduction in the October CPI to 0.4 percent compared to 0.8 percent for September suggests that inflation may have plateaued. (Downward pressure)
• Low water levels along the Mississippi River and tributaries caused by drought is still impeding barge traffic. A rail strike tentatively scheduled for December 5th is also threatened unless Congress intervenes. (Downward pressure and lower cash prices paid to farmers)
• Hot and dry conditions in extensive areas of the Corn Belt reduced the yield and quality of the late-planted 2022 corn crop. The yields for the corn and soybean harvests were updated in the November WASDE. (Downward pressure with higher ending stocks for corn and soybeans)
• Geopolitical tensions that impacted wheat, corn, oilseeds and vegetable oil exports from Ukraine persist. Restoration of Black Sea shipping was accomplished following security guarantees by Ukraine to the Russian Federation. Russia has inflicted extensive and deliberate damage on the agricultural and energy infrastructure of Ukraine including elevators and crushing plants and has placed landmines in fields. Ukraine corn yield for 2022 is down 18 percent from 2021 with 39 percent of the crop harvested as of November 17th. (Upward pressure on corn and wheat and an indirect effect on soybeans if Black Sea shipping is interrupted.)
• Expectation of high soybean and corn crops from Brazil for the 2022-2023 season. (Lower prices in the future subject to favorable reports on planting and crop progress)
• Volatility of the Dollar Index (DXY) that stood at 101 on June 2nd peaking at 116 in late October but declining to 106 on  November 23rd The dollar index influences timing and volume of export orders. (contributes to fluctuation in corn and soybean prices, depresses U.S. sales)
• Speculation in commodities by hedge funds declined consistent with falling equity prices in September with restoration in October but with a steady decline in the value of crypto currency with evidence of  inadequate regulation. Concerns over a U.S. recession, reemerged in early October, as the Federal Reserve is intent on raising benchmark funds rates to suppress inflation. (Downward pressure)

Based on CME quotations on November 23rd U.S. farmers are now receiving and conversely livestock producers and ethanol refiners in the Midwest will pay above $6.63 per bushel for corn delivered in December, down 0.5 percent from the quotation last week. Crushers will pay $14.36 per bushel for soybeans plus transport and basis for January 2023 delivery, up 1.4 percent from the previous week. December soybean meal was 1.2 percent higher compared to the quotation last week. Prices continued their moderate inter-day fluctuation and corn reversed the upward trend from the previous week with soybeans up reflecting both domestic and export demand, projected new-crop harvest and ending stocks.

EXPORTS

The restored ‘legacy’ FAS Export Report released on November 25th for the week ending November 17th reflecting market year 2022-2023, confirmed that outstanding export orders for corn amounted to 12.3 million metric tons (485.0 million bushels) with 5.43 million metric tons (213.7 million bushels) actually shipped. Net orders for the 2022-2023 market year increased sharply for the second consecutive week to 1.85 million metric tons (72.8 million bushels) with 0.46 million metric tons (18.2 million bushels) shipped for the past week. For the current market year outstanding sales of corn to date are 52.1 percent lower than at the corresponding week a year ago. For market year 2023-2024 outstanding sales this week amounted to 0.93 million metric tons (36.9 million bushels), with 0.63 million metric tons (24.8 million bushels) ordered for the 2023-2024-market year.

(Conversion 39.36 bushels per metric ton)

The FAS Export Report for the week ending November 17th reflecting market year 2022-2023, recorded outstanding export orders for soybeans amounting to 19.66 million metric tons (722.3 million bushels) with 17.0 million metric tons (622.7 million bushels) actually shipped. Net weekly soybean orders were down 77 percent from last week at 0.69 million metric tons (25.4 million bushels) with 2.43 million metric tons (89.4 million bushels) shipped for the past week. For the current market year to date outstanding sales of soybeans are 13.2 percent higher than for the corresponding week a year ago. Sales recorded for market year 2023-2024 are negligible                                                                   

(Conversion 36.74 bushels per metric ton)

For the week ending November 17th 2022 net orders of soybean meal and cake amounted to 576,400 metric tons for the market year 2022-2023. During the past week 227,100 metric tons of meal and cake combined was shipped, representing 18.0 percent of the total 1,260,200 metric tons shipped during the current marketing year. This quantity is 79.4 percent of the volume shipped during the corresponding weeks of the previous market year. For the next market year outstanding sales attained 19,000 million metric tons with 17,100 metric tons ordered this past week.

Projected harvests and ending stocks were documented in the November WASDE #630, posted under the STATISTICS Tab.  Corn yield was projected at 172.3 bushels per acre with a crop of 13,930 million bushels. Soybean yield was projected at 50.2 bushels per acre with a crop of 4,346 million bushels This report took into account the late planting of corn in the U.S. and regional drought together with the predicted impact on world prices following invasion of Ukraine by Russia.

COMMODITY PRICES

The following quotations for the months of delivery as indicated were posted by the CME at close of trading on November 23rd 2022, compared with values at 14H00 on November 17th 2022  (in parentheses): -

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

Corn:                  Dec. quotation down 0.3 cents per bushel.       (-0.5   percent)

Soybeans:         Jan. quotation up 20 cents per bushel                (+1.4 percent)

Soybean Meal: Dec. quotation up  $5 per ton                                (+1.2  percent)

The NASDAQ spot prices for feedstuffs per short ton at close of trading on November 23rd 2022 with prices for the previous week were:-

• Corn (ZC): $237 ($238).  52-week range $177 to $292
• Soybean Meal (ZM): $407 was $404. 52-week range $311 to $488

Values for other common ingredients per short ton:-

• Meat and Bone Meal, (According to the USDA National Animal By-product Feedstuffs Report on November 18th): $375-$425; porcine (MN) $360 to $390 ruminant. Price varies according to plant and location  
• DDGS, (IA. and other states according to the University of Missouri Extension  Service By-Product Feed Price Listing) $250 to $320 per ton. Price varies according to plant and location and is expected to fluctuate with the price of corn
• Wheat Middlings according to the USDA National Mill-Feeds and Miscellaneous Feedstuffs Report on November 18th for MO. and other states: $175 to $230 per ton ($235 per ton in early June, with current price reflecting surge and subsequent fluctuation in wheat price following the invasion of Ukraine and from U.S. drought)
• Bakery Meal, (MO & TX): $225 per ton  (unchanged)
• Rice Bran, (AR & TX): $150 to $270 per ton.

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 November 23rd spot prices compared with November 17th would not have changed nest-run production cost for eggs.

*(Rounded to 0.1cent)

COMMENTARY ON AVAILABILITY AND PRICES OF FEED COMMODITIES

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 91.7 percent of the U.S. ethanol fermentation volume was operational, based on the January 2022 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 quantity that is exported. During September, net exports attained 100.4 million gallons (2.4 million barrels), up 35.6 percent from August with more shipments to China.

According to the U.S. EIA, for the week ending November 18th 2022 the industry produced on average 1,041,000 barrels of ethanol per day. This was up 3.0 percent from the week ending November 11th 2022 and above the one million gallon per day benchmark for the sixth week after ten consecutive weeks below the one- million level. On November 18th ethanol stock was up a substantial 7.0 percent from the previous week at 22.8 million barrels, representing an approximately 21-day reserve and confirming lower demand given relative changes in production and stock. The US Energy Information Administration forecast ethanol production at 970,000 barrels per day during the first quarter of 2023. The White House has allowed all-year round 15 percent addition to gasoline resulting in an increase in the blend rate to 10.5 percent average during the past summer. The renewable Fuels association calculated that this represented an incremental sale of 190 million gallons of E-15. Given the unusually high price of gasoline relative to ethanol U.S. drivers may have saved $50 million over summer despite the deterioration in fuel efficiency from dilution of gasoline. Given that many older vehicles cannot use higher than an E-10 blend and drivers are curtailing mileage due to high fuel costs and the reality of restraints imposed on fuel station storage and dispensing of high-ethanol blends, the short-term prospects for increased domestic consumption are unfavorable. 

Energy Prices on November 23rd

• Ethanol quoted on the CBOT (EH) on November 23rd was priced at $2.16 per gallon unchanged over previous months and compared to a 52-week range of $2.14 to $2.21 per gallon.
• Concurrently RBOB gasoline traded on NASDAQ (RB) at $2.39 per gallon, down 7 cents per gallon (2.8 percent) from the previous week. The 52-week range for RBOB gasoline is $1.90 to $4.04.
• The CME WTI crude price of $78.04 per barrel on November 24th was 4.4 percent lower than the previous week although with intra-week fluctuation in the energy market. Hydrocarbon sources of energy are still contributing to inflation.
• The AAA national gasoline price declined progressively over thirteen weeks before rising for five weeks and on November 23rd was down 14 cents (3.7 percent) to $3.59 per gallon for unleaded grade. Gasoline is now $1.43 per gallon more expensive than ethanol with a 63 percent higher BTU rating. 
• Diesel was $5.25 per gallon, down 9 cents per gallon (1.7 percent) from the previous week but with prospects of a rise in price due to 6-decade low stock level.
• CME Henry Hub natural gas was priced at $7.57 per MM BTU on November 24th, up $1.18 cents (18.5 percent) from the previous week.

• With most plants among the 198 that were operational on January 1st 2022 with a combined capacity of 1,134 million barrels per day functioning at 91.7 percent, DDGS is freely available but commands a price reflecting corn. The University of Missouri Extension Service By-Product Feed Price Listing priced DDGS at $250 to $325 per ton on November 24th continuing relative price stability. Wide price variation exists depending on supplier, quantity and location. It is axiomatic that the cost of DDGS will reflect changes in the price of corn. Generally DDGS is currently incorporated at moderate inclusion levels in egg-production formulas based on price relative to the nutrient contribution of corn and other ingredients. This will change as corn and hence DDGS increases in price

The CME soybean price for January 2023 delivery at close of trading on November 23rd was 1.4 percent higher to 1,436 cents per bushel compared to the previous week at 1,416 for January delivery. The price of soybeans is attributed to availability for domestic consumption and export orders consistent with the reality that the 2022 crop was spared the impact of the July and August heat and drought. World availability of oilseeds was reduced following the late February invasion of Ukraine. Prices are obviously influenced by projections of yield in the three major producing nations in South America.

According to a release on November 15th by the National Oilseed Processors Association, whose members process 95 percent of the U.S. crop, 184.5 million bushels of soybeans were crushed in October 2022. This value was up 16.7 percent from September, a one-year monthly low at 158.1 million bushels. The October 2022 crush was 0.3 percent higher than the October 2021 value of 184.0 million bushels.

On November 24th the spot price for soybean oil was up 5.0 cents per lb. (7.2 percent) from the previous week to 74.91 cents per lb. Higher prices for vegetable oils were posted over past weeks reflecting a growing acceptance that total oilseed supply will eventually be limited by a sharply diminished crop of sunflower oil from Ukraine, the world’s largest exporter of this commodity. Ukraine is subject to restraints on cultivation and limits on crushing and exports due to hostilities following the invasion by Russia. During 2022, it is anticipated that 41 percent of U.S. soy oil will be diverted from fuel to biodiesel.

On November 23rd 2022, the soybean meal spot price quoted on NASDAQ was $407 per ton, $3.00 per ton higher than the spot price last week and compared to a 52-week range of $312 to $500 per ton.

On November 23rd 2022, Meat and Bone meal was priced over a range of $360 to $405 per ton according to the USDA National Animal By-product Feedstuffs Report, Prices were for central U.S. plants but with a wide range among prices based on composition, source and location. Price fluctuation reflects changes in soybean meal and other oilseed meals.

On November 24th the conversion of the CNY to the BRL was BRL 0.75 up BRL 0.01 from last week. The conversion of the CNY to the US$ was CNY 7.15, up CNY0.01 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 2021-2022 market year net export sales of corn were down 0.13 million tons (5.1 million bushels) compared to the previous market year with cumulative exports of 59.764 million tons (2,352 million bushels) 

For the 2021-2022 market year net export sales of soybeans were down 0.11 million tons (4.2 million bushels) compared to the previous market year with cumulative exports of 57.118 million tons (2,099 million bushels) 

COMMENT

Subscribers are referred to the November 9th 2022 WASDE # 630 and the USDA quarterly Grain Stocks Report available under the STATISTICS tab. Data will be revised when WASDE # 631 is released in mid-December with the harvest completed.

There is currently continuity of the free-passage agreement allowing Ukraine to ship commodities from Black Sea ports. Ukraine apparently exported the 2021 crop in storage to make room for the anticipated 2022 harvests of corn and other commodities in progress that will be lower compared to 2021.

Market Overview

• The average wholesale unit revenue values for Midwest Extra-large and Large sizes were higher by 6.7 percent on average, continuing the upward move from last week. Mediums were unchanged indicating a balance between supply and demand for this size. This past week shell egg inventory was down a noteworthy 9.9 percent with prices correspondingly higher. Both retail price and demand will continue to increase compared to previous years. Through the first quarter of 2023 retail purchases will be sustained by consumer perceptions of value in an inflationary environment with concern over the higher cost of other protein foods. Availability and hence prices are influenced by depletion of close to 38 million hens in 17 large complexes in ten states extending from the last week in February through early November. The U.S. flock is recovering in size with weekly transfer of pullets compensating for HPAI losses.

• Total industry inventory decreased by 8.6 percent overall this past week to 1.55 million cases with a 9.9 percent decrease in shell eggs and a concurrent 2.9 percent decrease in breaking stock. Wholesale unit prices during the first three quarters of 2022 contrasted favorably with the corresponding periods in both 2020 and 2021 that were characterized by low ex-plant unit revenue. Generic eggs are still yielding high positive margins given the USDA benchmark average combined costs for nest-run of 80.0 cents per dozen in October (feed, hen depreciation, housing, labor and fuel). In addition the average cost of grading, packaging and delivery amounted to approximately 50 cents per dozen according to the EIC.

• It is now apparent that the inventory held by chains and other significant distributors may be more important to establishing wholesale price than the USDA regional inventory figures published weekly, especially over the short term. Market data suggests that chains have priced generic white eggs in response to prevailing demand. Mainstream chains as opposed to deep discounters seldom feature generic eggs, irrespective of size with the exception of rare offering of “loss leaders”.

• Due to the depletion of flocks as a result of HPAI, unseasonal high unit revenue will now be a reality into 2023. The occurrence and extent of further outbreaks of HPAI cannot be assessed until more information is revealed concerning the molecular and field epidemiology relating to cases, identifying modes of transmission and possible deficiencies in biosecurity on affected complexes that demonstrated specific risk factors.

• 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 evidenced over the past two months. The benchmark functions to the detriment of the industry over the long term. A CME quotation based on Midwest Large, reflecting demand relative to supply would be more equitable. If feed cost is determined by CME prices then so should generic shell eggs.

• According to the USDA the U.S. flock in production was up by a net 1.3 million or 0.4 percent to 304.5 million hens during the week ending November 23rd. The flock in production includes about 3.0 million molted hens that resumed lay during the past week plus 4.0 million pullets attaining production.

• There is some prospect of a return in the food service sector post-COVID with liquid, frozen and dried egg prices stable to moderately higher over the past three weeks. The ex-farm price for breaking stock was up 0.4 percent this past week to 270 cents per dozen. Checks delivered to Midwest plants were unchanged at 253 cents per dozen. Prices for breaking stock will remain high in relation to season over the recovery period from HPAI as replacement flocks are reared, paralleling 2015-2016.

The Week in Review

Prices

According to the USDA Egg Market News Reports released on November 21st the Midwest wholesale price (rounded to one cent) for Extra-large was up 6.7 percent to $3.98 per dozen. Large size was up 6.8 percent to $3.96 per dozen; the Medium price was unchanged at $3.15 per dozen as delivered to DCs. Prices should be compared to the USDA benchmark average 6-Region blended nest-run cost of 80.0 cents per dozen in October excluding provisions for packing, packaging materials and transport amounting to 50 cents per dozen according to the EIC. The progression of prices during 2022 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

The November 21st 2022 edition of the USDA Egg Market News Report documented a USDA Combined Region value rounded to the nearest cent, of $3.80 per dozen delivered to warehouses for the week ending November 15th 2022. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $3.71 per dozen. At the high end of the range, price in the South Central Region attained $3.90 per dozen. The USDA Combined Price last week was approximately $2.50 above the 3-year average. This past week Midwest Large was also approximately $2.50 above the corresponding week in 2021. Prices were higher this past week due to pre-Thanksgiving demand coupled with low shell inventory held by the industry.

Infection of commercial egg, turkey and broiler flocks with HPAI previously considered unlikely after June, has resulted in recent incident cases among turkeys and broiler breeder flocks in California and Mississippi, growing turkeys in Minnesota, Utah and the Dakotas and large egg-production complexes in Ohio, Colorado and Iowa and egg and turkey flocks in a number of Canadian provinces from the Maritimes to British Columbia. Prices appear to have following the trend during the 2015 epornitic although for a relatively longer period and at a higher level in 2022.

Flock Size

The USDA adjusted the estimate of flock size to reflect depopulation of more than 31.1 million hens through June 6th due to HPAI with subsequent depopulation of approximately 6 million additional hens in Ohio, Colorado and Iowa by the beginning of November. According to the USDA the number of producing hens reflecting November 23rd (rounded to 0.1 million) was up 1.3 million or 0.4 percent to 304.5 million. The total U.S. flock includes about 3.0 million molted hens due to come back into production with approximately 4.0 million new pullets reaching maturity each week based on USDA chick hatch data. The increase is offset by routine flock depletion in addition to losses over the past months during the continuing HPAI epornitic. Based on inventory level the hen population producing eggs should now be slightly lower than consumer demand. Industrial and food service off-take although increasing, has not reverted to pre-COVID levels. Prices will continue to fluctuate, trending upwards through the last week of November with an expectation of stability at an unseasonal high price until pre-Christmas surge. Prices of shell eggs and products will also depend on incident outbreaks of HPAI offset by the contribution of new pullets and of molted hens to supply.

According to the USDA the total U.S. egg-flock on November 23rd was up by 0.1 million to 308.5 million hens including second-cycle birds and those in molt. The nominal difference of 4.0 million between hens in production and total hens is an approximate figure but denotes that many molted hens resumed production. At present there are now at least 20 million fewer hens in both the total and producing flocks with the difference equivalent to about seven percent of the pre-HPAI national flock.

INVENTORY LEVELS

Cold storage stocks of frozen products in selected regions on November 22nd 2022 amounted to 2.386 million pounds (1,085 metric tons) of frozen egg products, 2.3 percent more than the inventory of 2.444 million lbs. on November 1st 2022. The monthly USDA Cold Storage Report below quantifies a reduction in the actual total stock level.

The most recent monthly USDA Cold Storage Report released on November 22nd 2022 documented a total stock of 25.7 million pounds (11,666 metric tons) of frozen egg products on October 31st 2022. This quantity was down 2.7 percent from the October 31 st 2021 value of 26.4 million pounds. October 31st frozen egg inventory was down 3.7 percent from September 30th 2022 despite depletion of close to 36 million hens. Compared to October 31 st 2021 yolks were down 11.1 percent to 488 million lbs.

A total of 86.4 percent of combined inventory (22.2 million lbs.) comprised the categories of “Whole and Mixed” (34.0 percent) and “Unclassified” (52.4 percent). The lack of specificity in classification requires a more diligent approach to enumerating and reporting inventory by the USDA

Shell Inventory

The USDA reported that the national stock of generic shell eggs effective November 21st 2022 was down 8.6 percent compared to an increase of 2.3 percent during the previous week. The sharp decline in stock over the past week suggested increased consumer demand. Combined with breaking stock, the total inventory of shell eggs in the industry is now at 1.55 million cases (1.69 million last week and now 145,300 cases lower). The U.S. population of laying hens at this time is influenced by the number of hens culled due to HPAI, and includes the population unaffected by HPAI, flocks retained after molting (with an anticipated increase in this category depending on available housing capacity) and started pullets from chick placements in late May 2022. Going forward, older hens will assume a larger proportion of the national flock as more flocks are molted especially as many “at risk” pullet flocks were depleted due to HPAI.

All six USDA Regions reported higher stock levels this past week. The regions are listed in descending order of stock: -

· The Midwest Region was down 7.2 percent compared to the previous week to 405,100 cases.

· The Southeast Region was down 4.4 percent to 274,700 cases

· The South Central Region was down 14.6 percent to 227,000 cases

· The Northeast Region was down 14.9 percent to 158,000 cases.

· The Southwest Region was down 16.4 percent to 120,500 cases

· The Northwest Region was down 3.4 percent to 62,300

The total USDA six-area stock of commodity eggs comprised 1,548,900 cases, down 8.6 percent, of which 80.5 percent were shell eggs (81.7 percent last week). The inventory of breaking stock was down 2.9 percent to 301,300 cases. Shell eggs were down 9.9 percent to 1,247,600 cases. The relatively lower level of breaking stock over recent weeks and the proportion of in-line eggs processed suggests movement of uncommitted eggs to the shell market. This conclusion is supported by sustained higher prices for shell eggs compared to breaking stock. The average price for Midwest checks and breaking stock combined is now 70.3 percent of the average value of Midwest Extra-large and Large shell eggs (last week 70.6 percent compared to 80.0 percent in May reflecting the initial period of high demand). The price for breaking stock and for checks is influenced by the relative demand for generic shell eggs and contract obligations with breakers. This past week the wholesale Midwest Extra- large and Large shell egg prices were higher by an average of 6.7 percent compared to breaking stock and checks that were up by an average of 0.2 percent from the previous week.

On November 21st 2022 the inventory of other than generic eggs amounting to 368,000 cases (last week 401,000 cases) among three categories (with the previous week in parentheses) comprised: -

· Specialty category, down 14.4 percent to 39,400 cases. (Was up 15.9% to 46,100 cases)

· Certified Organic, down 6.1 percent to 69,200 cases. (Was up 3.6% to 72,700 cases)

· Cage-Free category, down 7.8 percent to 259,400 cases. (Was down 5.2% to 281,200 cases)

Demand for cage-free product will not increase materially while generic eggs from caged flocks and surplus down-classified cage-free eggs are on the shelf at $1.80 to $2.20 per dozen during normal supply conditions over the long term. Existing and proposed individual state legislation mandating sale of only cage-free eggs will support most of the anticipated transition from cages but total re-housing will not be completed, if ever, by the beginning of 2025, less than 25 months away. The California Department of Food and Agriculture issued a revised draft of regulations based on Proposition #12 for comment but the Agency was over two years late in releasing a final version, resulting in a court-ordered moratorium on implementation for sow housing. The constitutional status of Proposition #12 was considered by SCOTUS on October 11th with specific consideration of the Dormant Commerce Clause relating to interstate trade. Many chains are reneging on their commitments to achieve complete transition to cage-free eggs. With the current proportion of non-caged flocks, cage-free eggs are surplus to demand in some areas and are becoming a commodity in many markets subjected to the same price pressures as generic eggs from caged hens. Growth in demand for organic product has been static for months.

Long-term demand for cage-free eggs is influenced by the relative shelf prices of the category in comparison with generic white-shelled eggs from caged flocks. At the other end of the price range, consumers will purchase less-expensive brown cage-free product over organic eggs when there is a differential in price greater than about $1.20 per dozen under normal balance between supply and demand. Similarly, consumers will traditionally purchase white-shelled generic eggs in preference to brown-shelled cage-free with a differential of over $1.20 per dozen.

The need for comprehensive structured statistically relevant market research on the willingness to pay for attributes such as housing, shell color, GM status and nutritional enrichment is self-evident. As in 2015, the recently concluded 2022 HPAI epornitic will provide a valuable opportunity for economists to determine the price elasticity for eggs provided funding is made available to agricultural economists at Midwest Land Grant University.

RELATIVE PRICES OF SHELL-EGG CATEGORIES

USDA-AMS posted the following national shell egg prices for November 18 th in the Egg Markets Overview report for dozen cartons with comparable prices in parentheses for the previous week: -

Large, in cartons generic white $4.12 up 68.9 percent ($2.44)

Large, in cartons cage-free brown $3.38 up 20.2 percent ($2.81)

Large, California in Cartons $4.56 down 10.8 percent ($5.11)

Wholesale

National loose, (FOB dock) $3.12 down 1.1 percent ($2.94)

NYC in cartons to retailer $4.14 up 7.8 percent ($3.84)

Midwest in cartons to warehouse $3.72 up 6.6 percent ($3.49)

The following advertised retail prices for the week ending November 24th 2022, (compared with the previous week in parentheses) were posted by the AMS on November 21st for dozen packs:

USDA Certified Organic, Brown, Large: $4.74 ($4.56)

Cage-Free Brown, Large: $3.42 ($2.81)

Omega-3 Enriched Specialty, White, Large: $4.15 ($3.48)

Generic White, Large Grade AA $4.12* ($2.28)

Generic White, Large Grade A (Feature price) $2.61* ($2.44)

* Based on a small sample with few advertised promotions

The advertised price this week for Large white grade AA was $4.12 per dozen, up $1.84 per dozen or 80.7 percent extending the increase from last week. Lower shelf prices will increase demand for generic categories given availability and higher advertised shelf prices for specialty and cage-free brown eggs. Current supply was probably below demand this past week with independent producers continuing to divert more shell eggs from breaking. Retail demand will continue to be supported by home cooking and baking and reinforced by dining out as COVID is now almost ignored. Eggs and product purchases will be limited among some demographics by their earnings and inflation.

For the current week the USDA benchmark-advertised retail price of brown cage-free was $3.42 per dozen as documented by the USDA, up 21.7 percent or $0.61 per dozen. Advertised promotional price for certified organic was up 3.9 percent or $0.18 per dozen to $4.74 compared to the previous week at $4.56 per dozen. This week the difference in advertised price between cage-free brown and certified organic was $1.32 per dozen ($1.75 per dozen last week) suggesting continued demand for cage-free brown over certified organic eggs. Large week-to-week fluctuations can be expected in the stock of specialty and organic eggs based on the small base of these categories.

This past week cage-free brown was advertised at $3.42 per dozen, $0.76 higher than cage-free white at $2.66 per dozen.

Features for the major categories this week by proportion included Organic (39.0 percent, up from 26.8 percent last week); Cage-free (31.8 percent, up from 28.4 percent reflecting relatively high stock in this category) and Omega-3 enriched, (14.7 percent, up slightly from 12.6 percent). Other categories amounted to 14.5 percent of features with Large predominating at 6.5 percent and Mediums following at 4.0 percent of all features. This confirms that retailers promote generic categories only if eggs are available in excess of demand or under current circumstances, as loss leaders in a pre-holiday market.

USDA Cage-Free Data

According to the latest monthly USDA Cage-free Hen Report released on November 2nd 2022, the number of certified organic hens during October 2022 was unchanged from September 2022 at 18.0 million. This is 0.6 percent lower than the average of 18.1 million during Q2 of 2022.

The USDA reported the cage-free (non-organic) flock to be up 1.9 percent to 88.8 million in October 2022.

According to the USDA the population of hens producing cage-free and certified organic eggs in September 2022 comprised: -

Total U.S. flock held for USDA Certified Organic production = 18.0 million (18.1 million in Q2 2022).

Total U.S. flock held for cage-free production = 88.8 million (88.2 million in Q2 2022).

Total U.S. non-caged flock =106.8 million (106.3 million in Q2 2022).

This total value represents 33.0 percent (last month 32.4 percent) of a nominal 324 million total U.S. flock (but 35.0 percent of the national flock after HPAI mortality to 305 million). Hens certified under the USDA Organic program have decreased in proportion to cage-free flocks since Q1 of 2021.

The accuracy of individual monthly values is questioned given a history of either sharp changes or no change in successive months as documented over the past two years. Precise quarterly reports would be more suitable for the industry in planning expansion and allocation of capital.

Processed Eggs

For the processing week ending November 19th 2022 the quantity of eggs processed under FSIS inspection during the week as reported on November 23rd 2022 was down 3.7 percent compared to the previous processing week to a level of 1,385,272 cases (1,438,197 cases last week). The proportion of eggs broken by in-line complexes was 50.9 percent (50.8 percent for the previous week), denoting relatively stable use of contract and purchased eggs. The differential in price for shell sales and breaking will determine the movement of uncommitted eggs. This past week 71.6 percent of egg production was directed to the shell market, (70.5 percent for the previous week) despite relatively high prices paid by breakers. Breaking stock inventory was down 2.9 percent this past week to 301,300 cases following diversion to shell-egg markets. This is probably due to a slight recovery in the food service sector. There has been increased demand by QSRs and casual dining, complemented by increased demand from travel, baking and eat-at-home. During the corresponding processing week in 2020 (during-COVID) in-line breakers processed 53.8 percent of eggs broken.

For the most recent monthly report for week ending November 12th 2022, yield from 5,718,949 cases (7,173,656 cases last month) denoted a decrease in demand for liquid over the period October 2nd through October 29th 2022. Edible yield was 38.5 percent, distributed in the following proportions expressed as percentages: - liquid whole, 63.6; white, 22.7; yolk, 11.0; dried, 2.7.

All eggs broken during 2021 attained 77.8 million cases, 2.6 percent more than 2020. Eggs broken in 2022 to date amounted to 68.2 million cases, 1.0 percent less than for the corresponding period in 2021. This is attributed to decreased demand for egg liquids from retail, food service and QSRs and casual dining restaurants despite restoration of service as COVID restrictions are relaxed.

Consumption of liquids is still moderately constrained by COVID-19 home-cooking resulting in diversion of breaking stock into the shell market partly balanced by a large reduction in hens dedicated to breaking.

PRODUCTION AND PRICES

Breaking Stock

The average price for breaking stock was almost unchanged, up 0.4 percent this past week to an average of 269 cents per dozen with a range of 264 to 275 cents per dozen delivered to Central States plants on November 21 st. Checks were unchanged this past week to an average of 253 cents per dozen over a narrow range of 252 to 254 cents per dozen.

Shell Eggs

The USDA Egg Market News Report dated November 21st 2022 confirmed that Midwest prices for Extra-large and Large sizes were up by 6.7 percent compared to the previous week. Mediums were unchanged. Prices represented the fifth consecutive weekly increase with mostly downward fluctuation in weekly inventory. This suggests moderately higher prices through the last week in November into the pre-Christmas surge. The following table lists the “most frequent” ranges of values as delivered to warehouses*: -

*Store Delivery approximately 5 cents per dozen more than warehouse price

The November 21st 2022 Midwest Regional (IA, WI, MN.) average FOB producer prices, for nest-run, grade-quality white shelled eggs, with prices in rounded cents per dozen were up 7.0 percent from last week, (with the previous week in parentheses): -

EL. $3.88 ($3.60), (estimated by proportion): L. $3.83 ($3.58): M. $2.95 ($2.95)

The November 21st 2022 California price per dozen for cage-free, certified as Proposition #12-compliant large product in cartons delivered to a DC, (with the previous week in parentheses) was up 1.1 percent for the week.

EL. $4.63 ($4.58); L. $4.61 ($4.56); M. $4.08 ($4.30)

(See the text, tables and figures and the review of production data and prices comprising the USDA Report for September and the 1st Quarter FY 2023 results for Cal-Maine Foods under the Statistics Tab)

Shell-Egg Demand Indicator

The USDA-AMS Shell Egg Demand Indicator for November 23rd was up a noteworthy 12.0 points from the last weekly report to 13.1 with a 9.9 percent increase in shell inventory from the past week as determined by the USDA-ERS as follows: -

Note 1: USDA Flock numbers were adjusted after incident cases of HPAI in mid-May. The hen population takes into account the depletion of approximately 38 million hens following HPAI outbreaks in seventeen large complexes and eight smaller units in ten states followed by successive weekly pullet placements restoring the national flock.

Dried Egg Products

The USDA extreme range in prices for dried albumen and yolk products in $ per pound was released on November 18th. Prices were unchanged from the previous week and past months are depicted to illustrate the trend in prices attributed to HPAI depopulation: -

Frozen Egg Products

The USDA range in prices for frozen egg products in cents per lb. on November 18th 2022 compared to the previous week were on average lower but indicating a balance between available products and demand from the manufacturing and retail sectors: -

Prices were not posted by USDA for white and whole liquid egg products this past week. The October averages for non-certified truckload quantities are tabulated (cents per lb.): -

Whole 274c; Whites 173c ; Yolks 375c.

The USDA has not released a report on dried egg inventory since March 13 th 2020 due to inability to obtain data from producers, and will not issue reports for the immediate future.

COMMENTS

Prevalence rates from APHIS surveys of migratory waterfowl in the Atlantic and Mississippi Flyways confirmed that birds were shedding H5 avian influenza virus expressing an Eurasian lineage from late January 2022 onwards. This is confirmed by subsequent ongoing outbreaks in backyard flocks and combinations of commercial egg complexes, broiler and turkey growing farms among the four flyways. It is evident that some wild domestic birds are shedding virus based on cases in backyard flocks. This situation requires more intensive monitoring including wild endemic birds and small mammals with the presumption to maintain high levels of biosecurity.

Outbreaks in commercial egg-producing flocks extended from February 23 rd to September 21st

To date approximate losses in commercial flocks with confirmed HPAI and updates include:-

· 2,400,000 broilers on 12 farms in 7 states

• 320,000 broiler breeders on 10 farms in 6 states

· 7,900,000 turkeys including a few breeders on 188 farms in 7 states

· 37,600,000 egg-production hens in total with 95 percent on large complexes above 0.5 million in addition to 1,050,000 pullets all involving 30 locations in 10 states. Pullet mortality does not include “at risk” replacements depleted on affected complexes with contiguous pullet rearing.

Through the second week in October, Canada recorded 72 outbreaks in 9 provinces and has depopulated 3.0 million commercial poultry including hens, turkeys and broilers.

Unlike in previous years there are continuing reports from the E.U. documenting shedding of H5N1 and other H5 strains by migratory waterfowl with mortality in other than anseriform wild birds and also in foxes. Outbreaks of HPAI are still occurring on commercial farms in Eastern and Western Europe. Incident cases have been confirmed in Japan and South Korea during the past two weeks. These outbreaks were attributed to contact with wild birds. Domestic chicken, turkey and duck flocks will be vulnerable, if as usual they are allowed access to pasture. Most veterinary authorities in Western Europe have advised flock confinement with obligatory housing in the U.K. and France due to increasing rates of recovery of H5N1 HPAI from migratory waterfowl. Avian influenza strains H5 and H7 persist in Western and Eastern Europe, Asia and both Western and Southern Africa. France and Holland are evaluating DNA vaccines. Mexico will introduce vaccination. An International conference on vaccination against HPAI took place in Paris on October 25th and 26th and details will be provided when released

Backyard flocks that are allowed outside access will continue to be at risk of infection in the U.S. These small clusters of birds in suburban areas are of minimal significance to the epidemiology of avian influenza as it affects the commercial industry. Backyard flocks serve as indicators of the presence of virus among free-living birds as evidenced by ongoing outbreaks in commercial poultry flocks across the U.S.

The level of biosecurity in commercial egg production complexes and broiler farms is appreciably higher than in 2015 when the U.S. experienced an epornitic along the Mississippi Flyway The response of state and federal authorities since this time has been rapid and effective both in diagnosing and depleting affected flocks. To date, all floor-housed flocks that were infected were depleted using foam. Euthanasia of egg production complexes involved various combinations of VSD+ applying heat or carbon dioxide or conventional kill carts flushed with carbon dioxide

.

The role of migratory waterfowl in introduction and subsequent dissemination of H5N1 HPAI virus is indicated by the close proximity of infected complexes and their counties with major waterways, lakes, wetlands or reservoirs during the spring months of 2022. There is now limited subjective evidence of aerogenous transmission of HPAI over short distances with virus (possibly shed by wild endemic birds) becoming entrained in dust and introduced into ventilation inlets by powered ventilation systems.

It would have been helpful for APHIS epidemiologists to have reported on their findings from the epidemiologic questionnaires completed following outbreaks on commercial farms and with special reference to the first seven large complexes affected through the end of March. The industry should have been advised of possible routes of infection and whether any obvious defects in structural or operational biosecurity contributed to outbreaks. This would have facilitated appropriate preventive action and allocation of additional resources to intensified biosecurity . A preliminary opinion with guidance during mid-April 2022 was not an unrealistic request and an interim report by early-May may have provided more value than a comprehensive document in 2023 or later. This is especially the case since an outbreak ocurred in a broiler breeder flock in Turlock, CA. on August 22nd followed by a second 4 days later with reports of four turkey flocks aong three counties in that state. In addition two cases were diagnosed in turkey flocks in Minnesota on August 30th with large egg complexes in Northwest Ohio and Colorado confirmed during September and a complex in Iowa in October. This suggests ongoing exposure from wild domestic birds as evidenced by the incidence in backyard flocks that are effectively sentinels.

EGG-NEWS notes the sad passing of Dr. Peter Woolcock who spent 22 years with the California Laboratory Diagnostic System in both Fresno and Davis before retirement in 2013.

A native of Great Britain, Dr. Woolcock received undergraduate degrees from Birmingham University and a doctorate in microbiology from Leeds University in 1974.  He immigrated to the U.S. in 1986 and assumed the position of Senior Research Associate at the Cornell University Duck Research Laboratory.  He joined CAHFS-Fresno as an avian virologist in 1991 transferring to the Davis laboratory in 2009.

He provided specialist virology services to the West Coast industry applying then current procedures.  Dr. Woolcock was noted for his expertise and willingness to assist poultry health professionals and academics with diagnostic virology and applied research projects. His expertise was in isolating viruses responsible for clinical outbreaks of disease followed by characterization applying classical laboratory techniques. His skills were instrumental in identifying a highly virulent strain of IBDV in the late 1980s facilitating eradication. Some of his isolates from field cases were used as vaccine candidates and for autogenous products.

His enthusiastic cooperation with the profession will be missed.

On November 9th Ahold-Delhaize, with supermarket operations in the E.U. and the U.S. reported on Q3 ending September 30th.  Assuming parity between the Euro and the U.S. dollar, ($1.03 to  €1) the Group attained a net income of $589 million on net sales of $22,407 million with a diluted EPS of $0.59.  Corresponding figures for the third quarter of FY2021 comprised a net income of $522 million on net sales of $18,545 million.  The Group achieved an operating margin of 4.1 percent compared to 4.2 percent for the corresponding third quarter of 2021.

The U.S. segment attained net sales of $14,745 million, including online sales of $1,077 million.  The U.S. operations achieved an operating income of $566 million compared to $534 million in the third quarter of 2021.  Operating margin was 5.0 percent, up from 4.8 percent during the third quarter of 2021.  Comparable sales growth was 8.6 percent, excluding gasoline, compared to 3.6 percent for the third quarter of 2021.

Ahold-Delhaize posted total assets of $51,516 million against long-term debt and lease obligations of $16,529 million.  The company operates 2,050 stores in the U.S. under the Food Lion, Stop & Shop, Hannaford, Giant and Pea Pod banners.  The E.U. operations comprise 5,575 stores including 1,123 specialty units.

The company provided FY 2022 guidance of a 4 percent minimum operating margin and low double-digit growth compared to 2021 with $2.5 billion for capital expenditures.

In commenting on results, Frans Muller, President and CEO, stated, "High inflation, increasing interest rates, slowing economic growth and the war in Ukraine are putting intense pressure on customers' household budgets. At the same time, retailers and suppliers alike are also facing rising costs of doing business. High energy prices, for example, are not just a cost headwind but are also disrupting supply chains, which are still fragile in many parts of the world. With a deep understanding of commodity prices, built through our extensive experience with own-brand products, our teams play an important role in the value chain and work hard on behalf of customers to ensure realistic pricing. In the face of increasing price pressures, it is everyone's job, across the value chain, to keep prices as low as possible for customers. To this end, we continue to engage diligently and proactively with partners, making clear choices on assortment when necessary. We are also adapting our organization and processes to rising costs by increasing efficiencies and mitigating costs wherever practical and possible.

Referring to the U.S Segment, Muller stated, “We took an impairment charge of $187 million on FreshDirect, largely related to the broad based re-rating of sector valuations and reduced scope of that business that is now predominantly focused on the New York Tri-State area” He added "So, while we can't control external factors like energy prices, we have continued to work diligently on things that are under our control, and I am pleased we are making good progress. For example, at Stop & Shop, we continue to advance on our remodeling program, with over 40 percent of the store fleet now remodeled since 2018. An important focus area for Stop & Shop is New York City, where we announced a multi-year $140 million investment earlier this year. With the first five store remodels completed, we are encouraged to see all stores trending ahead of plan, with the sales lift driven by increased units and new customer transactions. In addition, the introduction of Stop & Shop's new Deal Lock savings program, which helps customers capture value by locking in a specific sales price for multiple weeks on both national and private brands, is delivering strong early chain-wide results”.

Opal Foods LLC is recruiting a manager to be responsible for all aspects of egg production at the Roggen, CO. complex. The incumbent will provide direction and supervision to team members in order to optimize production, quality, safety and operational goals. The appointee will have at least five years experience in egg production with a demonstrated increase in responsibility. A degree in poultry science will be an added recommendation. The position requires good written and communication skills, initiative and ability to communicate with all levels of management and team members.

A competitive salary is offered based on qualifications and experience. Opal Foods, LLC provides a comprehensive benefits package including medical insurance and a 401K plan with employer match.

Apply, attaching CV to Jennifer Norris, HR Director <jnorris@opal-foods.com>

Due to revamped menus and promotions, the approximately 6,000 North American locations of Subway attained a 13 percent average growth rate in same-store sales compared to the first nine months of 2021.  Growth was especially evident with customers buying grab-and-go sandwiches at airport, college campus and hospital locations.

In commenting on the improvement, Taylor Bennett, VP of Non-Traditional Development at Subway stated, "as we focus on strategic and profitable growth, there is a significant opportunity to expand our footprint in non-traditional locations and for franchisees to generate incremental revenue for their businesses". Subway intends establishing sandwich centers in convenience stores, hospitals and airports.

In a November 17th release, BJ’s Wholesale Club Holdings (BJ) announced third quarter results for the period ending October 29th 2022.  The company posted net income of $130 million on total revenue of $4,785 million with an EPS of $0.95.  Comparative values for the third quarter of FY2021 were net income of $127 million on revenue of $4,264 million with an EPS $0.92. For the third quarter BJ’S attained a gross margin of 16.6 percent and an operating margin of 4.1 percent

Comparable club sales, excluding fuel, increased by 5.3 percent. Digital sales increased by 43 percent compared to Q3 of 2021. The company operates 231 stores with 161 fuel centers in 17 states.

In commenting on results, Bob Eddy, president and CEO stated, We reported another quarter of strong results, demonstrating the power of our business model. Our consistent focus on delivering value to our members at a time when they need it most will bolster our business for the future. Our member base is growing in both size and quality. We are improving our merchandising to deliver amazing value. We are offering more convenience for our members through a great digital experience. We are expanding our footprint into new and existing markets. We have a great team and a competitive strategy, and the investments we continue to make in our Company position us well for long-term growth and sustainable value creation.”

Effective October 29th 2022, BJ’s posted total assets of $6,478 million including $1,126 goodwill and intangibles and carried long- term debt and lease obligations of $3,812 million. BJ’s had a market capitalization of $10 billion on November 18th and has traded over the past 52 weeks from $51.45 to $80.41 with a 50-day moving average of $74.90.  BJ closed at $78.36 on Wednesday 16th but opened post release on Thursday 17th at $72.34. BJ trades with a forward P/E of 19.2. For the trailing-12 months the company posted an operating margin of 3.9 percent and a profit margin of 2.6 percent.  The company returned 7.5 percent on assets and 65.2 percent on equity.

A class action lawsuit has been filed alleging that 11 companies with collectively 140 plants representing 80 percent of U.S. meat and poultry production conspired to collude on wages.

The common factor among the companies is that they were subscribers to AgriStats™, an industry benchmark service that circulated detailed cost information.  The lawsuit claims that, “Defendants implemented, monitored an enforced a conspiracy to fix and depress compensation paid to class members through a series of overt acts, including secret compensation surveys, annual meetings, direct communications among executives, data exchange by AgriStats™ and in some cases, “ non-poach” agreements.

Given the settlements agreed to in lawsuits alleging collusion and price fixing, there is every prospect that defendant companies will enrich the legal profession and possibly the Class.

Informed observers have opined that Southeastern Grocers would be receptive to a buy-out offer from either an investment company or a competitor.  This would be an alternative to an IPO that was canceled last year.  Southeastern Grocers operates the Winn-Dixie and Harvey’s banners, including 420 stores in Florida and in Gulf and Southeast states.  The portfolio includes 200 in-store pharmacies and units selling liquor, depending on state and local regulations.

The November 21st edition of the USAPEEC MondayLine highlighted the importance of financial support by commodity associations.  Twenty-one groups with nine representing corn and eleven for soybeans and the American Egg Board have funded USAPEEC to the value of $5.6 million year-to-date.

Approximately 40 percent of the USAPEEC budget for marketing programs is derived from commodity groups.  Funding is spread among chicken at 36 percent; turkey, 27 percent; ducks at 13 percent and eggs, 24 percent.  The amount of funding allocated to international markets is determined by staff specialists at the USAPEEC.

Funding is divided between identifying new markets and building demand within existing nations.  Each week, the MondayLine documents programs conducted in importing nations promoting the quality and consistency of U.S. poultry products to representatives of food service and hospitality sectors.

Shelby Watson, Manager for Allied Industry Relations USAPEEC, stated, “We are grateful for the time, energy and resources our commodity members spend working to help our mission of opening, developing and protecting markets for U.S. poultry and eggs and we look forward to continuing our partnership.”

The Wednesday, November 16th edition of the USPOULTRY Wire featured Chore-Time, a prominent U.S. equipment manufacturer.  Chore-Time manufactures a complete range of feeding and drinking systems, ventilation components and the Vike™ Aviary System developed in Switzerland in 1992.

Opal Foods received the 2022 Large-Business of the Year award from the Neosho Chamber of Commerce.

According to Kelly Brown, Chairperson, "this recognition celebrates Opal’s contributions to the community in which we live and work, as well as the fact Opal is an employer of choice.”    

 The award was based on a comprehensive review by the Chamber including letters of recommendation from suppliers and team members".

Opal Foods is owned by Rose Acre Farms and Weaver Brothers Inc. and operates complexes in Missouri, Iowa and Colorado.

The Neosho Complex was established by the Osborn Family and was subsequently acquired by Land ‘O Lakes but on the break-up of the egg-production operations their Central Division was divested to form the nucleus of Opal Foods during mid-2015.

According to the American Farm Bureau Federation, the cost of a traditional Thanksgiving dinner for ten diners increased by $6.50 per person to an average of $64 for the meal using a standard list of ingredients.  The cost was based on prevailing supermarket values in late October and included turkey at $1.81 per pound.  Escalation in cost reflects commodity prices influenced by world markets and the situation in Ukraine in addition to inflation in transport costs, labor and energy in the U.S.

In a November 17th 2022 release, Post Holdings (POST) released financial results for the 4th quarter and Fiscal 2022 ending September 30th. The Company involvement in the U.S. egg production industry comprises Michael Foods, Almark acquired in February 2021 and the Egg Beater’s Brand in May 2021. Post Holdings sold Willamette Farms, acquired in September 2015 to Versova Holdings in December 2021 with the participation of Proterra Investment Partners.

For the 4th quarter of 2022, net income was $83.9 million on total revenue of $1,579 million with a diluted EPS of $1.32.  Comparable figures for the 4th quarter of Fiscal 2021 ending September 30th 2021 were net income of $29.9 million on total revenue of $1,356 million with an EPS of $0.39. Gross margin declined from 24.5 percent to 24.9 percent denoting relative stability in cost of goods sold despite inflation. Operating margin increased from 6.2 percent for Q4 of 2021 to 8.4 percent for the most recent quarter.

For FY 2022 Post Holdings earned $742.5 million on revenue of  $15,851 million with a diluted EPS of $12.09. Comparable values for FY 2021 were net earnings of $166.7 million on revenue of  $14.982 million with a diluted EPS of $2.38.

The release included comments on the two segments relevant to the U.S. egg industry:-

• Foodservice

“For the fourth quarter, volumes increased 3.6%, with egg volumes up 5.2% and potato volumes up 2.1%. Segment profit was $70.0 million, an increase of 393.0%, or $55.8 million, compared to the prior year period. Segment profit for the fourth quarter of 2022 was negatively impacted by a provision for legal settlements of $13.8 million, which was treated as an adjustment for non-GAAP measures. Segment Adjusted EBITDA was $109.6 million, an increase of 97.1%, or $54.0 million, compared to the prior year period”.

• Refrigerated Retail

“Net sales in the fourth quarter of 2021 included $10.1 million related to the divested Willamette egg business business. Volumes declined 15.0%; excluding the contribution from Willamette in the prior year period, volumes declined 7.1% primarily driven by declines in egg (resulting from reduced supply driven by avian influenza and elasticities resulting from inflation-driven price increases) and cheese (resulting from the decision to exit certain low-margin business and some distribution losses). Segment profit was $16.1 million, an increase of 335.1%, or $12.4 million, compared to the prior year period. Segment Adjusted EBITDA was $35.8 million, an increase of 49.2%, or $11.8 million, compared to the prior year period.

Post Holdings listed assets of $11,308 million, including $7,062 million goodwill and intangibles, against long-term debt and other obligations of $6,223 million. The Company had an intraday market capitalization of $5,320 million on November 21st. POST trades with a forward P/E of 27.4 and has ranged over a 52-week period from $61.68 to $92.66 with a 50-day moving average of $86.36. Twelve-month trailing operating margin was 7.1 percent and profit margin 12.9 percent.  Return on assets over the past twelve months was 2.2 percent and the return on equity 22.4 percent. At close of trading November 17th pre-release, POST was priced at $89.69. Post closed at $88.87 on November 18th, post-release.

Alltech has arranged a webinar at 11H30 EST on Tuesday, December 6th.  The program will include Dr. Max Hawkins of the Alltech Mycotoxin Management Team, Brian Sanderson, Sales Representative, Kami Grandeen, Sales Manager for the Companion Animal Business and Russell Gilliam, the Alltech U.S. Swine Business leader.

The panel will share crop data and species insights with respect to mycotoxins.  Data from the Alltech 37+® Mycotoxin Analysis Program will be presented.

For registration and additional details click on to the Alltech logo on the right side of the Welcome Page.

According to a November 17th posting on Food Safety, the Food and Drug Administration is investigating an extensive outbreak of Salmonella Typhimurium.  There is no information on the vehicle of infection, location or source.  It is considered interesting that the Centers for Disease Control and Prevention has not posted any report of an outbreak.

While it is acknowledged that premature disclosure of non-verified data can compromise investigations and give rise to unjustified rejection of implicated products, greater transparency, especially with respect to the location of those infected would be helpful.

Two hundred and sixty or more confirmed cases implies at least 2,000 actual infections that should justify release of at least the areas where infections have occurred. If there is any foot-dragging, those responsible for investigation should be held to account since, if a common source is responsible for the outbreak, it should be rapidly identified with product recall.

Lack of transparency without clear justification does not serve consumers.  The FDA track record is less than stellar and accordingly, a dedicated food safety agency, combining the responsibilities and jurisdiction of the FSIS and the FDA with respect to foodborne disease outbreaks, would be a more productive alternative than divided jurisdiction.

Norfolk Plant Sciences Ltd. Located in Norwich, England has developed a GM tomato incorporating genes enhancing deposition of anthocyanins resulting in a strain with a striking purple color.  Both the skin and flesh of the tomato contain the pigment as a result of a genetic modification that inactivates genes inhibiting the production of the anthocyanin common to blueberries. It is claimed that the Big Purple Tomato™ has an extended shelf life and superior nutritional qualities. 

The Norfolk Big Purple Tomato™ has successfully completed a USDA Regulatory Status Review for genetically engineered (GM) plant products. This approval, granted under the Secure Rule, suggests that additional GM fruits and vegetables may become commercially available. These cultivars will offer benefits to producers through pest resistance, drought and heat tolerance and also provide improved nutritional profiles for consumers.

In a recent article entitled, Hot Topics in Primary Care, issued as a special supplement to the Journal of Family Practice, Dr. Maria Luez Fernandez reviewed cardiovascular health, cholesterol intake and the effect of egg consumption.  The review featured in the AEB Egg Enthusiasts confirms the generally accepted principal that elevated LDL-cholesterol levels increase the risk for cardiovascular disease but the relationship with dietary cholesterol intake is now questioned.  The American College of Cardiology has concluded that there is “insufficient evidence to determine whether lowering dietary cholesterol reduces LDL-cholesterol.”  Accordingly, the 2015 Dietary Guidelines for Americans deleted the 300 mg. per day dietary cholesterol restriction.  The Dietary Guidelines for Americans and recommendations by the American Heart Association accept that consumption of two eggs per day by healthy consumers is acceptable.  The review authored by Dr. Fernandez confirms that consuming eggs does not influence serum cholesterol level.

Increased levels of dietary cholesterol do not alter the ratio of LDL to HDL and deleterious lipoproteins are preferentially removed by the liver, decreasing the risk of endothelial changes.

Dr. Fernandez notes that egg consumption is associated with elevated HDL-cholesterol and that eggs are an excellent of choline and that carotenoids, including lutein in the yolk, contribute to the integrity of the retina, reducing the risk of age-related macular degeneration.

The literature review conducted by Dr. Fernandez not only refutes the outmoded concept that eggs are deleterious, but reinforces the realization that they are beneficial to health.

A program of strategic vaccination of poultry in high-risk areas is now underway in Mexico under the direction of the SENASICA, the National Department of Health, Food Safety and Food Quality.  Three vaccines, all locally produced, have been approved:-

• An oil emulsion product containing inactivated H5N2 derived from A/chicken Mexico 232/CPA/94, a low-pathogenicity strain propagated in chicken embryos

• An activated freeze-dried LaSota ND-vectored H5 vaccine

• Vectormune™ produced by CEVA comprising an HVT-vectored H5 strain

Pronabive™ developed in 2012 is available as an inactivated H7N3 oil emulsion vaccine deployed only against the homologous strain where it occurs.

Hatchtrack® is modular system to seamlessly manage fertile eggs from farm of origin through storage and incubation extending to chick delivery.  Hatchtrack® is infinitely flexible, managing stock, providing traceability of eggs, inventory control and labeling of chick boxes. The system eliminates the need for manual entry of data.

Hatchtrack is compatible with Royal Pas Reform, Innovatec and Viscon Hatchery Automation among others.  Operation of the system is depicted in the attached YouTube video.

Ovotrack has established a strategic partnership with Innovatec Hatchery Automation resulting in the establishment of Hatchtrack BV for the incubation sector of the poultry industry.  In commenting on the formation of Hatchtrack BV, Job Beekhuis, Managing Director of Ovotrack commented, “By joining our forces Innovatec we are increasing our footprint in the hatchery sector.”  He added, “The increasing demand for data in hatcheries and the growing focus on traceability is a global trend and the market is looking for innovative and automated solutions.”  For additional information access the Ovotrack website by clicking on to the Company logo on the right side of the welcome page.

In response to the trend replacing cardboard packing materials with reusable crates including the Eggs Cargo System by Gi-Ovo, Ovotrack has introduced the Reusables® system to maintain control of pallets, crates and pallecons.  The system allows real-time recording of reusables with online and offline registration.  Reusables® data can be scanned with a pocket PC and the system is user-friendly facilitating planning and distribution and recording the decontamination status of crates and pallets.

Additional information can be obtained from the Ovotrack website by clicking on to the Company logo on the right side of the welcome page.

Methane represents twenty percent of all global greenhouse gas emissions.  Although relatively short-lived compared to carbon dioxide, methane has almost 100 times the global warming potential compared to carbon dioxide.

Although agriculture is blamed for methane emissions, the petrochemical industry is the largest emitter of methane and possibly the easiest to constrain.  During the COP27 Climate Conference in Egypt, the President announced higher emissions standards and penalties for methane release by the oil and gas industries.  This action is reinforced by similar restrictions to be imposed by fifteen nations.

With regard to intensive livestock industry and the release of methane by CAFOs, biodigesters will be funded by the Inflationary Reduction Act.  These installations will be capable of converting livestock waste from dairy and hog operations into biogas that can be used to generate power.

Intensive livestock production has come under extreme pressure from environmental groups and there is now common cause among welfare, vegan and environmental activist organizations. They have obviously generated synergy in their lobbying and public relations efforts to demonize milk, pork, beef and egg production by creating a sense of guilt over environmental degradation among consumers.

Even if we concede that intensive livestock production has a quantifiable deleterious effect on the environment, opponents cannot provide an alternative to the protein food produced by the intensive livestock industries that is currently required to satisfy nutritional needs.

ORKA Launches Egg Tester Plus

 Features:

1. Electronically measures and calculates egg weight, albumen height, yolk color, Haugh units and USDA grade in a single instrument. 
2. Displays and prints measured  and calculated values. 
3. Extreme accuracy. 
4. Constantly stable measurement, not depending on  operator.
5. Short processing time of 17 seconds per set
6. Proprietary software compatible with an external PC
7. Unified data with transportability
8. Offers both USB-cable and wi-fi  communication to a PC: 
9. Internal memory of 32GB with SDHC card
10. Large 3.5’’ color/graphic display

ORKA will be participating at the IPPE 2023, Atlanta (during Jan 24~26, 2022, Booth No: B-7348) and will demonstrate the Egg Tester Plus. We invite you to visit us to review our new instrument

For additional information and to review literature E-Mail  josh@orkatech.com