By any measure, the attempts by USDA-APHIS to eradicate Highly Pathogenic Avian Influenza have been an abject failure.  In any event, it is an epidemiologic reality that it is impossible to eradicate an endemic disease with wild avian and mammalian reservoirs.  Rapid diagnosis, depopulation, disposal and decontamination are effective and appropriate approaches to an introduction of an isolated exotic disease. Since 2020 and possibly prior to this time, the current approach relying on variable levels of biosecurity cannot protect flocks.  With the emergence of bovine influenza-H5N1, the situation has become more complicated.  It is now evident that close to 170 diagnosed herds affected by H5N1 in 13 states represents the potential for transmission to large egg-production complexes.

Last week, the USAPEEC, the National Chicken Council, the National Turkey Federation, United Egg Producers and USPOULTRY submitted a joint letter to the Secretary of Agriculture expressing concern over HPAI and seeking “novel methods to prevent, detect and respond to this virus.” At this time, a logical and appropriate but belated initiative.  The letter included the phrase “novel methods to prevent” HPAI. Given that the approach by USDA is entirely reactive  something “novel” beyond biosecurtity is required. But then we come to the “V’ word that shall not be uttered! The letter expressed the need to “preserve all U.S. export markets for poultry products” evidently a manifestation of the inherent conflict among the associations concerning vaccination. The communication did however refer to “conducting important research, particularly as it pertains to vaccines”. As far as assessing combinations of biosecurity with vaccination, “important research” especially in the laboratory is a delaying tactic since there is adequate field evidence of efficacy. What is needed is a USDA supervised field evaluation following the successful implementation for the  foie gras industry in France. A suitable U.S. candidate would be Weld County CO. USDA has recorded seven cases among four complexes in 30 months with one farm affected three times and a second twice, suggesting epidemiologic factors contributing to regional endemnicity..

The problem is that the U.S. producers and specifically the broiler segment are justifiably concerned over potential loss of export markets as a result of introducing a controlled vaccination program.  This restraint should be critically reviewed.  The bulk of our low-price leg quarters are destined to nations that either have endemic HPAI or are probably willing to accept an APHIS certification program based on PCR assay. This innovation would certify that flocks of origin destined for export are free of infection prior to slaughter and shipment.  Nations that are unwilling to accept appropriate documentation and that persist in imposing unrealistic, anachronous and unjustified embargos against the U.S. to protect their domestic industries are probably not prospects for export.

While the export impasse prevails, egg production and turkey producers are experiencing losses beyond the previously limited fall and spring migration periods. This is especially the case in regions with a high concentration of production involving these two segments of U.S. production.

It is not necessary to conduct ‘research’, there is adequate published information available as to the effectiveness of commercially available vaccines in reducing the incidence of outbreaks and facilitating control of the disease. 

The zoonotic implications of H5N1 is evidenced by workers involved in depopulation of an infected egg complex in Colorado with a prevalence rate yet to be determinedwhen investigations have been completed. Affected individuals displayed not only conjunctivitis but also respiratory symptoms and malaise. This is consistent with the acquisition by the avian H5N1 virus of a mammalian adaptation marker E627K indicating that the original avian virus isolated from dairy cows and human contacts is now more infectious and pathogenic for humans.  Introduction of H5N1 virus onto egg production complexes with upwards of two million susceptible hens creates the potential for mutations, some of which may result in emergence of a zoonotic strain that may even become contagious.

The letter addressed to APHIS presents a ‘chicken or an egg’ dilemma.  The emphasis was placed on USDA to engage with trading partners to obtain commitments to accept U.S. exports in the event of introducing a controlled vaccination program. If we wait for assurances from a number of trading partners, as a pre-requirement for vaccination, we will continue to depopulate egg production and turkey farms ad infitinum.

Vaccination is now accepted by the World Association of Animal Health as a component of a broader strategy including biosecurity to suppress avian influenza. The question of vaccination may well pass beyond the purview of USDA if a zoonotic strain emerges or if a recombinant event results in the emergence of a pandemic strain of influenza incorporating avian genes.

During the 1970s, the world’s poultry industries were faced with velogenic viscerotropic Newcastle disease.  The infection was effectively controlled by vaccination.  Avian influenza is ‘the Newcastle disease of the 2020s’ and should be approached with a similar mindset that existed half a century ago.

The letter from the poultry organizations is a first step and clearly indicates a willingness to consider vaccination to preserve flocks and herds and to avert a possible U.S. epidemic or a worldwide pandemic of H5N1v influenza among susceptible human populations.

USDA Weekly Egg Price and Inventory Report, July 25^th 2024.

Market Overview

• The average wholesale unit revenue values for Midwest Extra-large and Large sizes were up 4.0 percent on average this past week. Medium size was down 3.6 percent. The 5-day rolling National wholesale price for graded loose on July 22^nd at $2.24 per dozen was approximately $0.79 per dozen above the 3-year average of $1.45 per dozen and up $1.39 from the corresponding week in 2023 at $0.85 per dozen. This past week shell egg inventory was down 2.4 percent, following a fall of 3.5 percent in stock during the previous week. Decreased inventory with small incremental daily increases in prices during early summer suggests higher margins for producers through the current quarter despite replacement of depleted flocks. Higher prices compared to 2023 are attributed to losses due to HPAI depletion reducing the national flock by 20 to 22 million hens.
• Although there are weekly transfers of mature pullet flocks to laying houses, hen numbers are constrained by depopulation due to HPAI. Close to 13 million hens were lost during the 4^th Quarter of 2023 that have not yet been completely replaced. During April 2024 almost 8.4 million hens were depopulated with an additional 5.7 million during May and 3.0 million in July.
• This past week, chains apparently widened the spread between delivered cost and shelf price. This could result in a rise in generic stock despite reduced supply with softening demand. Stock level will depend on constant re-ordering to fill the pipeline through into August. Discounters are holding prices on generics influencing mainstream retail stores. Eggs are still highly competitive in price against the comparable costs for other protein foods.
• Total industry inventory was down by 1.4 percent overall this past week at 1.52 million cases with a concurrent 3.6 percent increase in breaking stock, following a 5.5 percent rise during the preceding processing week. Demand for egg products fell through late May into July attributed to less home-baking and entertaining.
• It is now apparent that the inventory held by chains and other significant distributors may be more important over the short term in establishing wholesale price compared to the USDA regional inventory figures. Changes in stock held by DCs and in the pipeline as determined by weekly orders are probably responsible for up to three percent cyclic fluctuation in weekly industry stock, especially into and after a holiday weekend.
• The number and extent of future possible HPAI outbreaks during coming months cannot be projected but sporadic cases in backyard poultry, isolation from wild migratory and predatory birds and almost 170 confirmed dairy herds in thirteen states is a cause for concern. More surveillance information should be released by USDA-APHIS as it becomes available, concerning the prevalence rate of avian carriers of H5N1 among resident domestic free-living birds together with a review of molecular and field epidemiology for the current spring and future fall waves of HPAI. The USDA has yet to identify and release specific modes of transmission for the 2022-2024 epornitic including likely airborne spread from wild birds and their excreta over short distances.
• The current relationship between producers and chain buyers based on a single commercial price discovery system constitutes an impediment to a free market. The benchmark price appears to amplify both downward and upward swings as evidenced over the past three years. A CME quotation based on Midwest Large, reflecting demand relative to supply would be more equitable. If feed cost is determined by CME ingredient prices then generic shell eggs should be subject to a Midwest Large quotation.
• On July 24^th the stated total flock of 304.7 million, was up by 0.3 million from last week, including about one million molted hens that will resume lay during coming weeks plus 4.5 to 5.0 million pullets scheduled to attain production. Given the latest figures for depopulation it is estimated that the total flock is at least 20 to 22 million hens lower than the 326 million before the onset of HPAI in 2022. The loss of 3 million hens in July does not appear to be reflected in the latest release of data. Figures released on July 24^th may overestimate flock size especially if more recent losses are not included.
• The ex-farm price for breaking stock (rounded to one cent) was unchanged at $1.71 per dozen.Checks delivered to Midwest plants were unchanged at $1.61 per dozen this past week. Prices for breaking stock generally follow the wholesale price for shell eggs usually with a lag of one to two weeks.

The Week in Review

Prices

According to the USDA Egg Market News Reports released on July 22^nd 2024, the Midwest wholesale price (rounded to one cent) for Extra-large was up 4.0 percent from last week to $2.37 per dozen. Large was up 4.0 percent to $2.35 per dozen. Mediums were down 3.6 percent to $1.61 per dozen delivered to DCs as young pullets commence production contributing to 1.6 and 5.9 percent respectively increases in Medium and Small sizes over the past week. It is emphasized that these prices are for the previous week. 

Prices should be compared to the USDA benchmark average 4-Region blended nest-run cost of 77.7 cents per dozen as determined by the Egg Industry Center based on USDA data for June 2024. This value excludes provisions for packing, packaging materials and transport, amounting to 57 cents per dozen as determined in mid-2023 from an EIC survey (with a low response) and now realistically 60 cents per dozen.

Currently producers of generic shell eggs should be operating with positive margins irrespective of region and customer-supply agreements. The progression of prices during 2023 and 2024 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

The July 19^th edition of the USDA Egg Markets Overview confirmed that the USDA Combined Region value in cartons (rounded to the nearest cent), was down 0.5 percent to $2.35 per dozen delivered to warehouses one week ago. The USDA Combined range for Large in the Midwest was $2.26 per dozen. At the high end of the range, the price in the South Central region attained $2.42 per dozen.

Flock Size 

The loss of 8.6 million hens in April is now reflected in the most recent weekly data. There is a question concerning the 5.7 million depopulated in May and 3.0 million in July to date. Any delay in posting accurate updated data should be avoided given the importance of weekly flock numbers to pricing. Accurate values for both the producing and total flock are required by farmers, packers, breakers and buyers.

According to the USDA the number of producing hens reflecting July 24^th 2024 (rounded to 0.1 million) was up 0.3 million to 299.3 million suggesting that the rate of depletion and depopulation is almost balancing placement of started pullets. The total U.S. flock includes about one million molted hens due to return to production Approximately 4.5 to 5.0 million pullets on average reach maturity each week, based on USDA monthly chick-hatch data for 20-weeks previously. The increase is offset by routine flock depletion and an additional loss of approximately 17 million year-to-date. Some flocks have been replaced on a rotational basis and flock depletion delayed subject to available housing. Based on inventory level and prices, the population of hens producing table eggs and breaking stock should now be in balance or slightly below early summer demand by consumers. Industrial and food service off-take is increasing, attaining pre-COVID levels. Prices will continue to fall through August but have shown atypical seasonal stability compared to anticipated decline.

Updated July 2024 USDA Projection for U.S. Egg Production and Consumption.

On July 18^th 2024 the USDA Economic Research Service (ERS) issued actual values for egg production during 2023 with a projection for 2024 and a forecast for 2025. Production, consumption and prices were only slightly revised from the previous June 16^th 2024 report.

Projected egg production for 2024 was lowered from the June 2024 Report to 7,797 million dozen This will be 0.9 percent less than in 2023 due to progressive depletion of hen flocks due to HPAI The per capita consumption of shell eggs and liquids combined for 2024 will be 275.1 eggs down 4.2 eggs of an egg from 2023. The projected average 2024 benchmark New York bulk unit price was raised to 236.4 cents per dozen.

Subsequent USDA projections will provide greater clarity on the recovery in consumption in an economy that is undergoing deflation. The 2023 Midwest in-carton national wholesale price peaked at $5.17 per dozen on January 3^rd 2023 but fell precipitously to a market bottom of $0.78 per dozen on May 8^th 2023. National average wholesale price was restored during May 2024 and settled at $2.36 per dozen for eggs in cartons delivered to DCs on July 12^th 2024. This is approximately 50 cents per dozen higher than the three-year average prevailing for the corresponding week in early summer. The national wholesale Large value should be compared to the USDA/EIC projection of the combined nest-run June 2024 cost of 78 cents per dozen for caged white Large, plus a provision for processing, packaging and transport of 60 cents per dozen amounting to $1.38 cents per dozen.

Restoration in flock size after HPAI flock depletions in 2022 progressed at a rate of approximately 0.5 million per week but placements were limited by the availability of pullet chicks and in some companies the rate of conversion to alternative housing systems. Restoration of the national flock was compromised by a resurgence of HPAI with 13.0 million layers depleted during the 4^th quarter of 2023 representing 4.0 percent of the nominal producing flock of 325 million hens, mainly on complexes averaging over one million hens. Unpredictable factors affecting price will include the extent of losses during the remainder of 2024 due to a continuing avian influenza epornitic. Approximately 17 million hens have been lost to HPAI year to date in four states. Exports of eggs and products at approximately 2.4 percent of total production over the first five months of 2024 will not materially affect the domestic price.

The USDA forecast for 2025 includes production of 8,150 million dozen, up an optimistic 4.5 percent from 2023. Projected consumption of 286.6 per capita, would be a speculative 11.5 egg (4.2 percent) increase over 2024 This forecast probably presumes complete control of HPAI and an adequate supply of replacement chicks and pullets both unrealistic assumptions. The increase, if it were to transpire would depress the NY Large benchmark price to $1.60 per dozen.

During 2023 shell egg exports attained 89.4 million dozen, up 28.6 percent compared to 2022 when high domestic prices prevailed. Egg products were up 18.2 percent to 20,814 metric tons compared to 2022. For the first five months of 2024 shell egg exports were down 12.5 percent in volume to 33.7 million dozen and down 26.6 percent in value to $65.8 million compared to the corresponding months in 2023. Unit value was down 16.4 percent to $1.95 per dozen.

Updated July 2024 USDA data is shown in the table below:-

*Data influenced by HPAI losses. Recovery in 2025 considered unrealistic

Source: Livestock, Dairy and Poultry Outlook released July 18^th 2024

Subscribers to EGG-NEWS are referred to the postings depicting weekly prices, volumes and trends and the monthly review of prices, exports and related industry statistics.

WEEKLY ECONOMY, ENERGY AND COMMODITY REPORT: JULY 25^th 2024.

OVERVIEW

Prices for corn, soybeans and soybean meal were considerably higher this past week reversing the declines over the preceding week. Prices were influenced by more moderate weather conditions suggesting high yields despite a derecho on July 15^th affecting five major production states. There was some technical selling arising from geopolitical concerns and in response to revised projections for harvests in Brazil and Argentine. Contributory factors included disruption in shipping in the Red Sea and Panama Canal, carryover from the 2023 U.S. crop, export orders and the predicted ending stocks of corn and soybeans for the 2024 crop. The July WASDE Report contained essentially unchanged values from the extensively revised May and June Reports. Two thirds of corn is silking and more than half of the soybean crop is setting pods in advance of the five-year average and with superior crop condition as compared to 2023. The transition from a neutral phase to a La Nina event is expected during the fourth quarter. The August WASDE should provide updated projections on yields, exports and prices that should for the 2024 season.

At 12H00 EDT on July 25^th the CME corn quotation for September delivery was up 3.8 percent to 407 cents per bushel, compared to the previous week at 392 cents per bushel for September delivery. Corn price was influenced by acreage planted, ethanol demand and the proportionally high ending stock from the 2023 crop. Export orders for the current market year have increased in response to lower prices. Volumes and price are indirectly influenced by wheat availability as influenced by weather in North America and Australia, the Black Sea crop and events in the Red Sea. Orders by China resumed at the end of the 2022-2023 market-year and have continued through mid July despite a moderately higher Dollar Index and increased ocean freight. Total exports for the current market year are 30.7 percent higher than for the corresponding week during the 2022-2023 year.

Soybeans were priced at 1,073 cents per bushel for September 2024 delivery, up 3.1 percent compared to 1,042 cents per bushel for September delivery last week. Higher prices were attributed to export orders, more farm selling and projections of availability from the 2024 U.S., Brazil and Argentine harvests. Total exports for the current market year are 16.2 percent lower than for the corresponding week in the 2022-2023 year.

Soybean meal closed at $333 per ton for September delivery, up 4.4 percent from $319 per ton last week for September delivery. Price was influenced by demand coupled with high crush volumes for consecutive months from December 2023 through May 2024 inclusive but with a lower volume in June. Price will fluctuate to reflect the CME price for soybeans and the demand for biodiesel despite the adverse financial situation in this sector. The market previously responded to the increased 2023 crop and higher stocks together with projections for 2024 in the extensively revised May and June WASDE Reports essentially unchanged in July.

On July 24^th at 20H00 WTI was $6.74 (-8.2 percent) lower from last week to $74.60. Price is attributed to lower demand despite geopolitical uncertainties and tensions persisting in the Middle East. Other factors influencing price included restoration of drilling and refining in the Gulf region and a draw-down on U.S. reserves. The reduction in attacks on shipping in the Red Sea is due mostly to fewer vessels transiting the waterway to and from the Suez Canal. It is evident that U.S. production is a moderating influence on price, attaining an average of 13.3 million barrels per day in June with ample reserves. There was a downward trend in WTI price during the week with a range of $78.11 down to $74.60 per barrel. Crude oil inventory in the U.S., other than the Strategic Reserve, was down 5.2 percent to 31.0 million barrels last week. High U.S. production is constraining domestic and international prices. The recent decline in energy cost during the past month is reflected in deflation possibly influencing the FOMC in their eventual lowering of the benchmark interest rate.

Economic data released during the past quarter (Q1 GDP; PCE, Confidence, Productivity, Employment) confirmed slow growth of the economy but with a downward trajectory in inflation The data-driven Federal Reserve FOMC passed on lowering the benchmark rate on June 12^th. Federal Reserve Chair Jerome Powell and Reserve Bank Governors indicated one reduction in the 10-year rate during 2024 in the fall. Economists are now suggesting that the Fed is “behind the curve” again on adjusting rates downward with an 80 percent consensus for a 25 basis point reduction at the September meeting.

Status of the 2024 Corn and Soybean Crops

The USDA Crop Progress Report released on July 22^nd documented two thirds of the soybean crop blooming and sixty percent of the corn crop silking, both in advance of the 5-year average for the corresponding week.

Despite high temperatures across the Midwest and Plains states crop condition was unchanged during the past week. Corn and soybeans attained 67 and 68 percent respectively for the two highest categories of “Good” and “Excellent” No mention was made of the effect of the Monday July 15^th derecho. The July 22^nd values for corn and soybean quality were considerably higher than the 57 percent and 54 percent respectively for the two highest categories for the corresponding week in 2023. Prospects for high yields were reflected in lower price projections in the July WASDE and for CME quotations for August delivery.

Based on the sum of the “Adequate” and “Surplus” categories, surface and subsoil moisture levels were higher than during the corresponding week in 2023. For the past week surface and subsoil moisture values were 73 and 72 percent respectively for the two highest categories of ‘Adequate’ and ‘Surplus’ representing an acceptable situation for growth in 2024. These levels were higher than the previous week despite hot conditions. Corresponding values of 57 and 52 percent were recorded for the two highest categories for topsoil and subsoil moisture respectively in 2023.

It is too early in the expected transition to a La Nina event to predict any impact on crop condition in coming months. If prolonged dry and hot weather is encountered in corn and soy areas, yield will be depressed depending on timing and severity.  A long-range forecast in the form of two charts is provided predicting rainfall and temperature during the growing season.

Heat stress during silking predisposes corn to fungal infection leading to mycotoxin contamination of kernels. The status of the 2024 crop will require monitoring at harvest in affected areas and especially if unseasonal precipitation occurs during the late growing period.

Reference is made to the July 12^th WASDE Report #650 and the weekly Commodity, Economy and Energy Report, both in this edition, documenting acreage to be harvested, yields, weekly prices and ending stocks. The August WASDE will be reviewed in the August 23^rd edition.

EGG-NEWS will report on the progress of the two major crops as monitored by the USDA through the end of the 2024 harvest in November.

WEEK ENDING   Corn Status (18 states) * July 14th  2024        July 21st  2024 5-Year Average  Corn Emerged (%) 100 100 100 Corn Silking (%) 41 61 56 Corn Dough (%) 8 17 11 Soybean Status (18 states)       Soybean Emerged (%) 100 100 100 Soybeans Blooming (%) 51 65 60 Soybeans Setting Pods (%) 18 29 24 *Representing 92% of 2024 acreage planted	Soybeans Blooming
Crop Condition  V. Poor Poor Fair Good Excellent Corn  2024 (%) 3 7 23 51 16 Corn  2023 (%) 4 9 30 46 11             Soybeans  2024 (%) 2 6 24 56 12 Soybeans  2023 (%) 4 10 32 46 8	Corn Silking
Parameter  48 States V. Short Short Adequate Surplus Topsoil Moisture:         Past Week 8 21 62 11 Past Year 14 29 52 5 Subsoil Moisture:         Past Week 7 21 64 8 Past Year 14 31 52 3

EGG-NEWS will report on the progress of the two major crops as monitored by the USDA through to the end of the 2024 harvest in November.

In a release dated July 23^rd Cal-Maine Foods Inc. (CALM) announced results for the 4^th Quarter and FY 2024 ending June 1^st 2024. This report summarizes data provided in the Company release and the concurrently filed SEC 10-Q Report.

It is noted that market conditions during Q4 2024 were favorable with an average unit revenue for Cal-Maine of $2.13 per dozen for all eggs, compared with Q4 2023 with a corresponding price of $2.20 per dozen. 

Cal-Maine represents a bellwether for the shell egg sector as the only public-quoted, pure-play egg company in the industry, supplying close to 20 percent of domestic shell egg consumption. The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

Notes: $9.8 million ‘other income,’ Q4 2024 compared to $9.7 million in Q4 FY2023:

$11.3 million patronage dividends, Q3 2024 compared to $10.2 million Q3 FY2023

$32.5 million interest income, FY2024 compared to $18.5 million FY2023

$0.3 million loss on non-controlling interest Q4 2024 compared to $0.4 million Q4 FY202.

Fassio Farms acquisition in Q2 2024: comprised 1.2 million hens, housing, packing plant and feed mill etc. for $53.7 million representing $44.80/hen

For FY 2024 Cal-Maine Foods earned $277.9 million on sales of $2,326 million with a diluted EPS of $5.69 Average Selling price for shell eggs was $1.93 per dozen.

For FY 2023 Cal-Maine Foods earned $758.0 million on sales of $3,147 million with a diluted EPS of $15.52 Average Selling price for shell eggs was $2.62 per dozen

Trailing P/E 11.3

52-Week Range in Share Price: $42.25 to $68.37 50-day Moving average $60.56

Market Close, Tuesday July 23^rd $64.83 pre-release.

Post release, after-hours, 20H00 up 1.8 percent to $66.00.

In reviewing the CALM Q4 2024 report and the SEC 10-Q submission the following values represent key data for the most recent Quarter or FY 2024. (Q4 for FY 2023 and percentage differences in parentheses):-

• Shell egg sales attained $640,789 million in Q4 2024 based on shell eggs comprising 96.1 percent of total revenue. ($661,821 million, in Q4 2023, based on 96.4 percent of revenue). (Sales value for shell eggs was down 3.2% reflecting lower average unit value).

• Dozen shell eggs sold (thousands): 285,555 (296,554; -3.7%)
• Average selling price of all shell eggs: $2.13 per dozen; ($2.20 per dozen; -3.2%).
• Average selling price of specialty eggs (excluding co-pack): $2.25 cents per dozen; ($2.50 per dozen; -10.0%).
• Average selling price of generic eggs: $2.06 cents per dozen; ($2.04 cents per dozen; +1.0%).
• Differential between specialty eggs and generic eggs: +$0.19 cents per dozen; (+$0.46 per dozen; -58.7%)
• Specialty eggs as a proportion of volume sold: 36.5%; (34.6%; +6.3%)
• Specialty eggs as a proportion of sales value: 38.5%; (39.1%; -1.5%)
• Proportion of eggs sold that were produced by Cal-Maine and their contract flocks in Q4 FY 2024 : 88.8% (92.3%; -3.8%).
• Farm feed cost: 50.4 cents per dozen, (67.1 cents per dozen, -24.9%) Includes specialty and breeder diets. Differential represents $107 million over Q4 volume.
• Egg product sales in FY 2024 attained $89 million or 3.8% of sales value at a unit price of $1.19 per lb. For FY 2023, sales attained $122 million with a unit price of $1.74 per lb.
• Cal-Maine Foods maintained a flock of 39.9 million hens on average Capacity 48 million) during FY 2024 with 11.8 million pullets (capacity 12.7 million) plus parent breeders representing less than two percent of the total flock. 

The following observations relate to the comparison of Q4 2024 with the corresponding Q4 FY2023:-

• Cal-Maine Foods was not affected by the 2022-2023 HPAI epornitic during FY 2022 or FY 2023. During Late December 2023 (Q3 FY 2024) the Chase, KS. Complex comprising 1.5 million hens and 240,000 pullets, representing 3.3% of the total flock was depopulated as a result of HPAI. On April 1^st 2024 (Q4 2024) the Farwell, TX complex was confirmed positive requiring depopulation of 1.6 million hens and 0.34 million pullets.
• Q4 of FY 2024 represented a less favorable marketing comparison to Q4 FY 2023 based on lower prices for shell eggs, as U.S. flocks were re-populated, coupled with restoration of normal consumer demand. Average shell egg price obtained by Cal-Maine was 3.2 percent lower than in Q4 FY 2023.
• Comparing FY 2024 with FY 2023 gross profit was impacted negatively by lower unit revenue for generic eggs although with some benefit from specialty eggs. The 24.9 percent lower feed cost to 50.4 cents per dozen was partly offset by 7.5 percent higher farm production costs attaining 43.0 cents per dozen,
• In a market characterized by low unit prices for generics, the relative contribution of specialty eggs is more important to net earnings in contrast to an up-market for conventional eggs. Normality was restored in FY 2024 with generic eggs at a lower unit price and margin compared to specialty eggs.

In commenting on Q4 and FY 2024 results Sherman Miller, president and CEO stated, “We are pleased to report a solid performance for the fourth quarter amidst a challenging period for Cal-Maine Foods and our industry. We are extremely proud of our managers and employees who continued to manage our operations in a dynamic environment affected by recent outbreaks of highly pathogenic avian influenza (“HPAI”). Despite the interruptions, we continued to meet the demands of our valued customers.

“Throughout the year, we continued to execute our growth strategy and deliver a favorable product mix in line with customer demand. Our operations ran well as we remained focused on our objective of operational excellence.

In reference to acquisitions Miller stated “We also completed two asset acquisitions in fiscal 2024 and completed one subsequent to the end of the fiscal year, each of which complements our organic growth initiatives. We are excited about the additions of the assets of Fassio Egg Farms, Inc., located in Erda, Utah, and the former broiler processing plant, hatchery and feed mill in Dexter, Missouri, previously operated by Tyson Foods. We have commenced work on the acquired Dexter facilities to repurpose the assets for use in shell egg production and processing. We are partnering with local farmers, working with local contractors and businesses and making significant investments in the Dexter area to renovate and improve the facilities, with future plans for expanded shell egg and value-added egg product opportunities. Following the end of the fiscal year, we acquired substantially all the assets of ISE America, Inc. and certain of its affiliates (“ISE”). We expect that the acquisition of these assets from ISE will enable us to significantly enhance our market reach in the Northeast and Mid-Atlantic states.”

The 10-Q Report documented approved capital investment of $233 million for cage-free conversions, $16 million additional items for FY 2024 through FY 2027 with a $10.9 million provision for improvements to the Dexter, MO. broiler complex acquired from Tyson Foods. Of this total $194 million has been committed with $56 million to be expended.

Measure J is on the Sonoma County ballot in November.  The intent of the Measure is to effectively eliminate all intensive livestock production in the County given their definitions for Concentrated Animal Feeding Operations (CAFOS).

Measure J is backed by a number of animal rights and environmental advocacy groups led by the Coalition to End Factory Farming with participation from Direct Action Everywhere (DxE)

The limits proposed in Measure J designate farms with between 25,000 and 82,000 laying hens as “medium” and above this figure as “large”. Farms operating with a liquid manure system with 99,000 to 30,000 would be categorized as “medium” and with more than this number as “large”.

Other than laying hens, presumably broilers, ducks or turkeys the “medium” category will be between 37,500 and 125,000 with farms holding more birds regarded as “large”.

A resolution passed by the Petaluma City Council on a 7 to 0 vote urged all Sonoma County voters to vote NO on Measure J in November.

The British Egg Industry Council developed the Lion Quality seal that can be imprinted on eggs subject to compliance with a Code of Practice that ensures food safety.  The latest Version 3 incorporates standard operating procedures extending from lay to delivery.

Gary Ford, CEO of the British Egg Industry Council, noted, “For more than 25 years the Code of Practice for the production of Lion Quality egg products has provided peace of mind, ensuring retailers, food manufacturers, food service operators, wholesalers and other organizations that British egg products can be served without risk and with traceability not available in imported egg products.”

Sterling Crew, President of the Institute of Food Science and Technology, welcomed the issue of Version 3 of the Code of Practice stating, “There’s an assumption that once an egg has been pasteurized it is automatically safe but there’s a lot more to it, especially when some egg products including egg white are heat treated.  The Code gives assurance not only to egg safety but also on quality, authenticity, provenance and welfare.”

The British Egg Industry Council is obviously appealing to the sentiments of food service and grocery segments of the UK market, positioning domestic eggs above lower-priced imports including from Poland, where problems of Salmonella contamination have resulted in foodborne disease outbreaks in the E.U and the U.K.

The Albert Schweitzer Foundation an extremist entity advocating for a vegan lifestyle and therefore opposed to intensive livestock production, has initiated a campaign against grocery chain Lidl in Europe.  The Albert Schweitzer Foundation supported by activist groups Open Cages, and the Animal Welfare Observatory collected retail chicken on display from 22 Lidl stores in Italy, Spain, Great Britain and Poland.

Samples were obtained from each store and were assayed for foodborne bacterial pathogens: -

• Salmonella was isolated from 9 percent of 94 samples in the E.U.
• Listeria (species not revealed) was detected in one third of samples in the E.U., a surprisingly high level.
• Campylobacter was found in 32 of 48 samples, with a 50 percent recovery rate from Germany, a not unexpected finding
• In contrast, the results in the U.K. yielded 12 out of 40 samples positive for Listeria but the laboratory was unable to demonstrate the presence of either Salmonella or Campylobacter, a surprising result.
• A third of the chicken samples from Germany yielded methicillin-resistant Staphylococcus aureus (MRSA) and with samples from Spain, demonstrating a 71 percent contamination rate with the pathogen.

The results were used by the Albert Schweitzer Foundation to coerce Lidl into adopting “better chicken farming across the board”.  It is generally accepted that welfare organizations in the E.U. are attempting to force retailers and food service companies to source chicken from suppliers conforming to the “Better Chicken Commitment”.  The standards required impose a higher cost of production, presumably to be passed down to consumers.  It is unclear how increasing space requirements for birds on litter or providing enrichments will reduce bacterial contamination on RTC products.

In commenting on the results of the assay conducted by the Albert Schweitzer Foundation, the Food Safety Agency of the U.K. emphasized long-standing recommendations that chicken and other meats should be cooked before consumption and not consumed raw.

Lidl issued a statement of clarification, noting “We work closely with our suppliers and a multitude of industry partners aligning our policies with the Responsible Use of Medicines in Agriculture Alliance and the Food Industry Initiative on Antimicrobials to ensure the responsible application of recommended use of antibiotics when ensuring animal welfare remains a priority.”

The statement continued, “Our own testing shows that in the last twelve months there have not been any microbial-related deviations outside legal levels and no concerns have been raised to us by any regulatory bodies on this topic”.

Lidl welcomed opponents to provide “real and verified concerns regarding the alleged presence of pathogens”.

The assays commissioned by the activist group should not be taken as representative of bacterial contamination of chicken in the E.U. or the U.K.in chicken marketed by Lidl or any other chain.  Specifically, levels of Listeria and MRSA are inconsistent with established industry values.

Dollar General, the subject of numerous citations has signed a Consent Agreement with the Department of Labor, Occupational Safety and Health Administration (OSHA) committing to future worker safety. The Company paid a penalty of $12 million as part of the settlement.

Dollar General is now obliged to hire safety managers, establish a companywide safety and health management system and remove hazards in stores.  Among the improvements will be a reduction in obstructions including blocked exits and access to electric panels and fire extinguishers.  The Consent Agreement makes provision for extensive fines for failure to comply with safety hazards affecting both workers and customers.

Douglas Parker, Assistant Secretary for Occupational Safety and Health, stated, “These changes help give peace of mind to thousands of workers knowing that they are not risking their safety in the workplace and that they will come home healthy at the end of each day.”  The consent agreement covers at least 20,000 stores in the U.S.

According to Adobe Analytics, the recent Amazon Prime Day generated sales approaching $14 billion, up from the corresponding event in 2023. The “Prime Day” that extended over 48 hours involved an average household expenditure of $152, lower than the $180 in 2023.

The record revenue was achieved by attracting “millions of new shoppers”. Amazon attributes increased sales to an AI Chatbot that assisted customers with inquiries.

The Government of Canada has announced that Costco and Walmart have agreed to the National Grocery Code of Conduct.  The objective of the Code is to establish transparency and equity in the grocery supply chain extending from farmers and manufacturers to consumers.

The Grocery Code of Conduct was developed in response to conflicts between producers and major retailers with the size of their collective presence representing an oligopoly.  Major issues of concern were the fees imposed by retailers to shelve products together with coercion over pricing.  The Code of Conduct imposes fair and ethical dealing and dispute resolution.

According to Dr. Mike Von Massow at the University of Guelph, “Setting guidelines for how retailers and suppliers interact should help protect farmers and also small chains that lack buying power.”  He added “It’s going to be a more level playing field, but my guess is it’s not going to be a perfectly level playing field.”  Michael Graydon, CEO of Food and Consumer Products of Canada, noted that the Code “Will mean a new era of friendlier relations between grocers and suppliers”.

Loblaw Companies a major grocery chain, initially declined to subscribe to the Code of Conduct but following consumer complaints, assented claiming “Support of the Code is part of Loblaw’s continued commitment to promote a fair and transparent grocery industry in Canada.”  The company maintained that the Code would increase food costs.  The Canadian Code follows a similar initiative that has proven successful in the U.K. Experience in that Nation suggests that their Code of Conduct has resulted in a reduction in retail prices.

A research team led by Dr. Jonah Sacha at the Oregon Health and Science University has developed what may become a universal vaccine against influenza.  This is especially important given the need for a broad-spectrum product to protect populations against the emergence of a pandemic strain of influenza.

The vaccine uses a herpes cytomegalovirus (CMV) that is ubiquitous and generally asymptomatic as a vector.  The CMV-vectored virus incorporating influenza antigens selected from the 1918 pandemic strain induces a T-cell response. In trials conducted at the Oregon Health and Science University, 6 of 11 cynomolgus macaques survived exposure to the 1918 virus, an unimpressive level of protection, compared to six of the unvaccinated controls that died following infection.

The research team considers that the CMV-vectored virus could become commercially available within five years by which time, mRNA vaccines will have undergone further refinement and approval and will be widely deployed.

In a July 23^rd 2024 release, Albertson’s Companies (ACI) posted financial results for the 1^st quarter of FY 2024 ending June 15^th 2024. Earnings and revenue were consistent with consensus estimates. As the second largest pure-grocery company, Albertson’s can be regarded as a bellwether for the retail food industry, subject to increased costs of foods, labor, and transport in a competitive consumer environment impacted by inflation as reflected in low net margins among competitors.

Albertson’s Companies posted a 1.4 percent increase in same-store sales during the most recent quarter with a 23 percent increase in digital sales over the corresponding Q1 of FY 2023. Loyalty membership increased 15 percent to 41.4 million.

For Q1 FY 2024 net income was $240.7 million on total revenue of $24,265 million.  Comparable figures for Q1 FY 2023 ending February 25^th 2023 were net income of $417.2 million on total revenue of $24,050 million. Diluted EPS for Class A shares for the most recent quarter was $0.41 down from $0.72 for Q1 FY 2023. Gross margin increased fractionally from 27.7 percent to 28.0 percent denoting a minor reduction in cost of goods sold reflecting deflation. Operating income decreased from 2.6 percent in Q1 FY 2023 to 1.8 percent. During Q1 FY 2024 Albertsons recorded a $9.3 million loss on property disposition, impairments and “other expenses”. This contrasts with a $27 million in property or other impairments offset by $16 million “other income” in Q1 FY 2023.

In commenting on results CEO Vivek Sankaran stated, "In the first quarter of fiscal 2024, we continued to invest in our Customers for Life strategy and the digital and omnichannel capabilities necessary to support it." He added "Our Customers for Life strategy is placing the customer at the center of everything we do, and we continued to drive strong year-over-year growth in loyalty members as we launched our new simplified 'for U' loyalty program. Amidst an evolving economic and industry backdrop, we continued to deliver outsized growth in our digital and pharmacy businesses."

Sankaran concluded, "As we look ahead to the balance of fiscal 2024, we expect to see continuing headwinds related to investments in associate wages and benefits, an increasing mix of our pharmacy and digital businesses which carry lower margins, and the cycling of prior year food inflation”

On October 14^th 2022 Kroger announced a bid for Albertson’s offering $34 per share and assuming $4.7 billion in debt in a $25 billion transaction. The acquisition would at the least have required divestment of stores among in areas with an overlap.  Several U.S. senators, states Attorneys General and unions representing Albertson’s workers oppose the transaction. The parties to the merger offered to spin off 413 stores and eight DCs to C&S Wholesalers, since increased by an additional 166 stores. The combined company would invest in worker benefits, devote $1 billion of working capital to reduce prices and would recognize unions.

On January 15^th in advance of a Federal Trade Commission decision, the parties issued a joint statement “We remain in active and ongoing dialogue with the FTC and individual state Attorneys General regarding our proposed merger and divestiture plan. We believe our merger with Albertsons and the comprehensive divestiture to C&S will result in the best outcomes for customers, associates and our communities”.

The FTC sued to block the merger in mid-February 2024 supported by eight states and Washington DC. with an administrative hearing to commence on August 26^th 2024. A case filed by the Attorney General of Colorado will be heard commencing September 30^th 2024.

Albertson’s Corporation posted assets of $26,077 million including $3,616 million in goodwill and intangibles, against long-term debt and lease obligations of $15,343 million. The Company had an intraday market capitalization of $11,690 million on July 25^th 2024. ACI trades with a forward P/E of 8.3 and has ranged over a 52-week period from $19.33 to $23.88 with a 50-day moving average of $20.10. Approximately 74 percent of equity is held by institutions with 14 percent by insiders. The Company attained a 12-month trailing operating margin of 2.3 percent and a profit margin of 1.4 percent. Return on assets was 5.4 percent and 45.6 percent on equity

Albertsons operates 2,269 stores under 20 banners including Albertson’s, Safeway, Von’s, Acme, Jewel-Osco and Shaw’s.

Rob Steiner, Vice-president of sales for Ziggity Systems has announced the appointment of Luke D. Snyder as an Account Manager responsible for the Carolinas, Virginia, Maryland, Delaware, Ohio and southern Indiana.  Steiner stated, “His background in agriculture and extensive experience in relationship-building across multiple states will be invaluable as we continue to grow our presence in the region”.

Luke is a native of Indiana and graduated from Purdue University in May 2021 with a degree in interdisciplinary agriculture with a minor in agricultural systems management.

Luke is currently undergoing extensive training at the company headquarters and will relocate to North Carolina in coming months.

Additional information on products produced by Ziggity Systems can be obtained by accessing the company website by clicking on to the Ziggity logo on the right side of the Welcome Page.

In early July, the USA Export Development Council (USAEDC) arranged an attaché conference in Washington DC.  Greg Tyler, president and CEO of USAPEEC, serves as the Chairperson of USAEDC.  His knowledge, together with the experience of members of the Council provided information and input to the USDA-Foreign Agricultural Services attachés representing importing nations in Asia, South America and Europe.

Topics considered at the Conference included demography, marketing updates and culinary perspectives. The USAEDC Conference provided an opportunity for USAPEEC to strengthen international relationships, benefiting the U.S. poultry and egg exporters.

According to a ProMED posting, authorities in Taiwan reported an outbreak of H5N1 avian influenza.  The index flock comprising 53,000 birds demonstrated clinical signs on June 29^th with confirmation on July 4^th.  Since a second farm under common ownership was in all probability infected, 44,000 chickens were depopulated on the neighboring location on July 6^th.  The National Reference Laboratory confirmed the infection as an H5N1 strain of clade 2.3.4.4b.  Following decontamination, a two-mile zone was designated for surveillance.

On Tuesday, July 16^th, Walmart opened a distribution center in Lancaster, TX to handle fresh produce, eggs, dairy and frozen goods for delivery to 590 locations in Texas and others beyond the state.  The 730,000 square foot DC dedicated to perishables complements an existing fulfillment center opened in 2023.

The design of the facility and its equipment expedites assembly of pallets for stores optimizing trailer capacity and quick turnaround at delivery.  The Lancaster, TX facility is the second of five distribution centers dedicated to perishables opened by Walmart.  Additional locations will be placed in Welford, SC, Belvedere, IL., and Piles Grove, NJ.  Four additional distribution centers handling perishables will be expanded in Minnesota, North Carolina, Indiana and Tennessee.

Over the past decade, Walmart has invested in advanced technology, both as mechanical and digital innovations to reduce the cost of distribution and to expedite deliveries. The question arises as to whether Walmart has achieved the same level of efficiency at a capital cost that may be lower than the Ocado concept followed by the Kroger Company

Given that seventy percent of agricultural workers in the U.S. were born in another country and that as many as forty percent are undocumented, a stringent Iowa immigration law will impact livestock production and other segments of agriculture.  The law, since blocked by a federal court, would have made it possible for authorities to detain illegal immigrants previously deported or denied admission to the U.S. irrespective of current legal status.

Notwithstanding, the hold on the proposed July 1^st date of enforcement, many immigrants concerned over their freedom have elected to move from the state.  This trend was evident in Florida after restrictive legislation was introduced.  It is a reality that farmers need labor and despite the extensive population of U.S. citizens drawing federal and state aid, there are insufficient hands to produce food, especially in fields, orchards, livestock farms and labor-intensive packing plants.

Congress has failed to enact a major revision of current immigration legislation attributed to political posturing that inhibits bipartisan action.

Canada is faced with a similar problem of filling agricultural jobs but has elected to issue visas and in most instances to offer a path to permanent residence or citizenship for productive foreign agricultural workers.  We could gain from their experience and benefit from a more practical and humanitarian approach to immigration. 

Our population is aging and without immigration will eventually shrink following the pattern in Japan and Europe.  In decades to come, there will be insufficient workers contributing to social security to sustain payments to those reliant on federal and state support.

The U.S. Centers for Disease Control and Prevention (CDC) has recorded 28 cases of listeriosis among 12 states with all patients hospitalized and with two fatalities.

According to a release on July 26th the source was identified as  the Boar's Head  plant in Jarrett, VA. with liverwurst as the vehicle of infection.  The Company is recalling 103 tons of product including other cold cuts prepared on a common line. It is possible that contamination within the plant is more extensive than the liverwurst equipment and that thorough disinfection will be required, guided by an intensive program of assays.

Since the incubation period of listeriosis may extend to 70 days, and that many cases are mild or not confirmed, the actual incidence rate is probably higher than initially indicated from hospitalizations.

Samples collected from late May through early July showed genetic similarity among patients’ isolates implying a common source. Initially in the absence of a known product or brand responsible for infection the CDC  recommended that those most susceptible to listeriosis including the elderly, pregnant women and the  immunosuppressed to refrain from consuming deli-sliced cold meats.

A contaminated product could result in dissemination of Listeria to other cold cuts or cheeses unless deli slicers are thoroughly decontaminated at regular intervals.  A major outbreak occurred in Canada during 2008, attributed to failure to strip and clean slicers in a major food plant processing and packaging RTE ham and turkey products.

Lohmann Germany has announced that the current application of Respeggt in ovo sexing at the Ankum Hatchery will be extended for an additional three years.

The Respeggt process involves assay of estrogenic hormones in a sample of allantoic fluid extracted from eggs on the 9^th day of incubation following the principle developed by Embrex in the late 1980s.  The Respeggt process is applicable to both white and brown-feathered strains.

Monogram Foods has informed the Tennessee Department of Labor and Workforce Development that it intends to close the Dickson, TN plant commencing September 16^th with completion on October 31^st. 

The facility established in 1989 operates sandwich production lines and produces frozen breakfast sandwiches and snacks.  Monogram Foods purchased the Dickson plant that was previously expanded in 2005 with the intention of attaining profitability for the facility.  Despite exploring various options, the company has concluded that the business is non-viable due to weak consumer demand.

In an editorial in the July12th 2024 edition of Science Dr. Nicola Lewis Director of the Worldwide Influenza Center, at the Francis Crick Institute in London and Dr. Martin Beer Head of the Institute of Virology, Friedrich-Loeffler Institute in Germany expressed their concern over the diagnosed incidence rate of bovine influenza-H5N1. Essentially the specialists warned of emergence of a potential zoonotic strain given the changes in the genome of the H5N1 avian virus to become infectious to dairy cattle. 

It is evident that cases of H5N1 among workers involved in depopulating impacted egg production complexes in Weld County, CO. showed both conjunctivitis and respiratory tract involvement, denoting increased pathogenicity for humans.  Comparison of avian, bovine and human strains applying whole genome sequencing is in progress but the inference of human susceptibility to a mammalian-adapted H5N1 avian influenza virus raises concerns.  As yet there is no evidence of contagion, but obvious animal-to-animal transmission occurred among mink on a farm in Spain in 2023 and among marine mammals along the Pacific coast of South America from 2022 onwards.

The authors urge action expressed in the title of their editorial entitled Stop H5N1 influenza in U.S. cattle now.  Suggested action included:

• Intensify surveillance incorporating as many U.S. dairy farms as is possible by sampling bulk milk. This has been initiated in Colorado.

• Enforce strict quarantine for infected herds and restrictions on both interstate and within-state transport

• Introduce biosecurity and hygiene precautions including the supply of PPE and decontamination of vehicles and equipment.

• Initiate surveillance for human cases including characterization of viruses from influenza cases and sampling of wastewater.

The authors urged global surveillance with real-time release of information concerning swine and fur-animal farms to detect any mutation that may predispose to a zoonotic strain or resistance to current antiviral drugs.  Human clusters of infection should be investigated to determine source and mode of transmission.

Drs. Lewis and Beer stressed the need for a One Health approach with cooperation among the Food and Agriculture Organization, the United Nations Environment Program, the World Health Organization and the World Organization for Animal Health.