Editorial


Bailouts Under MFP Exceed Farmers’ Losses

12/10/2019

According to a December 4th posting on Bloomberg the $28 million farm bailout program extending over 2018 and 2019 represents a gross overpayment.  At the outset it must be recognized that “China is not paying for the tariffs” as is claimed by the Administration.  The cost is effectively borne by importers and consumers.

 

The actual loss experienced by soybean farmers, most directly affected by the sharp drop in exports to China, represents 50 percent of the Market Facilitation Program (MFP) fund payments. Although actual quantification of losses varies according to the models used by various teams of agricultural economists, according to Dr. Joseph Glauber, the USDA former Chief Economist, “It is clear that the payment rates overstated the damage suffered by soybean growers”.  He added, “Based on what the studies show, the damages were about half that”. 

 

A team of agricultural economists at the University of Kentucky led by Dr. Yuqing Cheng calculated that the loss of exports to China represented 36 cents per bushel during 2018 compared to MFP compensation of $1.65 per bushel.  Dr. Pat Westoff, Director of the University of Missouri Food and Agriculture Quality Research Institute considers that the trade dispute caused U.S. soybeans to drop by 78 cents per bushel.  A team at the University of Georgia led by Dr. Michael Adjemian estimated that the loss was 52 cents per bushel based on export prices through the Port of New Orleans.

 

For the current year, the USDA estimates that the loss to soybean farmers was $2.05 per bushel.  The sharp escalation of the USDA figure was based on export sales extending over a ten-year period compared to 2018 that was considered to be the base year of the trade dispute.

 

Agricultural economists point to the flaw in USDA calculations that excluded the emergence of new markets.  Effectively the share of the market lost by the U.S. in China was supplied from Brazil.  This in turn created new markets for U.S. soybeans albeit at a lower price but still far below the MFP value.  It must also be remembered that the total soybean requirement by China was reduced by the loss of hog herds affected by African swine fever.  Dr. Pat Westoff stated, “USDA projections do not consider the impact of exports to other markets, considering only the negatives and not the positives.”

 

The question arises as to whether the more than liberal compensation extended to farms was due to political considerations or was the result of incompetence among agriculture economists affiliated to the USDA. It could be speculated that the forced relocation of the Economic Research Service from Washington D.C. to Kansas City, resulting in mass-resignation among experienced staff economists may have been a factor in assessing the discrepancy between actual loss and compensation. A further area of concern expressed by farmers and their associations relates to the fairness in distribution of MFP payments.  The Environmental Working Group has pointed to the disproportionate amount of compensation received by large-scale farmers.

 

In mitigation, Dr. Robert Johansson the Chief Economist for the USDA stated, “Compensation was based on gross trade losses rather than net losses. This approach was used to ensure uniformity across all commodities.  The gross-damages method was used as it is used by trade negotiators with respect to the World Trade Organization”.

 

Irrespective of how the quantum of compensation was determined consumers will ultimately pay the price for the trade dispute with China. With no prospect of a settlement of countervailing tariffs it seems certain that MFP will extend into 2020


 

Egg Industry News


COMMODITY REPORT: December 6th.

12/06/2019

Corn and soybean prices diverged this past week attributed to:-

 

  • Renewed optimism over soybean purchases by China despite uncertainty over finalization of a "Phase 1" agreement. The parties have not reached an understanding on either tariff rescission or structural issues.
  • Prospects of exports of soybeans to China have resurfaced after dormancy since the White House announcement of "$40 billion in agricultural imports by China" following the October 10/11 th round of negotiations. The market for soybeans is responding positively despite the absence of specific details on quantities and prices or even an expressed commitment from state-controlled brokers in China.

 

Uncertainties still exist:-

 

  • Traders are responding to low yields of both corn and soybeans and the effect of recent bouts of severe weather in the upper Midwest.
  • Brexit and the U.S. relationship with the U.K and the E.U. especially with the threat of punitive tariffs on food products from France.
  • An unpredictable political situation delaying ratification of the USMCA possibly until early 2020.

 


 

Export of Shell Eggs and Products January-October 2019.

12/07/2019

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing the first ten months of 2019 with the corresponding period in 2018:-

PRODUCT

Jan.-Oct. 2018

Jan.-Oct. 2019

Difference

Shell Eggs

     

Volume (m. dozen)

100.9

123.2

+22.3 (+22.1%)

Value ($ million)

109.3

94.5

-14.8 (-13.5%)

Unit Value ($/dozen)

1.08

0.77

-0.31 (-28.7%)

Egg Products

 

 

 

Volume (metric tons)

26,243

25,575

-668 (-2.5%)

Value ($ million)

92.9

80.0

-12.9 (-13.9%)

Unit Value ($/metric ton)

3,540

3,128

-412 (-11.6%)

U.S. SHELL EGG AND EGG PRODUCT EXPORTS DURING

JANUARY-OCTOBER 2019 COMPARED WITH 2018

Source USDA-FAS/USAPEEC


 

Egg Monthly

12/07/2019

Review of November 2019 Production Costs and Statistics.

  • November 2019 USDA ex-farm blended nest-run benchmark price was up 47 cents per dozen or 118.0 percent from October 2019 to 106.8 cents per dozen. Higher price is consistent with seasonal purchase trends but moderated in extent and timing by oversupply.
  • November 2019 USDA average nest-run production cost was 0.4 percent lower than October 2019 at 59.8 cents per dozen due to decreased feed costs.
  • November 2019 USDA benchmark nest-run margin increased to a positive value of 47.0 cents per dozen from a loss in October of 11.2 cents per dozen, representing a swing of 58.2 cents per dozen.
  • October national flock ( over 30,000 hens/farm) was up 2.4 million or 0.8 percent to 319.5 million.
  • October pullet chick hatch was up 4.3 percent from September to 26.2 million.
  • October exports of shell eggs and products were up 32.7 percent to 957,300 case equivalents representing the theoretical production of 14.9 million hens.

 

INTRODUCTION.

Summary tables for the latest USDA November 2019 prices and flock statistics made available by the EIC on December 6th 2019 are arranged, summarized, tabulated and reviewed in comparison with values from the previous November 8th 2019 posting reflecting October 2019 cost and production data.

COSTS & REVENUE

Note:

From January 2019 onwards EIC has used USDA-AMS data for regional corn, soybean and standard feed prices. The basis for corn will be cash payment except for California (10-day delivery) and Louisiana and Oregon (30-day delivery). For soybean meal a similar approach is applied with 20-days for Minnesota. It is noted that January 2019 prices are not directly comparable with December 2018. Month-to-month comparisons in 2019 are valid.

Parameter

NOVEMBER 2019

OCTOBER 2019

5-Region Cost of Production ex farm (1st Cycle)

59.8 c/doz

60.2 c/doz

Low

56.8 c/doz (MW)

57.3c/doz (MW)

High

78.0 c/doz (CA)

78.4 c/doz (CA)

Components of USDA 6-Region 1stCycle nest-run Cost of Production:-

 

NOVEMBER 2019

OCTOBER 2019

Feed

31.0 c/doz

31.3c/doz

Pullet depreciation

10.9 c/doz

11.0 c/doz

Labor (estimate)

4.0 c/doz

4.0 c/doz

Housing (estimate)*

5.0 c/doz

5.0 c/doz

Miscellaneous and other*

9.8 c/doz

8.9 c/doz


* Adjusted February 2019 and used as a rounding factor

 

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting NOVEMBER 2019:-

106.8 cents per dozen1- 59.8 cents per dozen = 47.0

(Oct. 2019 comparison 49.0 1 cents per dozen - 60.2 cents per dozen = -11.2 cents per dozen.)

Note 1: USDA Blended egg price

   

NOVEMBER 2019

OCTOBER 2019

USDA

Ex-farm Price (Large, White)

106.8 c/doz (Nov.)

49.0 c/doz (Oct.)

 

Cage-free to packing plant

153.0 c/doz (Oct.)

153.0 c/doz. (Sept.)

 

Warehouse/Dist. Center

129.0 c/doz (Oct.)

68.0 c/doz (Sept.)

 

Store delivered (estimate)

134.0 c/doz (Oct.)

73.0 c/doz (Sept.)

 

Dept. Commerce Retail

128.2 c/doz (Oct.)

139.0 c/doz (Sept.)

Layer Feed Cost

NOVEMBER 2019

OCTOBER 2019

See note on source of data: now USDA

U.S. Average

$197.26/ton

 

$199.30/ton

High

$225.69/ton (West)

$227.54/ton (West)

Low

Differential

$180.14/ton (MW)

$45.55

$182.90/ton (MW)

$44.64

Pullet Cost (19 Weeks) $3.76 November 2019 $3.78 OCTOBER 2019

 

VOLUMES OF PRODUCTION

PARAMETER

NOVEMBER 2019

OCTOBER 2019

Table-egg strain eggs in incubators

47.9 million (Nov.)

48.3 million (Oct.)

Pullet chicks hatched

26.2 million (Oct.)

25.1 million (Sept.)

Pullets to be housed in 5 months

23.6 million (March '20)

21.1 million (Feb '20.)

     

National Flock in farms over 30,000

319.5 million (Oct.)

317.1 million (Sept.)

National egg-producing flock

334.9 million (Oct.)

332.6 million (Sept.)

     

Proportion flock in molt or post-molt

15.4% (Nov.)

15.2% (Oct.)

Total of hens in flocks over 30,000, 1st cycle (estimate)

283.3 million (Oct.)

282.4 million (Sept.)

Total U.S. Eggs produced

8.41 billion (Oct.)

8.03 billion (Sept.)

Cage-Free hens in production

70.8 million (Nov.)

22.9% Organic

70.3 million (Oct.)

22.9% Organic

"Top-5" States hen population (USDA)

162.9* million (Oct.)

162.5 (Sept.)

* Texas excluded to maintain confidentiality

PROPORTION OF U.S. TOTAL HENS BY STATE, 2019

Based on a denominator of 320 million hens in flocks over 30,000.

USDA has amended inclusion of specific states in regions and eliminated Texas data to protect confidentiality of Company flock sizes

 

STATE

NOVEMBER 2019

SEPTEMBER 20191

Proportion by region (FEB. 2019)

Iowa

17.3%

17.6%

MW 53.7%

Indiana

10.5%

10.4%

NE 10.4%

Ohio

11.0%

11.0%

SE 6.7%

Pennsylvania

8.1%

8.0%

SC 5.2% (exc. TX)

Texas (estimate)

6.0% ?

6.0% ?

CA 4.1%

California

4.0%

4.1%

NW 2.9%

1. Values rounded to 0.1%

Rate of Lay, weighted hen-week (USDA) 81.7% (OCTOBER) 80.3% (SEPTEMBER)

 

Actual USDA-ERS 2016 U.S. per capita annual egg consumption post HPAI:- 275.2 eggs (+19.8 from 2015)

Actual USDA-ERS 2017 U.S. per capita annual egg consumption:- 281.8 eggs (+6.6 from 2016)

Actual USDA-ERS 2018 U.S. per capita annual egg consumption to be:- 284.0 eggs (+2.2 from 2017)

Projected USDA-ERS 2019 U.S. per capita annual egg consumption to be:- 289.5 eggs (+5.5 from 2018)

Projected USDA-ERS 2020 U.S. per capita annual egg consumption to be:- 291.2 eggs (+1.7 from 2019)

Revised, using data from USDA Livestock, Dairy and Poultry Outlook November 15th 2019

Egg Inventories at beginning of NOVEMBER:

Shell Eggs: 1.77 million cases down 0.4 percent from October.

Egg Products: 3.40 million case-equivalents up 0.2 percent from October.

Eggs broken under FSIS inspection (million cases) OCTOBER 7.408 SEPTEMBER 6.834

Cumulative eggs broken under FSIS inspection 2019 (million cases) 69.4 JAN to OCT.

Cumulative 2019: number of cases produced (million) 226.7 JAN. to OCT.

Cumulative 2019: proportion of total eggs broken 30.6%

 

EXPORTS OCTOBER 2019: ( Expressed as shell-equivalent cases of 360 eggs).

 

Parameter

Quantity Exported

Exports:

 

Shell Eggs (thousand cases)

OCT. 596.5 SEPT. 406

Products (thousand case equivalents)

OCT. 360.8 SEPT. 316

TOTAL (thousand case equivalents)*

OCT. 957.3 SEPT. 722

*Representing 3.6 percent of National production in October 2019.

 

COMMENTARY ON NOVEMBER 2019 COSTS AND STATISTICS

 

November 2019 COST AND REVENUE DATA

The USDA reports data for six regions, respectively comprising the Northeast, South East (Mid-Atlantic), South Central, Midwest, Northwest and California (NW and California combined in some tables).

From March 2019 onward some state data was withheld to maintain confidentiality where a company predominates in a specific state or region .

  • The USDA ex farm benchmark blended egg price in November 2019 increased by 118.0 percent or 57.8 cents per dozen from October 2019 to 106.8 cents per dozen, contributing to a positive margin of 47.0 cents per dozen based on 'nest-run' eggs (delivered from the laying house). The November 2019 USDA benchmark price of 106.8 cents per dozen should be compared to 95.6 cents per dozen for the corresponding month in 2018 and 109.1 cents per dozen in October 2017, post-recovery from HPAI.

· During November 2019 the feed component of production cost averaged 31.0 cents per dozen 1.0 percent lower compared to October 2019. Year-to-date average feed price is 31.5 cents per dozen. The 2018 average feed cost was 33.3 cents per dozen compared with an average feed cost of 32.0 cents per dozen in 2017.

· Combining data from the USDA and the EIC, producers recorded positive margin of 47 cents per dozen at farm-level for flocks in November 2019 compared to a negative margin of 11.2 cents per dozen in October. The aggregate algebraic margin for the first eleven months of 2019 is -54.4 cents per dozen or an average monthly loss of 5.0 cents per dozen.

The cumulative margin for entire 2018 was 424.0 cents per dozen or a monthly average of 35.3 cents per dozen. The algebraic margin for entire 2017 was a positive 39.2 cents per dozen, with the first eight months negative comparing production cost against USDA benchmark 'nest run' values. The algebraic average margin for entire 2016 was a loss of 9.6 cents per dozen with negative values recorded for eight consecutive months.

· The simple average price of feed for November 2019 over 5-regions was $197.26 per ton, 1.0 percent lower (using USDA-AMS data) or $2.05 per ton compared to October 2019. Southwest data is no longer disclosed to avoid compromising a company that predominates in Texas. The highest cost among five regions was the West at $227.54 per ton compared to the lowest region, the Midwest at $180.04 per ton. The average figure includes ingredients plus milling and delivery at approximately $10 per ton. The benchmark price of corn was $148.43 per ton in November 2019, down $2.27 per ton or 1.5 percent lower than October taking into account the difference in basis. A decrease of $2.33 per ton or 0.7 percent in the price of soybean meal from $313.22 per ton in October to $310.89 per ton in November contributed to a lower feed cost. There was a wider differential of $45.55 per ton in feed price between the Midwest and the West compared to the comparison October. The differential in corn price between the Midwest and the West in October was $49.48 per ton ($47.93 in October).

· Feed price will continue to be a major factor driving production cost and hence margin. Unknown factors influencing feed cost during the last quarter of 2019 will include ongoing disruption of international trade due to tariffs imposed by China with little prospect of a settlement of the ongoing dispute in the current year. Each $10 per ton difference in feed cost represents 1.75 cents per dozen.

· The EIC-calculated the 6-Region total nest-run production cost in November 2019 to be 59.8 cents per dozen, 0.4 cents per dozen lower than in October. Production costs during November 2019 ranged from 56.7 cents per dozen in the Midwest up to 78.0 cents per dozen in California which was higher than the Midwest region by 21.3 cents per dozen.

· Retail egg prices as determined by the Department of Commerce for OCTOBER 2019 averaged 128.2 cents per dozen, 10.1 cents per dozen or 7.3 percent lower than in September 2019. During October 2017 and 2018 retail prices were respectively 154.0 and 166.0 cents per dozen. During 2016 and extending through mid-2018, retail prices did not decline in proportion to ex-farm prices allowing higher margins at retail thereby depressing demand.

 

NOVEMBER 2019 PRODUCTION DATA

 

· According to USDA data, the estimated average complement of U.S. hens in flocks over 30,000 during October 2019 amounted to 319.5 million, reflecting a seasonal adjustment in flock size. The average total U.S. flock including hens in molt on all farms counted by the USDA amounted to 334.9 million in October. The average end-of-year flock sizes over the past five years respectively were, 2012 (299 million); 2013 (308 million); 2014 (311 million); 2015 (291 million post HPAI losses) and in 2016 (319 million). The EIC predicts the December 2019 total flock will attain 340.3 million, 1.5 million more than the October forecast.

· Pullet chick hatch was up 4.3 percent in October 2019 to 26.2 million compared to the previous month at 25.1 million. The high October 2018 value of 27.4 million was in anticipation of the Easter 2019 market as is the increase in October 2019. It is evident that if lower than seasonal prices prevail during winter, flock placements will be constrained by some producers cancelling pullet-chick orders.

· The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA attained 15.4 percent of the national flock in November 2019, slightly higher than in October in anticipation of Christmas sales. Annual averages were 17.4 percent for 2018 and 18.0 percent in 2017. The high value of 23.8 percent in 2016 was due to the loss of hens in the 2015 HPAI epornitic.

· The average monthly projection for pullets to be transferred to laying houses during the fourth quarter of 2019 will be 24.6 million with 21.9 million during the first quarter of 2020.

· The projected hatchery supply flock attained 2.4 million in November 2019. Peak parent-flock placements rose to 3.1 million hens in production in June 2015, coinciding with the end of the HPAI epornitic, to a low of 2.5 million hens during the 4th Quarter of 2016. Projections show monthly averages of 2.3 and 2.4 million breeder hens in production during the third and fourth quarters of 2019 and 2.5 million during the 1 st Quarter of 2020.

· Average production of 81.7 percent in November 2019 compared to 80.3 percent in October reflects the relative number of young pullets approaching and attaining peak production. This is evidenced by the volume and hence price of mediums. Average rate of lay attained 78.7 percent during 2016, 79.8 percent in 2017 and 79.2 percent in 2018. The average rate of lay during any period is a function of the proportion of pullets placed, the rate of depletion of flocks and retention of molted hens for a second cycle. Average flock production will fall as weighted flock age increases or will rise due to early depletion and restricting production to the first cycle.

· Slaughter of light spent-hens in plants under FSIS inspection during October 2019 was up 15.4 percent from September 2019 attaining 3.0 million. In October 2018, 4.2 million light hens were slaughtered under FSIS inspection. Spent-hens are shipped live to Canada from Northern-tier U.S. states or are rendered or composted in other regions. Approximately 14 million spent hens are disposed of each month.

OCTOBER 2019 EXPORT DATA.

· According to USDA-FAS data, 596,500 cases of shell eggs were exported in October 2019, compared to 406,100 in September 2019, representing 2.6 percent of total production. This value should be compared to the high value of 409,700 cases in March 2016 prior to the onset of HPAI.

During October 2019 the following regions were the leading importers:- North America, comprising the two neighboring NAFTA/USMCA nations (61.4 percent), East Asia (34.5 percent). Shipments in October 2019 to the Middle East decreased to 2.7 percent of monthly volume with 16,600 cases, up from 14,900 cases in September 2019.

· Exports of egg products in October 2019 were up 14.4 percent from September to 360,800 case-equivalents representing 1.5 percent of U.S. output. The following regions were the leading importers of egg products by proportion of volume shipped in September:- North America, our NAFTA/USMCA neighbors (received 43.0 percent), East Asia (34.5 percent), Southern Asia (6.5 percent), the EU-28 (1.4 percent) and the Caribbean (3.3 percent).

· Collectively, exports of shell eggs and products in October 2019 represented the output from approximately 14.9 million hens in production during the month, attaining 957,300 case-equivalents, up 32.7 percent from September. This was a 0.3 percent decrease compared to monthly average shipments of 960,000 case-equivalents exported over the first four months of 2015 prior to the advent of HPAI, indicating that international markets are being regained.

 

Efforts in this respect are attributed to cooperation between the AEB and USAPEEC both in existing and new markets. Specific attention is directed to nations with the potential to import U.S. product based on landed price against competition. Exports of both egg-products and shell eggs in October 2019 corresponded to 4.1 percent of a nominal national flock of approximately 320 million hens in production on commercial farms holding more than 30,000 hens.

· There is no scientifically justifiable reason why any nation should embargo pasteurized egg products from an approved plant, based on a diagnoses of avian influenza or END in a state or country.

 

 

 


 

Egg Week

12/12/2019

USDA Weekly Egg Price and Inventory Report, December 12th 2019.

  • Hen numbers in production down 0.2 million to 333.1 million .
  • Shell inventory again up a significant 6.1 percent after a similar increase last week.
  • USDA Midwest benchmark generic prices for Extra large and Large down 13 percent to 135.5 and 131.5 cents per dozen. Mediums were down 7.4 percent to 81.5 cents per dozen. Sharply higher inventory for two successive weeks with a decline in price suggests lower unit revenue unless seasonal demand increases to match production.
  • Price of breaking stock down 25 percent to 57.5 cents per dozen. Checks down 17.5 percent to 52.0 cents per dozen reflecting shell-egg prices. Both categories are now below the cost of production

 

Harvest Report for the Past Week

12/09/2019

The December 9th USDA Crop Progress Report, the last for the 2019 season, documented a continued advance in harvesting a crop delayed by late planting due to flooding in spring, drought in some areas at mid-stage and inclement weather during the harvest period.

 

 

As of December 8th in 18 major corn-producing states, responsible for 94 percent of the 2018 crop, 92 percent of corn had been harvested. This compares to a five-year average of 98 percent. During the past week, 3 percent was gathered consistent with the trend of diminishing returns at the end of each harvest year. States with suboptimal harvests of corn included N.Dakota (43 percent of projected total) and Wisconsin and Michigan at 74 percent each. The remaining 15 states posted harvests of 93 percent to 100 percent.

 

Farmers harvested an additional 4 percent of soybeans crop past week completing the harvest of the faster-growing crop. North Carolina harvested only 75 percent of soybeans planted with Michigan and Wisconsin at 75 percent each. Other states ranged from 92 percent (N. Dakota) to 100 percent as of December 8th.

 

Any remaining corn or soybeans in fields can be regarded as unmarketable.


 

USDA-WASDE FORECAST #595 December 8th 2019

12/10/2019

OVERVIEW

Predictably the December 10th 2019 USDA WASDE Report was unchanged from November but with lower price projections for soybeans and soybean meal.

Corn and soybean harvests reflected in the December WASDE are based on actual yield and harvested area. The corn acreage harvested was 89.9 million acres (81.8 million in 2018) unchanged from the November WASDE. Soybeans were harvested from 75.6 million acres, unchanged from the November WASDE. (88.3 million acres in 2018)

The December USDA projected corn yield was retained at 167.0 bushels per acre, (178.9 bushels in 2018) The low value was due to late planting, delayed development and adverse weather before harvest. Soybean yield was retained at 46.9 bushels per acre from the November WASDE, (52.1 bushels in 2018). The November USDA projection for the ending stock of corn was retained at 1,910 million bushels. Ending stock for soybeans will be unchanged from the November estimate to 475 million bushels.

Projections for ending stocks of both corn and soybeans have influenced recent CME price quotations concurrently with conflicting reports on trade negotiations with China. It is presumed that projections are based on the assumption that there will be no comprehensive settlement of the trade dispute with China in 2019. It is hoped that some concessions on tariffs will be incorporated into an anticipated "Phase-1" accord. China failed to commit to purchase commodities following the June meeting between President Trump and Premier Xi at the G-20 Meeting in Osaka. No substantial orders have been placed by China since the mid-October negotiations in Washington. Some orders representing four percent of projected 2019 exports of soybeans were forthcoming in September after the August G-7 Summit in France. In mid-September, China rescinded a ban on all agricultural imports from the U.S. imposed on August 4th. This followed the announcement of a delay in introducing a September 1st threatened tariff of 10 percent on imports from China valued at $300 billion not already subject to duty.

CORN

The corn harvest for 2019 documented in the December WASDE Report #595 is projected to be 13,661 million bushels consistent with acreage planted, crop progress and estimated yield. The projection for 2019 can be compared to the 2018 harvest of 14,420 million bushels and is down 9.0 percent from the 2016 record harvest of 15,148 million bushels. The "Ethanol and Byproducts" category was retained from November at 5,375 m. bushels despite the prospect of year-round use of E-15 but eroded by Small Refinery Exemptions and reduced domestic demand for E-10. Exports were held at 1,850 million bushels taking into account intense competition from Brazil and Argentine and increased World domestic coarse grain production relative to demand. The "Feed and Residual" category was retained at 5,275 million bushels. Ending stocks were projected to be 1,910 m. bushels. The forecast USDA farm price was unchanged at 385 cents per bushel. Near close of trading on December 10th after release of the WASDE the CME quotations for December 2019 and March 2020 corn were 364 cents and 367 cents per bushel respectively. December corn was down 3.5 percent from trade levels following the release of the December 10th WASDE.

December 2019 WASDE #595 ESTIMATES FOR THE 2019 CORN HARVEST:

Harvest Area

81.8 m acres

(89.9 m. acres planned, corresponding to 91.0% of are harvested)

Yield

167.0 bushels per acre

(was 168.4 bushels per acre in October WASDE. 175.4 bushels per acre in 2017)

Beginning Stocks

2,114 m. bushels

 

Production

13,661 m. bushels

 

Imports

50 m. bushels

 

Total Supply

15,825 m. bushels

Proportion of Supply

Feed & Residual

5,275 m. bushels

33.3%

Food & Seed

1,415 m bushels

8.9%

Ethanol & Byproducts

5,375 m. bushels

34.0%

Domestic Use

12,065 m. bushels

76.2%

Exports

1,850 m. bushels

11.7%

Ending Stocks

1,910 m. bushels

12.1%

Stock-to-domestic use proportion

15.8%

(Was 15.9 % in the October 2019 WASDE Report)

 

Average Farm Price: $3.85 per bushel. (unchanged from the November 2019 WASDE Report)

SOYBEANS and SOYBEAN MEAL

USDA projected the 2019 soybean crop to be 3,550 million bushels, unchanged from the November WASDE estimate, based on a yield of 46.9 bushels per acre, down 2.1 percent from the earlier September projection. Use parameters were unchanged from the November 2019 WASDE Report with crushings at 2,105 m. tons. Projected exports were retained at 1,775 million bushels, presumably not anticipating any resolution of the trade conflict with China during 2019. The export projection appears speculative given that negotiations are still in progress although China has rescinded the complete ban on importation of U.S. agricultural products imposed in August. The U.S. has identified and is supplying alternative markets to China. It is ironic that some of this volume is probably transshipped to China. In recent years our largest trading partner imported the equivalent of 25 percent of U.S. soybeans. Ending stocks were held at 460 million bushels.

The USDA projection of the ex-farm price for soybeans for the 2019 harvest is 885 cents per bushel, down 15 cents per bushel from the November WASDE estimate. Near close of trading on December 10th following release of the WASDE the CME quotations for soybeans for January 2020 and March 2020 delivery were 900 cents and 915 cents per bushel. January 2020 soybeans were 2.1 percent lower from the December trade level, following the release of the December 10th WASDE.

Projected output of soybean meal was held at 49.5 million tons. Domestic use was unchanged at 36.7 million tons. Exports were retained at 13.4 million tons despite an uncertain trade environment. The USDA reduced the ex plant price of soybean meal by $15 per ton from the November WASDE to $310 per ton. Near close of trading on December 10th CME quotations for December 2019 and March 2020 deliveries of soybean meal were $297 and $302 respectively. The December 2019 quotation on December 10 th was 2.6 percent lower than the November 8th quotation following the release of the November WASDE.

DECEMBER 2019 WASDE #595 ESTIMATE FOR THE 2019 SOYBEAN HARVEST AND SOYBEAN MEAL PRODUCTION:

Harvest Area

75.6 m acres

(76.5 m. acres planted, corresponding to 99.0% of planted acreage)

Yield

46.9 bushels per acre

(Was 49.5 bushels per acre in 2017, 52.1 bushels/ per acre 2018)

Beginning Stocks

913 m. bushels

(Was 1,005 m. bushels in September WASDE)

Production

3,550 m. bushels

 

Imports

20 m. bushels

 

Total Supply

4,483 m. bushels

Proportion of Supply

Crushings

2,105 m. bushels

47.0%

Exports

1,775 m bushels

39.6%

Seed

96 m. bushels

2.1%

Residual

32 m. bushels

0.7%

Total Use

4,008 m. bushels

89.4%

Ending Stocks

475 m. bushels

10.6% (Was 460 m. bushels in October WASDE)

 

Average Farm Price: 885 cents per bushel (Down 15 cents per bushel from the November WASDE Report)

 

Soybean Meal

Beginning Stocks

0.402 m. tons

Production

49.498 m. tons

Imports

0.500 m. tons

Total Supply

50.400 m. tons

Domestic Use

36.650 m. tons

Exports

13.350 m. tons

Total Use

50.000 m. tons

Ending Stocks

0.325 m. tons

 

Average Price ex plant : $310 (Down $15 per ton from the November WASDE Report)

 

IMPLICATIONS FOR PRODUCTION COST

The price projections based on CME quotations for corn and soybeans suggest lower production costs for broilers and eggs. Going forward, prices of commodities will be determined by World supply and demand and U.S. domestic yield, use and exports.

· For each 10 cents per bushel change in corn:-

  o The cost of egg production would change by 0.45 cent per dozen

  o The cost of broiler production would change by 0.25 cent per live pound

· For each $10 per ton change in the cost of soybean meal:-

  o The cost of egg production would change by 0.40 cent per dozen

  o The cost of broiler production would change by 0.25 cent per live pound.

 

WORLD SITUATION

Global coarse grain production for 2019/2020 was raised by 6.8 million m. tons to 1,401 million m. tons. Higher output from Russia, China and Bolivia will be partly offset lower production in Mexico and Canada. The 2019/2020 season will be characterized by higher production and trade in coarse grains and raised ending stocks. Brazil will increase exports to traditional U.S. markets including Japan, S. Korea and Mexico.

The global projection for oilseeds was increased by 3.3 m. metric tons to 574 million m. tons including 1.0 million metric tons additional soybeans from China but lower production in the U.S. The production of sunflower was lower in Canada and Australia but higher in Russia and Ukraine. Updated World production and use of total grains and oilseeds is summarized for the 2019/2020 season taking into account Northern and Southern Hemisphere production:-

Factor: billon m. tons

Coarse Grains

Oil Seeds

Output

1.401

575

Supply

1.748

703

World Trade

201

172

Use

1.417

497

Ending Stocks

332

116

(1 metric ton corn= 40 bushels) ("ton" represents 2,000 pounds)


 

HatchTech selected by Huayu for Hy Line Parent Stock Hatchery in China.

12/06/2019

HatchTech Incubation Technology has been selected by Huayu Agricultural Science and Technology Co., Ltd. to construct and equip a new hatchery. The facility to be erected in Handan, Hebei Province will produce Hy-Line parent stock chicks. HatchTech will supply incubators and HVAC installations for the hatchery, together with a full-service package of technical and biological support.

 

Due for completion in the third quarter of 2020, the new hatchery will supply 10 million parent layer chicks annually. The project will increase the approximate 60% market share of Hy Line in the egg production sector of China, placing more than 700 million pullets annually.

 

The new hatchery is the second collaboration between HatchTech and Huayu, following the successful completion of a commercial layer hatchery in July 2018. This

 layer hatchery in Handan is the world’s largest, with an annual production of 60 million day-old chicks.

 

“The commercial layer hatchery we built together with HatchTech is delivering excellent results,” said Mr .Wang Lianzeng, Chairman of Huayu Agricultural Science and Technology Co., Ltd. He added “our customers demand superior chick quality and a high level of biosecurity so we once again selected HatchTech to construct this important parent stock hatchery. Supported by an excellent team of technical and biological support from HatchTech’s offices in Beijing, we are confident that this new project will deliver success to all stakeholders”.

 

‘It is important that Hy-Line continues to develop its Chinese distribution operations’, adds Antonio Paraguassu, Managing Director at ILD/EW Group. “We strongly believe that, to support our market-leading position, we need to invest in the best possible production facilities, to provide our customers with the superior quality they demand and expect.”

 

As a leading supplier to the poultry industry, HatchTech enables companies worldwide to maximize the genetic potential of their flocks. HatchTech applies expertise and research to develop installations for incubation, chick transport and brooding and to deliver and service to customers. Headquartered in the Netherlands, and with offices in China and Ukraine, HatchTech supports producers in over 40 countries.

 

Additional information can be obtained by clicking on to the HatchTech logo on the right side of the Welcome page.


 

American Egg Board Lists 2020 Board Meetings

12/06/2019

The American Egg Board has provided advanced notice of board meetings in 2020:

  • March 23-25, at the Ritz-Carlton, Sarasota, FL.
  • Thursday, July 16th Executive Committee at the AEB office in Chicago
  • September 29-30, at the Gwen Hotel Chicago.

 

Herbruck’s Establishes Wellness Clinic

12/06/2019

Herbruck’s Poultry Ranch has established an employee wellness clinic to serve associates and dependents. The facility will provide screening, physical examinations and vaccinations.

The investment in a clinic is consistent with the generous employee-relations program operated by the fourth-generation egg producer, recognized as a standard for efficiency, safety and biosecurity.

The formal ceremony took place on December 3rd in Ionia, MI. and was an effective reminder that personnel in contact with chickens should receive an annual influenza vaccination. Apart from maintaining health and reducing absenteeism, vaccination against influenza may avert a recombinant event in the unlikely situation that a worker infected with a human strain comes into contact with a flock incubating avian influenza.


 

Highlight of Nielsen Data Circulated by the AEB

12/11/2019

For the ten months ending November 2nd 2019, Nielsen reported a 1.9 percent increase in egg equivalents sold at retail but with a corresponding 11.8 percent decline in value. For 2019, projected per capita consumption will be 289.0 eggs representing a 1.76 percent increase over 2018.

Year to date, shell eggs represent 96.2 percent of retail sales with egg products 2.7 percent and hard-boiled peeled eggs 1.1 percent. Total retail value of all eggs and products for the period was $5.66 billion. In reviewing pack size, conventional 12-count decreased by 2.0 percent and 18- count increased by 4.3 percent compared with the first 10 months of 2018. 60-count packs increased by 13.6 percent attaining 200 million dozen for the period ending November 2nd.

In analyzing retail shell egg sales by product segment, conventional eggs represented 87.8 percent posting a 1.9 percent rise compared to the first 10 months of 2018, but with a 15.2 percent decline in value. Cage-free eggs comprised 10 percent of sales up 1.3 percent in volume but down 1.5 percent in value. Organic eggs represented 2.2 percent of retail sales, up 4.7 percent in volume and 4.5 percent in value.

In comparing branded with private label shell eggs, the latter represented 71.7 percent of the combined categories with a 2.3 percent growth rate in 2019 compared to the first 10 months of 2018, but with a 15.0 percent decrease in price. Branded eggs comprised 28.3 percent of the combined categories increasing by one percent in volume but declining 6.9 percent in value. The comparisons show the relative price stability of branded compared to private label attributed to consumer loyalty reinforced by national promotion. A decline in dollar volume for branded eggs was less than half the decrease recorded for private label. Private label eggs frequently do not claim enrichment or superior attributes and are priced lower than branded eggs and on occasions conventional eggs. The dollar value decline of 15.0 percent for the private label category actually exceeds the 2019 total for all retail shell eggs of 11.8 percent.


 

S&R Egg Farm Receives Approval for Three Million Hen Complex

12/11/2019

The LaPrarie, WI, City Council approved a conditional use permit for S&R Egg Farm to establish a complex with up to three million hens. Currently the company houses 4.5 million hens and replacement pullets and is a significant Midwest producer.


 

Target Benefitting from Good and Gather™ House Brand

12/11/2019

Following the launch of the Good and Gather™ brand in September 2019, Target is adding to the number of items within the brand. It is expected that combined dairy, deli, produce, beverage and pantry items will reach 2,000 by mid-2020. Good and Gather®will displace the existing Target brands Simply Balanced® and Archer Farms®.

Commenting on the favorable consumer response to Good and Gather®, CEO Brian C. Cornell noted “I think it’s really on-trend with what the consumer is looking for in food and beverage from Target”. He added “Despite our strength in our own brands overall, we are underpenetrated from a food and beverage standpoint so I am very optimistic about the potential for the brand”.


 

Magnitude of Industrial Espionage by China

12/11/2019

Significant structural issues to be resolved in any comprehensive trade agreement between the U.S. and China include rejection of intellectual property rights and industrial espionage conducted by that Nation. The magnitude of the problem is illustrated by the indictment of Haitao Xiang in the U.S. district court for eastern Missouri. In June 2017, he was arrested while attempting to board a one-way flight to China carrying trade-secret technology.

According to the indictment, Xiang worked as a scientist at The Climate Corporation on remote sensing and was familiar with the Nutrient Optimizer™ product developed in conjunction with Monsanto. Xiang, who is a permanent U.S. resident and citizen of China apparently was recruited into the Hundred Talents Program responsible for illicit technology transfer from the U.S. and other nations to China. Xiang sought to leverage his knowledge and potential illegal transfer of intellectual property to obtain a position with the Chinese Academy of Sciences, Institute of Soil Science in Nanjing.

Officials at The Climate Corporation and Monsanto became suspicious of Xiang when he announced his resignation. Searches of his computer indicated that he was involved in illegal activity leading to his arrest.

Assistant Attorney General for National Security, John C. Demers noted Xiang promoted himself to the Chinese government based on his experience at Monsanto. Within a year of being selected as a talent plan recruit, he resigned from his job, bought a one-way ticket to China and was apprehended at the airport with a copy of the company’s proprietary algorithm.

In past years, Monsanto, DuPont Pioneer and Ventria Bioscience have been the victims of theft of intellectual property and GMO seeds.


 

Texas Beef Council Attempting to Dispel Cholesterol Perception

12/11/2019

The Texas Beef Council is directing $650,000 in check-off funds to nutritional research and promotion. The Council intends applying science-based information to refute concerns over cholesterol levels in beef. Generic beef has an image of high fat and elevated cholesterol and is regarded by internists and cardiologists as unsuitable for patients with a propensity towards cardiovascular disease. The Texas Beef Council intends promoting lean cuts which apparently contain lower cholesterol levels than beef as marketed during the final decades of the 1990s.

In many respects, the problems faced by the Texas Beef Council mirror the challenges encountered by the egg industry in he late 19990s resulting in the medical profession restricting consumption of eggs.

Through investment in basic and clinical research, the Egg Nutrition Center operated by the American Egg Board appears to have dispelled concern over cholesterol associated with eggs benefitting American diets and the industry alike.


 

FSNS Offers Summer Internships

12/11/2019

FSNS is inviting applications for their summer internship program. This is the fourth year for the Company to provide an opportunity for hands-on training and experience in a commercial laboratory. The internship offers the potential for a long-term career with FSNS after graduation. For further information, access www.hr@fsns.com.


 

USPOULTRY Announces Young Leader “20 Under 30” Program

12/11/2019

In a December 2nd announcement, USPOULTRY announced the 2020 Young Leader “20 Under 30” program. As in previous years, USPOULTRY will recognize leadership qualities and will provide further training through exposure to technology in the egg, broiler and turkey segments of the industry.

Selected applicants will receive complimentary registration to a USPOULTRY seminar program during 2020 together with support for subsistence.

Applicants should submit their documentation by January 3rd with details available on the following website:  www.uspoultry.org/20under30


 

Canadian Food Inspection Agency Revokes Safe Food Licenses

12/11/2019

Following a comprehensive review, the Canadian Food Inspection Agency (CFIA) has revoked the licenses of Ryding-Regency Meat Packers, Canadian Select Meats and the Beef Boutique. These companies are disqualified from slaughtering and processing for both export and inter-provincial transport.

Action by the CFIA follows an investigation of an E.coli 0157:H7 outbreak involving beef and veal. Evaluation of records and interviews with management and QC personnel revealed fraud in documentation with specific reference to the results of E.coli assays.

The temporary suspensions of the companies concerned are now permanent until reversed by the Agency following demonstration of compliance with relevant regulations.


 

Recall of Sushi due to Listeria Contamination

12/11/2019

Fuji Food Products Inc. is recalling ready-to-eat sushi and related products as a result of contamination with Listeria monocytogenes. Products were distributed to 33 Eastern and Mid-West states to a range of supermarkets and convenience stores.

Listeria contamination is a more frequent cause of recalls given the pathogenicity of the food borne organism relative to non-STEC E.coli and some serotypes of Salmonella.

Listeria can result in life-threatening infections with the elderly, pregnant and immunosuppressed consumers at the greatest risk. The introduction of rapid antigen capture assay kits has facilitated screening of products and since the FDA imposes a zero tolerance for Listeria, the frequency of recalls, especially of seafood and dairy products is increasing.

 


 

New SNAP Rules to be Imposed April 2020

12/11/2019

The proposal announced by USDA in February 2019 to exclude able-bodied adults from extended SNAP benefits will take effect in April 2020. It is established policy that adults aged 18 to 49 who are work eligible and without dependents may not receive SNAP benefits for more than three consecutive months in a three-year period. Exemptions can be extended in counties where unemployment exceeds 6 percent.

A number of states have extended SNAP to work-eligible adults, but enforcement of the rule will remove 700,000 from the program.

U.S. Secretary of Agriculture, Dr. Sonny Perdue noted “in the midst of the strongest economy in a generation, we need everyone who can work to work. This rule lays down the groundwork and expectation that able-bodied American re-enter the workforce where there are currently more job openings than people to fill them.”


 

Commentary


Confusion Over Recall of Romaine Lettuce-Contrast with the U.S Egg Industry

12/06/2019

On October 31st the Food and Drug Administration announced that Romaine lettuce was safe to eat following an outbreak of E.coli O157:H7. The outbreak involved 40 cases in sixteen states with product grown in the Salinas Valley of California. On Friday, November 22nd the FDA and CDC specifically implicated Santa Cruz, Santa Clara, San Bonito and Monterrey Counties in California as involved in the outbreak and advised that lettuce derived from the designated area should be recalled. Consumers were warned not use lettuce including whole heads, hearts and pre-cut packs and salad mixes.

The problem that has emerged relates to identification and specifically the product traceability identifiers on labels affixed to cases and cartons. This has predictably created consumer resistance impacting growers in the Yuma Valley and those outside the designated counties in California that at the present time are not involved in the recall.

The travails of the Leafy Produce Marketing Association and individual growers contrasts with the situation in the egg industry. Apart from comprehensive surveillance of flocks for SE, each carton bears a plant of origin and each packer maintains comprehensive paper or electronic records to initiate trace-forward within an hour. Some plants use Ovotrack™ technology that can follow product from farm to retail delivery using barcoding. Notwithstanding the present situation, consumer confidence could be enhanced by imprinting individual eggs with codes using the available AccuPrinter™ at a cost of 0.5 cents per dozen.


 

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Dr. Simon M. Shane
Simon M. Shane
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