WEEKLY ECONOMY, COMMODITY & ENERGY REPORT: September 6^th 2024.

OVERVIEW

The prices for corn and soybeans were sharply up from the previous week reversing the declines over preceding weeks. Corn and soybean prices were influenced by the August 2024 WASDE Report, the Pro Farmer Crop Tour and by farmers selling to avoid further declines and to make room for the 2024 harvest beginning in mid-to late September. More moderate weather conditions suggested high corn and soybean yields and proportionally lower prices as confirmed in the August WASDE. There was some technical selling arising from geopolitical concerns and in response to revised projections for harvests in Brazil and Argentine. Contributory factors included ongoing 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 from the 2024 crop. The August WASDE Report contained updated values from the extensively revised June/July Reports. A fifth of the 2024 corn crop is now mature. Concurrently almost all (95 percent) of the soybean crop is setting pods and ten percent dropping leaves consistent with the five-year average but apparently 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 but will not affect the 2024 harvest. The September WASDE and USDA Survey and field evaluations should provide updated projections of yields, anticipated exports and adjusted prices for the 2024 crop.

At 14H00 CDT on Sep6ember 5^th the CME corn quotation for September delivery was up a substantial 5.7 percent to 388 cents per bushel for September delivery. Corn price was influenced by acreage planted, ethanol demand and the 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 affecting the Black Sea wheat and corn crops and events in the Red Sea. Orders by China resumed at the end of the 2022-2023 market-year and continued through August. stimulated recently by a decline in the Dollar Index albeit with increased ocean freight. Total exports for the current market year are 36.8 percent higher than for the corresponding week during the 2022-2023 year.

Soybeans were priced at 999 cents per bushel for September 2024 delivery, approximating the 1,000-cent psychological threshold. Price was up 3.1 percent compared to 969 cents per bushel for September delivery last week. Higher prices were attributed to the projection of ending stock, despite more farm selling, but with recent export orders and projections of availability from the 2024 U.S., Brazil and Argentine harvests. Total exports for the current market year are 14.9 percent lower than for the corresponding week in the 2022-2023 year.

Soybean meal traded at $319 per ton for September delivery, up 2.3 percent to $312 from $307 per ton last week. Price was influenced by demand coupled with high crush volumes for consecutive months from December 2023 through July 2024 inclusive, although 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 Revised August WASDE Reports updated from July.

On September 5^th at 10H00 EDT the price for WTI was lower by $4.56 (-6.1 percent) from last week to $69.84. Price was independent of the geopolitical uncertainties and tensions in the Middle East and the decline reflected only moderate demand for crude as world economies and especially China have retracted. It is evident that U.S. production is a moderating influence on World price, attaining a record average of 13.4 million barrels per day in July with ample reserves. There was a downward trend in the price of WTI during the week resulting in a range of $74.90 down to $69.00.

High U.S. production is constraining domestic and international prices. The recent decline in energy cost during the past month has contributed to deflation influencing the FOMC in their anticipated lowering of the benchmark interest rate at the September meeting.

Economic data released during the past quarter (Q2 GDP; PCE, Confidence, Productivity, Employment) confirm a slowing economy but with a downward trajectory in inflation. Second Quarter GDP was revised upward to 3.0 Percent from the previous projection of 2.8 percent. The data-driven Federal Reserve FOMC passed on lowering the benchmark rate on July 31^st. Federal Reserve Chair Jerome Powell and Reserve Bank Governors indicated one or two reductions in the 10-year rate during 2024 in the fall. The August 2^nd Non-farm Payrolls and labor data clearly indicated the danger of prolonging the high benchmark interest rate that is negatively impacting the U.S. economy. Qualified commentators are now suggesting that the Fed is “behind the curve” again on adjusting rates downward with a consensus for a 25 basis points and a hoped-for 50 basis points reduction at the September meeting. The markets responded favorably to the remarks by FOMC voting members and Chairman Powell at the Jackson Hole Summit on August 23^rd almost confirming a reduction in the benchmark interest rate at the September Federal Reserve Meeting.

Macroeconomic U.S. factors:-

• Most economists in academia and the private sector are still confident of a “soft landing” for the economy despite the release of the Q2 2024 GDP and the August 21^st preliminary revision of 2023/2024 job creation, coupled with recent economic parameters including the ECI, CPI and PPI and with fluctuation in bond rates. Annual inflation as measured by CPI declined from 8.9 percent in June 2022 to 2.9 percent in July 2024. This is in part a response to a series of 11 FOMC rate raises that curbed inflation and cooled the labor market but without precipitating evident unemployment. There is obvious stability in the bank sectors in both the U.S. and Europe. Lower energy prices are contributing to deflation.
• The Federal Reserve held the benchmark interest rate steady at the monthly FOMC meeting on July 31^st, the eighth sequential pause. The Federal Reserve commentary indicated that progress has been made in reducing the rate of inflation with a pivot at the September FOMC meeting with a reduction of at least 25 basis points. Chairman Powell in Congressional testimony and documented in FOMC minutes has indicated that decisions would be based on demonstrated progress in reducing inflation as confirmed by a basket of key economic data, towards an annual 2.0 percent target by mid-2025 that now appears feasible.
• The August 14^th Bureau of Labor Statistics release of the July 2024 CPI confirmed a 0.2 percent increase from June, 0.1 percent below forecast. The annual increase of 2.9 percent was lower than the 3.0 percent projection and at a three-year low. The increase in the core value (excluding food and energy) was up 0.2 percent from June and 2.3 percent for the 12-month period, both down 0.1 percent from estimates. Food at home was up 1.1 percent year-over-year. The category of ‘meat, fish and poultry’ was collectively up 3.0 percent for the year with the inflation in egg prices noted. Food away from home was up 2.8 percent from July 2023 mainly as purchased at QSRs (+4.3 percent) compared to full service restaurants (+3. 8). Energy was up 1.1 percent from July 2023 with gasoline down 2.2 percent, electricity up 4.9 percent and natural gas up 1.5 percent. The shelter category was up 0.4 percent for the month and 5.1 percent over the past year. The macro trend is inclining towards reduced inflation but constrained by the shelter category that is detracting from deflation. The CPI heavily influences FOMC rate decisions.
• The August 29^th release by the Bureau of Economic Affairs documented the revised preliminary estimate of Q2 2024 GDP of 3.0 percent up from 2.8 percent, and above the Q1 value of 1.4 percent. The preliminary Q2 GDP value was influenced by higher consumer spending.
• On August 30^th the Bureau of Economic Analysis released the July Personal Consumption and Expenditure Price Index. The core index (excluding food and energy) was up 0.2 percent from the previous month and 2.6 percent year-over-year. This was in line with estimates. Food was up 1.4 percent and energy 1.9 percent year-over-year. Personal income was up 0.3 percent and expenditures up 0.5 percent from June. The headline PCE is closely followed by the Federal Reserve and confirms inflation is moderating but still above an annual target of 2.0 percent.
• The July Producer Price Index for Final Demand (PPI) released on August 13^th was up 0.1 percent from June compared to an expectation of a 0.2 percent increase. This was attributed in part to a 0.2 percent decrease in services but was offset by a 0.6 percent increase in goods. The PPI was up 2.2 percent over the past 12-months compared with 2.7 percent for the 12-month period through June. This is compared to a 6.4 percent increase in 2022. The core PPI value excluding volatile fuel and food, was up 0.3 percent from June.
• A Federal Reserve release on August 15^th confirmed that industrial production fell 0.6 percent in July compared to an increase of 0.3 percent in June. Capacity utilization was lower at 77.8 percent (78.8 percent in June) and 1.9 percent below the long run 1972-2020 average.
• The August 26^th report by the Department of Commerce, Census Bureau on Durable Goods Ordered during July 2024 confirmed a sharply higher 9.9 percent increase against a forecast value of 4.0 percent, compared to a revised decline of 6.9 percent in June. The fall in June was mainly due to the Transportation segment and specifically aircraft orders and parts that were down 20.5 percent. Excluding the Transportation component, new orders in July decreased by 0.2 percent compared to an increase of 0.1 percent in June. Shipments of durable goods in the non-defense category were down 0.4 percent in July from the previous month ultimately to be reflected in the quarterly GDP.
• In a September 4^th release the Census Bureau confirmed that factory orders for U.S. manufactured goods rose 5.0 percent in July against an estimate of 4.7 percent and compared to a fall of 3.3 percent in June.
• The August 15^thS. Census Bureau release of the advanced estimate of retail and food sales data for July was up 1.0 percent from the revised downward change of -0.2 percent in June and up 2.7 percent over 12 months. Food service sales were up 0.3 percent from June and 3.4 percent from July 2023. Grocery store sales were up 1.0 percent in July compared to June and up 2.8 percent over the past 12-months. The Federal Reserve FOMC closely monitors retail sales as a measure of the trend in inflation.
• The September 3^rd release by the Institute for Supply Management (ISM®) recorded a rise in the Manufacturing Index for August to 47.2 against an expected value of 47.5 but up from 46.8 in July. The August value was still below the bifurcation point of 50 percent between contraction and expansion. The Prices Index rose by 1.1 to 54.0 in August, denoting higher costs for production. U.S manufacturing continues to contract despite an improved economy, attributed to prolonged high benchmark interest rates. The Production Index for August was down from 45.9 in July to 44.8 in August.
• On July 31^st the U.S. Bureau of Labor Statistics reported a 0.9 percent increase in the Employment Cost Index (ECI) over the 2^nd quarter of 2024 against a consensus estimate of 1.0 percent. The year-over-year increase was 4.1 percent and with benefit costs up by 3.8 percent. The July ECI of 0.9 percent compares with a value of 0.9 percent for the 4^th quarter of 2023. The ECI is closely followed by the Federal Reserve FOMC and this data strengthened the possibility of a rate cut in September as suggested by Federal Reserve Chairman Powell.
• The August 27^th Consumer Confidence report prepared by The Conference Board for the period ending August 21st, confirmed an increase to 103.3 from the revised July value of 101.9. The Present Situation Index measuring perceptions of current business conditions improved from 133.1 in July to 134.4. The Expectations Index rose from 81.1 to 82.5 in August, the second consecutive month above 80. Values below this threshold over consecutive months and with a downward trajectory are regarded as predictive of a recession.
• The August 18^th University of Michigan Preliminary Index of Consumer Sentiment for August increased for the first time in 5 months from a revised July value to 67.8.The Bloomberg forecast was 66.9. The Index was down 2.3 percent from the corresponding month in 2023. The Current Economic Index (60.9 down from 62.7 in July) suggests present concerns. The Index of Consumer Expectations (72.1 up from 68.8 in July) denotes an improvement in consumer sentiment influenced by an anticipation of rate cuts and lower inflation despite geopolitical factors. Inflation expectations 12-months hence were unchanged at 3.0 percent among the 500 surveyed.
• Non-farm payrolls added 140,000 in August, as documented by the Bureau of Labor Statistics in a September release. This was far lower than the anticipated 161,000, and should be compared to the revised July value of 114,000. Of concern was the downward revision for June from 179,000 to 118,000 jobs added. The August decrease was attributed to workers in the private sector although reductions in health care and construction were constrained. The unemployment rate fell to 4.2 from 4.3 percent with 7.1 million unemployed and with 1.5 million in the long-term category. Real average hourly earnings during July showed a 0.4 percent increase over June to $35.21. Average hours worked increased 0.1 percent to 34.3 hours per week in August. Labor participation was unchanged at 62.7 percent in August. Wage rates increased 3.8 percent over 12-months. Wage rates are closely followed by the Federal Reserve FOMC.
• The August 21^st preliminary revision of job growth by the Bureau of Labor Statistics based on state data suggested that 818,000 fewer jobs were actually created from April 2023 through March 2024 than previously estimated. The discrepancy represented an apparent overstatement of 68,00 new jobs per month on average. Less than half of the overestimate was in the Professional and Business category (358,000); Leisure and Hospitality, (150,000) and Manufacturing (115,000). The preliminary revision that has mainly political implications should increase the magnitude of the reduction in benchmark rate at the September FOMC Meeting.
• The Bureau of Labor Statistics Job Openings and Labor Survey report released on September 4^th estimated 7.67 million job openings at the end of July, below the forecast of 8.10 million and lower than the revised June value of 7.91. The July job openings number was the lowest value since February 2021 and should be compared with July 2023 at 8.81 million and the peak March 2022 value of 12.2 million job openings during COVID. The hiring rate was 3.5 percent (5.4 million hires); the July total separation rate, 3.4 percent (5.4 million); the quit rate 2.1 percent (3.3 million); and the layoff rate 1.1 percent, (1.8 million).
• The seasonally adjusted initial jobless claims figure of 227,000 released on September 5^th for the week ending August 31^st was down by 5,000 from the revised value for the previous week and the lowest for seven weeks. The weekly value was lower than the Reuters estimate of 231,000, settling market concern over a rapidly slowing economy. The four-week moving average was 230,000. The Bureau of Labor Statistics estimated 1.838 million, continuing claims for the week ending August 24^th (down 22,000 from last week), the most since November 27^th 2021 at 1.928 million. There is clear evidence from data over the past three months that the labor market is cooling as confirmed by Chairman Powell in Congressional testimony and release of downward revised figures for job creation. The jobs market is still tight, but with sporadic weekly fluctuation in new claims due to weather or scheduled plant shutdowns.
• The September 5^th Bureau of Labor Statistics report recorded a 2.5 percent increase in non-Farm Productivity for Q2 2024 up from 0.4 percent in Q1 2024. Labor cost increased by 0.9 percent compared to 4.0 percent for Q1 2024. Output was up by 3.5 percent and hours worked were 1.0 percent higher.
• The ADP® reported on August 5^th that private (excluding government data) payrolls increased by 99,000 in August, down 11,000 from the revised 110,000 in July and compared to the Dow Jones estimate of 140,000 jobs. The increase in employment was mostly in the transportation, utilities, construction and hospitality sectors with 25,000 positions combined and an additional 18,000 in Financial Activities. In contrast losses were recorded in Professional and Business Services (-16,000) and Information (-14,000) Annual pay was up 4.8 percent year-over-year for ‘job-stayers’, unchanged from June and the lowest value since August 2021. The decrease as reported by ADP will not directly influence the probability of short-term future changes in interest rate since their number excluding public sector jobs is regarded as less reliable by the FOMC than the Bureau of Labor Statistics Monthly non-farm payroll report to be considered next week.

USDA Weekly Egg Price and Inventory Report, September 5^th 2024.

Market Overview

• The average wholesale unit revenue values for Midwest Extra-large and Large sizes were up 2.1 percent on average this past week. Medium size was up 14.5 percent. The 5-day rolling National wholesale price for graded loose on August 30^th at $2.77 per dozen was 7.7 percent down from last week. This value was approximately $1.42 per dozen above the 3-year average of $1.35 per dozen and up $1.57 from the corresponding week in 2023 at $1.20 per dozen. This past week shell egg inventory was up 4.3 percent, following a rise of 9.0 percent during the previous week. Small fluctuation in inventory with low to moderate incremental weekly increases in price during late 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 million hens and with sustained demand.
• Although there are weekly transfers of mature pullet flocks to laying houses, the size of the producing flock is 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. There is a presumption that buyers held back on orders in the face of high prices to “bend” the trajectory of the benchmark price to their advantage. This is evidenced by the short-term increase in inventory despite reduced supply albeit with softening demand. The cessation of incident cases of HPAI has probably provided buyers with the confidence to hold orders and run down stock. Inventory levels will depend on constant re-ordering to fill the pipeline through mid-September. 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, but highlighted as a factor in food price inflation.
• Total industry inventory was up by 5.7 percent overall this past week at 1.57 million cases with a concurrent 11.8 percent increase in breaking stock, due to a shortened processing week, following a 3.9 percent fall during the preceding week.
• 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 possible HPAI outbreaks during coming months cannot be projected but the industry has moved into a quiescent period. Over 195 confirmed dairy herds in fourteen 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 September 4^th the stated total flock of 306.3 million, was up by 0.4 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 million hens lower than the 326 million before the onset of HPAI in 2022. The loss of 3 million hens in July may not be reflected in the latest release of data. Figures released on September 4^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 down 0.5 percent to $2.74 per dozen.Checks delivered to Midwest plants were down 1.1 percent to $2.65 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 September 3^rd 2024, the Midwest wholesale price (rounded to one cent) for Extra-large was up 2.1 percent from last week to $4.37 per dozen. Large size was up 2.1 percent to $4.35 per dozen. Mediums were up 0.8 percent to $2.65 per dozen delivered to DCs. It is emphasized that these prices are for the previous week. 

As more replacement pullets advance in production, the stock of Medium size declined by 2.5 percent but the inventory of Small size fell by 6.2 percent over the past week suggesting pullet flocks are maturing with implications for prices during mid-to-late September.

Prices should be compared to the USDA benchmark average 4-Region blended nest-run cost of 73.33 cents per dozen as determined by the Egg Industry Center based on USDA data for August 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 strong positive margins irrespective of region and customer-supply agreements. The progression of prices for loose eggs during 2023 and 2024 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

The August 30^th edition of the USDA Egg Markets Overview confirmed that the USDA Combined Region value in cartons (rounded to the nearest cent), was up 7.9 percent to $4.35 per dozen delivered to warehouses one week ago. The USDA Combined range for Large in the Midwest was $4.26 per dozen. At the high end of the range, the price in the South Central region attained $4.42 per dozen.

Flock Size 

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

The September 3^rd release of the Purdue University-CME Group Economy Barometer Index for row-crop production fell in August to 100 points. The Index of Current Conditions was down 17 points from July to 83. The Future Expectations Index was down eleven points to 108. The Index is derived from the responses of 400 U.S. farmers and was conducted from August 12^th through 16^th.

Evident conclusions from the survey is that farmers are encouraged by the prospect of high soybean and corn yields, declining inflation, the prospect of lower interest rates and future  energy costs linked to the price of crude oil. The outstanding concern was the anticipated fall in commodity prices reflecting bountiful crops in South America and limited prospects for increased exports and domestic demand, even for biofuels. Many respondents indicated that they would carry higher debt burdens in 2024 mainly due to increased costs of inputs including seed, fuel and fertilizer for the current season.

In a September 4^th release, Dollar Tree, Inc. (DLTR) announced Q2 FY 2024 results for the period ending August 3^rd 2024.  The Company fell far short of expectations for revenue and earnings with an 11 percent decline in share price at the post-release open and falling 25 percent in subsequent trading. The holding company operates Dollar Tree and Family Dollar banners.

Dollar Tree Inc. posted net income of $132 million on total revenue of $7,379 million with a diluted EPS of $0.62. Expectations were for revenue of $7,480 million  and an EPS of $1.04. Comparable values for Q2 FY 2023 ending July 29^th were net income of $200 million on revenue of $7,325 million with a diluted EPS of $0.91.

Comparing the respective quarters, revenue was up 0.7 percent in Q2 2024. During the most recent quarter, Dollar Tree attained a gross margin of 30.1 percent (29.2 percent in Q2 FY 2023) and an operating margin of 2.8 percent, compared to 3.9 percent in Q2 2023.

For Q2, consolidated comparable store sales, increased by 0.7 percent, with Dollar Tree achieving 1.3 percent and Family Dollar, -0.1 percent.

In commenting on results, Rick Dreiling, Chairman and CEO stated, “We are encouraged by the continuous progress we are making in the transformation underway at Dollar Tree and Family Dollar, despite immense pressures from a challenging macro-environment,” He added “Customers are responding favorably to initiatives like our expanded multi-price offering and we are already seeing a meaningful sales lift at the 1,600 Dollar Tree stores that have been converted to our newest in-line multi-price format. With thousands of stores left to convert, we believe we are still in the very early innings of this rollout, with many years of runway left ahead of us.”

Chief Financial Officer Jeff Davis added, “Our adjusted EPS of $0.67 was $0.38 below the midpoint of our previous outlook range. While the vast majority of this variance was attributable to an adjustment of our general liability accrual, a portion was attributable to a comp shortfall which reflected the increasing effect of macro-pressures on the purchasing behavior of Dollar Tree’s middle- and higher-income customers.”

Guidance for FY 2024 was downgraded from the Q1 report and included consolidated sales of $30,600 million to $30,900 million; a low-single-digit percent increase in comparable store sales and an EPS ranging from $5.20 to $5.60, down 20 percent.

Effective August 3^rd 2024, Dollar Tree posted total assets of $22,617 million including $3,063 as goodwill and intangibles and carried long-term debt and lease obligations of $8,302 million.  DLTR had a market capitalization of $17,555  million on September 4^th compared to $24,460 on October 31^st. The share has traded over the past 52 weeks from $151.22 down to $60.82 with a 50-day moving average of $100.63. DLTR closed at $81.50 on September 3^rd, pre-release, opening September 4^th at $72.81, down 11 percent and falling further in trading by 25 percent to $61.19 at 15H00 EDT. Dollar Tree trades with a forward P/E of 12.5.  For the trailing-12 months the company posted an operating margin of 5.5 percent and a profit margin of negative 3.2 percent.  The company returned 4.9 percent on assets and negative 12.3 percent on equity over the past twelve months.

Effective March 4^th the company operated 16,397 stores (Dollar Tree, 8,520; Family Dollar 7,897). During Q2 the company continued renovations and opened 27 new Dollar Tree and 28 Family Dollar stores. Responding to complaints from civic organizations Dollar Tree continued to add frozen and fresh foods to stores in areas deemed “food deserts”  

In the investors’ call the company commented on theft as a headwind and announced preventive measures including removal of self-checkout stations. Management noted recipt of $70 million in part settlement of an insurance claim for $110 million following the complete loss of the Marietta, OK. distribution center and inventory to a toronado on April 28^th.

Dollar Tree is now evaluating the possible sale of the Family Dollar chain after recently announcing an intention of closing 1,000 stores. The banner was acquired in 2015 for $9 billion.

The iHotraco Farm Manager facilitates review of flock performance across numerous barns on a complex or a series of farms.  The data from all houses can be consolidated into a single view for comparison analysis and decision making.

The iHotraco Farm Manager offers: -

• Live overview with early warning of deviations from standard.
•  
• A dashboard depicting feed and water intake with relevant comparisons over selected time periods.
• Production data relating to a single barn can be displayed and combined for multiple barns to generate a trend graphic.
• Parameters can be changed remotely using a range of devices.
• Feed intake and stock can be recorded to plan orders and deliveries.
• Climatic data can be stored and displayed, and historical data can be accessed.
• The system records all activities performed by any user in a continuous log.

For additional information on the iHotraco Farm Manager, access the Company website <www.hotraco-agri.com> or click onto the company logo on the right side of the Welcome page.

According to a recent press report, an analysis of payment data for Beyond Meat collected by Creditsafe suggests delays in paying vendors with extensions beyond 90 days.  In July, one third of invoices were between 1 to 30 days late for payment and 13 percent were 30 to 60 days late.

This indicates inadequate cash flow and is consistent with successive quarterly reports including Q2 of 2024.  The report on the company published in the August edition of CHICK-NEWS noted that management is currently negotiating a restructuring of the balance sheet given impending maturity of bonds. The Company is once more offering optimistic projections of revenue and profitability based on reformulation of products and rationalization of manufacturing.

As at the end of Q2 FY 2024, ending June 29^th the Company recorded a 12-month trailing operating margin of -36 percent and a profit margin of -99 percent. Market capitalization on September 3^rd was $395 million down from $619 a year ago, reflecting a concurrent decline in share price from $12.12 to $5.13. Institutional shareholding has sunk to 40 percent with 39 percent of outstanding shares short.

Failure to pay vendors according to accepted time periods, will have negative effects on the cash flow of their suppliers and may impact sourcing of ingredients by Beyond Meat.

The success or otherwise of the “health and wellness” marketing initiative that forms the basis of a program to reverse a sales decline will be evident in results posted for Q3 and beyond.

A bipartisan group of legislators addressed a letter to Secretary of Agriculture, Tom Vilsack, urging “a new dynamic approach to bring long-lasting benefits to our farmers and producers” and urging a “Highly Pathogenic Avian Influenza Strategic Initiative within the USDA Animal and Plant Health Inspection Service”.

The Members of the House representing California, Iowa, North Dakota, North Carolina and Virginia pointed to the accumulated cost of the unsuccessful attempts over the past two years to eradicate HPAI. They noted that indemnity payments and related costs attained $3.3 billion for the 2014-2015 epornitic.  A significant sentiment expressed in the letter was the fact that the ongoing series of outbreaks that commenced in 2022 “has no end in sight”.  The letter also alluded to the emergence of bovine influenza-H5N1 caused by a mammalian-adapted B3-13 strain of avian influenza virus.

 The legislators suggested concerted action by the USDA including: -

• Developing innovative biosecurity methods including those that deter wild birds that are reservoirs and disseminators of the infection.
• Adoption of vaccination following the policy and action of other nations but requiring outreach with trade partners.
• Developing novel methods of depopulation and bird disposal that are both cost-effective and humane.

The legislators pointed to existing authority vested in the USDA to collaborate with Land-Grant universities to develop and implement a more effective program to mitigate the extent and cost of avian influenza.

One week into the projected three-week hearing on the proposed merger between the Kroger Company and Albertson’s Corporation, there is no indication of an outcome.  U.S. District Judge, Adrienne Nelson, will rule on the action to derail the transaction initiated by the Federal Trade Commission and supported by the attorneys general of nine states.

The FTC maintains that the merger would be prejudicial to workers and would ultimately result in increased prices for consumers.

Kroger maintains that it is necessary to become larger through mergers or acquisitions to compete with Walmart, Amazon and Costco.  Kroger and Albertson’s have offered to divert $1 billion to reduce prices in stores with Albertsons running approximately ten percent higher than at Kroger.  Both parties to the proposed merger have agreed to recognize unions as a requirement for the transaction.  Kroger and Albertsons announced they would divest 579 stores to C&S Wholesale Grocers. This was an upward adjustment after a previous plan to sell 413 stores was rejected by the FTC.

Testimony during the first week of the hearing revealed internal messages among Kroger senior management relating to setting prices for eggs and milk at levels significantly higher than the trajectory of inflation. This strategy was intended to determine what consumers were willing to pay in order to maximize margins.  This evidence plays into current political rhetoric concerning allegations of price gouging and will in some measure indirectly influence public opinion if not the court’s ruling.

Attorney Susan Musser, appearing for the FTC, noted in opening arguments, “Stopping a multibillion-dollar deal will keep in place bigger competition that acts as a check on rising grocery prices and encourages further improvements in quality and innovation.”

Haggen is the 600-pound gorilla in the corner of the Court.  In 2014, Albertsons merged with Safeway, divesting stores in compliance with FTC concerns over limiting competition.  Within a year, Haggen was bankrupt and the stores that were divested returned to the Safeway banner. Both unions and the FTC maintain that a similar situation will occur, effectively negating the promises made by Kroger and Albertsons. 

An additional minor issue that emerged relates to alleged destruction of text messages by Kroger managers.  The FTC informed the companies on November 3^rd, 2022, within days of the official announcement, that all documentation pending completion of an FTC review should be retained.  The FTC claims that Kroger “failed to preserve responsive text messages after receiving a preservation hold and numerous reminders”.  Albertsons management claimed that an auto-delete feature on managers’ phones was responsible for the apparent disappearance of messages. One exchange emerging from discovery confirmed an Albertsons manager expressing the opinion that the merger would ultimately result in higher prices.  The FTC claims that allowing individual managers discretion as to deletion of messages constituted “willful destruction of evidence”.

Irrespective of the outcome of the Oregon hearing, the show will go on. Lawsuits have been filed in state courts in both Colorado and Washington at which both the FTC and Kroger-Albertsons will present expert witnesses analyzing the effect on suppliers, consumers and unions of the proposed merger. And then there will be appeals--.

Status of the 2024 Corn and Soybean Crops

The USDA Crop Progress Report released on September 3^rd documented 94 percent of the soybean crop setting pods and 12 percent dropping leaves. Nineteen percent of the corn crop is now mature, ahead of the 5-year averages for the corresponding week.

Despite high temperatures across the Midwest and Plains states, crop condition was almost unchanged during the past week. Corn and soybeans each attained 65 percent for the two highest categories of “Good” and “Excellent.” The September 1^st values for corn and soybean quality were considerably higher than the 54 and 53 percent recorded for corn and soybean crops respectively for the two highest categories during the corresponding week in 2023. Prospects for high yields were reflected in lower price projections in the August WASDE and for CME prices for August delivery following the release of the report.

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 lower at 54 and 57 percent respectively for the two highest categories of ‘Adequate’ and ‘Surplus’ combined. Average topsoil moisture this past week was down three percent on average across 18 major row-crop states but still with an acceptable outlook for growth and quality in 2024 given the stage in production. Corresponding values of 42 and 43 percent percent each were recorded for the two highest categories for topsoil and subsoil moisture respectively in 2023.

It is unlikely that the expected transition to a La Nina event will have any substantial impact on crop condition through harvest. Prolonged dry and hot weather apparent at this time will not depress corn and soy yields depending on timing and severity.

Heat stress that occurred during silking predisposes corn to fungal infection leading to mycotoxin contamination of kernels. Unseasonal rain during the pre-harvest period for corn will also result in elaboration of mycotoxins. The status of the 2024 crop will require monitoring at harvest in affected areas and especially if unseasonal precipitation occurs during the pre-harvest period.

Reference is made to the August 12^th WASDE Report #651 under the Statistics TAB and the weekly Commodity, Economy and Energy Report, in this edition, documenting acreage to be harvested, yields, weekly prices and ending stocks. WASDE #652 will be reviewed in the September 20^th edition.

During September the NASS will conduct their annual remote survey to estimate yields and final production. Pro Farmer completed their annual crop tour in mid-August. Their August 23^rd report estimated a corn yield of 181.1 bushels per acre with a projected crop of 14.98 billion bushels. The corresponding values for soybeans were a yield of 54.9 bushels per acre contributing to a 2024 crop of 4.74 billion bushels.

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) * August 25th  2024    September 1st 2024 5-Year Average  Corn Silking (%) 100 100 100 Corn Dough (%) 84 90 90 Corn Dented (%) 46 60 58 Corn Mature (%) 11 19 13 Soybean Status (18 states)       Soybean Blooming (%) 100 100 100 Soybeans Setting Pods  (%) 89 94 93 Dropping Leaves (%) 6 13 10 *Representing 92% of 2024 acreage planted	Soybeans setting pods
Crop Condition  V. Poor Poor Fair Good Excellent Corn  2024 (%) 4 8 23 50 15 Corn  2023 (%) 6 12 29 44 9             Soybeans  2024 (%) 3 7 25 52 13 Soybeans  2023 (%) 5 12 30 44 9	Corn Maturing
Parameter  48 States V. Short Short Adequate Surplus Topsoil Moisture:         Past Week 15 31 50 4 Past Year 24 34 40 2 Subsoil Moisture:         Past Week 14 29 53 4 Past Year 22 35 41 2

A joint study conducted by Kearney and Nielsen IQ estimates that private label food, beverage, beauty and fashion items represented 24 percent of consumer expenditure in 2023 compared to national brands at 76 percent of dollar sales.  From 2022 to 2023, private label sales rose 12 percent to $225 billion and are estimated to grow to $406 billion by 2030.

The motivation for the adoption of private brands extends beyond price.  A third of consumers now regard store-brand food and beverage offerings as superior to national brands with approximately half of survey respondents accepting equivalence to national brands.Kathryn Black, a partner at Kearney, stated, “Private labels can no longer be considered the poor cousin of major national brands.”

Private label food categories favored by consumers include bakery at 57 percent of dollar value, dairy at 35 percent, frozen foods, 24 percent and groceries at 14 percent.  It was striking that there was a similar level of acceptance approaching 70 percent among three, distinct income demographics ranging from less than $50,000 to more than $100,000 annually.  There was also no difference among age groups with 70 percent of ‘Generation Z’ (born 1997-2012) reporting a favorable impression of private labels compared to 65 percent for ‘baby boomers’ (born 1946-1964).

Private label products represent a disproportionately higher share of the market ranging from 31 percent in Italy to 37 percent in the U.K. compared to the relatively low volume in the U.S. and Canada. This suggests a potential for market growth.  Ms. Black noted, “Private label can generate significant margins for U.S. retailers and that manufacturers need to pay attention to growing private label offerings.”

The success of deep discounters, including Aldi, with over 70 percent of their shelf and cooler space displaying private brands is an indication of consumer acceptance.

The Consumer Financial Protection Bureau has determined that dollar stores and conventional supermarkets are benefitting from fees imposed on cash-back transactions.  It is estimated that the two major dollar stores and the Kroger Company collected over $90 million in fees during 2023.  The Bureau determined that the actual cost to the stores was marginal relative to the fee.  In many rural areas, Dollar stores represent the only source of cash in the absence of bank branches or ATMs, and especially for customers without bank accounts.  The report developed by the Bureau established that low-income earners were especially vulnerable to the fees and were disproportionately impacted.

In response to the report, Dollar General stated, “While not a financial institution, we provide cash-back options in more than 20,000 stores across the country as a service to customers who may not have convenient access to their primary financial institution.”  The statement continued, “These services may also help customers save money on fees compared to alternative non-retail options such as check cashing and ATM fees.”

Dollar Tree noted that cash-back transactions are completed according to a clearly disclosed fee.

North Carolina State University (NCSU), Department of Agricultural and Human Sciences in collaboration with the U.S. Food and Drug Administration, have established a training course entitled “Introduction to Public Health Food Inspection” The course has the support of the National Association of State Departments of Agriculture. 

The objective of the course is to provide participants with an understanding of federal regulatory food inspection regulations and enforcement. The initial 16-week in-person program will be led by Dr. Ben Chapman with participation by federal and university specialists.  The course will have both theoretical and practical components to provide a comprehensive appreciation of food safety regulations and enforcement.

The initial course will be offered as a special topics class but subsequently, will be refined and hopefully expanded to include on-line tuition with weekend participation.  The course will be offered annually with the prospect of participation by other Land Grant institutions.

According to a release by Moba, Chino Valley Ranchers has successfully operated an Omnia PX+ Vision at their Southern California plant for two years.  According to Chris Nichols, the installation has operated without problems and has contributed to increased efficiency. Both USDA-AMS inspectors and California Department of Food and Agriculture officials have monitored results in parallel with Chino Valley QC personnel to confirm sensitivity of crack detection and the accuracy of vision-weighing irrespective of the types of eggs among the extensive range packed in the off-line plant.

For additional information on Moba OmniaVision, access the Company website by clicking on to the Moba logo on the right side of the Welcome page.

In an August 27^th release, BioChek of Reeuwijk.Holland and Bio-X of Namur, Belgium announced a strategic partnership relating to their respective concentrations on poultry and ruminant diagnostic kits.  BioChek will also acquire a minority share in Bio-X.

Barend van Dam, CEO of BioChek, commented, “The business philosophy of our two companies is very similar.  State-of-the-art diagnostics and superior support for our customers is what we achieve.”

Philippe Hivorel, CEO of Bio-X, commented, “This partnership will enable Bio-X to offer our products worldwide.  Prior to the agreement, we cooperated with BioChek on several products and learned to appreciate their collegial way of working.”

BioChek has an extensive portfolio of veterinary diagnostic kits for poultry and swine diseases.  Bio-X diagnostics specializes in rapid-detection point-of-care products including CellSense® diagnosis of subclinical mastitis, a newly introduced PCR assay for bluetongue virus type 3, Clostridium perfringens in cattle and PRRS in swine.

BioChek operates an administrative facility in the Netherlands, R&D in the U.K. and a unit recognized by the USDA in the U.S.  The strategic alliance will expedite R&D to promote animal health and will be invaluable in extending the market reach of both companies.

On Friday 30^th August, Veterinary authorities in California confirmed a diagnosis of bovine influenza-H5N1 in three dairy herds in the Central Valley marking the 14^th state with affected herds.  The provisional diagnosis was based on symptomatology apparent on August 25^th, followed by laboratory investigation. It is presumed that whole genome sequencing will be performed.

The important question is the extent of infection among approximately 1.5 million cows in the San Jaoquin Valley extending from Bakersfield to Stockton.  Unless California introduces a mandatory testing program similar to Colorado, and then take appropriate action to quarantine affected farms, the dairy industry will be severely impacted.

Based on the reality that H5N1 strain B3-13 is adapted to mammals, appropriate precautions should be taken to prevent exposure of workers.

Karen Ross, Secretary of the California Department of Food and Agriculture stated “We have been preparing for this possibility since earlier this year when HPAI detections were confirmed at dairy farms in other states,” She added “Our extensive experience with HPAI in poultry has given us ample preparation and expertise to address this incident, with workers’ health and public health as our top priorities.” Secretary Ross commented on the financial challenges facing dairy farmers emphasizing the need for urgent action to suppress infection.

Nationally the dairy industry has been reticent to respond to offers by the USDA to participate in monitoring despite financial incentives.

During 2023, the Environmental Working Group submitted a petition to USDA to require meat producers from labeling product as “low carbon” or other claims of environmental sustainability including “carbon neutral” or “net zero”.

In rejecting the petition, the Food Safety and Inspection Service noted that the “low-carbon beef” label has not been approved and that the Agency will continue to evaluate environmental-related claims.  All label text must be truthful and in compliance with federal regulations.

The FSIS also denied the request for mandatory third-party verification of environmental label claims but does encourage third-party certification.

Governor Joe Lombardo issued a veto following bicameral passage of legislation to provide universal free school meals to all students in Nevada.  Lombardo believes that the USDA Community Eligible Program will provide adequate food for children in high poverty areas.  Basically, Lombardo should be ashamed that 80 percent of students in his state are automatically eligible for free or reduced-price meals.  As one of the states that deprecates federal involvement and touts independence from Federal involvement, he is apparently accepting the principle that U.S. taxpayer funds should help feed children in his state.

USDA Data On Cage-Free Production For August 2024

EGG-NEWS summarizes and comments on data and trends in the monthly USDA Cage-Free Report. This data is correlated and interpreted in the WeeklyEggPrice and Inventory Report posted on EGG-NEWS mailed on Fridays each week.

The USDA Cage-Free Report covering August 2024, released on August 30^th 2024, documented the complement of hens producing under the Certified Organic Program to be 19.6 million (rounded to 0.1 million), effectively unchanged from July 2024. Depopulation was carried out in July as a result of HPAI. The number of hens classified as cage-free (but excluding Certified Organic) and comprising aviary, barn and other systems of housing apparently increased by 3.3 million hens or 3.2 percent from July 2024 to 104.0 million, despite previous flock depopulation and an unexpected high value in July. Hen numbers posted by the USDA for August are questioned as to accuracy taking into account chick placements and July depopulation figures released by APHIS.

The number of eggs collected is accepted as accurate but since the values for average hen-week production are unacceptably high this suggests that the denominator reflecting the number of hens is probably incorrect. Alternatively if conventional eggs from cages are deceptively marketed as cage-free, or if cage free eggs are packed as certified Organic, assuming an accurate number of hens over a given month, the apparent hen-week value would be disproportionally high. The respective numbers of hens claimed for organic and cage-free flocks should reflect the net contribution of chick placements 20-weeks previously, HPAI depopulation and age-related depletion and should correspond to monthly supply data and inventory extending over successive quarters. Unlike conventional cage production cage-free hens are not generally molted reducing this possible reason for error in calculating rates of production.

Average weekly production for Certified Organic eggs in August 2024 was down by <0.1 percent compared to July 2024 with a questionably high average weekly production of 83.8 percent, unchanged from July. Average weekly flock production for cage-free flocks other than Certified Organic was up 3.2 percent in August 2024, but with a high average hen-month production of 82.6 percent, up from 82.5 percent. Seasonally, younger flocks increase the availability of cage-free and organic eggs in response to pullet chick placements 20 weeks previously especially in anticipation of periods of peak seasonal demand. Since the proportion of pullets according to housing type is not indicated in the monthly USDA Chickens and Eggs report, it is not possible to assess the relative sizes of flocks producing under the certified organic label or other categories. There is no adequate explanation for the high production rate especially if the reported number of hens is lower than actual, especially with undercounted HPAI flock depopulation.

Negotiated nest-run grade-ready cage-free price for August 2024 averaged $4.07 per dozen, up by 79.2 percent from $2.27 per dozen in July 2024, reflecting presumably lower supply relative to demand. The August 2024 advertised U.S. retail price for cage-free eggs over six regions (excluding AK. and HI.) was $2.83 per dozen down 47 cents per dozen (14.2 percent) from July 2024 over 4,487 stores. This compares with 3,527 stores in July confirming more promotions in August.

The recorded average wholesale price of $4.07 per dozen plus a provision of 60 cents per dozen for packaging, packing and transport, results in a price of $4.67 per dozen delivered to CDs. The average six-region advertised retail price of $2.47 corresponds to an average negative retail margin of 114 percent (+15 percent last month) over the average wholesale delivered price. Margins are presumed higher for non-featured eggs and pastured and other specialty eggs at shelf prices reaching $9.00 per dozen in high-end supermarket chains. Retailers maximizing margins especially on Certified Organic, free-range and pastured categories restrict the volume of sales, ultimately disadvantageous to producers.

Based on the importance of cage-free production, the USDA-AMS issues the Cage-Free report on volumes and prices at monthly intervals for the information of Industry stakeholders. There is obvious doubt as to the accuracy of individual monthly flock numbers especially when reports show a marked change at the end of a quarter or from the previous month without obvious cause, or alternatively when there is no change in the cage-free flock for sequential months.

The current report apparently does not account for flock depopulations as a result of HPAI in May and reflects a population higher than would be attained from early January 2024 pullet chick placements.

It is suggested that USDA should consider a quarterly report with more accurate hen data. This would be more useful to the industry for planning and marketing decisions. Price data is available each week from other USDA reports.

Subscribers are referred to weekly USDA wholesale and retail prices posted in the Egg Price and Inventory Report in EGG-NEWS E-mailed each Friday. The previous Monthly Cage-Free Report is available under the STATISTICS Tab.

A recent published study conducted within the Rush Memory and Aging Project determined that consumption of either one or two eggs per week was beneficial in supporting cognitive function in the elderly.  The study involved 1,024 adults with a mean age of 81 years with the longitudinal prospective study proceeding for 6.7 years with appropriate follow-up.  Subjects were evaluated on the basis of standard cognitive tests and with examination of brain pathology for 578 decedents.

Statistical analysis of data demonstrated that consumption of more than one or two eggs per week, was associated with a 47% reduced risk of Alzheimer's Dementia.

The study suggested that 39 percent of the beneficial effect was attributed to increased consumption of dietary choline. Each egg contributes 150mg. of the nutrient representing one quarter of the recommended daily allowance.

The authors cautioned that Alzheimer's Dementia is a complex clinical and pathological condition but the apparent benefit from egg consumption suggests further research to confirm the validity of the initial evaluation.

The Rush Memory and Aging Project is supported by the National Institute on Aging and aspects of the trial were sponsored by the Egg Nutrition Center of the American Egg Board.

*Pan, Y., Wallace, T. C., Karosas, T., et. al. Association of Egg Intake with Alzheimer’s Dementia Risk in Older Adults:  The Rush Memory and Aging Project. J. Nutritio.n doi.org/10.1016/j.tjmut.2024.05.012

Dr. Emmanuelle Soubeyran assumed the role of Director of the World Organization for Animal Health (WOAH) effective August 1^st. Dr. Soubeyran previously served as Chief Veterinary Officer and Deputy Director General for Food at the Ministry of Agriculture of France with responsibility for animal and plant health and food safety.  She was previously the Dean of the National Veterinary School of Lyon for a five-year term during which she established a One Health Institute. Dr. Soubeyran has extensive international experience including professional responsibilities in Japan over five years. 

Among objectives for her term of office, she will attempt to elevate recognition of animal health as a component of global One Health challenges including food security, trade, biodiversity and economic growth.  Based on her experience, Dr. Soubeyran will emphasize the value of veterinary services in enhancing prosperity, especially in developing nations. She intends to develop the WOAH as a “central hub for dialogue and collaboration and intends to modernize the existing organization to respond to the challenges of animal and public health”.

It is considered significant that Dr. Soubeyran was involved directly in controlling highly pathogenic avian influenza that became a seasonal occurrence among producers of foie gras. She contributed to the decision to adopt preventive immunization using commercially available vaccines with considerable success.

A study conducted by National Council on Aging in cooperation with the Urban Institute estimated that seventy percent of nine million elderly citizens, eligible for SNAP benefits, are not participating in state-administered programs. There is a wide range of seniors not availing themselves of benefits ranging from 70 percent of the eligible elderly in California compared to 51 percent in Rhode Island.

It was also determined that only half of elderly Americans eligible for Supplemental Security Income are enrolled in this program despite financial stress.

The National Council on Aging considers that both education and assistance with enrollment are necessary to bring eligible low-income citizens into federal programs.

Four Corners Property Trust has announced that it will acquire ten Outback Steak House units and ten Carrabba’s Italian Grill restaurants spread among ten states for a purchase price of $66.5 million.  Four Corners Property Trust includes Darden and Brinker restaurants in their portfolio with Bloomin’ Brands now the third largest public-quoted participant.

USDA has approved the HB4 wheat variety with both drought and herbicide-tolerant properties.  The cultivar was developed by Bioceres Crop Solutions in Argentine.  The strain is currently in commercial use in Argentine but will require careful introduction to the U.S and world markets with assurances to industrial and domestic consumers of safety.  It is hoped that three decades of acceptance of GM corn and soybeans will facilitate widespread adoption of genetically modified wheat. There are evident advantages to farmers, the environment agribusiness companies and ultimately consumers from adoption of GM technology.

The Centers of Disease Control and Prevention has documented 51 illnesses with 23 hospitalizations among 21 states since early July extending through August.  Both Salmonella Stanley and Salmonella Poona are implicated with a direct history of contact with an immature turtle.  Predictably a high proportion of the patient are under five years of age and equally spread among ethnic groups in the U.S. As with all Salmonella outbreaks, the number of those actually infected far exceeds the number diagnosed.

In 1975, interstate transport of immature turtles was banned, resulting in a precipitous decline in the number of cases of salmonellosis especially among children, reported the following year.

It is evident that there has been illegal interstate movement of turtles from Louisiana, the major producing state.  According to investigation, turtles were purchased from a variety of sources including street vendors, swap meets, online retailers with only a small proportion from pet stores who are aware of the risks involved.

Only one of 49 isolates demonstrated antimicrobial resistance.  This is unusual given that gentamicin is widely used to suppress Salmonella by the few remaining turtle multipliers. The antibiotic is used to treat eggs before submission of hatchlings to be screened for Salmonella under a state program that is based on a defective sampling protocol.

To quote the late Dr. Eugene Gangarosa, Dean Emeritus of the Emory University Rollins School of Public Health, “Turtles are inappropriate pets.”  The same could be said for a variety of lizards, snakes, iguanas, and other reptiles that acquire infection during rearing, transport and distribution.  These reptiles are usually cared for by teenagers and adults but turtles are essentially purchased for young children creating a danger for this age group

In an August 29^th release, Dollar General, Inc. (DG) announced Q2 FY 2024 results for the period ending August 2^nd. The Company fell below estimates on revenue and earnings and substantially cut the FY 2024 outlook wityh an evident impact on share price.

For Q2 Dollar General Inc. posted net income of $374 million on total revenue of $10,210 million ($10,360 million expected) with a diluted EPS of $1.70 ($1.79 expected).  Comparable values for Q2 FY 2023 ending August 4^h were net income of $469 million on revenue of $9,796 million with a diluted EPS $2.13.

Revenue was up 4.2 percent in Q2 2024 compared to Q2 2023. During the most recent quarter, Dollar General attained a gross margin of 30.0 percent (31.1  percent in Q2 2023) and an operating margin of 5.4 percent, down from 7.1 percent in Q2 2023.

For Q2 2023, consolidated comparable store sales, increased by 0.5 percent despite lower average transaction values and reduced traffic.

The classification of revenue by category in Q2 FY 20234 comared to Q2 2023 comprised:-

• Consumables  including food*,   82.2%  up 6.0%
• Seasonal items,                            10.3%  down 2.0%
• Home products,                             4.7%   down 7.0%
• Apparel,                                         2.8%   down 1.3%

* not separated by category

In commenting on results, Todd Vasos, CEO stated “We made important progress on our Back to Basics plan in the second quarter. However, despite advancing several of our operational goals and driving positive traffic growth, we are not satisfied with our financial results, including top line results that were below our expectations for the quarter.”

Vasos concluded “While we believe the softer sales trends are partially attributable to a core customer who feels financially constrained, we know the importance of controlling what we can control. With the evolving retail and consumer landscape in mind, we are taking decisive action to further enhance our value and convenience offering, as well as the in-store experience for our associates and customers.”

Guidance for FY 2024 was substantially downgraded and included a 28 percent reduction in net sales growth of 4.7 to 5.3 percent; same-store sales growth of 1.0 to 1.6 percent; and diluted EPS, reduced by 20.0 percent to a range of $5.50 to $6.20.

During Q2 FY 2024 Dollar General opened a net 359 new stores. As of August 2^nd the Company operated a total of 20,345 stores representing 154,475 square feet, a 5.5 percent growth for the quarter. Expenditure for property purchases and equipment during Q2 FY 2024 attained $696 million  including new stores, remodels and upgrades to DCs, transport and technology

Effective August 2^nd 2024, Dollar General posted total assets of $31,814 million including $5,539 as goodwill and intangibles. The Company carried long-term debt and lease obligations of $16,273 million.  Dollar General attained a market capitalization of $27,230 million on August 29^th 2024. The share has traded over the past 52 weeks from $168.07 down to $84.00 with a 50-day moving average of $123.97. DG closed at $124.50 on August 28^th, pre-release, closing at $84.00 on August 29^th down 32.5 percent at a six-year low. Dollar General trades with a forward P/E of 17.6.  For the trailing 12-months the company posted an operating margin of 5.5 percent and a profit margin of 3.9 percent, returning 4.6 percent on assets and 23.4 percent on equity.

During late May, the California Senate passed SB 1446 entitled the “Retail Theft Prevention and Safe Staffing Act.”  The intent was to regulate appropriate staffing levels where self-checkout kiosks were installed. Since this time, deliberate and inadvertent theft has prompted many retailers to remove self-checkout kiosks or to reduce the number and type of items scanned. 

The Harvard University, Kenndy School of Business recently conducted a study on self-checkout revealing:-

• 53 percent of workers reported that their stores equipped with self-checkout were understaffed.  Most workers in stores with self-checkout have inadequate time to complete work assigned.

• Understaffing creates the potential for conflicts with customers and contributes to unpleasant interaction.

Dr. Daniel Schneider, the Malcolm Winer Professor of Social Policy at Harvard noted “Self-checkout promises labor savings and convenience but when look at the data we find that self-checkout instead leads to problematic understaffing that sets up both workers and customers for toxic interactions.”

Self-checkout does work providing the system is adequately configured and above all every single item is barcoded.  Frustration occurs when customers are forced to progress through a series of sub menus to check out a specific variety of tomato or lettuce.  The system in use by the upscale Harris Teeter banner of the Kroger Company is vastly inferior and more frustrating than the self-checkout option offered by Aldi.  Although both banners offer a choice between manned checkout and self-checkout, there is ready acceptance at Aldi. Chains that have installed self-checkout and have reduced manning of conventional checkout lanes impose delays. Target is a prime example of long lines at both self-checkout due to user-unfriendly systems and at the few operational manned checkout lanes due to understaffing.

Opposition to self-checkout is manifest in state and local laws implemented in some New England states that have imposed minimum employee levels relative to self-checkout stations, and requiring fees for installation of these kiosks to deter transition from conventional to self-checkout.

At the end of the day it is obvious that for small stores especially located in low-income areas, the apparent advantages associated with reduced staffing are more that offset by losses due to theft. In larger stores catering to an affluent clientele delays and frustration erode customer loyalty.

USDA Weekly Egg Price and Inventory Report, August 28^th 2024.

Market Overview

• The average wholesale unit revenue values for Midwest Extra-large and Large sizes were up 8.1 percent on average this past week. Medium size was up 28.5 percent. The 5-day rolling National wholesale price for graded loose on August 26^th at $3.00 per dozen was approximately $1.70 per dozen above the 3-year average of $1.30 per dozen and up $1.75 from the corresponding week in 2023 at $1.25 per dozen. This past week shell egg inventory was up 9.0 percent, following a fall of 2.4 percent during the previous week. Small fluctuation in inventory with large incremental weekly increases in price during mid-to late 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 million hens and with sustained demand.
• Although there are weekly transfers of mature pullet flocks to laying houses, the size of the producing flock is 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. There is a presumption that buyers held back on orders in the face of high prices to “bend” the trajectory of the benchmark price to their advantage. This is evidenced by the short-term increase in inventory despite reduced supply albeit with softening demand.  The cessation of incident cases of HPAI has probably provided buyers with the confidence to hold orders and run down stock before an approaching holiday weekend. Stock levels will depend on constant re-ordering to fill the pipeline through mid-September. 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, but highlighted as a factor in food price inflation.
• Total industry inventory was up by 6.3 percent overall this past week at 1.48 million cases with a concurrent 3.9 percent decrease in breaking stock, following a 10.3 percent fall during the preceding processing week.
• 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 possible HPAI outbreaks during coming months  cannot be projected but the industry has moved into a quiescent period. Over 190 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 August 28^th the stated total flock of 306.7 million, was up by 0.7 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 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 August 21^st may overestimate flock size especially if more recent losses are not included.
• The ex-farm price for breaking stock (rounded to one cent) was down 4.3 percent to $2.76 per dozen. Checks delivered to Midwest plants were up 6.8 percent to  $2.68 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 August 26^th 2024, the Midwest wholesale price (rounded to one cent) for Extra-large was up 8.1 percent from last week to $4.28 per dozen. Large size was up 8.1 percent to $4.26 per dozen. Mediums were up a noteworthy 28.5 percent to  $2.62 per dozen delivered to DCs. It is emphasized that these prices are for the previous week. 

Despite pullets commencing production, the stock of Medium size declined by 7.7 percent but the inventory of Small size fell by 5.8 percent over the past week suggesting pullet flocks are maturing with implications for prices during mid- to late September.

Prices should be compared to the USDA benchmark average 4-Region blended nest-run cost of 75.7 cents per dozen as determined by the Egg Industry Center based on USDA data for July 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 strong positive margins irrespective of region and customer-supply agreements. The progression of prices for loose eggs during 2023 and 2024 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

The August 23^rd edition of the USDA Egg Markets Overview confirmed that the USDA Combined Region value in cartons (rounded to the nearest cent), was up 10.1 percent to $4.03 per dozen delivered to warehouses one week ago. The USDA Combined range for Large in the Midwest was $3.94 per dozen. At the high end of the range, the price in the South Central region attained $4.19 per dozen.

It is an axiom in food retailing that Target is a place to go to buy general merchandise and at the same time pick up some food items.  Recognizing the potential to increase both sales value and traffic, Target will emphasize food and beverage items going forward.  Improved performance over the second quarter was attributed in part to the food segment that has now attained 23 percent of fiscal 2023 sales, up from 19 percent in FY 2019.

The Target program will include:-

• Reducing prices on food items.  This initiative improved comparative sales by two percent.  The company intends to reduce everyday prices on many SKUs.

• Target will concentrate on seasonal merchandising of food and beverages with appointment of new Chief Merchandising Officer for food essentials and beauty.  Examples of seasonal stocking and promotion will include offering products for snacking, grilling and entertaining with placement of appropriate items.

• Promotion of store brands will be intensified. The Good & Gather™ family of products has achieved close to $4 billion in sales since introduction in 2019.  The program will be extended with introduction of the Favorite Day™ brand with an “indulgent image” but at an affordable price.

• Target will continue to expand digital sales that now account for 18 percent of revenue by emphasizing drive-up, in-store pick-up and same-day delivery through the Target Circle online membership program.

Target under the capable management team led by Brian Cornell is aware of opportunities to increase traffic and sales through expanding offerings of food and beverage products.

Gene deletion as opposed to insertion offers livestock producers practical advantages in terms of disease resistance, as in the case of pork, in addition to polled dairy and beef animals.

Currently, any form of genetic modification of livestock falls under the jurisdiction of the Food and Drug Administration.  This Agency requires extensive documentation relating to safety and efficacy. Personnel involved in review and authorization are unfamiliar with the science or practical application. Institutional reluctance to make decisions delayed the commercialization of AquaBounty® salmon for decades. Delays in adoption of gene deletion as currently applied in the E.U. and presumably China, places the U.S. at a competitive disadvantage. 

It is considered inappropriate for genetic modification of livestock destined for human consumption to fall under the Federal Food, Drug and Cosmetic Act administered by the FDA. In contrast it would be appropriate for the Agency to continue oversight of genetic modification of animals producing bio-pharmaceuticals and as organ downers

Although poultry breeders have committed to apply genetic technology to identify traits and for diagnostic procedures, it is inevitable that gene deletion will be accepted by consumers based on the potential advantages in terms of quality and cost.  At this time, technology developed in Israel involving gene insertion at the Grandparent level could resolve the problem of gender differentiation with advantages extending far beyond welfare considerations.

Gene deletion is evidently more acceptable than gene insertion although it will require considerable promotional effort and time to achieve commercialization.

JBS Australia has completed the second of two bioenergy recovery systems requiring an investment of $10 million.  Following the satisfactory commissioning of the first system at the Scone, NSW. plant, the second operation at Beef City in Toowoonba, Queensland, has commenced operation.  This plant will produce 10,000 cubic meters of biogas per day that will be used to power the facility.

The systems comprise gas-impermeable covers over lagoons that previously functioned as anaerobic wastewater reservoirs. The installations include de-sulfuration beneath the covers to avoid odor.

In the U.S., Wayne-Sanderson Farms is partnering with GreenGasUSA to produce renewable natural gas using a similar approach. Wayne-Sanderson Farms is active in reducing waste and contributing to sustainability and reducing Scope 1 emissions. Smithfield Foods has installed biogas collectors over lagoons holding hog waste in eastern North Carolina.

Many large egg-production complexes in China have installed biogas collection both to reduce environmental contamination and to provide an additional cash stream through sale of biogas.  Given increasing restrictions on disposal of poultry waste whether from cages or aviaries, operators in the U.S. will be increasingly receptive to rotary dehydration and biological reclamation.

Replenium Inc. based in Seattle, WA, entered into an agreement with Albertsons Corporation in 2020 to provide software to allow automatic assembly and renewal of orders for customers. The agreement was characterized and promoted by Albertsons as “industry revolutionizing and unique”.  The program of automatic replenishment was announced in a press release during December 2021 with an intended national rollout in 2022.

 The program was never put into effect and the contract was terminated in 2023.  Replenium maintains that Albertsons used provided proprietary information to attempt to construct its own system to offer auto-replenishment to the disadvantage of Replenium.  Despite the alleged misappropriation of technology, Albertsons has yet to offer a similar service to customers. Accordingly it is assumed that the contract was based on nonviability or that Albertsons failed to reproduce the software offered by Replenium.

In terms of the broader issue of the proposed merger between Albertsons and Kroger, any unethical or borderline legal action by either of the two merger partners could place in question the integrity of the intended partners. The publicized commitments to workers, suppliers and the FTC regarding protections offered and the promises of ultimate benefits to consumers would be subject to question.

The Recycling Coalition, a consortium of manufacturers and users of plastic material and packaging, recently reported on a 28 percent recycling rate of PET bottles representing 24 million pounds of material annually. In addition five million pounds was recycled from non-bottle packaging including, presumably, PET egg cartons. 

Members of the Coalition include Coca-Cola, Kraft. Heinz and Danone, the National Association for PET Container Resources, Niagara Bottling, Procter & Gamble and the Walmart Foundation. The Coalition encourages initiatives to recycle PET with a new emphasis on non-bottle products including fruit containers, tubs and trays most of which are fabricated using clear PET, that is in demand.

Major food and beverage companies now require rPET to contribute to sustainability goals and in response to environmental concerns expressed by consumers. To preserve PET packaging with handling and marketing benefits it will be necessary to increase the convenience and efficiency of collection. Supermarkets should place receptacles for used PET packaging connected to a collection chain to recycling plants to supplement municipal programs.

During the current influenza season, to date seven variant influenza cases associated with hogs have been diagnosed involving four infected with H1N2v, two with H3N2v and one of H1N1v.  In all cases, there was no evidence of human-to-human transmission and the cases were regarded as sporadic.  Investigation confirmed contact with hogs either at livestock shows or from occupational exposure.  The two most recent cases occurred in Ohio and Pennsylvania.

In a commentary in ProMED, the moderator noted that high dose influenza vaccines offered enhanced protection for those over 65 years of age.  Depending on homology with the infective strain, both symptoms and hospitalizations should be reduced.  This was confirmed, in part, by a Kaiser Permanente study in southern California comparing the effectiveness of a high-dose adjuvant product , recombinant and standard dose cell-derived vaccines in comparison to conventional egg-derived products.  Among the combinations, standard dose cell-derived vaccines showed superior protection compared to standard-dose egg-based vaccines as measured by comparative vaccine effectiveness based on visits to physicians and hospitalizations.

Dr. Jennifer Ku, an epidemiologist with Kaiser Permanente, noted, “While seasonal variation exists, it is expected that seniors will continue to benefit from flu vaccines with higher levels of antigen.

Determining the most effective vaccination programs and vaccines for various demographics in the U.S. is very much a work in progress.  At the very least, all who come into contact with live poultry should receive the seasonal vaccine and if over 65 years of age, an available product with high antigen content.

The new range of cell-based vaccines and possibly in the future, mRNA products, will offer higher levels of protection compared to traditional egg-derived vaccines. Antigens in these products are selected six months in advance of the influenza season and frequently, field strains of influenza differ from the selection incorporated in the vaccine reducing the level of protection for recipient populations.

It is estimated that between 2014 and 2022, vaccine effectiveness has remained at a low level of approximately 50 percent mainly due to evident mismatch between vaccine and circulating strains. The CDC estimates an average annual mortality of 35,000 from influenza and its complications. For the 2024 influenza season the U.S. will experience 28 million cases with 310,000 hospitalizations at immense cost to the economy. Preventive vaccination albeit of varying effectiveness would reduce clinical cases and the cost of health care borne by the entire population.

Red Lobster will close an additional two dozen locations during August reducing the number of stores to approximately 500, down from 650 before their bankruptcy filing.

Fortress Credit Corp. will be the beneficial owner of the chain when it emerges from Chapter 11.  This investment group operates Logan’s Roadhouse and other restaurant and QSR chains that previously encountered financial hardship due to mismanagement.

Fortress has announced the appointment of Damola Admolekun as CEO.  He has accepted the Red Lobster challenge after a four-year tenure with P.F. Chang’s restaurant chain.

Management have developed a rehabilitation program involving closing unprofitable restaurants, reorganization, reducing costs, introducing new menus and above all, abandoning unprofitable ventures such as “endless shrimp. ” The program should restore viability especially under experienced management.

Status of the 2024 Corn and Soybean Crops

The USDA Crop Progress Report released on August 26^th documented 89 percent of the soybean crop setting pods and 6 percent dropping leaves. Eleven percent of the percent of the corn crop is now mature, ahead of the 5-year averages for the corresponding week.

Despite high temperatures across the Midwest and Plains states, crop condition was almost unchanged during the past week. Corn and soybeans attained 65 and 68 percent respectively for the two highest categories of “Good” and “Excellent” The August 25^th values for corn and soybean quality were considerably higher than the 56 and 58 percent recorded for corn and soybean crops respectively for the two highest categories during the corresponding week in 2023. Prospects for high yields were reflected in lower price projections in the August WASDE and for CME prices for August delivery following the release of the report.

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 lower at 57 and 59 percent respectively for the two highest categories of ‘Adequate’ and ‘Surplus.’ Average topsoil moisture this past week was down six percent on average across 18 major row crop states but still with an acceptable outlook for growth and quality in 2024 given the stage in production. Corresponding values of 48 and 46 percent percent each were recorded for the two highest categories for topsoil and subsoil moisture respectively in 2023.

It is unlikely that the expected transition to a La Nina event will have any substantial impact on crop condition through harvest. Prolonged dry and hot weather apparent at this time will not depress corn and soy yields depending on timing and severity.  A long-range forecast appended in the form of two charts predicted rainfall and temperature during the growing season.

Heat stress that occurred during silking predisposes corn to fungal infection leading to mycotoxin contamination of kernels. Unseasonal rain during the pre-harvest period for corn will also predispose to elaboration of mycotoxins. The status of the 2024 crop will require monitoring at harvest in affected areas and especially if unseasonal precipitation occurs during the pre-harvest period.

Reference is made to the August 12^th WASDE Report #651 and the weekly Commodity, Economy and Energy Report, both in this edition, documenting acreage to be harvested, yields, weekly prices and ending stocks. WASDE #652 will be reviewed in the September 20^th edition.

During September the NASS will conduct their annual remote survey to estimate yields and final production. Pro Farmer has commenced their annual crop tour. Initial results from Illinois suggest a five percent increase in corn yield for the state to 200 bushels per acre in 2024. Soybean yield will exceed the Illinois 2023 value based on fields showing a 12 percent increment in pods.

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) * August 18th  2024    August 25th  2024 5-Year Average  Corn Silking (%) 100 100 100 Corn Dough (%) 74 84 83 Corn Dent (%) 30 46 42 Corn Mature (%) 5 11 6 Soybean Status (18 states)       Soybean Blooming (%) 100 100 100 Soybeans Setting Pods  (%) 81 89 88 Dropping Leaves (%) 0 6 4 *Representing 92% of 2024 acreage planted	Soybeans setting pods
Crop Condition  V. Poor Poor Fair Good Excellent Corn  2024 (%) 5 8 22 49 16 Corn  2023 (%) 6 11 27 47 9             Soybeans  2024 (%) 2 7 24 54 14 Soybeans  2023 (%) 4 10 28 48 10
Parameter  48 States V. Short Short Adequate Surplus Topsoil Moisture:         Past Week 13 30 53 4 Past Year 21 31 45 3 Subsoil Moisture:         Past Week 13 28 56 3 Past Year 21 33 44 2

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.

Nestlé recently announced the departure of CEO Mark Schneider on August 22^nd.  Appointed to the position in January 2017, Schneider has presided over rationalization of the company that employs 270,000 and has more than 2,000 brands sold in 188 nations.  Under Schneider, the share price has risen 40 percent although recent financial performance has been lackluster with a net margin of 4.7 percent in 2023 on earnings of $5 billion with global sales of $109 billion.

Paul Bulcke, Chairman of the Nestlé Board, expressed gratitude to Schneider “for his significant contribution to the Company and for his outstanding, steady leadership in turbulent times”.  It is recognized that Schneider was “instrumental in the great progress we have made in our sustainability agenda”.   In departing, Schneider noted, “Leading Nestlé for the past eight years has been an honor for me and I am grateful for what we have achieved having transformed Nestlé into a future-proofed innovative and stable business.”

The Board has appointed Laurent Freixe as the next CEO.  He is a company veteran, having joined in 1986, and served 16 years as a member of the Executive Board.  He was responsible for a number of global corporate initiatives and most recently was the CEO of the Latin America segment.

Nestlé has extensive market share in brands familiar to U.S. consumers including Nespresso™, KitKat™ and Purina One™ with a portfolio including ice cream, healthcare, food service, cereals, bottled water and frozen foods.

Following rejection of a 17.5 percent wage increase extended over four years and an immediate 10 percent rise, custodial and dining staff workers at Cornell University have commenced a strike.  Represented by the United Auto Workers Union, Local 2300, is intent on winning concessions from the University.  Although the School endowment has attained $10 billion, administrators are restrained by contracts to use the fund for financial aid, new facilities, maintenance and upgrades and academic programs.

The University has implemented programs to maintain campus activities as the fall term has commenced.  The negotiations will continue to restore services and to finalize a mutually acceptable contract.

Labor in service, transport and utility sectors has become more militant in their activities and demands reflecting living costs and conscious of a disparity between wages earned by manual workers and salaries paid to management. It would seem illogical that a university with a world-class Institute of Labor Relations and a first-ranked business school should end up with a  strike by non-academic employees.

Still on a nostalgic note I have some sympathy for the institutional workers despite busing my tray at Willard-Straight and never having my graduate student office cleaned by a University janitor from 1965 through 1968!  

A South Dakota Circuit Court previously ruled in favor of Summit Carbon Solutions, allowing eminent domain to facilitate construction of a CO2 pipeline.  Landowners appealed and the South Dakota Supreme Court unanimously reversed the lower court decision.  To be eligible, Summit would have had to demonstrate that it was a common carrier transporting a commodity.  Since the CO2 to be transported through the proposed pipeline was intended for disposal by sequestration, the Supreme Court of South Dakota reversed the decision of the Circuit Court denying Summit common carrier status.

If the pipeline transiting South Dakota and four other states linking 57 ethanol plants to a North Dakota disposal site is to become a reality, Summit Carbon Solutions will have to justify its status as a common carrier and provide additional documentation to receive approval from the Public Utility Commission to proceed with construction.

Legal wrangles involving setbacks and property rights relating to pipelines point to the reality that carbon dioxide generated by the fermentation of corn to produce ethanol is in large measure vented to the atmosphere. This represents a large volume of greenhouse gas release that in large measure, offsets the claimed advantages by the ethanol industry for sustainability and enhancement of the environment.

The 2024 HPAI Impact and Insights Forum sponsored by USPOULTRY and co-sponsored by all three industry associations and the USDA will take place October 29^th – 30^th at the Crystal Gateway Marriott in Arlington, VA.  This advance notice is provided for the benefit of subscribers. Details of the program and speakers will be posted when released.

Kroger has initiated litigation with the U.S. Federal Trade Commission (FTC).  The Agency intends to block the proposed merger between the Kroger Companies and Albertsons Corporation.  Kroger maintains that the scheduled FTC internal hearing represents an “unlawful proceeding” and is unconstitutional.  Kroger is requesting a hearing in a federal court.

The Company will, however, have its day in court before a federal judge in Portland, Oregon in late August with Plaintiffs comprising the FTC and attorney general of Oregon and eight other states.

Alimentation Couche-Tard, Inc. of Canada, the parent company of the Circle K convenience store banner, will acquire the GetGo Café+ markets chain from Giant Eagle, Inc.  GetGo operates 250 convenience stores with fueling locations in Ohio, West Virginia, Maryland, Pennsylvania and Indiana. GetGo operates both open-store configuration and kiosks with made-to-order foods.

Brian Hannasch, President and CEO of Couche-Tard, stated, “We are excited to welcome GetGo into the Couche-Tard family.  We have deep respect for its management and people and loyalty program.  We look forward to growing together as we learn from and continue the innovative approaches of GetGo to serving local customers.”

In a related but separate announcement, Couche-Tard has made an offer for Seven & i Holdings in Japan that operates a total of 85,000 stores functioning under the 7-11 banner.  Currently, Couche-Tard operates 16,000 stores in North America and Europe compared to the combined holdings of 85,000 stores operated by Seven & i Holdings in Asia and the U.S.

This the second attempt by Couche-Tard to acquire the holding company of 7-11 in Japan that has traditionally been resistant to foreign takeovers.

It is possible that the transaction even if it were to be approved by authorities in Japan would raise questions of oligopoly in the U.S. especially with the current orientation of the FTC.

Kemin has released ORO GLO® Dry to replace previous pigmenting additives with lower concentrations of xanthophyll. Kemin has supplied pigmenting products for the egg industry for four decades and has established technology to ensure stability and biological activity.

ORO GLO® 50 Dry provides 50 grams of xanthophyll activity per kilogram of commercial product.

The efficacy of the new preparation was confirmed in a trial conducted by the University of Illinois comparing the biological action of ORO GLO® 50 with ORO GLO® 30.  Data showed that the concentrated product provided similar pigmenting ability on a proportional dietary addition basis. Mean total xanthophyll level of 43 mg/kg egg and 12 micrograms/kg of lutein per egg were assayed irrespective of the concentration of the pigmenter.

ORO GLO® 50 increased the visual score for yolk pigmentation from a level of 7 to 9 within two weeks of initiating supplementation. Again there was no difference between supplementation with either ORO GLO® 30 and ORO GLO® 50 on a projected equal xanthophyll content of the diet.

The Ministry of Agriculture of France has announced that a second vaccination program would be initiated during October.  In 2023, approximately 50 million ducks were immunized with beneficial results.  Accordingly, ducks, many of which are on free-range and intended for foie gras production, in the Acquitane, Dordogne and Pyrenees-Atlantique regions require protection given the close proximity of farms, exposure to migratory birds and deficiencies in biosecurity.

The Department of Agriculture has ordered 70 million doses of vaccine to be supplied by Ceva Sante Animale and Boehringer Ingelheim.  The 2024 program will have an estimated cost of $110 million with 70 percent financed by the Government.

France clearly recognizes the value of preventive immunization to control and prevent viral infections among poultry and livestock and has concurrently introduced a vaccination program to protect sheep and cattle from bluetongue virus that is transmitted by Simulium midges and possibly other hematophagous insects.

After unsuccessful annual attempts to contain HPAI among ducks, in the foie gras-producing regions of France, it was decided in 2023 to abandon proactive and conventional post-exposure depopulation with decontamination to establish an immune population following established principles of epidemiology. 

It is possible that France will extend vaccination to chickens and turkeys in the Province of Brittany where introduction by marine birds has initiated a recent case of HPAI following previous seasonal outbreaks of the infection.

A rail strike covering more than 80 percent of Canadian track was averted by Government intervention. The two major rail operators, Canadian National Railway and Canadian Pacific-Kansas City had advised the Government that they would impose a lockout that commenced on Thursday 22^nd effectively preempting strike action by the railworkers’ union.

The Teamsters Union representing Canadian rail workers had announced that a strike would have commenced on Friday, August 23^rd.   The official notice of intent was provided to the Government in accordance with labor legislation.

The obvious impasse will require urgent and intensive negotiations and arbitration to avert a future stoppage that will affect all aspects of the Canadian economy. It is estimated that a strike would cost $250 million per day equivalent to four percent of GDP. The Canadian rail system carries freight valued at $1 billion each day. The agricultural sector including livestock would have been seriously affected with a strike extending over a week. Spillover to the U.S. is self-evident since a third of rail freight traffic on Canadian lines crosses our Northern border.

The Federal Labor Minister, Steve MacKinnon, emphasized the deleterious effect on the economy from failure of talks between the union and the rail operators with costs born by all Canadians.  Given the insecure tenure of the present  Liberal Party Government of Canada,  MacKinnon  used his powers to force binding arbitration despite the political implications of this action from organized labor.

Issues in contention include wages and benefits but also scheduling which is regarded by the Union as a safety-related more than a convenience factor. Last week faced with an impending strike rail companies refused to receive perishable loads and containers requiring refrigeration. The strike has would have impacted Pacific Northwest and all Canadian ports since unions sympathetic to the Teamsters would not have handled cargo to be loaded for the Canadian rail system.

Canadian Rail Strike Averted

Following Government intervention enforcing arbitration the 20-hour suspension of railway service has ended. The  lockout imposed by the two major Canadian rail operators and a reciprocal announcement of a strike by the Teamsters’ Union, the Canadian rail system forced a Federal response. CN workers have returned to be followed by CPKC employees.

Rail shipments carry a quarter of exports from Canada to the U.S. valued at $40 million per day during 2023. The strike would have had a profound, indirect effect on the U.S. with disruption of supply and delivery chains and a deleterious economic impact on both nations.

Agricultural organizations in Canada urged restraint and moderation in demands by both the unions and operators involved, encouraging rapid resolution of the issues and restoration of service.

The USDA National Institute of Food and Agriculture has made available $3.3 million for a package of research projects under the Organic Agriculture Research and Extension Initiative.  The recipients include a consortium of Land Grant universities in collaboration with the USDA Agricultural Research Service.

One component of the research program will comprise development of a water-soluble suspension of essential oils intended as a preventive against necrotic enteritis and intestinal infections encountered in organic flocks that cannot receive antibiotics. 

A second research project will evaluate encapsulating probiotics to control Salmonella and Campylobacter.  If successful both sub-projects of the comprehensive program will be of benefit to other than organic poultry.

A spokesperson for the University of Connecticut stated, “Our drive is to include microbiological safety as a principal objective to ensure that organic products that come onto the market are safe for human consumption. 

Uzelac Industries, a major manufacturer of high capacity rotary drying systems widely used in the egg and livestock industries has adapted Honeywell ‘Slate’ Technology to their installations.  This will allow remote diagnosis of malfunctions and facilitate operation and repair.

In a specific recent event, a major processor of animal byproducts was impacted by flooding.  The Honeywell Slate System enabled a Uzelac Industries team to activate and maintain operation of the system. This prevented loss of material that otherwise would have extended over a prolonged period with considerable implications for environmental compliance and revenue. 

Uzelac Industries are now able to retrofit existing installations with the Slate system to provide a higher level of safety and efficiency.  For additional information click on to the Uzelac logo on the right side of the Welcome page.

Pro-Animal Future an activist and vegan-inspired organization has placed a ballot before voters in Denver to ban slaughter within city limits.  Superior Farms is the only company that would be affected based on location.  Superior Farms is an employee stock-ownership company employing 160 of whom 80 percent are residents of Denver.

The company is now actively campaigning against the ballot initiative with the support of the Meat Institute and business organizations that recognize the danger of passage of the ballot.  Activities undertaken include sponsorship of the Denver Restaurant Week. The CEO of Superior Farms, Rick Stott has embarked on a series of meetings with civic leaders and organizations to acquaint policymakers with the impact of passage of the measure to the City and the state of Colorado. Stott stated the Superior Farms position as “Our challenge now is to communicate who we are to make sure people know that we exist, make sure that we tell the truth.”

On August 21^st Target Corporation (TGT) the Nation’s 6^th-ranked retailer, posted results for Q2 FY2024 ending August 3^rd, beating estimates for the bottom line.  For the quarter, the Company earned $1,192 million on sales of $25,021 million with a diluted EPS of $2.57 (estimate $2.18).  For the corresponding Q2 FY2023 ending June 29^th, Target earned $835 million on sales of $24,384 million with a diluted EPS of $1.80. Revenue was higher by 2.6 percent and net earnings were 42.5 percent greater than Q2 FY 2023. Gross margin increased from 27.0 percent in Q2 FY2023 to 28.4 percent for the most recent quarter. Operating margin rose from 4.8 percent to 6.4 percent. 

For Q2 FY2024, comparable same-store sales increased by 2.0 percent compared to a negative 5.4 in Q2 FY2023 due to a rise of 3.0 percent in transactions (‘traffic’) offset by a 0.9 percent  decline value of each transaction (‘ticket’). Digital sales were up 8.7 percent during Q2 FY 2024.

The Company re-launched Target Circle a free loyalty benefits program supplanting the previous paid membership alternative with an increase in membership penetration of 17.7 percent. 

In commenting on results Brian Cornell Chairman and CEO stated, "We made a commitment to get back to growth in the second quarter, and the team delivered, all while expanding operating   margins and growing EPS by more than 40% compared to last year. Importantly, our growth was driven entirely by traffic in stores and our digital channels, with double-digit growth in our same-day delivery services," He added "We also saw improving trends across our discretionary categories, most notably in apparel, and we're seeing continued strength in beauty. Looking ahead, even as we maintain the measured outlook that has served us well, we are focused on building on this positive momentum by executing our strategy and providing the unique combination of newness and value that consumers can only find at Target."

The Company raised guidance for fiscal 2024. Target expects a flat to two percent increase in same-store sales growth and an adjusted EPS ranging from $9.00 to $9.7 "We made a commitment to get back to growth in the second quarter, and the team delivered, all while expanding operating margins and growing EPS by more than 40% compared to last year. Importantly, our growth was driven entirely by traffic in stores and our digital channels, with double-digit growth in our same-day delivery services," said Brian Cornell, chair and chief executive officer of Target Corporation. "We also saw improving trends across our discretionary categories, most notably in apparel, and we're seeing continued strength in beauty. Looking ahead, even as we maintain the measured outlook that has served us well, we are focused on building on this positive momentum by executing our strategy and providing the unique combination of newness and value that consumers can only find at Target."

On August 3^rd Target posted total assets of $55,993 million, up 5.2 percent from July 29^th FY2023. Long-term debt and lease obligations attained $19,087 million. Target Corporation had an intraday market capitalization of $66,700 million on August 21^st. The Company has traded over the past fifty-two weeks in a range of $102.93 to $181.86 with a 50-day moving average of $145.24.  TGT trades with a forward P/E of 15.5. On August 20^th pre-release the share closed at $144.44 but after the morning release opened at $167.04 on August 21^st up 15.6 %.

Twelve-month trailing operating margin was 5.4 percent and profit margin 3.9 percent.  The Company generated a return on assets of 6.8 percent and 32.5 percent on equity.

At the end of FY2023, Target Corporation operated 1,956 stores with a total retail area of 245,939 square feet excluding offices and DCs. The company invested $4,806 million in property and equipment during FY2023.

Agri Advanced Technologies (AAT), a provider of specialized poultry technology, and part of the EW Group, has introduced the Cheggy in ovo gender determination to the U.S. egg industry. The first advanced non-invasive system will deliver chicks from two American hatcheries by the end of 2024. The Cheggy system offers speed, efficiency, and sustainability to satisfy perceptions of flock welfare for specific markets.

According to Jörg Hurlin, founder and CEO of AAT, Cheggy determines the gender of embryos by applying advanced hyperspectral imaging to detect brown-pigmented feathers of pullet embryos. Embryonated eggs are screened in a closed measuring chamber illuminated from below with halogen lights. A hyperspectral camera captures the image of the eggs. Using a specified algorithm that is based on a parametric model, the computer automatically differentiates among ‘clear’ eggs, and either male or female embryos. Eggs containing female embryos are replaced on the setter tray and are incubated until hatch. Clear eggs and those with male embryos are rejected and collected for disposal. 

With the capability to process up to 25,000 eggs per hour, the Cheggy system is fast and accurate, and has a small footprint suitable for retrofitting in existing hatcheries. Twelve Cheggy installations are in operation in seven hatcheries in France, Germany, and Italy.

The Federal Court of Appeals for the 3rd U.S. Circuit recently ruled in favor of Bayer, the defendant in a case alleging that Monsanto (acquired by Bayer in 2018) failed to add a cancer warning to the Roundup® label.  The allegation was made that Roundup® containing glyphosate as the active ingredient, was responsible for non-Hodgkin lymphoma. The cancer was diagnosed during 2006 in the Plaintiff, a landscaper who was exposed to Roundup® in his work.

At issue was the failure of Monsanto to post a label warning on product sold in the commonwealth of Pennsylvania. The court ruled that the Federal Insecticide, Fungicide, and Rodenticide Act requires uniformity in labeling, absolving Monsanto and its successor Bayer, of the obligation to post a specific warning. 

Bayer has faced more than 150,000 cases alleging adverse effects from exposure to glyphosate with over 100,000 settled under a $10.9 billion agreement negotiated in 2020.  Ultimately the question of label warning and responsibility of Monsanto-Bayer for alleged lymphoma will have to be heard by SCOTUS, given conflicting decisions by federal appeals courts.

The favorable decision handed down by the 3^rd U.S. Circuit Court of Appeals benefited Bayer with a transitory increase in share price.

The Animal Legal Defense Fund (ALDF) sued the USDA over label images creating the impression that chicken was reared with outside access.  The ALDF maintained that labeling was misleading but the case was dismissed on the grounds that the ALDF had no standing.  On appeal the D.C. Circuit Court upheld the decision of the District Court on the issue of standing. 

This outcome of this case should deter organizations such as ALDF from filing meritless lawsuits relating to packaging claims relating to production systems for poultry and livestock. As has frequently been stated, organizations such as the ALDF and HSUS are less interested in the welfare of food animals than they are in generating publicity to raise funds and to embarrass producers.  Their objective is not to enhance the care of poultry, dairy and beef animals but to drive up production and operating costs in pursuit of a vegan agenda.

USDA Weekly Egg Price and Inventory Report, August 21^st 2024.

Market Overview

• The average wholesale unit revenue values for Midwest Extra-large and Large sizes were up 10.3 percent on average this past week. Medium size was up 6.7 percent. The 5-day rolling National wholesale price for graded loose on August 19^th at $3.25 per dozen was approximately $2.00 per dozen above the 3-year average of $1.00 per dozen and up $2.25 from the corresponding week in 2023 at $1.00 per dozen. This past week shell egg inventory was down 2.4 percent, following a fall of 3.8 percent during the previous week. Small fluctuation in inventory with large incremental weekly increases in price during mid-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 and with higher demand.
• 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 albeit with softening demand. Stock level will depend on constant re-ordering to fill the pipeline through mid-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, but highlighted as a factor in food price inflation.
• Total industry inventory was down by 4.1 percent overall this past week at 1.40 million cases with a concurrent 10.3 percent decrease in breaking stock, following a 1.1 percent fall during the preceding processing week.
• 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 possible HPAI outbreaks during coming months cannot be projected but the industry has moved into a quiescent period. Over 190 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 August 21^st the stated total flock of 306.7 million, was up by 0.7 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 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 August 21^st may overestimate flock size especially if more recent losses are not included.
• The ex-farm price for breaking stock (rounded to one cent) was up a noteworthy 44.7 percent to $2.58 per dozen.Checks delivered to Midwest plants were up 25.7 percent to $2.51 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 August 19^th 2024, the Midwest wholesale price (rounded to one cent) for Extra-large was up 10.3 percent from last week to $3.96 per dozen. Large size was up 10.4 percent to $3.94 per dozen. Mediums were up a noteworthy 6.7 percent to $2.08 per dozen delivered to DCs. It is emphasized that these prices are for the previous week. 

Despite pullets commencing production, the stock of Medium size declined by 1.8 percent but the inventory of Small size fell by 12.5 percent over the past week suggesting pullet flocks are maturing with implications for prices during mid- to late September.

Prices should be compared to the USDA benchmark average 4-Region blended nest-run cost of 75.7 cents per dozen as determined by the Egg Industry Center based on USDA data for July 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 strong positive margins irrespective of region and customer-supply agreements. The progression of prices for loose eggs during 2023 and 2024 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

The August 16^th edition of the USDA Egg Markets Overview confirmed that the USDA Combined Region value in cartons (rounded to the nearest cent), was up 16.0 percent to $3.66 per dozen delivered to warehouses one week ago. The USDA Combined range for Large in the Midwest was $3.57 per dozen. At the high end of the range, the price in the South Central region attained $3.73 per dozen.

In an August 19^th release, the Urban School Food Alliance announced that Gwinnett County Public Schools in Georgia has joined the organization. 

Formed in 2012, the Urban School Food Alliance is a nonprofit advocating for improved meal access.  The organization assists member school systems to exercise purchasing power and to reduce costs. Membership includes 19 large school systems across the U.S. including New York, Chicago, Los Angeles, Miami, Dallas and Orlando.  The Alliance offers technical support including menu guidance, training, standards, bid practices and professional development.

Given the scope of activities of the Alliance and its membership it is hoped that the AEB is promoting egg dishes based on nutrient contribution, cost and convenience.

The USDA has assigned $19 million in grants to projects in 26 states to promote E15.  Projects will include installation of blender pumps and storage tanks required to expand availability of E15 to consumers at filling stations.

To date, USDA has expended $221 million of the $500 made available under the Higher Blends Infrastructure Incentive Program.

The question arises as to the beneficiaries of this taxpayer support. Corn growers? Ethanol refiners? Motorists? The environment? Certainly not livestock and poultry producers who are obliged to compete with the biofuels industry, speculators and importing nations for available corn.

It is now acknowledged that excessive sodium intake above 2,300 milligrams per day as recommended in the Dietary Guidelines for Americans is deleterious to health.  It has been established that 70 percent of sodium intake is derived from processed and packaged foods.  The U.S. FDA has embarked on a program of encouraging the voluntary reduction of salt addition to foods by processors to a level equivalent to 80 percent of the intake prevailing in 2021. 

Voluntary targets are intended to reduce average individual sodium intake to approximately 2,750 milligrams per day.  The program has achieved some reduction with 40 percent of the initial Phase I target.  Phase II will concentrate on packaged and prepared foods to achieve improved health in accordance with the White House National Strategy on Hunger, Nutrition and Health to be accomplished by 2030.

The FDA will eventually release 2024 data and provide an evaluation of progress in achieving Phase I target. Jim Jones, Deputy Commissioner for Human Foods at the FDA, stated, “Reducing sodium in the food supply has the potential to be one of the most important public health initiatives in a generation.  The early successes we are seeing with reduction of sodium level in certain foods is encouraging and indicates the impact we believe our nutrition approach can have on the well-being of society.”  Excess dietary sodium can result in hypertension, a contributory factor to heart attacks and stroke with evidence that reducing sodium intake lowers risk of theses conditions.

If high salt intake is overtly deleterious and because reducing intake is beyond the capacity of consumers to regulate since it is deliberately added to processed foods, why is the FDA pussyfooting around with long-term voluntary guidelines?  Let’s apply science and common sense to the situation and establish maximum levels for foods that are enforced. It is evident that manufacturer are adding superfluous levels of salt to foods that could be constrained. A 10 oz. can of “healthy” mushroom soup contains 410 mg salt representing a claimed 18 percent of RDA (2,270mg by calculation). The “regular” version of mushroom soup from the same manufacturer contains twice the level of salt confirming where the salt originates, and it is not the mushrooms.

Come on Mr. Jones if you know from your technical staff that high levels of salt are deleterious and add to the cost of healthcare why delay developing and enforcing standards that restrict deliberate and excessive addition of salt to foods? What is restraining you? Commercial interests and their lobbyists? Congenital and institutional reluctance by the FDA to “do the right thing” for the people you are charged to protect? It escapes me!

In an August 15^th release, Walmart Inc. (WMT) posted financial results for Q2 of Fiscal 2025 ending July 31^st 2024. All U.S. omni-channel retailers are subject to the same pressures from increased costs for goods, transport and labor in a competitive environment with most consumer demographics and especially lower income earners concerned over expenditure. As a multinational company, Walmart faces additional risks associated with currency fluctuation, geopolitical events and adverse policies by regulators in host-nations. Walmart serves as a bellwether for U.S retail combining groceries, clothing, electronics, drugs, toiletries and household necessities.

For the 2^nd quarter of FY 2025 net income was $4,501 million on total revenue of $169,355 million that beat consensus estimates for revenue and EPS, yielding a profit margin of 2.7 percent.  Comparable figures for Q2 FY 2024 ending July 31^st 2023, were net income of $7,891 million on total revenue of $161,632 million with a profit margin of 4.9 percent. Diluted EPS fell from $0.97 for Q2 FY 2024 to $0.50 for the most recent quarter.

Comparing Q2 FY 2025 with the corresponding quarter of the previous year, revenue was up 4.8 percent; comparable store sales up 4.2 percent for the consolidated enterprise; gross margin rose from 23.8 percent to 24.2 percent and operating margin increased from 4.5 percent to 4.7 percent for the most recent quarter.

In commenting on Q1 results, in the Investors’ Call, Doug McMillon, CEO and president stated “We had another good quarter, with strong sales growth and even stronger profit growth, exceeding our expectations, The strength we saw for the quarter was broad-based. Our business outside the U.S. continues to lift the total company in terms of sales and profit growth.”

 He added “In the U.S., for both Walmart and Sam’s Club, comp. sales were fairly consistent throughout the quarter. Food continues to be strong, although general merchandise showed a small improvement. Our U.S. health and wellness business in Walmart and Sam’s Club, primarily due to sales of GLP-1 drugs, is contributing to our strong comp sales”.

In assessing the business environment McMillon observed “So far, we aren’t experiencing a weaker consumer. Our customers and members continue to want four things: They want value, they want a broad assortment of items and services, they want a convenient and enjoyable experience buying them, and they want to do business with a company they trust. These four things are constant, but the way we provide them is changing”.

Forward guidance for FY 2025 was adjusted upwards from previously released ranges and included:- A 3.8 to 4.8 percent increase in consolidated revenue; Operating income of 6.5 to 8.0 percent, and an adjusted EPS of $2.35 to $2.43.Capital expenditure will be equivalent to 3.0 to 3.5 percent of net sales.

For Q2 FY 2025 segment results comprised:-

• Walmart US: Net sales of $115,300 million, up 4.1 percent over Q2 FY 2024. Operating income $6,600 million with strong gains in groceries and general merchandise up 7.8 percent. Comparable same-store sales were up 4.2 percent (excluding fuel). Transactions were up 3.6 percent with ‘ticket’ up 0.6 percent. E-commerce, was up 22 percent over the corresponding quarter of FY 2024. Inventory declined by approximately 2.6 percent.
• International: Net sales of $29,600 million, up 7.1 percent. Operating income was $1,400 million up 14.3 percent from Q2 FY 2024. Growth in E-commerce, was up 18 percent over the corresponding quarter of FY 2024.
• Sam’s Club US: Net sales of $22,900 million, up 4.7 percent excluding fuel. Operating income was $600 million. Comparable same-store sales were up 5.2 percent with a 6.1 percent increase in transactions but offset by a 0.5 percent reduction in ‘ticket’. Membership revenue grew 14.4 percent. Growth in E-commerce, increased 22 percent over the corresponding quarter of FY 2023, attributed to curbside pick-up service and delivery.

Walmart operates more than 10,500 stores worldwide of which 5,400 are in the U.S. including 600 Sam’s Club warehouses. Walmart trades under 46 banners in 19 nations and employs 2.1 million.

On July 31^st 2024, Walmart posted assets of $254,440 million including goodwill of $27,930 million. Long-term debt and lease obligations amounted to $54,336 million. The Company had an intraday market capitalization of $590,800 million on August 19^th. WMT trades with a forward P/E of 30.4 and has ranged over a 52-week period from $49.85 to $74.44 (post-split) with a 50-day moving average of $68.80.  Twelve-month trailing operating margin was 4.7 percent and profit margin 2.3 percent.  Return on assets over the past twelve months was 7.0 percent with a return on equity 18.3 percent. At close of trading on August 14^th pre-release, WMT was priced at $68.61`. On May 15^th WMT opened post-release at $74.09, up 8.0 percent.  

Status of the 2024 Corn and Soybean Crops

The USDA Crop Progress Report released on August 19^th documented 81 percent of the soybean crop setting pods and 97 percent of the corn crop silking with 5 percent mature, conforming to the 5-year averages for the corresponding week.

Despite high temperatures across the Midwest and Plains states, crop condition was almost unchanged during the past week. Corn and soybeans attained 67 and 68 percent respectively for the two highest categories of “Good” and “Excellent” The August 18^th values for corn and soybean quality were considerably higher than the 58 and 59 percent recorded for corn and soybean crops respectively for the two highest categories during the corresponding week in 2023. Prospects for high yields were reflected in lower price projections in the August WASDE and for CME prices for August delivery following the release of the report.

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 67 and 63 percent respectively for the two highest categories of ‘Adequate’ and ‘Surplus.’ Average topsoil moisture this past week was unchanged representing an acceptable outlook for growth and quality in 2024. Corresponding values of 58 and 50 percent percent each 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. Unseasonal rain during the pre-harvest period for corn will also predispose to elaboration of mycotoxins. 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 August 12^th WASDE Report #651 and the weekly Commodity, Economy and Energy Report, both in this edition, documenting acreage to be harvested, yields, weekly prices and ending stocks. WASDE #652 will be reviewed in the September 20^th 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) * August 4th  2024    August 11th  2024 5-Year Average  Corn Silking (%) 94 97 98 Corn Dough (%) 60 74 71 Corn Dent (%) 18 30 26 Corn Mature (%) 0 5 3 Soybean Status (18 states)       Soybean Emerged (%) 100 100 100 Soybeans Blooming (%) 91 95 95 Soybeans Setting Pods (%) 72 81 80 *Representing 92% of 2024 acreage planted	Soybeans setting pods
Crop Condition  V. Poor Poor Fair Good Excellent Corn  2024 (%) 4 7 22 51 16 Corn  2023 (%) 5 10 27 47 11             Soybeans  2024 (%) 2 6 24 54 14 Soybeans  2023 (%) 4 9 28 49 10
Parameter  48 States V. Short Short Adequate Surplus Topsoil Moisture:         Past Week 11 26 57 6 Past Year 18 29 50 3 Subsoil Moisture:         Past Week 10 25 60 5 Past Year 18 32 47 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.

On August 13^th, the Food and Drug Administration announced results of a second round of assays of pasteurized dairy products for H5N1 virus.  Samples were collected by a third-party from retail outlets during June and July and were processed at a USDA-ARS laboratory. 

No viable virus was detected in any of 167 samples of fluid milk or products made from pasteurized milk including cheeses, butter and ice cream.  The survey, confirmed previous laboratory studies that pasteurization was adequate to destroy H5N1 strain B3.13, mammalian adapted avian influenza virus. 

To date, 190 herds have been diagnosed with bovine influenza-H5N1 since April in 13 states.  Of this total, it is significant that 63 were herds in Colorado.  This indicates the effectiveness of a state mandatory bulk milk-sampling program introduced by the Colorado state Veterinarian.  Positive flocks are quarantined for the duration of the infection, preventing spread to other dairy farms and indirectly to egg production flocks. “spill-over” from dairy herds to egg-production farms has been documented or presumed in outbreaks in Michigan and Colorado by the movement of infected or contaminated personnel or fomites.

The USDA has produced an Environmental Impact Statement (EIS) outlining three alternative approaches to disposal of flocks following depopulation.  The USDA is therefore soliciting comments to be submitted before September 30^th, 2024.

The alternatives are: -

• No Federal Operational Assistance – Under this option, flock owners and the state and local authorities would be entirely responsible for depopulation, disposal of carcasses and managing logistics without USDA-APHIS direct involvement.  USDA-APHIS would provide technical guidance and may provide indemnity or financial compensation.
• Federal Operational Assistance – Under this alternative, USDA-APHIS would be responsible for all activities and would provide operational assistance and actively participate in carcass disposal and transportation with cleaning and disinfection the responsibility of states.
• Federal Operational Assistance with Biosecurity Incentives – The USDA considers this as the preferred alternative.  The Agency would provide complete support and assistance as described under the Federal Operational Assistance alternative.  In addition, the alternative would provide an incentive to comply with established biosecurity plans for commercial producers including in-person or virtual audits.

The Environmental Impact Statement included the effects of depopulation on soil, air and water quality, human health and safety, equity and environmental justice, wildlife health and endangered species.  No specific differences on the environment were attributed to any of the three alternatives.

Prompt diagnosis, euthanasia, depopulation and disposal of infected flocks is considered essential to the control of HPAI in poultry.  Submissions or comments are invited through the Federal e-Rulemaking portal www.regulations.gov entering APHIS-2022-0055 in the search field.    Comments may be submitted by mail, citing docket number APHIS-2022-0055. 

For additional information, contact Ms. Chelsea Bare, Chief of Staff Veterinary Services, APHIS Department of Agriculture, 1400 Independence Avenue SW, Whitten Building, Room 318-E, Washington, D.C. 20250 or Chelsea.J.Bare@USDA.gov.

The Ohio Department of Education and the Office of the Governor have made available $332,000 in Grow Ohio grants.  These funds will support 14 farm-to-school projects.  The intention is to encourage students to consider future careers in agriculture through partnerships with local food producers and farmers.

Governor Mike DeWine stated, “For some students these programs will inspire them to take an interest in the agricultural industry and become part of the next generation of Ohioans who will feed our communities.” 

The initiative in Ohio follows neighboring Pennsylvania that has awarded $500,000 to farm-to-school projects.  Local egg-producers are encouraged to establish cooperative programs with schools facilitating internships, education and community participation.

Laxman Narasimhan has stepped down as CEO of Starbucks after a 16-month tenure.  He was selected to succeed Howard Schultz, the entrepreneurial founder of the company who was responsible for early growth and expansion into China. Schultz grew the coffeehouse chain of 20 stores to more than 100 during the four first years of his management and established Starbucks as a world brand with 38,000 stores in 86 nations by 2023.

The Board of Starbucks was disillusioned with their CEO and after consultation with activist investor, Elliot Management, the decision was made to search for a replacement eventually focusing on Brian Niccol who has accepted the position of CEO and will become member of the Board.  An indication of investor confidence in Niccol is indicated by the fact that following the announcement, Starbucks shares soared 20 percent with a corresponding 10 percent decline in the value of Chipotle Mexican Grill.

Starbucks has been troubled by organizational and labor issues including long wait times, waning of the perception of company stores as a place to gather, extreme competition and since COVID consumer reluctance to spend on high-priced gourmet and exotic coffee drinks.  This was reflected in a decline in revenue, pessimistic guidance all contributing to a declining share price, and erosion of image.

Surveillance implemented as mandatory, weekly assay of bulk milk samples identified ten incident cases of bovine influenza H5N1 in the state of Colorado.  This allows regulators and farmers to quarantine their herds until viral shedding ceases within a few weeks without evident mortality in uncomplicated cases.

The fact that Colorado is able to identify a number of incident cases suggests that infection is more widespread than the herds previously identified by the presence of clinical signs in twelve other states.

USDA-APHIS will allow interstate movement of lactating cows if three consecutive weekly bulk milk samples are negative.  This is relatively ineffective since heifers can theoretically transmit the infection and only herd operators wishing to move cows to other states are required to sample milk.

Knowing that a herd is infected can prevent infection of workers since they can be supplied with PPE and undergo training and supervision in the use of face shields or goggles.

A resident of Ingham County was diagnosed with H3N2v influenza frequently associated with hogs.  The diagnosis was confirmed in late July after preliminary identification by the Michigan Department of Health and Human Services, Bureau of Laboratories and was then subjected to virus sequence assay by the Centers for Disease Control and Prevention Emerging Infection Program.

Dr. Natasha Bagdasarian of the Michigan Department of Health noted, “While we believe this is an isolated case, Michigan residents should monitor for flu-like symptoms including a cough, nasal discharge and body aches.  It was recommended that patients with symptoms should be tested for both influenza A and COVID-19 and remain isolated until recovery.

Michigan has adopted a proactive approach to bovine influenza-H5N1 and there is close cooperation between the Department of Agriculture and Rural Development and the Department of Health and Human Services to the benefit of residents and livestock producers.  Tim Boring Director of the Michigan Department of Agriculture and Rural Development noted, “As part of our state’s One Health approach agencies are committed to collaborative action protecting both animal and public health.”

Arian Groot, Director of Sales for Hendrix-Genetics covering Europe, Australia and Asia  passed suddenly on August 3^rd 2024. He was born on November 21^st 1959, in the Netherlands, where he was raised on a farm, instilling a lifelong passion for agriculture.

He attended the Agricultural University of Wageningen, earning a Master of Science degree in genetics and economics. He joined Hisex, a Euribrid subsidiary in 1980 as a geneticist and completed 40 years with successive appointments among Hendrix Genetics, Hendrix Poultry Breeders, and Euribrid, contributing to the global egg and poultry industry.
 

Arian was responsible for modernizing breeding operations at Hisex and later at Euribrid the broiler subsidiary. In 2000, Arian transferred to Hendrix Poultry Breeders (HPB) as Sales Manager later being appointed as the Director of Sales and Marketing based on client relations and achievement.

Throughout his career, Arian was known for his innovations, exceptional leadership, and commitment to excellence. His efforts were pivotal in establishing Project Charlemagne, a merger between the Instituut de Selection Animal (ISA) in France and HPB in Holland, leading to significant advances in poultry breeding.
 

Arian is survived by Sjan, his widow and their three children, who were his pride and joy. Arian brought people together, whether in business, travel or social gatherings. He will be sadly missed.

Unitas Flock Management recently completed the installation of a comprehensive flock management system tailored to the needs of Creighton Brothers a major producer with over four million hens.

EGG-NEWS discussed the system in an interview with Steve Miller, General Manager of the enterprise and also Zach Davis, Layer Supervisor.

EGG-NEWS: What were the challenges faced by your company that motivated adoption of the Unitas system?

Steve Miller: Before implementing the system, we used paper farm production records that required transfer to Excel spreadsheets for review each week.  This was time consuming laborious, and we missed information.  All relevant flock data is now accessible to our team using the mobile app.

EGG-NEWS: Were there difficulties in implementing the system?

Zach Davis: The transition was smoother than we expected.  Despite language barriers our production team was trained in the system and it operates as expected.

EGG-NEWS: How has the Unitas system improved your operations?

Zach Davis: It helps us streamline decision making because we can see information daily.  Our nutrition and veterinary teams can also access data to enhance their contribution.  Unitas adapted the reports we were already using including the output from the Moba grader, replacing manual tracking of egg transfers and pricing.  We are now able to double-check our numbers and ensure correct pricing.  Unitas software system allowed us to benchmark internally by comparing current flocks with historical performance.

EGG-NEWS: Service is an important consideration, what has been your experience for the Unitas installation?

Zac Davis: Service from the Unitas team has been great. They have made whatever changes we have requested efficiently and effectively.

EGG-NEWS: Have you been able to measure a return on investment since implementing the system?

Zach Davis: It is difficult to place an exact value on the Unitas system but our team has the most current data and can respond to deviations from standard. We saved in data entry and there is no longer confusion over multiple spreadsheets.

Our production team can monitor feed, water and ventilation correlate data with production and can respond to abnormalities.  It is obvious that we are now doing a better job of inputting daily information using the pads in each house.

EGG-NEWS: Are you pleased with the results of your decision to adopt a comprehensive software management system?

Steve Miller:  We would highly recommend the Unitas software to our fellow producers.  Realtime data has improved our internal communications especially among the live production team, the feed mill and the packing plant as well as our outside nutrition and veterinary consultants.

For additional information on Unitas software access the Company website by clicking on to the logo on the right side of the welcome page.

Almost all all U.S. QSRs have reported decreased sales.  This was evident in the most recent quarterly report by McDonald’s Corp. that documenting a decline in revenue after nine consecutive quarters of higher than five percent growth.  A similar story was evident with Restaurant Brands International subsidiaries including the Burger King franchise. Yum! Brands recorded declines for their KFC and Pizza Hut segments.  Wendy’s and Starbuck’s have also reported downturns in sales value and traffic.

Restaurant operators attribute the decline to customer patronage to progressively higher prices especially during and following the COVID period that was characterized by supply chain disruption.  Despite recovery from the pandemic, prices have not fallen and the gap between eat-at-home and purchased meals has widened.  In response, QSRs are offering value deals with McDonald’s the first to introduce $5 combinations.  This initiative to increase sales, initially announced to be over a limited period but now extended indefinitely, was soon followed by competitors. The race to the bottom should attract customers but will obviously detract from the bottom line.

The plight of the QSRs has resulted in predictable impacts on suppliers. Manufacturers of packaging material have been adversely affected by the decline in QSR sales.  Graphic packaging, West Rock, and Berry Global have reported on the effect of lower traffic on their businesses.  Although no specific data is available it will appear that beef has suffered to the advantage of chicken that provides higher value for sandwiches.  Egg servings despite prices and inventory levels for medium size suggests that they are still in demand by QSRs especially those serving all-day and extended breakfast periods.

It remains to be seen whether meal deals will regain business from increasingly frugal customers who are becoming restrained in their expenditures. Consumers appear willing to spend time on supermarket and warehouse shopping, food preparation and clean-up at the expense of convenience.

CSL Seqirus, located in Holly Springs, NC., has completed a federal order for 4.8 million doses of H5N1 vaccine stockpiled for emergency administration in the unlikely event that it is required. The vaccine has been distributed in 10-dose vials with an additional 250,000 pre-filled single dose syringes.

The CSL-Seqirus facility prepares seasonal influenza vaccines using cell culture as opposed to traditional egg-embryo propagation.  Each batch of vaccine requires approximately one month to prepare followed by assay for safety and purity and then distribution into multi-dose vials or syringes. The plant is capable of producing two million influenza vaccine doses at two-week intervals as required for North America.

Dawn O’Connell, Assistant Secretary for Preparedness and Response at the U.S. Department of Health and Human Services, oversaw the project initiated by the White House. The order for the vaccine was to “prepare for a worse-case scenario” according to Dr. Raj Panjaei, a Special Assistant to the President.

It is a matter of record that the E.U. has purchased CSL-Seqirus H5N1 vaccine and Finland has deployed the product for workers on dairy and fur-animal farms.

The Department of Health and Human Services has awarded a $176 million contract to Moderna to manufacture a range of influenza vaccines including the H5N1 strain.  As demonstrated during the COVID pandemic, mRNA vaccines are both safe and effective and can be modified quickly to provide protection against viruses that undergo mutation.

According to press reports, Vera Liddell, formerly Food Service Director for Harvey School District, in Illinois misappropriated 11,000 cases of chicken wings and other products valued at close to $1.5 million.  Apparently, Liddell ordered chicken during the COVID period claiming that the product was for take-home meals.  The scam was detected during a mid-year audit that revealed a deficiency in the budget initiating an investigation.  Liddell has entered a guilty plea and faces up to nine years in prison.

In an August 8^th announcement, Farm Service Agency Director, Zach Ducheanauex, outlined new rules “to make FSA more responsive to the needs of farmers at the beginning of a lending relationship”.  Going forward, the FSA will lower collateral requirements from 150 to 125 percent of direct loans and reconsider whether homes should be pledged as collateral.  The FSA will also establish a Distressed Borrower Set-Aside Program to allow a farmer to defer one annual loan installment per loan at a reduced interest rate. The FSA intends to support farmers with modified repayment terms appropriate to needs, including smaller interest-only payments.

The FSA is following its mission to support farmers, Accordingly the traditional banking criteria of Character, Collateral and Capacity are not strictly applied to all loan applications.  There is justifiable concern that FSA may be overreacting to justified criticism over discrimination inherent to the agency over many decades. This bias was recently reversed through deferred payments amounting to $2 billion to over 40,000 minority applicants. 

Hartmann North America has announced a proposed expansion of both the Rolla, MO and Brantford, Ont. facilities.  The company will install new production lines and increase manufacturing and warehouse capacities.  It is anticipated that the projects will be completed by the end of 2025.

Karl Broderick, President of Hartmann North America, stated, “This growth reflects the rising demand for environmentally sustainable egg-packing solutions.  We deeply value the partnerships with our customers and the dedication of our employees who are the backbone of our success.

Hartmann, based in Denmark, is a multinational company with 17 manufacturing plants on four continents.

Dr. Robert Tauxe recently retired as Director of the CDC, Division of Foodborne, Waterborne and Environmental Diseases, after a 40-year career.

Dr. Tauxe earned his baccalaureate degree in cultural anthropology from Yale University, his medical degree from Vanderbilt Medical School and a Master’s in public health from Yale.  In 1984, he joined the CDC in the program then entitled the National Center for Emerging and Zoonotic Infectious Diseases.  His first challenge was an outbreak of E.coli O157 requiring field investigation and the laboratory application of molecular subtyping, an emerging technology.

Since joining CDC Dr. Tauxe has been at the forefront of investigating food and waterborne disease outbreaks in addition to mentoring aspirant epidemiologists in the Epidemic Intelligence Service  (EIS) program.

Dr. Tauxe has always emphasized the need for collaboration among scientists of diverse disciplines and has advocated for cooperation among state and local public health agencies in addition to the FDA and USDA. He emphasizes, “We can always count on fresh challenges because Mother Nature bats last.”  This is evidenced by emerging drug resistance, changes in eating habits and the problems arising from expansion, intensification and specialization inherent to food production systems. He stated in a recent interview “Every time there’s a challenge, there’s something to learn from it and I encourage everyone to look for the lesson in every emergency that arises.” He credits more comprehensive surveillance with the ability to identify emerging foodborne infections and with molecular subtyping to identify their source.

Dr. Tauxe has authored or co-authored more than 300 scientific contributions to journals, and texts relating to his chosen field. He is a speaker in demand having participated in numerous conferences delivering platform presentations in addition to the poultry industry. In his “retirement”, Dr. Tauxe will continue writing, mentoring and contributing to the field of food safety.

A recent study conducted in Japan confirmed that blowflies (Calliphora) are capable of disseminating H5 virus.  Blowflies feed and females lay eggs on dead animals and birds and can be infected with viruses and toxins in carcasses.  In the reported study, H5 virus was identified applying PCR. The recovery rate ranged from 2 to 15 percent from bowflies contaminated by feeding on carcasses dead wild cranes in outbreaks of H5N1avian influenza during 2022.  In a subsequent 2023 study, only one among 648 Calliphora flies yielded H5N1 virus.

These results are not unexpected given the demonstrated ability of blowflies and their larva to accumulate botulinum toxin and for houseflies (Musca) to transmit Campylobacter jejuni.

The need for fly control on poultry farms is self-evident.  In the case of flock depopulation, appropriate measures should be implemented to transport carcasses under cover to landfills for rapid burial or in the case of on-farm disposal by composting or burial.

Given that houseflies and blowflies will regurgitate their crop contents before feeding on a more acceptable food source, it is considered worthwhile to evaluate their possible role in transmission among poultry farms located in in close proximity.

Fujita, R., et al.  Blowflies are potential vectors for avian influenza virus at enzootic area in Japan (sic) Sci.reports.1410285(2024) Doi.org. /10.1038/s41598-024-61026-1.