Egg Industry News


Sad Passing of Dr. Peter Woolcock

11/24/2022

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

 

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

 

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

 

His enthusiastic cooperation with the profession will be missed.

 


 

USDA Weekly Egg Price and Inventory Report, November 23rd 2022

11/23/2022

Market Overview

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

 

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

 

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

 

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

 

  • The current relationship between producers and chain buyers based on a single price discovery system constitutes an impediment to a free market. The benchmark price amplifies both downward and upward swings as evidenced over the past two months. The benchmark functions to the detriment of the industry over the long term. A CME quotation based on Midwest Large, reflecting demand relative to supply would be more equitable. If feed cost is determined by CME prices then so should generic shell eggs.

 

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

 

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

 

The Week in Review

Prices

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

 

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

 

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

 

Flock Size

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

 

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

 

INVENTORY LEVELS

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

 

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

 

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

 

Shell Inventory

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

 

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

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

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

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

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

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

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

 

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

 

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

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

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

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

 

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

 

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

 

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

 

RELATIVE PRICES OF SHELL-EGG CATEGORIES

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

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

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

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

Wholesale

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

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

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

 

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

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

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

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

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

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

* Based on a small sample with few advertised promotions

 

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

 

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

 

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

 

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

 

USDA Cage-Free Data

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

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

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

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

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

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

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

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

 

Processed Eggs

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

 

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

 

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

 

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

 

PRODUCTION AND PRICES

Breaking Stock

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

 

Shell Eggs

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

 

Size/Type

Current Week

Previous Week

Extra Large

396-399 cents per dozen

371-374 up 6.7%

Large

364-397 cents per dozen

369-372 up 6.8%

Medium

313-316 cents per dozen

Unchanged

Certified Organic EL

248-251 cents per dozen

Unchanged long term

Breaking stock

264-275 cents per dozen

262-275 up 0.4%

Checks

252-254 cents per dozen

Unchanged

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

 

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

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

 

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

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

 

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

 

Shell-Egg Demand Indicator

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

 

Productive flock

304,463,583 million hens

Average hen week production

82.3% (was 82.7%)

Average egg production

250,460,758 per day

Proportion to shell egg market

71.6% (was 70.5%)

Total for in-shell consumption

497,828 cases per day

USDA Inventory

1,247,600 cases

26-week rolling average inventory

4.50 days

Actual inventory on hand

3.98 days

Shell Egg Demand Indicator

13.1 points (was 1.1 on November 16th)

 

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

 

Dried Egg Products

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

Whole Egg

$11.50-$13.75

Average June $14.71

July $13.11

August $11.70

Sept. $10.94

Yolk

$13.00-$16.30

Average June $13.50

July $13.52

August $13.50

Sept. $14.31

Spray-dried white

No quotation, past week

Average June $17.23

July $14.70

August $12.80

Sept. $12.53

Blends

No quotation, past week

 

 

Frozen Egg Products

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

 

Whole Egg

$2.60 - $2.70

$2.65 - $2.70

White

$1.70 - $1.80

$1.74 - $1.80

Average for Yolks

$3.75 - $3.80

$3.75 - $3.80

 

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

 

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

 

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

COMMENTS

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

 

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

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

 

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

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

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

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

 

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

 

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

 

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

 

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

.

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

 

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


 

Ovotrack Introduces Tracking Systems for Reusable Crates and Pallets

11/23/2022

 


Ovotrack Reusables monitors status
of reusable egg containers and pallets

 

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

 

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


 

Opal Foods Recruiting a Layer Production Manager

11/23/2022

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

 

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

 

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


 

COMMODITY REPORT

11/22/2022

WEEKLY COMMODITY REPORT: November 24th 2022.

 

OVERVIEW

 

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

 

Factors influencing commodity prices in either direction over the past

 weeks included:-

 

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

 

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

 

EXPORTS

 

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

(Conversion 39.36 bushels per metric ton)

 

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

(Conversion 36.74 bushels per metric ton)

 

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

 

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

 

COMMODITY PRICES

 

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

 

COMMODITY

 

Corn (cents per bushel)

Dec.    663          (666).

March ‘23     662      (668)

Soybeans (cents per bushel)

Jan. ‘23 1,346   (1,416).

March ’23 1,442    (1,422)

Soybean meal ($ per ton)

Dec.    410         (405). 

March ‘23    404     (404)

 

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

 

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

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

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

 

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

 

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

 

Values for other common ingredients per short ton:-

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

 

For each $1 per ton (2.8 cents/bushel) change in corn the cost of egg production would change by 0.11 cent per dozen

 

For each $10 per ton change in the price of soybean meal the cost of egg production would change by 0.35 cent per dozen

 

The respective changes in the prices of corn and soybean meal for November 23rd spot prices compared with November 17th would not have changed nest-run production cost for eggs.

 

*(Rounded to 0.1cent)

 

COMMENTARY ON AVAILABILITY AND PRICES OF FEED COMMODITIES

The social restrictions imposed in the U.S. as a result of COVID-19, that are now being eased, were projected to reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2020-2022 requirement, accepting a nominal ten percent addition (E-10) to gasoline. This past week 91.7 percent of the U.S. ethanol fermentation volume was operational, based on the January 2022 U.S. Energy Information Administration (U.S. EIA) capacity data. The outlook for increased production will depend on higher domestic demand in addition to increasing the quantity that is exported. During September, net exports attained 100.4 million gallons (2.4 million barrels), up 35.6 percent from August with more shipments to China.

 

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

 

Energy Prices on November 23rd

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

 

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

 

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

 

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

 

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

 

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

 

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

 

On November 24th the conversion of the CNY to the BRL was BRL 0.75 up BRL 0.01 from last week. The conversion of the CNY to the US$ was CNY 7.15, up CNY0.01 from the previous week..

 

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

 

For the 2021-2022 market year net export sales of corn were down 0.13 million tons (5.1 million bushels) compared to the previous market year with cumulative exports of 59.764 million tons (2,352 million bushels) 

 

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

 

COMMENT

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

 

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


 

Ovotrack Provides Egg-to-Chick Traceability through Hatchtrack®

11/22/2022

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

 

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

 

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


 

Mexico Initiates AI Vaccination

11/22/2022

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

 

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

 

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

 

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

 

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


 

Dietary Cholesterol Evaluated

11/22/2022

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

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

 

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

 

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


 

GM Big Purple Tomato Approved by USDA

11/22/2022

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

 

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


 

FDA Investigating Salmonella Outbreak

11/22/2022

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

 

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

 

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

 

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


 

Alltech Webinar on 2022 Harvest

11/22/2022

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

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

 

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


 

Post Holdings Releases Q4 and FY 2022 Financial Results

11/21/2022

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

 

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

 

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

 

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

 

  • Foodservice

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

 

  • Refrigerated Retail

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

 

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


 

2022 Corn and Soybean Harvest Report

11/21/2022

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

 

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

 

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

 

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

      

 

Crop

October 16th

October 23rd

4-Year Average

Corn Dented (%)

Corn Mature (%)

Corn Harvested (%)

100

100

  93

100

100

 96    

100           

100

 90

Soybeans Setting Pods (%)

Soybeans Dropping Leaves (%)

Soybeans Harvested (%)

100

100

100      

100

100

100

100

100

 100

 

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

 

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

 

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


 

Opal Foods Receives Neosho Chamber of Commerce Award

11/21/2022

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

 

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

 

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

 

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

 

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


 

Chore-Time Featured by USPOULTRY

11/21/2022

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


 

Subway Expanding Grab-&-Go Sales

11/21/2022

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

 

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


 

Cost of Thanksgiving Dinner Up 20 Percent in 2022

11/21/2022

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


 

Commodity Funding Advances Export Activities of USAPEEC

11/20/2022

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

 

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

 

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

 

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


 

Southeastern Grocers, Inc. Evaluating Strategic Alternatives

11/20/2022

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


 

Lawyers Find New Vehicle for Class Action Suits

11/20/2022

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

 

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

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


 

BJ’s Wholesale Club Posts Results for Third Quarter of FY 2022

11/19/2022

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

 

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

 

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

 

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


 

Ahold-Delhaize Reports On Q3 Of Fiscal 2022

11/19/2022

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

 

 

 

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

 

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

 

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

 

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

 

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


 

COMMODITY REPORT

11/17/2022

WEEKLY COMMODITY REPORT: November 17th 2022.

 OVERVIEW

 

Over the past five trading days commodities were little changed. December corn was up 2.0 percent to 660 cents per bushel for January 2023 delivery. In contrast soybeans were almost unchanged compared to the previous week at 1,416 cents per bushel for January 2023 delivery. The market has adjusted to the projections of crop size and ending stocks as projected in the November 9th WASDE #630. Despite fluctuating economic sentiment, restoration of shipping from Black Sea ports has reduced price pressure on wheat and other grains although revocation by Russia or some marine incident is always possible. Commodity prices in the U.S. were influenced by a lower Dollar Index and orders placed by China and other importers.

 

 

Factors influencing commodity prices in either direction over the past

 weeks included:-

 

  • Renewed fears of a U.S. recession due to an aggressive Federal Reserve FOMC, followed the September 13th CPI release and the fourth successive monthly 0.75 percent upward rate adjustment on November 2nd. A rebound in equity markets was evident during the past two weeks albeit with inter-day fluctuations. (Transitory upward pressure on markets)
  • A reduction in the October CPI to 0.4 percent compared to 0.8 percent for September suggests that inflation may have plateaued. (Downward pressure)
  • Low water levels along the Mississippi River and tributaries caused by drought is still impeding barge traffic. A rail strike is also threatened. (Downward pressure and lower cash prices paid to farmers)
  • Hot and dry conditions in extensive areas of the Corn Belt reduced the yield and quality of the late-planted 2022 corn crop. The yields for the corn and soybean harvests were updated in the November WASDE. (Downward pressure with higher ending stocks for corn and soybeans)
  • Geopolitical tensions that impacted wheat, corn, oilseeds and vegetable oil exports from Ukraine persist. Restoration of Black Sea shipping was accomplished following security guarantees by Ukraine to the Russian Federation. Russia has inflicted extensive and deliberate damage on the agricultural and energy infrastructure of Ukraine including elevators and crushing plants and has placed landmines in fields. Ukraine corn yield for 2022 is down 18 percent from 2021 with 39 percent of the crop harvested. (Upward pressure on corn and wheat and an indirect effect on soybeans if Black Sea shipping is interrupted.)
  • Expectation of high soybean and corn crops from Brazil for the 2022-2023 season. (Lower prices in the future subject to favorable reports on planting and crop progress)
  • Volatility of the Dollar Index (DXY) that fell to 101 on June 2nd but peaked at 116 in late October, declined to 107 on November 17th The dollar index influences timing and volume of export orders. (contributes to fluctuation in corn and soybean prices, depresses U.S. sales)
  • Speculation in commodities by hedge funds declined consistent with falling equity prices in September with restoration in October but with a steady decline in the value of crypto currency with evidence of inadequate regulation. Concerns over a U.S. recession, reemerged in early October, as the Federal Reserve is intent on raising benchmark funds rates to suppress inflation. (Downward pressure)

 

Based on CME quotations on November 17th U.S. farmers are now receiving and conversely livestock producers and ethanol refiners in the Midwest will pay above $6.66 per bushel for corn delivered in December, up 2.0 percent from the quotation last week. Crushers will pay $14.16 per bushel for soybeans plus transport and basis for January 2023 delivery, almost unchanged from the previous week. December soybean meal was 0.2 percent lower compared to the quotation last week. Prices continued their moderate inter-day fluctuation and corn continued the upward trend from the previous week with soybeans little changed reflecting both domestic and export demand, projected new-crop harvest and ending stocks.

 

EXPORTS

The restored ‘legacy’ FAS Export Report released on November 17th for the week ending November 10th reflecting market year 2022-2023, confirmed that outstanding export orders for corn amounted to 10.93 million metric tons (430.2 million bushels) with 4.97 million metric tons (195.6 million bushels) actually shipped. During the past week net orders for the 2022-2023 market year increased sharply to 1.17 million metric tons (46.0 million bushels) with 0.56 million metric tons (22.2 million bushels) shipped for the past week. For the current market year outstanding sales of corn to date are 36.2 percent lower than at the corresponding week a year ago. For market year 2023-2024 outstanding sales this week amounted to 0.31 million metric tons (12.2 million bushels), with no orders for the 2023-2024-market year.

(Conversion 39.36 bushels per metric ton)

 

The FAS Export Report for the week ending November 10th reflecting market year 2022-2023, recorded outstanding export orders for soybeans amounting to 21.40 million metric tons (786.1 million bushels) with 14.59 million metric tons (535.9 million bushels) actually shipped. Net weekly soybean orders were sharply higher at 3.03 million metric tons (111.3 million bushels) with 2.08 million metric tons (76.5 million bushels) shipped for the past week. For the current market year to date outstanding sales of soybeans are 11.6 percent lower than for the corresponding week a year ago. Sales recorded for market year 2023-2024 are negligible (Conversion 36.74 bushels per metric ton)

 

For the week ending November 10th 2022 net orders of soybean meal and cake amounted to 267,100 metric tons for the market year 2022-2023. During the past week 213,800 metric tons of meal and cake combined was shipped, representing 20.7 percent of the total 1,033,100 metric tons shipped during the current marketing year. This quantity is 78.9 percent of the volume shipped during the corresponding weeks of the previous market year. For the next market year outstanding sales attained 2.0 million metric tons with cancellations of 200,00 metric tons this past week.

 

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

 

COMMODITY PRICES

The following quotations for the months of delivery as indicated were posted by the CME at 14H00 on November 17th 2022, compared with values at 14H00 on November 10th 2022 (in parentheses): -

COMMODITY

 

Corn (cents per bushel)

Dec. 666 ( 653).

March ‘23 668 (659)

Soybeans (cents per bushel)

Jan. ‘23 1,416 (1,422).

March ’23 1,422

Soybean meal ($ per ton)

Dec. 405 ( 404). 

March ‘23 404

 

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

Corn: Dec. quotation up 13 cents per bushel. (+2.0 percent)

Soybeans: Jan. quotation down 6 cents per bushel (-0.4 percent)

Soybean Meal: Dec. quotation down $1 per ton (-0.2 percent)

 

The NASDAQ spot prices for feedstuffs per short ton at noon on November 17th 2022 with prices for the previous week were:-

  • Corn (ZC): $238 (unchanged from previous week). 52-week range $177 to $292
  • Soybean Meal (ZM): $404 was $418. 52-week range $311 to $488

 

Values for other common ingredients per short ton:-

  • Meat and Bone Meal, (According to the USDA National Animal By-product Feedstuffs Report on November 11th): $375-$490; porcine $350 to $390 ruminant. Price varies according to plant and location
  • DDGS, (IA. and other states according to the University of Missouri Extension Service By-Product Feed Price Listing) $230 to $295 per ton. Price varies according to plant and location and is expected to fluctuate with the price of corn
  • Wheat Middlings according to the USDA National Mill-Feeds and Miscellaneous Feedstuffs Report on November 11th for MO. and other states: $225 to $250 per ton ($235 per ton in early June, with current price reflecting surge and subsequent fluctuation in wheat price following the invasion of Ukraine and from U.S. drought)
  • Bakery Meal, (MO & TX): $225 per ton (unchanged)
  • Rice Bran, (AR & TX): $180 to $220 per ton.

 

For each $1 per ton (2.8 cents/bushel) change in corn the cost of egg production would change by 0.11 cent per dozen

 

For each $10 per ton change in the price of soybean meal the cost of egg production would change by 0.35 cent per dozen

 

The respective changes in the prices of corn and soybean meal for November 17th spot prices compared with November 10th would decrease nest-run production cost for eggs by 0.50 cents per dozen.  (Rounded to 0.1cent)

 

COMMENTARY ON AVAILABILITY AND PRICES OF FEED COMMODITIES

The social restrictions imposed in the U.S. as a result of COVID-19, that are now being eased, were projected to reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2020-2022 requirement, accepting a nominal ten percent addition (E-10) to gasoline. This past week 89.1 percent of the U.S. ethanol fermentation volume was operational, based on the January 2022 U.S. Energy Information Administration (U.S. EIA) capacity data. The outlook for increased production will depend on unlikely higher domestic demand in addition to increasing the quantity that is exported. During September, net exports attained 100.4 million gallons (2.4 million barrels), up 35.6 percent from August with more shipments to China.

 

According to the U.S. EIA, for the week ending November 11th 2022 the industry produced on average 1,011,000 barrels of ethanol per day. This was down 3.8 percent from the week ending November 4th 2022 but above the one million gallon per day benchmark for the fifth week after ten consecutive weeks below the one- million level. On November 11th ethanol stock was down 0.4 percent from the previous week at 21.3 million barrels, representing an approximately 20-day reserve and confirming lower demand given relative changes in production and stock. The White House has allowed all-year round 15 percent addition to gasoline. Given that many older vehicles cannot use higher than an E-10 blend and drivers are curtailing mileage due to high fuel costs and the reality of restraints imposed on fuel station storage and dispensing high blends, the short-term prospects for increased domestic consumption are unfavorable. 

 

Energy Prices on November 17th

  • Ethanol quoted on the CBOT (EH) on November 17th was priced at $2.16 per gallon unchanged over previous months and compared to a 52-week range of $2.13 to $2.48 per gallon.
  • Concurrently RBOB gasoline traded on NASDAQ (RB) at $2.46 per gallon, down 2 cents per gallon (0.8 percent) from the previous week. The 52-week range for RBOB gasoline is $1.90 to $4.04.
  • The CME WTI crude price of $81.67 per barrel on November 17th was 11.4 percent lower than the previous week although with intra-week fluctuation in the energy market but with hydrocarbon sources still contributing to inflation.
  • The AAA national gasoline price declined progressively over thirteen weeks before rising for five weeks and on November 17th was down 8 cents (2.1 percent) to $3.73 per gallon for unleaded grade. Gasoline is now $1.57 per gallon more expensive than ethanol with a 63 percent higher BTU rating.
  • Diesel was $5.34 per gallon, down 2 cents per gallon (0.4 percent) from the previous week but with prospects of a rise in price due to 6-decade low stock level.
  • CME Henry Hub natural gas was priced at $6.39 per MM BTU on November 17th, up 45 cents (7.6 percent) from the previous week.
  • With most plants among the 198 that were operational on January 1st 2022 with a combined capacity of 1,134 million barrels per day functioning at 91.6 percent, DDGS is freely available but commands a price reflecting corn. The University of Missouri Extension Service By-Product Feed Price Listing) priced DDGS at $230 to $295 per ton on November 17th continuing price stability. Wide price variation exists depending on supplier, quantity and location. It is axiomatic that the cost of DDGS will reflect changes in the price of corn. Generally DDGS is currently incorporated at moderate inclusion levels in egg-production formulas based on price relative to the nutrient contribution of corn and other ingredients. This will change as corn and hence DDGS increases in price

 

The CME soybean price for January 2023 delivery at 14H00 on November 17th was almost unchanged at 1,430 cents per bushel compared to the previous week at 1,422 for March delivery. The price of soybeans is attributed to availability for domestic consumption and export orders consistent with the reality that the 2022 crop was spared the impact of the July and August heat and drought. World availability of oilseeds was reduced following the late February invasion of Ukraine. Prices are obviously influenced by projections of yield in the three major producing nations in South America.

 

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

 

On November 17th the spot price for soybean oil was down 7.4 percent from previous week to 69.91 cents per lb. Higher prices for vegetable oils were posted over past weeks reflecting a growing acceptance that total oilseed supply will eventually be limited by a sharply diminished crop of sunflower oil from Ukraine, the world’s largest exporter of this commodity. Ukraine is subject to restraints on cultivation and limits on crushing and exports due to hostilities following the invasion by Russia. During 2022, it is anticipated that 41 percent of U.S. soy oil will be diverted from fuel to biodiesel.

 

On November 17th 2022, the soybean meal spot price quoted on NASDAQ was $404 per ton, $14 per ton lower than the spot price last week and compared to a 52-week range of $312 to $500 per ton.

 

On November 17th 2022, Meat and Bone meal was priced over a range of $350 to $390 per ton according to the USDA National Animal By-product Feedstuffs Report, Prices were for central U.S. plants but with a wide range among prices based on composition, source and location. Price fluctuation reflects changes in soybean meal and other oilseed meals.

 

On November 17th the conversion of the CNY to the BRL was BRL 0.76 up BRL 0.05 from last week. The conversion of the CNY to the US$ was CNY 7.16, up CNY0.11 from the previous week..

 

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

 

For the 2021-2022 market year net export sales of corn were down 0.13 million tons (5.1 million bushels) compared to the previous market year with cumulative exports of 59.764 million tons (2,352 million bushels) 

 

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

COMMENT

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

 

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


 

Egg Week

11/17/2022

USDA Weekly Egg Price and Inventory Report, November 16th 2022.

 

Market Overview

  • The average wholesale unit revenue values for Midwest Extra-large and Large sizes were higher by 6.6 percent on average, continuing the upward move from last week. Mediums were unchanged indicating a balance between supply and demand. This past week shell egg inventory was up 2.3 although prices were higher. Both retail price and demand will continue at a higher level than in previous years sustained by consumer perceptions of value in an inflationary environment with concern over the high cost for protein. Availability and hence prices are influenced by depletion of close to 38 million hens in 17 large complexes in ten states extending from the last week in February through early November. The U.S. flock is recovering in size with weekly transfer of pullets compensating for HPAI losses.
  • Total industry inventory increased by 1.4 percent overall this past week to 1.69 million cases with a 2.3 percent increase in shell eggs and a concurrent 2.6 percent decrease in breaking stock. Wholesale unit prices during the first three quarters of 2022 contrasted favorably with the corresponding periods in both 2020 and 2021 characterized by low ex-plant unit revenue. Generic eggs are still yielding high positive margins given the USDA benchmark average combined costs for nest-run of 80.0 cents per dozen in October (feed, hen depreciation, housing, labor and fuel). In addition the average cost of grading, packaging and delivery amounted to approximately 50 cents per dozen according to the EIC.
  • It is now apparent that the inventory held by chains and other significant distributors may be more important to establishing wholesale price than the USDA regional inventory figures published weekly, especially over the short term. Market data suggests that chains have priced generic white eggs in response to prevailing demand seldom feature generic eggs, irrespective of size.
  • Due to the depletion of flocks as a result of HPAI, unseasonal high unit revenue will now be a reality into 2023. The occurrence and extent of further outbreaks of HPAI cannot be assessed until more information is revealed concerning the molecular and field epidemiology relating to cases, identifying modes of transmission and possible deficiencies in biosecurity on affected complexes that demonstrated specific risk factors.
  • The current relationship between producers and chain buyers based on a single price discovery system constitutes an impediment to a free market. The benchmark price amplifies both downward and upward swings as evidenced over the past two weeks. The benchmark functions to the detriment of the industry over the long term and a CME quotation based on Midwest Large, reflecting demand relative to supply would be more equitable. If feed cost is determined by CME prices then so should generic shell eggs.
  • According to the USDA the U.S. flock in production was down by a net 0.5 million or 0.2 percent to 303.2 million hens during the week ending November 16th. The flock in production includes about 3.0 million molted hens that resumed lay during the past week plus 4.0 million pullets attaining production.
  • There is some prospect of a return in the food service sector post-COVID with liquid, frozen and dried egg prices stable to moderately higher over the past three weeks. The ex-farm price for breaking stock was up 0.4 percent this past week to 269 cents per dozen. Checks delivered to Midwest plants were 2.0 percent higher to 256 cents per dozen. Prices for breaking stock will remain high in relation to season over the recovery period from HPAI as replacement flocks are reared, paralleling 2015-2016.

 

The Week in Review

Prices

According to the USDA Egg Market News Reports released on November 14th the Midwest wholesale price (rounded to one cent) for Extra-large was up 6.6 percent to $3.73 per dozen. Large size was up 6.6 percent to $3.71 per dozen; the Medium price was unchanged at $3.15 per dozen as delivered to DCs. Prices should be compared to the USDA benchmark average 6-Region blended nest-run cost of 80.0 cents per dozen in October excluding provisions for packing, packaging materials and transport amounting to 50 cents per dozen according to the EIC. The progression of prices during 2022 to date is depicted in the USDA chart reflecting three years of data, updated weekly.


 


Egg Monthly

11/17/2022

REVIEW OF OCTOBER 2022 EGG PRODUCTION COSTS AND STATISTICS.

 

OCTOBER HIGHLIGHTS

  • October 2022 USDA ex-farm blended USDA nest-run benchmark price was 284.4 cents per dozen, 5.4 percent higher than the September 2022 value of 269.8 cents per dozen. For comparison average USDA benchmark price for 2021 was 84.3 cents per dozen with a range of 58.0 cents per dozen in June to a high of 123.6 in December. Stock levels and prices prior to the onset of flock depletion due to HPAI indicated a relative seasonal balance between supply and demand. Prevailing wholesale prices will be largely dependent on consumer demand in an inflationary environment, with the potential to impact retail sales and margins. Other considerations include diversion to shell sales from the egg-breaking sector and fluctuation attributed to the amplification of changes in unit wholesale revenue due to the price discovery system. A moderate decline from unseasonal current levels is anticipated into early 2023 unless additional depletion of flocks occurs due to HPAI.
  • October 2022 USDA average nest-run production cost was down 1.4 cent per dozen (1.7 percent) compared to September 2022 to 80.0 cents per dozen, mainly attributable to a 2.4 percent lower average feed cost per dozen.
  • October 2022 USDA benchmark nest-run margin attained a positive value of 204.4 cents per dozen compared to a margin of 188.4 cents per dozen for September 2022.
  • September 2022 national flock in production (over 30,000 hens/farm) was up 0.8 percent or 2.3 million hens to 290.2 over a revised August 2022 value of 287.9 million. Approximately 2.5 million hens returned to production from molt in early September together with projected maturation of 24.0 million pullets, with this number offset by depletion of spent flocks. From February through the beginning of November, approximately 38 million hens were depopulated to control HPAI.
  • September 2022 pullet chick hatch was up 5.3 percent or 1.4 million from August 2022 to 26.6 million.
  • September 2022 exports of shell eggs and products combined were up 14.0 percent from a low volume in August 2022 to 413,000 case equivalents representing the theoretical production of 5.9 million hens.

 

INTRODUCTION.

Summary tables for the latest USDA October 2022 prices and flock statistics made available by the EIC on November 11th 2022 are arranged, summarized, tabulated and reviewed in comparison with values from the previous October 7th 2022 posting reflecting September 2022 costs and production data.

 

 

 

COSTS & REVENUE

 

Parameter

SEPTEMBER 2022

OCTOBER 2022

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

81.4 c/doz

80.0 c/doz

Low

77.9c/doz (MW)

76.1 c/doz (MW)

High

88.5 c/doz (N.West)

87.8c/doz (N.West)

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

Note: 1. Rounded to decimal of a cent

 

SEPTEMBER 2022

OCTOBER 2022

Feed

50.5 c/doz

49.3c/doz

Pullet depreciation

13.6 c/doz

13.5 c/doz

Labor (estimate)

4.0 c/doz

4.0 c/doz

Housing (estimate)

5.0 c/doz

5.0 c/doz

Miscellaneous and other*

8.3 c/doz

8.2 c/doz


* Adjusted January 2022 and used as a rounding factor


 


STOP PRESS

11/16/2022

Rail Strike Inevitable Without Congressional Intervention

 

With three of 12 Unions rejecting the provisional agreement the prospect of a rail strike is looming with inevitable dislocation of grain shipments and bulk commodities and fuel. The situation is exacerbated by the concurrent restrictions on Mississippi barge traffic and approaching freezes in the upper Midwest river system

 

Congressional intervention during this lame duck session is necessary to avert a major transportation crisis with impacts through the entire economy. Let us hope that reason prevails and that the diverse unions recognize their responsibilities to the Nation.

 


 

Increasing Atmospheric Greenhouse Gas Concentration

11/14/2022

According to the U.S. National Oceanic and Atmospheric Administration (NOAA), greenhouse gases continue to accumulate in the atmosphere.  Data, presented at the Cop27 climate talks, confirmed a new record for carbon dioxide of 415 ppm in mid-2021, according to the World Meteorological Organization (WMO).  NOAA reported on an upward trend in methane, a potent greenhouse gas.  In January 2002, the monthly mean value was 1,774 ppb.  This increased to 1,807 ppb in January 2012 and at the beginning of 2022, attained 1,908 ppb.


 

Eastman Chemicals to Recycle PET Packaging

11/14/2022

According to the November 7th edition of Chemical and Engineering News, Eastman Chemicals has received a substantial contract from PepsiCo that will justify construction of a third methanolysis plant to recycle polyethylene terephthalate (PET) packaging and fiber.  The Eastman process produces dimethyl terephthalate and ethylene glycol from the raw PET waste.

 

It is anticipated that the first plant located in Kingsport, TN. will be on-line during early 2023 and will process 110,000 metric tons of polymer per year.  A second plant will be established in France.  A third facility, to be located in the U.S., will process 160,000 tons of PET annually.


 

Food Costs in U.S. Moderate in October

11/14/2022

On Thursday, October 10th, the Department of Labor, Bureau of Statistics reported an increase in the CPI during October, up 0.4 percent, following a 0.8 percent rise for the previous month.  The Food Index increased by 0.6 percent in October following a 0.8 percent increase in September, representing a measure of moderation. 

 

The Food-at-Home Index rose 0.4 percent.  Within this figure, the category comprising Meats, Poultry, Fish and Eggs rose 0.6 percent during the month, 0.1 percent higher than during September.  The Index for Cereals and Bakery Products increased 0.8 percent in October, possibly due to the rise in the price of wheat resulting from drought in the U.S. and the invasion of Ukraine by the Russian Federation.

 

Food-Away-from-Home rose 0.9 percent in October with corresponding increases for the two previous months.

 

Over the past 12-months, the CPI rose 7.7 percent for the period ending October.  All food was up 10.9 percent with a breakdown of At-Home recording an increase of 12.4 percent but Food Away-From-Home rose 8.6 percent.  Within this category, full-service meals were higher by 9.0 percent and for limited-service meals, by 7.1 percent.


 

Hamlet Protein.to Present Seminar at EuroTier

11/14/2022

Hamlet Protein hosted a Feed Your Brain seminar on November 15th at the EuroTier Exhibition in Hannover, Germany.  The principal speaker was Professor Elizabeth Santin, addressing sustainability in swine and poultry production through gut health. 

 

CEO of Hamlet Protein, Erik Visser, stated, “EuroTier was an opportunity to share insights on the latest technical developments in nutrition of young animals.  The Feed Your Brain seminar complemented our booth and provided interaction with nutritionists, veterinarians, and customers concerned over gut health”.

 

Visser added, “Research shows that the inclusion of high-quality ingredients in starter and pre-starter feeds results in improved gut health, better digestion and absorption of feed components and a stronger immune system.”

 

Hamlet Protein produces soy-based protein ingredients for piglets, poults and chicks at two production plants the original facility in Denmark and a more recent installation in the U.S. in Ohio. For additional information, access www.HamletProtein.com.


 

Will FDA Acquire Greater Authority Over Food Contact Chemicals?

11/14/2022

With increased concern over the persistence of “forever chemicals”, the Government Accountability Office (GAO) has recommended that FDA request Congress for authorization to gather information on the presence of persistent chemicals including per and polyfluorinated compounds (PFASs) in food packaging.

 

U.S. Representatives Rosa DeLauro (D-CT) and Chellie Pingree (D-ME) requested that GAO report based on concerns resulting from recent studies.  The report included the comment:- “Thousands of food contact substances are available for use in manufacturing, packaging and transporting food.  These substances are used in food wrappers and the lining of metal food cans.  Some of the substances may, by themselves or in combination, contribute to adverse health effects including thyroid disease and hormone disruption.”

 

The GAO recommended that FDA request specific legal authority to compel companies to provide information needed to reassess safety of these compounds.  The FDA was urged to track dates of reviews for all food contact substances to identify compounds that require post-market evaluation.


 

USAPEEC Appoints Manager of Trade and Technical Services

11/14/2022

Egg-NewsUSAPEEC has announced the appointment of Dr. Ben Morris as Manager of Trade and Technical Services, working directly under Garrett Borkhuis in the Trade Policy Task Force. Morris earned bachelor's and master's degrees in Agribusiness from the University of Georgia and a PhD in Agricultural Education from the University of Florida.  He joins USAPEEC with considerable experience in agribusiness.


 

Survey on Profitability of Online Grocery Shopping

11/14/2022

Supermarket News recently conducted a survey on the margins generated from online grocery shopping.  According to a posting in the November 11th edition, 35 percent of the respondents indicated that they were losing money, 34 percent were achieving a positive margin and 21 percent were breaking even. 

 

As the U.S. emerges from COVID restrictions and concerns, shoppers appear to be favoring in person shopping or if ordering online, are taking advantage of store pickup.  This involves additional labor that depending on circumstances, may be adding to the cost of a transaction without being passed onto the customer.

 

Initial indications from various surveys indicate a return to brick-and-mortar shopping for the Thanksgiving and gift-giving season as consumers return to traditional buying practices after having been screen-bound for over two seasons.


 

Bunge Posts Q3 FY 2022 Financial Results

11/12/2022

Egg-NewsIn an October 26th release, Bunge Limited (BG) posted financial results for the 3rd quarter of fiscal 2022. This Company can be regarded as a bellwether for ‘Mega-Ag’ and the commodities sector. Along with competitors ADM, Cargill, Cofco and Dreyfus, all are subject to the risks of currency fluctuation, geopolitical events, climatic extremes, and increased cost of ingredients, labor and transport in a competitive world environment still restrained by COVID and conflict in the Ukraine.

 

For the 3rd Quarter of FY 2022 ending September 30th, net income was $380 million on total revenue of $16,759 million.  Comparable figures for the 3rd quarter of fiscal 2021 ending September 30th 2020 were net income of $645 million on total revenue of $14,117 million.  EPS fell from $4.28 for the 3rd quarter of fiscal 2021 to $2.49 for the most recent quarter.

 

The Agribusiness Segment generated sales of $11,741 million with a contribution of $632 million followed by oils and refining with revenue of $4,302 and a contribution of $232 million.

 

In commenting on results Greg Heckman, CEO, commented, “Our strong results this quarter demonstrate our team’s outstanding coordination and discipline as well as the flexibility of our global platform in this rapidly changing market. These strengths enabled us to better partner with our customers at both ends of the value chains to deliver innovative and sustainable solutions to consumers around the world”.

 

Heckman concluded "We are also enhancing our capabilities and assets to position Bunge for continued growth. We are investing in our core oilseed business as well as the growing opportunities in specialty fats and oils, renewable feedstocks and plant-based proteins. We remain confident in our business and our team’s ability to create value for the long term.”

 

Bunge incurred expenses and write-offs amounting to $167 million from withdrawal from the Russian Federation and the conflict in the Ukraine during FY 2022.

 

Bunge projected FY 2022 EPS at $13.50 based on improved performance.

 

On September 30th 2022, Bunge posted assets of $24,792 million, against long-term debt and other obligations of $4,852 million. The Company had an intraday market capitalization of $15,310 million on November 10th. BG trades with a forward P/E of 8.5 and has ranged over a 52-week period from $80.41 to $128.40 with a 50-day moving average of $91.96. Twelve-month trailing operating margin was 3.8 percent and profit margin 2.2 percent.  Return on assets over the past twelve months was 6.5 percent and the return on equity 17.7 percent.


 

Sweden Reports Case of Newcastle Disease

11/11/2022

A flock of 14,000 commercial table egg hens was depopulated following a diagnosis of Newcastle disease.  The outbreak occurred near Linkoping in the Province of East Gothland on October 24th.

 

The outbreak could have been avoided if flocks had been vaccinated against Newcastle disease a practice disallowed in Sweden and Norway.  The previous outbreak of Newcastle disease in Sweden occurred during April.


 

Canada Depopulates 400,000 Commercial Birds During September and October

11/10/2022

According to postings by the Canadian Food Inspection Agency, 400,000 birds of diverse commercial types were depopulated as a result of seventeen cases of highly pathogenic avian influenza.  Five farms with a total of 168,000 turkeys were affected together with 19,000 turkey breeder flocks on two farms.  Two outbreaks on commercial egg production farms totaling 17,250 birds were recorded.  Approximately 185,000 birds identified as commercial poultry but not assigned to a specific type were depleted on five farms.  The bird numbers among the farms ranged from 17,000 to 47,000.

 

Outbreaks are ongoing with three cases reported during the first week of November.


 

Protests in Brazil Impede Transport of Agricultural Commodities

11/10/2022

Following the election of President Luiz Inacio Lula da Silva by a narrow majority, protests have occurred in rural areas that have impacted exports. In addition domestic supply chain has been constrained with shortages for some items evident in urban supermarkets.

 

The Paranagua Port Authority is attempting to resolve a blockade of the access road to the Nation’s largest installation.  The Federal Road Police dismantled 339 blockades in the region erected by truckers. Exports of agricultural products are down by approximately one third since the start of protests, impacting soybeans, corn and fertilizer.  Some meat packing plants have reduced operating hours and processing of oranges has almost come to a halt as drivers are concerned over road protests.

 

Lula has vowed to end deforestation and to reverse policies imposed during the Bolsonaro regime detrimental to the environment.  An NGO dealing with Amazon conservation has determined that since 2020, 100,000 acres of Amazon rain forest have been cleared to plant soybeans in Mato Grosso state.  In his inaugural address to the nation, Lula noted, “Brazil will fight for a living Amazon.  We will resume the surveillance of the entire Amazon and any illegal activity will be suppressed and we will promote sustainable development.”

 

To his credit, ex-President Bolsonaro has called upon supporters to cease protests and destructive activities.


 

Uncertainty over Corn Exports to Mexico

11/10/2022

Secretary Tom Vilsack is confident that exports of corn to Mexico will continue based on assurances provided by Minister of Agriculture, Victor Villalobos. This opinion is contrary to the statements by Deputy Agriculture Minister Victor Suarez, that Mexico intends imposing a ban on  GM corn and the use of glyphosate in accordance with the directives of the President.  The ban is scheduled to commence in January 2024.

 

The U.S. exported 16.8 million metric tons of corn (661 million bushels) to Mexico in 2021.  According to press reports, if the ban were to be effected, Mexico would seek to buy 15 million tons of GM corn from other nations. This appears to be unattainable based on the fact there is insufficient availability of non-GM seed.  The financial impact on Mexico and consumers would be considerable if the ban is imposed.  There is no scientific justification for banning either GM corn or the use of glyphosate herbicide in cultivation. The proposed ban is either a combination of ignorance and misinformation on the part of the President or a cynical political move to create the impression of a leader concerned with the wellbeing of his Nation.

 

Irrespective of the motive the proposed ban lacking in scientific support is contrary to the principle of the USMCA


 

FAO World Food Price Index for October

11/10/2022

The Food and Agriculture Organization (FAO) of the United Nations released the October Food Price Index on November 4th.  The Index for October averaged 135.9 points, below the 136.3 points for September and 138 points in August.  The October Index is 14.9 percent below the record March 2022 high of 156.2.

 

The FAO Food Price Index comprises five components.  Excluding sugar, these comprise: -

 

  • The Cereal Price Index averaged 147.9 points for October compared to 152.3 for the previous month.  The decline was attributed to wheat price with higher supplies from Canada coupled with resumption of exports from Ukraine through the Black Sea.  U.S. wheat output was lower in October as a result of drought.
  • The Vegetable Oil Price Index in October rose 152.6 compared to 150.1 for the previous month.  Higher prices were recorded for sunflower and rapeseed oils offset by lower prices for palm oil.
  • The Meat Price Index rose from 118.4 points in September to 120.1 in October.
  • The Dairy Price Index averaged 142.6 compared to 140.1 for September.  Milk production was lower in Western Europe and demand was generally weaker, especially from China.

 

Historically, the annual FAO Food Price Index has almost doubled from 2005 (67 points) through 2010 (107 points); 2015 (93 points); 2020 (98 points); 2021 (125 points).  The August Index was 138.0 points, September 136.3 points, and October 135.9 points.


 

COP27 Commitment to Eliminate Deforestation

11/10/2022

According to a release from the 27th Conference of the Parties of the United Nations Framework Convention on Climate Change (COP27) major foods companies, including Cargill, JBS, Marfrig and COFCO have published their plans to reduce deforestation from their supply chains by 2025.  Extensive deforestation has occurred in Brazil, Indonesia and Malaysia to cultivate soybeans, cocoa and palm oil.  The commitment will contribute to the goal to hold global warming to 1.5 C above pre-industrial levels.

 

Newly elected President da Silva of Brazil has committed his administration to ending deforestation of the Amazon and to reverse many of the policies adopted by the outgoing Bolsonaro Administration, relating to environmental degradation. 

 

Both climate activists and the United Nations maintain that company pledges with respect to environmental improvement are essentially, “greenwashing” and will not contribute in any meaningful way to reversing global warming.


 

U.K. to Facilitate Gene-Deletion Technology

11/10/2022

The British House of Lords (equivalent to the U.S. Senate) is considering the Genetic Technology (Precision Breeding) Bill supported by the Department for Environment, Food and Rural Affairs (equivalent to the USDA).  It is intended to introduce a science-based regulatory system for precision-bred plants and animals.  The benefits of genetic modification are considered necessary to counteract the effects of climate change and to reduce the use of pesticides.

 

The Bill covers precision breeding, applying gene editing, paralleling natural and traditional breeding methods.  The Bill does not cover genetic modification involving the transfer or addition of genes.  It is intended to apply advanced precision breeding to plants and then subsequently to animals.

 

The John Innes Center will cooperate with farmers and food producers to commercialize innovations.  Professor Graham Moore, Director of the Center, noted, “We welcome the development of this legislation and the science-led approach to enable its delivery.  Our scientists use gene editing to improve the crops we eat every day, including wheat, cabbage, tomatoes and peas.”  He added, “We must use technology such as gene editing if we are to meaningfully tackle the complex challenges of climate change, food security and disease.”

 

It is intended that the Bill will exempt precision breeding technologies from regulatory requirements currently applied to genetically modified crops.  Two notification systems will be introduced for research and marketing, respectively.  When precision-bred animals are practical, regulations will ensure high standards for animal welfare.


 

October Food Inflation Rises to 14.7 Percent in U.K.

11/10/2022

Although the U.S. recorded an 8 percent increase in food prices during the month of October, British consumers are faced with relatively higher costs.  Market research company, Kantar, has calculated that inflation rose to 14.7 percent in October, with food such as milk, pet food and proteins showing the greatest increases.  Failure to curb inflation cost Prime Minister Liz Truss her job amid concern over the state of the economy. It is estimated that a quarter of U.K. households are under extreme financial stress.  The situation will be exacerbated through the winter with a reduction in availability of gas from Russia for home heating.

 

Predictable results of food price inflation include demand for lower-priced house brands.  Sales in this category increased 10 percent during September compared to branded goods that rose 0.4 percent.  Deep discounters ALDI and Lidl recorded sales increases during October of 23 percent and 22 percent, respectively, compared to conventional supermarkets that recorded lower sales.


 

Self-Checkout Studied in Relation to Shopper Preferences

11/10/2022

Market research company, Catalina, Inc., has reviewed UPC level transactions of 214 million consumer purchases in the U.S. during 2021 to estimate use of self-checkout lanes.  Catalina determined that self-checkout lanes have increased by 10 percent over the past five years and represent 40 percent of all lanes in grocery chains.  Catalina determined that 40 percent of shoppers used both self-checkout and manned checkout during the year and that only 12 percent of shoppers consistently using self-checkout.  Although shoppers used both systems in equal proportions, manned checkout accounted for 68 percent of sales compared to self-checkout with 32 percent.  Hybrid shoppers using both systems represented the highest customer value. Customers using manned checkout exclusively are predominantly seniors with household incomes under $100,000 and only a high school education.

 

It does not take a research company to analyze 4.5 billion UPC transactions to know that customers will only use self-checkout when they have a small basket of items, all of which are labeled with a bar code and when manned checkout lines are busy.  There is considerable variation in the efficiency of self-checkout and most pods with three or more stations require an attendant.  There are problems with non-barcoded items, including fruit and vegetables and frequently self-checkout stations are inconvenient to use when more than ten items are purchased.

 

Irrespective of the user friendliness of self-checkout and the availability and efficiency of manual checkout, the future probably lies in “just walk out” employing cameras and smart carts.  Many chains are testing or have installed self-checkout in order to reduce the cost of labor at the cost of customer goodwill. Until electronic systems incorporating cameras, barcodes and AI are perfected, supermarkets will rely on a hybrid mix of manned and self-checkout with consumers making the decision as to their channel of payment.


 

STOP PRESS

11/10/2022

October CPI Rise Half of September Value.

 

The Bureau of Labor Statistics reported Thursday 10th November that the Consumer Price Index (CPI) for October fell from 0.8 percent to 0.4 percent. The figure was lower than the 0.6 percent predicted by economists. Food at home rose 0.4 percent with the category of ‘Meat, Poultry and Eggs’ at 0.6 percent. The decrease in CPI suggests an easing of inflation and may influence the Federal Reserve to depart from an anticipated 0.75 percent rate increase to a lower number at the December meeting of the Federal Open Markets Committee.


 

Trivia-Origin of the Red Robin Chain

11/10/2022

This image taken in 1969 depicts Sam’s Red Robin Tavern in Seattle. The 1,500 square foot structure erected during the first decade of last century was refurbished in 1985 by Gerry Kingen as a hamburger restaurant and was renamed the Red Robin—the rest is history.

 


 

Vital Farms Releases Q3 Financial Results

11/09/2022

In a November 3rd release, Vital Farms Inc. (VITL), a Certified B Corporation posted financial results for the third quarter of fiscal 2022. This specialty egg producer competes directly with producers and distributors of USDA Certified Organic and pasture-raised products including Pete and Gerry’s, Hidden Valley and Egg Innovations. The Company has experienced the same pressures including increased cost of feed, contractor remuneration, labor and transport as competitors in a market environment subject to food inflation. Vital Farms has however benefitted from the increase in wholesale prices for eggs in common with all egg producers.

 

For the third quarter of FY 2022 ending September 25th 2022, net income was $723,000 on revenue of $92.0 million.  Comparable figures for the third quarter of fiscal 2021 ending September 26th 2021 were a net loss of $1.32 million on revenue of $64.6 million. Diluted EPS rose from $(0.03) for the third quarter of fiscal 2021 to $0.02 for the most recent quarter.

 

Gross margin for the most recent quarter was 32.0 percent compared with 30.7 percent for the third quarter of 2021. Operating margin for the most recent quarter was 2.2 percent compared with (2.8) percent for the third quarter of 2021.

 

In commenting on results, Russell Diez-Canseco, President and CEO stated “Vital Farms continues to challenge food system norms and deliver strong results,” Vital Farms’ President and He added “Our brand has maintained its positive momentum, as exemplified by 28% year-over-year volume growth during our third quarter, outpacing the category, which declined 0.5%. Our company produced both sequential and year-over-year gross margin improvement, and adjusted EBITDA improved by $5 million relative to the same period last year. This performance occurred during the most inflationary grocery environment in over 40 years” He concluded “Vital Farms added further retail distribution this quarter, and our household penetration was up over 40 percent compared to the same period last year to nearly 8 million homes.”

 

The Company retained guidance for FY 2022 with revenue of $340 million and an adjusted EBITDA of $13 million.

 

It is considered significant that in the statement of risks that included climatic factors, COVID and the war in Ukraine, management did allude to the possibility of HPAI infection. Flocks allowed outside access on pasture are more vulnerable compared to flocks confined to houses. The report did not mention biosecurity procedures and other preventive action. There was no reference as to whether flocks were confined during the third quarter. If not this would have been imprudent. In the event that some or all of the flocks were confined as a preventive measure eggs should have been labeled as “cage-free” and not “pasture” held.

 

On September 25th 2022, Vital Farms posted assets of $206.6 million of which $6.1 million comprised intangibles against long-term lease obligations of $1.0 million. The Company had an intraday market capitalization of $546 million on November 9th. VITL trades with a forward P/E of 53 and has ranged over a 52-week period from $7.89 to $20.17 with a 50-day moving average of $12.49. VITL traded at $14.35 at noon on November 9th. Twelve-month trailing operating margin was -1.1 percent and profit margin -1.3 percent.  Return on assets over the past twelve months was -1.1 percent with -2.8 percent on equity. Thirty six percent of the equity of Vital Farms is held by insiders with 64 percent by institutions. As of October 13th 4.8 percent of the float was short.

 

For purposes of comparison the Cal-Maine Foods report for the 1st quarter of FY 2023 ending August 27th documented a gross margin of 33.0 percent, an operating margin of 24.9 percent and a profit margin of 19.0 percent. The Cal Maine Foods report covers essentially the same cost and price environment as the third quarter of Vital Foods.  The complete Cal Maine Foods report can be retrieved by entering Cal Maine in the SEARCH block.


 

Workers Hands Source of Staph

11/08/2022

A study conducted in Portugal demonstrated that 11 percent of food service workers yielded Staphylococcus aureus from hand swabs obtained during workA significant proportion of the isolates were multiple drug resistant.

The study highlighted the need for personal hygiene involving frequent handwashing and the use of disposable gloves when in contact with food, especially items that are served uncooked.


 

Nestle Reduces Plastic in Packaging

11/08/2022

In 2018, Nestle a multinational food company, announced that it would use either recyclable or reusable plastic packaging by 2025.  By the end of 2021, the company had achieved 80 percent of this objective.  Nestle has adopted a comprehensive approach to replacing plastic by using less packaging, redesign and using recyclable material.

 

Nestle has adopted paper-based packaging, transiting from plastic to recyclable for its Smarties™ brand.  The company has phased out plastic straws, using a recyclable paper alternative.  Wrappers for the Quality Street™ brand are now made from compostable paper, compatible with nine different shapes that were previously using cellophane and foil.

 

 Nestle has collaborated with supermarket chain Carrefour in France to change the packaging of coffee, confectionary and pet food.  Recyclable packaging is now available allowing customers to fill reusable containers, in a constant cycle, obviating wastage.


 

HPAI Diagnosed in Mississippi Broiler Breeder Flock

11/08/2022

A broiler breeder flock in Lawrence County, Mississippi, was diagnosed with Highly Pathogenic Avian Influenza confirmed by the National Veterinary Services Laboratory.  The farm was quarantined and the flock depopulated.  The implications for export from Mississippi depend on acceptance by importing nations of either county or statewide embargos as documented in the USDA Export Library.


 

Pfizer Release on COVID Booster Vaccination

11/08/2022

The Pfizer COVID omicron-specific booster elicited a response four times higher as measured by neutralizing antibody titer against omicron subvariants BA.4 and BA.5. as compared to the original vaccine. The booster was especially effective in recipients older than 55 who demonstrated a 13-fold rise in antibody titer.

 

Pfizer and BioNTech have initiated a Phase 1 trial for a combined influenza and COVID vaccine, applying nRNA technology.  Dr.Ugur Sahin, CEO of BioNTech, stated, “By combining both antigens in one vaccine, we aim to provide individuals with an efficient way to receive immunization against two respiratory diseases with evolving viruses that require vaccine adaptation.”

 

A combination COVID and influenza vaccine that incorporates the most recent subtypes of both pathogens would be beneficial to enhancing population immunity.  The problem will be to persuade sufficient people to take advantage of the convenience and efficacy of a single vaccine.  Since introduction in late 2020, there has been unjustified opposition to available COVID vaccines, despite epidemiologic data showing higher rates of hospitalization and fatality in the unvaccinated.  Previously, a proportion of the population was willing to receive an annual inactivated trivalent influenza vaccine but rejected COVID protection.  If the same mentality prevails, the U.S. population will, in all probability, have a higher proportion of individuals susceptible to both influenza and COVID unless the vaccines are offered as separate options.


 

Zoetis Posts Q3 Financial Results

11/08/2022

In a November 3rd release, Zoetis Inc. (ZTS) posted financial results for the third quarter of FY 2022. The Company can be regarded as an indicator of the status of enterprises manufacturing pharmaceuticals, biologics and nutritional additives for companion animals and livestock industries in the Americas, Asia and Europe. Along with competitors Elanco, Phibro, Merck, and Boehringer-Ingelheim, all are subject to the risks of currency fluctuation, disruption of supply-chains and increased costs for products, labor and transport in a competitive environment with livestock producers and consumers impacted by inflation.

 

For the third quarter of FY 2022 ending September 30th 2022, net income attained $529 million on revenue of $2,002 million.  Comparable figures for the third quarter of fiscal 2021 ending September 30th were net income of $552 million on total revenue of $1,990 million. Diluted EPS attained $1.13 for the most recent quarter of fiscal 2022 compared to $1.16 for the third quarter of 2021. Gross margin for the third quarter of 2022 was 69.6 percent (70.5 percent Q3 2021) and operating margin was 38.0 percent (38.6 percent Q3 2021)

 

In reviewing the components of revenue for the third quarter of FY 2022 the Companion Animal Segment represented 63.4 percent of Company revenue with Livestock accounting for 35.4 percent (32.5 percent). Within this segment, cattle comprised 52 percent; poultry, 16 percent; swine, 18 percent with aquaculture and other species contributing to the difference. Sales to the International segment of livestock amounted to 49 percent (68 percent) with the remainder derived from the U.S.

 

No new breakthrough products for poultry were released in the most recent quarter. During the second quarter Zoetis expanded its poultry vaccine portfolio in the U.S. with the approval of  Poulvac® Procerta® HVT-IBD-ND, a trivalent vector vaccine that protects against Marek’s disease, infectious bursal disease and Newcastle disease.

 

In reviewing results Kristin Peck, CEO stated, "As the world continues to face dynamic market conditions and uncertainty in the global economy, our business has been tested and continues to perform well based on our diverse, durable product portfolio and global scale.”  She added "In the third quarter, we delivered five percent operational revenue growth, reflecting steady performance across our innovation-driven companion animal portfolio, especially internationally. We reported two percent operational growth in adjusted net income this quarter. This lower than usual growth on the bottom line was due primarily to a more favorable tax rate in the year-ago quarter.” Ms. Peck concluded “While we remain confident in the strength and growth drivers of our business, we are lowering 2022 guidance to reflect lower than expected sales in the second half of the year related to continued supply constraints, veterinary workforce challenges and recent changes to foreign exchange rates”.

 

Guidance for FY 2022 included revenue reduced to a range of $8,000 to $8,075 million; adjusted net income of $2,270 to $2,310 million and a raised diluted EPS ranging from $4.51 to $4.59.

 

On September 30th 2021 Zoetis posted assets of $13,674 million of which $4,172 million comprised intangibles and goodwill against long-term debt of $5,210 million. The Company had an intraday market capitalization of $62,580 million on November 8th 2022. ZTS currently trades with a forward P/E of 24.3 and has ranged over the past 52-weeks from $124.15 to $249.27 with a 50-day moving average of $151.70. Twelve month trailing operating margin was 35.5 percent and profit margin 25.8 percent.  Return on assets was 12.9 percent and 44.2 percent on equity. At close of trading on November 2nd pre-release ZTS priced at $148.85 opening on November 3rd post-release at $127.00 based on lowered guidance and the bottom line.


 

Financial Impact of California Drought Quantified

11/07/2022

A project team with representatives from the University of California and the Water Policy Center of the Public Policy Institute of California, estimated that climatic extremes in 2021-2022 resulted in crop losses and wildfires causing damage exceeding $3 billion. 

 

Central to the issue is the use of water that requires allocation between urban demands and agricultural needs.  The California Water Policy Center will develop economic impact assessments, will issue policy briefs and maintain a website publishing the results of studies relating to availability and the use of water in the State


 

GAO Questions EPA Policy on Small Refinery Exemptions

11/06/2022

The General Accounting Office (GAO) was requested to review issues relating to the granting of  Small Refinery Exemptions from the  Renewable Fuel Standard (RFS) obligation to blend ethanol into gasoline.  The investigation disclosed:-

 

  • EPA routinely misses the 90-day statuary deadline for issuing decisions on exemptions.
  • The Agency does not have procedures to ensure that it complies with deadlines.
  • EPA does not have policies or procedures to assess petitions and make consistent decisions.
  • Small Refinery Exemption decisions for 2019 through 2021 were based on a misperception that small refineries do not experience disproportionate economic hardship from complying with the RFS.
  • EPA and the Department of Energy lack policies and procedures relating to mutual consultation regarding decisions on Small Refinery Exemptions.

 

The number of exemptions granted increased sharply in 2016 through 2018 with more than 90 percent of applications granted.  From 2019 onwards, all requests were denied.

 

The General Accounting Office made seven recommendations to address deficiencies at the Department of Energy and the EPA, including the development of documentation for policies and procedures, compliance with deadlines and more rigorous economic analysis to ascertain the impact of RFS on small refineries.  The Department of Energy agreed with the GAO recommendations.  The EPA disagreed with one recommendation and partly accepted the other six.


 

Advanced Technology to Evaluate Flock Welfare

11/06/2022

The Foundation for Food and Agriculture Research (FFAR) and McDonald’s Corporation have announced that three of the six research projects funded in Phase I of the SMART Broiler Program have been selected to continue into Phase II. In 2019, $4 million was awarded to research teams to develop monitoring technologies to improve broiler welfare in Phase I.  These included Sensors, Monitoring, Analysis and Reporting Technologies to replace observational and subjective scoring.

 

Studies will be conducted at the Tyson Foods Broiler Research facility in Arkansas and at the Master Good unit in Kisvarda, Hungary. The three projects to be funded in Phase 11 are: -

  • Audio T, established at Georgia Tech University, will develop an audio-monitoring system to analyze flock vocalizations to be used in conjunction with video observation.
  • The University of Oxford will refine a computer system termed ‘Optiflock’ to evaluate locomotory dysfunction including foot-pad lesions and lameness.
  • The Queens University Belfast will apply artificial intelligence techniques to track individual birds within a flock.

 

Remi Rocca, Senior Director, Sustainable Sourcing for McDonald’s, stated, “We are proud to partner with FFAR and to take this next step in the SMART Broiler Program aimed at assisting farmers and providing greater levels of care for their birds.”  She added, “The collaborative work with FFAR, McDonald’s producers, including Tyson, Master Good and Moy Park and allied associations such as USPOULTRY as well as scientists and innovators is an excellent example of public-private partnerships that prioritize animal health and welfare.”


 

Promotion of U.S. Soybeans and Grains

11/06/2022

In order to establish market differentiation for consignments of U.S. agricultural commodities, the Specialty Soya and Grains Alliance has developed an Identity Preserved Assurance Plan and Mark.  Exporters and allied associations are eligible to join the Alliance, providing they adhere to the requirements, specifying source including product description and quality standards.

 

Funding for the U.S. Identity Preserved Assurance Plan and Mark was provided by the USDA Agricultural Trade Promotion Program. Additional contributions were made by the state soybean associations of Minnesota, Wisconsin, Illinois and Michigan.

 

The program is supported by the U.S. Soybean Export Council, the U.S. Grains Council and commercial groups including Spire Research and Consulting and Ag. Management Solutions.

 

Establishing a U.S. brand based on assurances of quality standards will differentiate certified products from commodities, ultimately benefiting producers through both volume and price. The program will however only be successful if buyers of the certified soybeans and grains can measure a benefit that might offset any differential in price between prevailing commodity prices and the cost for the certified products. The second consideration relates to the concept that non-certified U.S. products may be inferior in quality.

 

The U.S. Identity Preserved Brand was introduced at an event in Viet Nam where the brand mark designated premium crops with verifiable origins. The program developed in 2021 has attracted over a dozen U.S. companies to join and use the mark.  Additional participants are currently under evaluation to ensure compliance with standards.

 

Details on the Specialty Soya and Grains Alliance can be accessed on www.soyagrainsalliance.org


 

Written Comments on Proposed Organic Rule to be Reviewed by USDA

11/06/2022

The resuscitated Organic Rule incorporating welfare requirements was subject to public comment with a deadline for written submissions, yesterday, November 10th.

 

Agricultural organizations representing producer groups have submitted comments relating to the proposed requirements, including mandatory outside access for chickens and minimum space requirements for pregnant sows, effectively eliminating gestation crates for pork products bearing the USDA Certified Organic Seal.

 

The Cornucopia Institute is the motivator for small-scale organic producers to submit comments to an obviously receptive Agricultural Marketing Services, administrators of the National Organic Program.  The Cornucopia Institute has expressed concern that the lobbying power of large agricultural producers and associations may result in delays or modifications to the Proposed Organic Livestock and Poultry Standards.


 

Widespread Neglect of Hygienic Processing Disclosed in Italy

11/06/2022

The Ministry of Health of Italy has recruited the resources of the National Police Force (Carabinieri) to conduct a series of raids on food manufacturing facilities.  To date, 14 tons of food products have been confiscated and 23 companies have been closed.

The action was stimulated by an outbreak of listeriosis resulting in 90 diagnosed cases and three fatalities.  At the direction of the Ministry of Health, inspectors focused on approximately 1,100 manufacturers of meat and dairy products that are frequently associated with Listeria contamination.

 

The raids disclosed egregious deviations from acceptable plant management, including the use of expired ingredients, lack of hygiene and inoperative refrigeration.  In addition, irregularities were disclosed regarding microbiological assays, including submission of fraudulent certificates.

 

The chaotic situation disclosed in the raids is inconsistent with E.U. standards and will lead to loss of confidence in the wholesomeness of delicacies exported by Italy.


 

Baltimore County to Fund Supermarket

11/06/2022

Following closure of a Giant supermarket in the Liberty Road corridor of Baltimore, local residents were deprived of a large grocery.  With funding of $2 million and additional support from the American Rescue Plan Act, the Grocery Outlet Bargain Market based in California will renovate and operate the store.  Baltimore county executive Johnny Olszewski, Jr noted, "every resident deserves access to fresh, healthy foods and with this critical investment we are fulfilling a long-standing commitment to bring fresh grocery options to this community".


 

Trade Associations Urge Presidential Intervention in Rail Dispute

11/06/2022

On October 27th, a letter signed by numerous trade and agricultural organizations was forwarded to the President urging intervention by the Administration in the ongoing labor dispute between railway worker unions and carriers.  A tentative agreement on September 15th achieved with the assistance of the Secretaries of Labor and Transportation was adopted by six unions.  Two unions have rejected the terms and four others have yet to vote.

 

The letter supported Administration leadership on the issue including a Presidential Emergency Board that facilitated a tentative agreement but urged the White House to continue involvement in negotiations.  Failure to reach agreement will result in a strike that would have significant impact on the U.S. economy and contribute further to inflation. The disruption caused by a rail strike would be amplified by the current impediment to transportation along the Mississippi river and tributaries. This parallel traffic crisis is restricting barge traffic southbound for agricultural commodities and northbound for fertilizer.

 

In the event of a strike call, a cooling off period can be mandated and Congress may intervene.  It is noted that after a short lame-duck session in late November, Congress will be in recess, creating a level of urgency to adopt a new contract embracing the remaining six unions.


 

HPAI Outbreak Reported by Russian Federation

11/06/2022

The Russian Federation reported an outbreak of H5NI highly pathogenic avian influenza to the World Organization for Animal Health at the end of October.  The outbreak near Khabarovsk on the Amur River in southeast Russia was diagnosed clinically on October 23rd. The case involved a flock of 523,000 birds with type not specified.  The diagnosis was confirmed by rRT-PCR on October 30th denoting a delay in conducting laboratory procedures.

 

Russia infrequently reports outbreaks of HPAI and these are invariably in backyard flocks.  It is unusual to receive a report confirming an outbreak in a large commercial farm.


 

Chore-Time Appoints Production Planner

11/06/2022

In a recent press release, CTB Inc. announced the appointment of Ashley Landwerlen to the position of Senior Production Planner for the Chore-Time Brand of products.  In her role, Ms. Landwerlen, will be responsible for planning manufacture of ventilation systems, process training and related activities.

 

CTB is located in Milford, IN. and employs 3,000 worldwide, manufacturing equipment and installations to handle and store grain and for intensive livestock industries.


 

Meijer to Build Small Store in Indiana

11/06/2022

According to media reports, Meijer will erect a 90,000 square foot store in Noblesville, IN. This store will conform to the Meijer Grocery concept that deviates from the superstores that comprise the majority of Meijer locations.

 

Meijer has also initiated a program of neighborhood markets of 40,000 square foot in extent located in high density areas.  The first store with this configuration was opened in Grand Rapids in 2018 as a trial, but has been followed by five other locations.


 

Dr. Audrey McElroy Appointed Head of Texas A&M Poultry Science Department

11/06/2022

Dr. Jeff Savell, Vice-Chancelor of Texas A&M AgriLife and Dean of Agriculture and Life Sciences has announced the appointment of Dr. Audrey McElroy as head of the Poultry Science department.  Dr. McElroy served as a professor at Virginia Tech in research, teaching and extension for 15 years before returning to her alma mater from where she earned bachelor’s, master’s and doctoral degrees.  She served as interim head of the Department during the recruitment process.

 

Dr. McElroy noted that Texas A&M Department of Poultry Science is well-aligned among other national poultry programs but has aspirations to advance the status and image of the Department especially with stakeholder commitment involving partnerships with the poultry industry, commodity and professional groups.  During her term as Interim Head, Dr. McElroy led recruitment efforts and raised $6 million in donations from individuals and corporations to advance department initiatives.


 

Yum! Brands Q3 Financial Results

11/03/2022

In a November 3rd release, Yum! Brands Inc. (YUM) posted financial results for the 3rd quarter of fiscal 2022. Along with other QSRs and casual dining competitors, all are subject to the pressures of increased costs for food, packaging and labor in a competitive environment restrained by the hangover of COVID and inflation impacting consumers.

 

For the 3rd Quarter ending September 30th, net income was $331 million on total revenue of $1,640 million.  Comparable figures for the 3rd quarter of fiscal 2021 ending September 30th were net income of $528* million on total revenue of $1,606 million. Diluted EPS fell from $1.75 for the 3rd quarter of fiscal 2021 to $1.14 for the most recent quarter.

*Includes $77 million tax benefit

 

In comparing Q3 of 2022 with Q3 of 2021, revenue increased by 2.1 percent: operating margin by 3.6 percent but net profit declined by 37.3 percent

 

For the quarter, system-wide sales increased by 7.0 percent compared to Q3 of FY 2021 exclusive of foreign exchange and Russia. KFC +8 percent; Taco Bell 9 percent and Pizza Hut 4 percent

 Segment results for Q3 2022 comprised:-

  • KFC Division: System sales, $7,824 million. Segment revenue, $704 million; Operating margin 43.4%; Operating profit $304 million; 26,872 units. Same store sales growth: International, 8%; U.S. 2%.
  • Pizza Hut Division: System sales, $3,146 million. Segment revenue $237 million; Operating margin 39.0%; Operating profit $92 million; 18,807 units. Same store sales growth: International, 2%; U.S. 1%.
  • Taco Bell Division: System sales $3,417 million. Segment revenue, $568 million; Operating margin 35.9%; Operating profit $204 million; 7,974 units.  Same store sales growth: International, 5%; U.S. 7%.

 

In commenting on Q3 results, David Gibbs, CEO, stated “I’m pleased to report another strong quarter for Yum! with system sales growth of 10% excluding Russia, driven by strong demand for our iconic brands, increased digital adoption and continued momentum on unit development. Our three global brands delivered widespread system sales growth, once again demonstrating that our globally diversified business, led by our world-class teams and franchisees, can thrive in any environment.”

 

On September 30th 2022, YUM posted assets of $5,779 million of which $974 million comprised goodwill, lease obligations and intangibles.  Long-term debt was $11,517 million The Company had an intraday market capitalization of $33,540 million on November 3rd. QSR trades with a forward P/E of 22.6 and has ranged over a 52-week period from $103.97 to $139.85 with a 50-day moving average of $112.06.  Twelve-month trailing operating margin was 31.0 percent and profit margin 22.2 percent.  Return on assets over the trailing twelve months was 22.7 percent


 

Welcome to VDL Jansen as a Sponsor

11/03/2022

VDL Jansen was established in Holland in 1986 by entrepreneur and engineer, A.H. Jansen, to produce automatic laying nests.  Over successive years, the range of products was expanded to include mechanization for the poultry industry.  In 2020, his company, Jansen Poultry Equipment was acquired by the VDL Group and subsequently VDL Jansen was adopted as the company name.

 

The company is dedicated to providing systems to allow producers to obtain optimal results from flocks. VDL Jansen manufactures all products in-house and offers flexibility in design to suit specific needs.

 

The VDL Group is an industrial conglomerate operating 106 companies in 20 nations with 15,000 employees.  Products include vehicles, automotive components, production automation systems, container handling, dust extraction and agricultural equipment. 

 

VDL Jansen has developed efficient aviary systems for both rearing and laying flocks. Compatibility between rearing and laying configurations is necessary to achieve performance consistent with breed standards especially in the early phase of the laying cycle. Among the range of available models for North America VDL Jansen is promoting:-

 

RearMaxx® - Available as either two or three tier layout this system offers features that contribute to effective training and development of flocks. RearMaxx® offers efficient use of the volume of a rearing house to achieve high stocking density.  The modules facilitate vaccination and handling of pullets based on the design of the doors and the lengthwise partition installed in modules.  Feeder and drinking lines located on the first and second tiers are adjustable in height to accommodate growth of the flock.  The third tier, if installed, has a fixed drinking line.  Foldable perches are supplied with the system.  The dimensions of floor mesh supports chicks after placement. Manure is removed on plastic belts.

 

Comfort 2.0® Laying System – This three-tier installation is equipped with nests on the middle tier with feeding and water lines on the bottom and top tiers to encourage even distribution of flocks.  The open system allows observation within the modules.  As an alternative configuration, the Comfort 2.0® system can be supplied with two tiers, especially for retrofitting to existing houses with low ceilings.

 

For information on aviary systems produced by VDL Jansen, access the company website www.VDLJansen.com - The U.S. contact is Todd Heimler, T.Heimler@VDLJansen.com - Telephone: (248) 933-4868.


 

Restaurant Brands International Q3 Financial Results

11/03/2022

In a November 3rd release, Restaurant Brands International Inc. (QSR) posted financial results for the 3rd quarter of fiscal 2022. Along with other QSRs and casual dining competitors, all are subject to the pressures of increased costs for food, packaging and labor in a competitive environment restrained by the hangover of COVID and inflation impacting consumers.

 

For the 3rd Quarter ending September 30th, net income was $530 million on total revenue of $1,726 million.  Comparable figures for the 3rd quarter of fiscal 2021 ending September 30th were net income of $329 million on total revenue of $1,495 million. Diluted EPS rose from $0.70 for the 3rd quarter of fiscal 2021 to $1.17 for the most recent quarter.

 

 For the quarter, system-wide sales increased by 14.0 percent compared to Q3 of FY 2021.

 Segment results comprised:-

Tim Horton’s: Revenue, $1,033 million; EBITDA, $305 million; Comparable store sales increase, 9.8 percent with 5,405 stores

Burger King: Revenue $6,668 million; EBITDA $262 million; Comparable store sales increase 10.3 percent with 19,401 stores

Popeye’s LA Kitchen: Revenue,  $1,532 million; EBITDA, $62 million; Comparable store sales increase, 3.1 percent with 3,928 stores

Firehouse Subs: Revenue,  $289 million; EBITDA, $13 million; Comparable store sales increase, 0 percent with 1,234 stores

 

José Cil, Chief Executive Officer of Restaurant Brands International Inc. ("RBI") commented, "Our strong results this quarter, including 9 percent consolidated comparable sales growth and 4 percent net restaurant growth, reflect the strength of our diversified, global business model, strong free cash flow generation and benefits from our focused investments in key areas including operations, technology, marketing, franchising, and people."

 

Cil noted "Tim Hortons remains a loved destination, with strong sales momentum driven by quality new menu items and great value for money, resulting in accelerated comparable sales growth versus 2019 levels”. Additionally, we are proud that our Burger King franchisees are behind our Reclaim the Flame plan to accelerate growth by engaging existing and new guests, with important investments in marketing, operations, digital, and remodels. Internationally, the Burger King business is driving strong results with over 20 percent system-wide sales growth for the quarter and remains a great example of the power of being guest-led in everything we do.

 

He concluded "We are fortunate to own iconic brands that offer great value for money with menu offerings that are loved by our guests. We will continue to provide guests with the value they love while driving results in a profitable way for our franchisees. I am incredibly proud of the hard work from our franchisees, team members and employees as they execute against our plans and work towards our big dream to build the most loved restaurant brands in the world."

 

On September 30th 2022, QSR posted assets of $22,557 million of which $16,436 million comprised goodwill, lease obligations and intangibles. The Company had an intraday market capitalization of $17,930 million on November 3rd. QSR trades with a forward P/E of 13.3 and has ranged over a 52-week period from $46.68 to $61.79 with a 50-day moving average of $57.11.  Twelve-month trailing operating margin was 32.6 percent and profit margin 13.4 percent.  Return on assets over the trailing twelve months was 5.4 percent and the return on equity 29.6 percent. At close of trading on November 2nd pre-release, QSR was priced at $58.18. At noon, post-release on November 3rd QSR traded at at $59.04


 

Importation of Infant Formula

11/03/2022

According to a November 2nd FDA update, a Danone plant in Ireland and the a2 milk company in New Zealand will be authorized to supply infant formula to the U.S.   Both companies will provide infant milk and follow-on milk formulas intended for the first six months and the subsequent six-month periods respectively.  Authorization was issued under FDA oversight with information on nutritional adequacy and safety including microbiological testing and a review of facilities.  Importation of infant formulas was authorized in May 2022.


 

Publix Releases Q2 Results

11/03/2022

Supermarket chain, Publix, a privately held, employee-owned corporation, released limited Q3 financial data on November 1st for the period ending September 24th.  Sales attained $13,010 million compared to $11,920 million for the 3rd Quarter of 2021.  Net earnings were $394 million compared to $856 million in Q3 of 2021. Earnings per share attained $0.12 compared to $0.25 in Q3 2021. Comparable same store sales were up 7.6 percent compared to Q3 of 2021.

 

According to the Publix SEC Q10 submission total assets on November 1st were $30,347 million with long-term debt and lease obligations of $3,014 million.

Share price was adjusted downward from $13.84 to $13.19 on November 1st.

 

In commenting on results Todd Jones, CEO stated, “Unfortunately the stock market continues to be a challenge, but I could not be more proud of Publix’s response to Hurricane Ian,” Jones added, “Our associates’ efforts to serve our customers, our communities and each other during this difficult time have been amazing”.

 


 

Uzelac Industries Installs Manure Drying Installation

11/02/2022

Uzelac Industries has recently completed the second manure drying installation for Herbruck’s Poultry Ranch in their Lake Odessa, MI. facility.  The dryer was commenced operation in August and will complement the Herbruck’s Poultry Ranch commitment to sustainability and environmental quality. 

 

In May 2021 EGG-NEWS posted a comprehensive review on the Uzelac Industries drying installation as installed at Herbruck’s Poultry Ranch and Giroux Poultry Farm in NY.  The article included operating characteristics and a projected return on investment.  The article can be retrieved by entering “Uzelac” in the SEARCH block.

 

Herbruck’s Poultry Ranch is the recipient of a number of awards for sustainability, including the 2020 Project of the Year award from Consumers Energy, recognizing sustainability practices and projects.

 

For further information, click onto the Uzelac Industries logo on the right side of the Welcome Page.


 

High Cost of Salmonella Contamination

11/02/2022

The financial consequences of contamination of a chocolate plant in Wieze, Belgium cost holding company, Barry Callebaut $77 million.  The problem commenced when a batch of contaminated lecithin was delivered to the Wieze plant in late June 2022.  This resulted in an extensive in-plant dissemination of Salmonella Tennessee.  The contamination was detected on routine examination within a few days and the source of infection was identified resulting in closure of the plant.  Due to rapid detection, no contaminated product entered the supply chain.

 

Decontamination of the chocolate line extended from July 5th to July 14th with production commencing on August 8th after approval by the Belgium Federal Agency for the safety of the food chain.

 

The plant is now back to normal operation, although the shutdown had a notable impact on volume and hence, profit with reduced sales in Europe, the Middle East and Africa regions.


 

Alltech Establishes Organic Mineral Production Plant in Viet Nam

11/02/2022

Alltech recently opened a state-of-the-art manufacturing plant in Dong Nai, Viet Nam. This is the eighth Bioplex® production facility worldwide and has a capacity of 7,000 metric tons, annually.

 

In commenting on the new plant, Dr. Mark Lyons, President and CEO of Alltech, stated, “Our organic mineral program reflects a focus on sustainability in all aspects, from the health of animals, the nutrition of meat, milk and eggs produced, the economic well-being of the producer and the impact we have on our planet’s land and water.”  He added, “Our investment in enhancing our mineral production in Asia reflects our confidence in the market’s continued growth and our alignment with our customers’ commitment to better nutrition from farm to market.”

 

Features incorporated into the design of the plant are consistent with the Alltech principle of working together for a “planet of plenty” ™.  Environmental considerations include:-

 

  • The use of natural gas as a fuel to reduce carbon monoxide and nitrogen dioxide emissions compared to using fuel oil.
  • Installation of high-pressure clean-in-place pumps to reduce water use.
  • Incorporation of a highly efficient dust collection system.
  • Specifying invertor electric motors to reduce consumption.
  • Application of fluid bed drying to reduce thermal consumption in comparison to spray dryers.

 

The facility is certified by ISO to a 22000:2018, establishing food safety management standards.  In addition, the Alltech Q+ program will be applied to offer a global quality guarantee consistent with all Alltech production facilities that regulates analyses on raw materials and product.

Viet Nam produces 18.5 million metric tons of feed with a sharp increase in swine diets attaining 7.8 million metric tons in 2021.  Production of aquatic feeds increased by 40 percent in 2021 to 6 million metric tons.  Broiler feed advanced to 2.1 million metric tons and feed for egg producing flocks increased 11 percent to 2 million metric tons.


 

TekniPlex Acquires Ematec

11/02/2022

In a November 1st release, TekniPlex Communications announced the acquisition of Ematec, headquartered in Monterrey, Nuevo Leon, Mexico.  This company ha been a leading manufacturer of sustainable molded cellulose pulp packaging for over five decades.  Ematec products are used to pack eggs, produce and for food service and other applications.  The company also manufacturers post-consumer recycled PET plastic containers, including egg cartons. Ematec operates six production units in Mexico and is authorized to recycle paper, cardboard and plastic.

 

The acquisition of Ematec extends the range of TekniPlex egg packaging both in volume and diversity and will contribute to sustainability.

 

In the Company release, Eldon Schaffer, CEO of TekniPlex Consumer Products, noted, “Adding Ematec to the TekniPlex consumer products family gives us a boost in our overall efforts towards offering additional sustainable solutions to our customers.”  He added, “This allows us to stay ahead of increasing consumer demand for molded fiber packaging products and more sustainable packaging solutions.”


 

Washington State AG Intervenes in Albertson’s Acquisition

11/02/2022

Bob Ferguson the activist Attorney General of the State of Washington, has filed suit in the King County Superior Court to prevent Albertson’s Holdings Inc. paying $4 billion as a dividend to shareholders before the sale to the Kroger Company.

 

Attorney General Ferguson stated, “Paying out $4 billion before regulators can do their job and review the proposed merger will weaken Albertsons’ ability to continue business operations and to compete.”

 

The proposed acquisition of Albertsons by the Kroger Company will undergo DOJ scrutiny based on the potential to stifle competition.  Albertsons, headquartered in Idaho, has a strong presence in Washington State through the Safeway banner.  Kroger operates Fred Meyer and QFC stores.


 

U.K. Imposes Mandatory Confinement of Flocks Over HPAI

11/02/2022

The Chief Veterinary Officer of the U.K. has issued a mandatory confinement order requiring captive birds and poultry to be housed indoors effective November 7th.  In addition, flocks must be maintained under stringent biosecurity.  During the last week of October, the entire area of Great Britain was designated a bird flu prevention zone. 

 

Dr. Christine Middlemiss, Chief Veterinary Officer, stated, “This year we are now facing the largest ever outbreak of bird flu and are seeing rapid escalation in the number of cases on commercial farms and in backyard birds across England.”  She added, “The risk of flocks being exposed to disease has reached a point where it is now necessary for all birds to be housed until further notice.”

 

According to the Department for the Environment and Rural Affairs (equivalent to USDA), evidence shows that housing free-range birds reduces the risk of infection.


 

ALDI Rolls Back Selected Prices to 2019

11/02/2022

In keeping with the image of the chain as a deep discounter and recognizing the impact of inflation on consumers, ALDI is rolling back prices on holiday essentials. With effect from November 2nd, specific items traditionally consumed over Thanksgiving will be offered at 2019 prices, representing discounts of up to 30 percent. Products covered in the offer include Brie cheese, cornbread stuffing, wines, apple pie and other traditional foods.

 

David Rinaldo, President of ALDI U.S., stated, “We expect to welcome tens of millions of customers in our stores this Thanksgiving season and we want them to know they can count on us.”  He added, “This Thanksgiving and all year-round, ALDI is committed to offering shoppers the best possible value.”


 
































































































































































































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