Egg Industry News


WEEKLY COMMODITY REPORT

11/09/2018

According to the November 8th 2018 WASDE Report #583, 81.8 million acres of corn will be harvested in 2018 to produce 14.62 Billion bushels. The soybean crop is projected to attain 4.60 Billion bushels from 88.3 million acres harvested. The levels of production for the two commodities are based on revised projections of yield and acreage harvested. Ending stocks were revised based on anticipated domestic use and exports.

See the WASDE posting summarizing the November 8th USDA-WASDE Report #583 in this edition documenting price projections and quantities of commodities to be produced, used and exported from the 2018 harvest

Quarterly corn and soybean stocks were estimated by USDA in a release on September 28th to total 2.14 Billion bushels (14.7 percent of the 2017 harvest) and 0.44 Billion bushels (10.0 percent of 2017 harvest) respectively. Of the "old soy crop" 0.10 Billion bushels are held as on-farm storage, up 15 percent from the corresponding period in 2017. Off-farm storage is up 58 percent to 0.34 billion bushels. Disappearance from June to August was 0.78 Billion bushels, up 18 percent from the corresponding period in 2017. This reflects accelerated shipments in anticipation of increased tariffs imposed by China. Since August soybean exports to China have ceased.

The following quotations for the months as indicated were posted by the CME at close of trading on November 9th together with values for the corresponding months in parentheses confirmed a slight decline in prices after an upturn during the previous week.

COMMODITY

 

Corn (cents per bushel)

Dec.'18 369 (371)

March '19 380 (383)

Soybeans (cents per bushel)

Nov. '18 875 (874)

March '19 899 (899)

Soybean meal ($ per ton)

Dec. '18 306 (311)

March '19 311 (315)

Changes in the price of corn, soybeans and soybean meal were:-

COMMODITY CHANGE FROM PAST WEEK____________________

Corn: Dec. quotation down 2 cents per Bu. (-0.5 percent)

Soybeans: Nov. quotation up 1 cent per Bu. (+0.1 percent)

Soybean Meal: Dec. quotation down $5 per ton (-1.6 percent)

  • For each 10 cent per bushel change in corn:-

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

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

  • For each $10 per ton change in the price of soybean meal:-

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

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

Markets were essentially unaffected by release of the November WASDE. There is no immediate prospect of resolving the trade dispute with China before the 2018 harvest is completed. The Administration previously announced that negotiations are underway to arrange a meeting between President Trump and Premier Xi in late November at the G-20 Meeting but there has been no confirmation of a specific date or agenda. Markets fluctuate in response to conflicting messages from the White House concerning possible resolution of trade issues with China.

The financial future for row-crop farmers appears bleak despite the promise of $12 billion as "short-term" compensation. Recent comments from the USDA suggest that this value may be trimmed. Farmers will not be placated by the promise of a year-round E-15 blend since the logistic problems of delivery to consumers and legal challenges will delay any positive price benefit. The loss inflicted on farmers by the trade war with China is a gain for livestock producers who will benefit from lower feed costs. Of course the hog and poultry industries have experienced higher costs for a decade as a result of the RFS, a gift which keeps on giving. The RFS is a boon to Midwest politicians, corn growers and ethanol refiners at the expense of anyone in the U.S. who eats or uses any form of transport.


 

SELEGGT Unveils Gender Selection Technology

11/08/2018

A joint venture between Dutch incubation company HatchTech and German supermarket chain REWE Group has developed a practical gender identification system for commercial-level hatching eggs with funding from the German Federal Ministry of Food and Agriculture.

 

On the 9th day of incubation a sample of allantoic fluid is withdrawn through a laser-produced  hole in the shell 0.3 mm in diameter. The fluid is assayed in real time for the presence of estrone indicating an egg with a female embyo. This allows removal of half the setting comprising eggs wit male embryos. According to preliminary studies the outer shell membrane seals the extraction aperture and does not affect hatchability or chick quality.

REWE will market commercial eggs designated as derived from pullets “without brothers” This is considered a marketing advantage in a nation increasingly concerned over the destruction of 45 million day-old cockerel chicks.

 

Seleggt GmbH is developing a business model to make the system available as a “cost-neutral” service. Commercial application is anticipated in early 2020. REWE will roll-out commercial eggs initially in 223 stores in Berlin and will extend to 5,000 REWE and PENNY stores in Germany.

The integrity of the process will be ensured through blockchain technology.

 

In commenting on the Seleggt process unveiled on November 8th representatives of the the participating entities commented on the technical achievement and prospects:-

  

The Federal Minister of Food and Agriculture Julia Klöckner stated “This is a great day for animal welfare in Germany. In this way we will set the pace in Europe. My Ministry has provided around five million euros to support research for promising methods of gender identification in hatching eggs. With  the market readiness of the process presented today, Germany is a pioneer. Now it is possible to identify the gender of the chicks in the hatching egg through a needle-tip tiny hole. Male hatching eggs no longer need to be incubated and killed immediately after hatching.

Dr. Ludger Breloh, Managing Director of SELEGGT stated “The Ministry's funding was tremendously important to us, especially during the research phase at the University of Leipzig. I would like to express my sincere gratitude to the ministry for this support.

Despite all the euphoria, we still have a long way to go. We will work vigorously from our side to make the SELEGGT process available to the hatcheries as a cost-neutral system. Next year, we intend to move from market readiness to start of production Jan Kunath, the Deputy Chief Executive Officer of REWE Group said “REWE Group promotes and funds change processes in the industry that take social demands into account – even beyond those outside the company’s own business divisions. For this reason, REWE Group set up SELEGGT GmbH, a joint venture whose mission is to conduct basic research on endocrinologic gender identification in hatching eggs until market-ready solutions are developed. I am therefore all the more pleased that, as of today, we can offer customers in our REWE and PENNY stores an alternative husbandry”

 

Further information is available on www.seleggt.com


 

Mexico Reports H7N3 HPAI on Small Farms

11/08/2018

According to a report to the World Organization for Animal Health, Mexico identified cases of H7N3 HPAI on egg production farms in each of the states of Queretaro and Guanajuato. Outbreaks involved an egg production farm and a flock of fighting cocks.

HPAI can be regarded as endemic in many states in Mexico but is suppressed by administration of inactivated vaccines.

The avian influenza situation is continuously monitored by SENASICA, equivalent to USDA APHIS.


 

USDA-WASDE FORECAST #583 November 8th 2018

11/08/2018

OVERVIEW

The October 11th 2018 USDA WASDE projections for the 2018 corn and soybean harvests are based on actual planting data, crop progress with monitoring by "scouts", recorded crop progress and the fact that 70 percent of the new-crop corn and 87 percent of soybeans have been harvested. The acreage for corn was retained from the July through October projections at 81.8 million acres (83.1 million in 2017). Soybeans will be harvested from 88.3 million acres (89.5 million acres in 2017).

The USDA lowered corn yield by 1.0 percent to 178.9 bushels per acre from the October WASDE (175.4 bushels in 2017). Soybean yield was reduced by 1.9 percent from October to 52.1 bushels per acre (49.5 bushels in 2017).

The November USDA projection of ending stock for corn was lowered by 4.4 percent to 1,736 million bushels. Ending stock for soybeans was raised 7.7 percent to 955 million bushels resulting in predictable declines in CME quotations.

The 2018 corn and soybean crops will be the second largest ever but will be harvested during a time of uncertainty regarding previously projected, anticipated and actual export volumes. The USDA projections of ending stocks and hence prices for corn and soybeans take into account current announced tariffs on U.S. products but do not reflect tariffs or unlikely resolution of the trade conflict with China.


 


Salmet Appoints Regional Business Manager, U.S. and Canada

11/08/2018

Peter Mumm will serve as the Regional Business Manager for U.S. and Canada for Salmet GmbH & Co KG.  Peter is a 25 year veteran of the North American Egg Industry and was previously affiliated to a major primary breeder.


 

Egg Nutrition Center Appoints Director of Research

11/08/2018

The American Egg Board announced that Dr. Jen Houchins will serve as the director of Nutrition Research coordinating the ongoing research program and professional communications.

 

Previous Dr. Houchins served five years with the National Dairy Council as the Director of Regulatory Affairs.  Dr. Houchins earned a baccalaureate degree from the University of Minnesota and was awarded a PhD by Purdue University.  She is a Registered Dietician and can be contacted at jhouchins@eggnutritioncenter.org


 

ENC Presented Promotional Event at Food and Nutrition Conference

11/08/2018

From left to right, Dr. Mickey Rubin and Katie Hayes, ENC and Paul Sauder, Sauder’s Egg, PA.

The Egg Nutrition Center, a unit of the American Egg Board hosted a breakfast event for attendees at the 2018 Food and Nutrition Conference and Expo.  Special guest speaker was the chair of the AEB Member and Consumer Marketing Committee, Paul Sauder who provided a perspective on U.S. egg production.


 

Egg Nutrition Center Emphasizes Importance of Lutein Intake

11/08/2018

Dr. Elizabeth Johnson of Tufts University and Dr. Naiman Khan of the University of Illinois presented scientific data demonstrating the benefit of dietary lutein on brain and eye function at the 2018 Food and Nutrition Conference.

 

The Egg Nutrition Center operated a Macular Pigment Optical Density instrument at the Expo to measure the concentration of macular lutein in the eyes of attendees.  It is considered significant that approximately 15 percent of those screened among a population of registered dieticians showed suboptimal levels of lutein.

 

Lutein is present in the yolk of eggs and nutritional value can be enhanced supplementing diets with natural pigments extracted from marigold petals which supply xanthophylls and lutein.

 

There is no U.S. RDA for lutein which is considered a critical nutrient. Dietary supplementation is recommended to prevent macular degeneration.


 

FDA Issues Recommendations Following Arizona STEC Contamination

11/08/2018

As the growers in the Yuma Valley, AZ plant their crops for the 2019 season, the FDA has issued recommendations based on the belated investigation of the extensive STEC outbreak attributed to Romaine lettuce earlier this year.

 

Based on an assessment of the source of the STEC involved in an outbreak, the FDA have placed emphasis on preventing contamination of that irrigation water.  The recommendations also include suggestions to process and pack ready-to-eat produce.  It is self-evident that in the absence of an effective decontamination procedure, lettuce, spinach and other leafy vegetables that are harvested with E. coli or other pathogens present will represent a risk to consumers.

 

Regulations introduced by the Leafy Growers Association to distance fields from Concentrated Animal Feeding Operations including dairy farms and feed lots will be beneficial.  It is however necessary to constantly monitor irrigation and processing water for the presence of E. coli which may be present in sub-surface water as a result of percolation and runoff.

 

At the present time irradiation is the only absolutely effective measure to decontaminating leafy vegetables with bacteria causing foodborne disease.  This would involve installing electron beam pasteurization, analogous to X-rays at packing plants or transfer of pallet-loads of packed product to a central facility using cobalt60 isotopic irradiation at dose rates subject to FDA approval.  Ultimately consumers will have to decide whether they are willing to accept innocuous irradiation or endure with recurrent outbreaks of listeriosis, salmonellosis and colibacillosis.


 

Elanco Animal Health Enters into Strategic Partnership with Novozymes

11/08/2018

Elanco Animal Health will collaborate with Novozymes in the area of ruminant nutrition.  It is intended for the joint venture to undertake research and development to produce commercially acceptable products within a decade.  It is to be expected that the results of the collaboration will eventually extend to monogastric species including poultry.


 

ADM Reports on Q3 of FY 2018

11/07/2018

In a press release dated November 6th Archer Daniel Midland Company (ADM) announced results for the 3rd Quarter of Fiscal 2018 ending September 30th 2018.

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

3rd Quarter Ending September 30th.

2018

2017

Difference (%)

Sales:

$15,800,000

$14,827,000

+6.6

Gross profit:

$1,058,000

$812,000

+30.3

Operating income:

$523,000*

$227,000

+130.4

Net Income

$536,000

$192,000

+179.2

Diluted earnings per share:

$0.94

$0.34

+176.4

Gross Margin (%)

6.7

5.5

+21.8

Operating Margin (%)

3.3

1.5

+120.0

Profit Margin (%)

3.4

1.3

+161.5

Long-term Debt:

$7,320,000

$6,608,000

+10.8

12 Months Trailing:

     

Return on Assets (%)

2.9

   

Return on Equity (%)

10.8

   

Operating Margin (%)

2.8

   

Profit Margin (%)

3.1

   

Total Assets

$29,138,000

$27,837,000

+4.7

Market Capitalization

$26,930,000

   

*Includes $196 million in non-recurring revenue from sale of assets and other sources

52-Week Range in Share Price: $38.59 to $52.07

Market Open Nov. 7th post release $47.68

Forward P/E: 13.3 Beta 0.7

The team delivered another strong quarter, capitalizing on robust global demand with good execution and great utilization of our global footprint," commented ADM Chairman and CEO Juan Luciano. He opined "For the last several years, through good conditions and bad, we've remained focused on serving our customers and delivering our strategic plan - optimizing our core, driving efficiencies, and expanding strategically. Now, as we look forward to 2019, we are continuing to enhance our earnings power, both through our growth investments and our Readiness initiative, which is beginning to drive fundamental changes in the way we run our company.

He concluded "Thanks to the team's great work and the growing benefits of our strategic actions, we expect a solid end to 2018, as well as continued momentum for growth in earnings and returns in 2019 and the years to follow."


 

EPA to Exempt Farms From Air Release Reports Under EPCRA

11/06/2018

The Environmental Protection Agency has proposed changes to the Emergency Planning and Community Right to Know Act (EPCRA) to exempt farms from reporting air releases derived from animal waste.

The Fair Agricultural Reporting Method Act passed by Congress on March 23rd clearly stated that it was not the original intention of EPCRA to cover low-level air releases from natural degradation of manure as an emergency notification.

The decision by the EPA was warmly received by the U.S. Poultry and Egg Association, the National Chicken Council, National Turkey Federation and United Egg Producers. In a joint statement, the industry groups noted “The removal of this unnecessary burden will ensure that emergency first responders’ important effort and time is not wasted on responding to non-emergencies.”


 

Kroger Places Orders for Ocado Mechanized Warehouse Installations

11/06/2018

Following the agreement between the Kroger Company and Ocado in the U.K. during May, Kroger has confirmed orders for three mechanized warehouse installations to be termed “fulfillment centers”.

Previously Ocado provide robotic warehouse installations for U.K. supermarket chain Morrison’s in addition to Casino in France, Sobeys in Canada and ICA Group in Sweden.

Subject to satisfactory function, Kroger intends purchasing 20 units over a three-year period.

In terms of the agreement, Ocado will install and maintain the robotic warehouse installations against payment of an upfront fee and a royalty.


 

REVIEW OF OCTOBER PRODUCTION STATISTICS AND COSTS.

11/05/2018
  • October 2018 USDA Ex-Farm Benchmark Price up 10.5 Percent from September Consistent with Seasonal Trends.

  • USDA Average Nest-run Production Cost Fractionally Lower to 60.0 cents per dozen.

  • Positive USDA Benchmark Nest-run Margin Increased 61.4 percent from September to 20.5 cents per dozen

 

INTRODUCTION.

Summary tables for the latest USDA October 2018 statistics and prices made available by the EIC on November 5th are arranged, summarized, tabulated and reviewed in comparison with values from the previous October 8th 2018 posting reflecting September 2018 data.

 

COSTS & REVENUE

Parameter

SEPTEMBER 2018

OCTOBER 2018

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

60.08 c/doz

59.98 c/doz

Low

55.17 c/doz (MW)

55.65c/doz (MW)

High

76.68 c/doz (CA)

77.03 c/doz (CA)

 

Components of 6-Region 1stCycle Cost of Production:-

 

SEPTEMBER 2018

OCTOBER 2018

Feed

31.72 c/doz

31.63c/doz

Pullet depreciation

10.84 c/doz

10.84 c/doz

Labor

4.00 c/doz

4.00 c/doz

Housing

5.30 c/doz

5.30 c/doz

Miscellaneous and other*

8.22 c/doz

8.21 c/doz


* adjusted February 2018

Ex Farm Margin according to USDA values reflecting OCTOBER 2018:-

80.5 cents per dozen1- 60.0 cents per dozen = +20.5 cents per dozen

(September 2018 comparison 72.8 1 cents per dozen - 60.1 cents per dozen = +12.7 cents per dozen.)


 


USDA Weekly Egg Price and Inventory Report, November 7th 2018.

11/05/2018
  • Hen Numbers in Production increased 1.1 million to 321.2 million.
  • Shell Inventory Up by 2.6 Percent from Previous Week.
  • USDA Midwest Benchmark Generic Prices for Extra Large and Large up 8.8 and 9.0 Percent Respectively. Mediums up 14.6 Percent Compared to Previous Week.

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on November 5 th the Midwest wholesale prices for Extra Large and Large sizes were up 8.8 and 9.0 percent respectively and Mediums were up 14.6 percent compared to the past week. The progression of prices during 2018 is depicted in the USDA chart reflecting three years of data, updated weekly.

The November 5th USDA Egg Market News Report (Vol. 65: No. 45) documented a USDA Combined Region value rounded to the nearest cent, of $1.10 per dozen delivered to warehouses week ending November 1st This price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $1.01 per dozen. At the high end of the range, price in the South Central Region attained $1.16 per dozen. The USDA Combined Price last week was 8 cents per dozen below the three-year average and 7 cents per dozen above the corresponding week in 2017.


 


USDA DATA ON CAGE-FREE PRODUCTION

11/05/2018

Based on the importance of cage-free production, the USDA-AMS issues a monthly report on volumes and prices for the information of Industry stakeholders. There is some doubt as to the accuracy of the monthly flock numbers and the question is raised whether it would be more desirable to post accurate quarterly data in place of erratic monthly figures.

EGG-NEWS summarizes and comments on data and trends in the monthly USDA Cage-Free Report, supplementing the information posted weekly in the EGG-NEWS Egg Weekly Price and Inventory Report.

The USDA Cage Free Report for the month of October 2018 released on November 2nd 2018 documented constant flock sizes in hens producing under the Certified Organic seal and for cage-free flocks as compared to September 2018. Organic and cage-free egg production were down <0.1 percent from September. The respective numbers of hens in organic and cage-free flocks should reflect the realities of supply and demand in the market over successive quarters. Average flock production remained at 75.3 percent for both categories of non-caged hens (accepting USDA data):-

Flock size '18 (million hens)

May

June

July

Aug.

Sept.

Oct.

Certified Organic

15.6

15.6

15.6

15.6

15.7

15.7

Cage-free hens

38.9

39.1

39.1

39.1

41.4

41.5

Total non-caged

54.5

54.7

54.7

54.7

57.1

57.2

Average weekly production cases, October 2018 Δ

Certified Organic

229,517 was 229,356 Sept. < -0.1%

Cage-free

606,787 was 606,304 Sept. < -0.1%

Total non-caged

836,304 was 835,660 Sept. < -0.1%

Average Wholesale Contract Price Cage-Free Brown

$1.56/doz. Down 3 cents/doz. From Sept.

Range unchanged at:

$1.15 to $2.10/doz. (Av. $1.56/doz)

FOB Negotiated price, grade quality nest- run, loose

Average up 0.9 percent from September with narrower spread

$1.02 to $1.37/doz. (Av. $1.14/doz)

Average Advertised National Retail Price C-F, L, Brown

$2.62/doz. (was $2.55 September)

USDA 6-Region

High: NE

$2.96/doz. $2.74 SW

 

Low: MW

$2.19/doz. $2.24 MW

 

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


 

Status of 2018 Corn and Soybean Crops

11/04/2018

The USDA Crop Progress Report released on November 5th updated the 2018 corn and soybean harvest.

Seventy-six percent of the corn crop has been harvested conforming to the 5-year average. There is concern over mycotoxicosis associated with early and persistent drought which occurred in some Midwest states during the "silking" stage coupled with wet conditions at the time of harvest.

Eighty-three percent of the soybean crop has been harvested compared to eighty-nine percent for the 5-year average. Harvest was delayed by rain during the past three weeks but advanced eleven percent this past week. The problem facing farmers and elevators will be storage given the rise in ending stocks occasioned by cessation of exports to China. Some relief may occur with the sale of the Southern Hemisphere harvest.

EGG-NEWS and CHICK-NEWS will report on the progress of the two major crops as monitored by the USDA and will continue posting updates through the end of harvest.

WEEK ENDING

Crop Parameter (%)

October 28th

November 4th

5-Year Average

Corn Emerged

Corn Silking

Corn Dough

Corn Denting

Corn Mature

Corn Harvested

100

100

100

100

100

63

100

100

100

100

100

76

100

100

100

100

100

77

       

Soybeans Emerged

Soybeans Blooming

Soybeans Setting Pods

Soybeans Dropping Leaves

Soybeans Harvested

100

100

100

100

72

100

100

100

100

83

100

100

100

100

89


 

WEEKLY COMMODITY REPORT

11/02/2018

According to the October 11th 2018 WASDE Report #582, 81.8 million acres of corn will be harvested in 2018 to produce 14.78 Billion bushels. The soybean crop is projected to attain 4.69 Billion bushels from 88.2 million acres harvested. The levels of production for the two commodities is based on revised projections of yield and acreage harvested. Ending stocks were revised based on anticipated domestic use and exports.

 

Quarterly corn and soybean stocks were estimated by USDA in a release on September 28th to total 2.14 Billion bushels (14.7 percent of the 2017 harvest) and 0.44 Billion bushels (10.0 percent of 2017 harvest) respectively. Of the “old soy crop” 0.10 Billion bushels are held as on-farm storage, up 15 percent from the corresponding period in 2017. Off-farm storage is up 58 percent to 0.34 billion bushels. Disappearance from June to August was 0.78 Billion bushels, up 18 percent from the corresponding period in 2017. This reflects accelerated shipments in anticipation of increased tariffs imposed by China. Since August soybean exports to China have ceased.

 

The following quotations for the months as indicated were posted by the CME at close of trading on November 2nd together with values for the corresponding months in parentheses indicating an upturn in prices after declines during the previous week.

 

COMMODITY

 

Corn (cents per bushel)

Dec.’18   371   (367)        

March ‘19  383  (379)

Soybeans (cents per bushel)

Nov. ’18  874  (846)*   

March ’19  899  (872)      

Soybean meal ($ per ton)

Dec.  ‘18  311  (308)*

March ’19  315  (311)

*values reflect 2017 harvest

 

Changes in the price of corn, soybeans and soybean meal were:-

COMMODITY                      CHANGE FROM PAST WEEK

Corn:                      Dec. quotation up 4 cent per Bu.                        (+1.1 percent)

Soybeans:               Nov. quotation up 29 cents per Bu.                     (+3.4 percent)

Soybean Meal:         Dec.  quotation up $3 per ton                             (+1.0 percent)                                

  • For each 10 cent per bushel change in corn:-

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

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

  • For each $10 per ton change in the price of soybean meal:-

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

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

 

Markets were essentially unaffected by release of the October WASDE. There is no immediate prospect of resolving the trade dispute with China before the 2018 harvest is completed. The Administration previously announced that negotiations are underway to arrange a meeting between President Trump and Premier Xi in late November but there has been no confirmation of a specific date or agenda. Markets fluctuated in response to conflicting messages from the White House concerning possible resolution of trade issues with China.

 

The financial future for row-crop farmers appears bleak despite the promise of $12 billion as “short-term” compensation. Recent comments from the USDA suggest that this value may be trimmed. Farmers will not be placated by the promise of a year-round E-15 blend since the logistic problems of delivery to consumers and legal challenges will delay any positive price benefit. The loss inflicted on farmers by the trade war with China is a gain for livestock producers who will benefit from lower feed costs. Of course the hog and poultry industries have experienced higher costs for a decade as a result of the RFS, a gift which keeps on giving. The RFS is a boon to Midwest politicians, corn growers and ethanol refiners at the expense of anyone in the U.S. who eats or uses any form of transport.

 

See the WASDE posting summarizing the October 11th USDA-WASDE Report #582 under the STATISTICS tab documenting price projections and quantities of commodities to be produced, used and exported from the 2018 harvest.


 

U.K. to Tax Plastic Packaging

11/02/2018

The 2018 U.K. budget included a provision to tax non-recyclable plastic packaging. This would apply to both domestic and imported product. The criterion for taxation will be less than 30 percent recycled material. According to Phillip Hammond the Chancellor of the Exchequer (equivalent to the U.S Treasury Secretary), the tax will “transform the economics of sustainable packaging”.

Prime Minister Theresa May has committed Britain to eliminating avoidable plastic waste by 2042.


 

Evonik Invests in In Ovo Gender Determination

11/02/2018

InOvo, founded in 2013 by scientists affiliated to the University of Leiden is a company vying for a breakthrough in early embryonic gender determination. According to press reports their system is based on removal of a sample of (presumably) allantoic fluid from the egg prior to the time of setting to determine the presence of a biomarker applying mass spectrometry.

If this process requires genetic manipulation for the placement of a biomarker on a chromosome determining gender, the process will in all probability not be acceptable to the major breeders who have eschewed any application which could be regarded as genetic manipulation. Furthermore, the abstraction of fluid from an egg prior to incubation for automated assay will require equipment and installations reminiscent of the gender-sorter developed by Embrex in the late 1990s which proved financially infeasible.

The investment made by Evonik will be used by InOvo to advance technology from a laboratory demonstration of proof of principle to hopefully a commercial prototype.


 

Is Amazon Go™ the Future of Supermarkets?

11/02/2018

Andrew Tarantola writing in Engadget on October 27th makes a strong case that Amazon Go™ will be the future of supermarket shopping. He recounts the history of innovation in grocery shopping from the 1905 Astor Market in Manhattan which failed. The forerunner of modern supermarkets was 30-years ahead of its time but lacked support. Customers were used to purchasing dairy, meat and groceries in separate specialty stores with interaction with the proprietor and his staff.

The supermarket concept was developed by Piggly Wiggly in the early 1950s to cater for suburbanites with autos in the post-WWII era. The innovation comprised selecting items from shelves with payment at a checkout counter.

Barcoding was developed in the late 1940s, but was only introduced in the 1970s since it required considerable technical refinement, innovation and acceptance by consumers.

Shopping without checkout may appear efficient and technologically beneficial, but consumers will have the last say as to acceptability. If there are snafus in reading codes or if consumers make errors in selection and wish to substitute or cancel an item the system may result in confusion.  It must be remembered that over a decade ago, self-checkout counters were introduced with great fanfare. Apart from quick-service lanes with customers purchasing a limited number of items all barcoded, the system has minimal application and is not cost-effective either in terms of labor saving or goodwill.

The heading of the article proclaiming that Amazon Go™ will be “the future of supermarkets” may be more presumptuous than prescient.


 

STOP PRESS

11/02/2018

The following breaking items are of interest to the poultry industry and will be considered in subsequent editions of EGG-NEWS and CHICK-NEWS:

  • Pilgrim's Pride posts lower sales and sharply diminished earnings: The October 31st release by Pilgrim's Pride Corp. on the third quarter denoted a 3.2 percent decline in revenue compared to Q3 2017 to $2.7 billion. Net earnings of $29.3 million contrasted with $232.7 million in the corresponding quarter of 2017. EPS was reduced proportionately to $0.12 in the most recent quarter from $0.93 in Q3 of 2017. The Company attributed the decline in performance to "weak pricing"

  • Zacky Farms to cease operations: The Company has undergone successive restructuring and refinancing but has been removed from life support and will wind down operations by mid-January 2018.

  • Zoetis achieves exceptional results for Q3: In a November 1st press release multinational biopharmaceutical manufacturer Zoetis earned $347 million on sales of $1.5 billion. Poultry products comprising vaccines, diagnostics and pharmaceuticals represented 8.8 percent of worldwide revenue.

  • Idexx achieves sales and profit from companion animal market: Although a groundbreaker in poultry diagnostic technology introducing ELISA assay systems 35 years ago Idexx has transitioned to companion animals. In the third quarter of 2018 Idexx earned $93 million on sales of $545 million reflecting higher margins in pets. The Livestock/poultry/dairy segment represented 5.3 percent of sales and contributed 3.4 percent of operating profit.

  • Proponents of California Proposition #12 raise tenfold more than opposition: The coalition of animal welfare groups including the ASPCA and HSUS supported by the State Democratic Party, United farm Workers and the Sierra Club have raised over $1.6 million as of September 28 th compared to less than $0.6 million for groups advocating a NO vote. A positive vote as expected will phase out confined housing for livestock including hens allowing aviary and floor systems for production of eggs produced or transported into the State.


 

Zoetis Reports on Q3 of FY 2018

11/01/2018

In a press release dated November 1st 2018 Zoetis (ZTS) announced results for the 3rd Quarter of Fiscal 2018 ending September 30th 2018.

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

Quarter Ending. Sept. 30th

2018

2017

Difference (%)

Sales:

$1,480,000

$1,347,000

+9.8

Gross profit:

$1,007,000

$912,000

+10.4

Operating income:

$561,000

$457,000

+22.8

Net Income

$347,000

$296,000

+17.2

Diluted earnings per share:

$0.71

$0.61

+16.4

Gross Margin (%)

68.0

67.7

+0.4

Operating Margin (%)

37.9

33.9

+11.8

Profit Margin (%)

23.5

22.0

+6.8

Long-term Debt: Dec 31st. 2017/2016

$4,953,000

$4,468,000

+10.9

12 Months Trailing:

     

Return on Assets (%)

12.1

   

Return on Equity (%)

83.5

   

Operating Margin (%)

32.7

   

Profit Margin (%)

16.3

   

Total Assets Dec 31st. 2017/2016

$8,506,000

$4,468,000

+10.9

Market Capitalization

$45,000,000

   

52-Week Range in Share Price: $67.44 to $96.57

Market Close Nov. 1st $94.25 (+4.6%)

Forward P/E: 32.6

Livestock sales represented 52.6 percent of revenue (55.9 percent Q3 2017); Poultry represented 8.8 percent of sales (8.8 percent) International sales were 47.9 percent of revenue (33.9 percent)

Juan Ramón Alaix, CEO of Zoetis commented "continued delivering strong results in the third quarter, with 12% operational growth in revenue and 32% operational growth in adjusted net income," He added "our companion animal products performed well, primarily based on our key dermatology brands, new parasiticides and the addition of the Abaxis diagnostics portfolio. Meanwhile, in livestock products, our swine, poultry and fish portfolios each delivered double-digit growth, with more modest growth in our cattle business. Our diverse portfolio provided us with steady performance across markets, species and therapeutic areas, and we continue to invest internally and externally to support future growth."

F0r FY 2018 ZTS provided guidance for revenue of $5.75 billion to $5.85 billion, with EPS ranging from $3.08 to $3.13.


 

Mexico Amends Regulations to Permit Washing of Eggs

11/01/2018

The Diario Official of Mexico, equivalent to the U.S. Federal Register has published a rescission of requirements concerning washing of eggs which represented a potential barrier to exports of table eggs to Mexico.

The Mexican Federal Commission on Sanitary Risk Prevention has essentially harmonized regulations with those of the FDA amending NOM-159. Eggs may be washed immediately after collection followed by drying and subsequently either be coated with oil or held under refrigeration.

The amendment to the standard followed negotiations between the FAS and counterparts in Mexico with strong support from the USAPEEC.


 

Apparent Association of Organic Food Consumption with Non-Hodgkins Lymphoma

11/01/2018

A study published in the Journal of the American Medical Association* provided statistical evidence that consumption of organic foods in France was associated with a lower prevalence of non-Hodgkins lymphoma and post-menopausal breast cancer.

The study involved 69,000 adults divided into quartiles based on claimed intake of organic foods. Over the period May 2009 to November 2016, 1,340 incident cases of cancer were identified. Allowing for compounding factors including socio-demographics, lifestyle and dietary preferences, there was in inverse association between consumption of organic food and developing either of the two cancer diagnoses.

The authors implied that the difference was due to the presence of pesticides citing the European Food Safety Authority. This agency found 44 percent of conventionally produced samples contained one or more quantifiable pesticide residues compared to 6.5 percent of organic samples. The authors concluded because of their lower exposure to pesticide residues, consumers may have a lower risk of developing cancer.

It is noted that 78 percent of the participants in this study were female, participating in a national NutriNet-Sante study. Consumers incorporating a large proportion of organic foods in their diets usually are of a higher economic demographic and are obviously health-conscious. This cohort may also exhibit other health-promotional activities such as moderation in alcohol consumption, abstaining from tobacco and incorporating exercise in their daily routines.

The study might have been more persuasive had the investigators measured pesticide residues in urine and available tissue samples in order to correlate consumption of organic foods with the two cancers.

*Alles, B. et. al. “Association of frequency of organic food consumption with cancer risk findings from the NutriNet-Sante perspective cohorts study”, JAMA Intern MED published online on October 22, 2018. doi:10.1001/jamainternmed.2018.4357


 

Dairy Farmers will not Benefit Materially from USMCA

11/01/2018

Despite hype and premature celebration over modifications to NAFTA incorporated into the USMCA, two Federal Reserve Banks reports that material benefits will not accrue to U.S. dairy farmers in the short term. The Chicago Federal Reserve reported that “gains will be too small and too far into the future to help dairy farmers.” The Minneapolis Federal Reserve reported on the “substantial number of dairy operations which have exited the business since the beginning of 2018.”

In terms of the USMCA, Canada will allow U.S. producers to supply up to 3.6 percent of the dairy market. This quantity is the same as the provision incorporated into the 2015 Trans Pacific Partnership from which the U.S. unilaterally withdrew at the inception of the current Administration.

According to Liz Moyer, Investment Editor who posted on the CNBC website on October 24th, “the insistence by the U.S. on concessions by Canada with respect to dairy products was intended as a political gesture to hard-pressed dairy farmers in Midwest and northern tier states”.


 

Increased Supply of Commodities Reduces Food Price Index

11/01/2018

The Food and Agricultural Organization recently issued a report confirming a 1.4 percent decline in the FAO Food Price Index, from August to September. The index is now 7 percent below the September 2017 level. This is due in part to a 2.8 percent decline in the cereal price component following the large U.S. harvest coupled with shipments of wheat from the Russian Federation. The Vegetable-oil price index has declined for eight months in a row and is now 2.3 percent below September. The dairy price index declined by 2.4 percent together with a decrease in the Meat-price index.

The FAO noted that drought in Australia and Canada will lower wheat yields but offset by product from the Russian Federation. Concurrently rice output will increase by 1.3 percent due to higher planting and yields in Asia.

The effect of increased supply relative to demand will result in increased ending stocks of many commodities.


 

Chore-Time Appoints E.U. Sales Director

11/01/2018

Jeff Miller, GM for CTB Chore-Time Group Business Unit has announced the appointment of Paul Janssen as Sales Director for Chore-Time in Europe. In this position, Janssen will be responsible for both Chore-Time and Volito product sales and service cooperating with existing regional sales managers and distributors.

Janssen joined Chore-Time distributor, Veldmaster B.V. located in Holland in 2000. He has over 25 years of experience including work on a turkey farm.

He is fluent in Dutch, German and English and holds a bachelor’s degree in logistics management from the Netherlands.


 

Frank Yiannis Appointed FDA Deputy Commissioner

11/01/2018

Commissioner of the Food and Drug Administration, Dr. Scott Gottlieb has announced the appointment of Frank Yiannis to a newly created position, Deputy Commissioner for Food Policy and Response. He replaces Dr. Stephen Ostroff who will retire as FDA Deputy Commissioner for Foods and Veterinary Medicine after a distinguished career at the FDA.

Yiannis who is currently Vice President of Food Safety at Walmart is a proponent of blockchain technology and is experienced in aspects of food safety and proactive measures to prevent foodborne disease. Yiannis has been a strong proponent of food safety both at Walmart where he completed a 10-year tenure and previously as Director of Safety and Health at Walt Disney World Company for 20 years.

Yiannis was recruited by Dr. Ostroff based on knowledge and experience which is critical after the challenges facing the FDA in protecting the food supply. In a statement accompanying the announcement, Dr. Gottlieb noted “We are delighted to be welcoming Frank to FDA and believe his extensive expertise in supply chain security can help inform our work across our different product areas including food, but also when it comes to the safety and security of medical products.”

The appointment has been welcomed by public health experts including Dr. Michael Taylor who served as the first Deputy Commissioner for Foods and Veterinary Medicine who stated “Frank is passionately committed to public health and the wellbeing of consumers.” The appointment was also endorsed by attorney Bill Marler, who referred to the action taken by Yiannis in response to the extensive STEC infection associated with lettuce grown in the Yuma Valley in 2017.

The appointment of Yiannis coincides with reorganization of responsibilities at FDA. The Heads of Centers including the Center for Food Safety and Applied Nutrition will report directly to the Commissioner, bypassing Deputy Commissioners. The new office headed by Yiannis will be separate from the current office of Foods and Veterinary Medicine previously led by Dr. Ostroff.


 

Hard-Boiled Eggs Donated for Hurricane Michael Relief

11/01/2018

Deb-El Food Products of Elizabeth, NJ. donated 140 cases of hard-boiled eggs as part of the American Egg Board Disaster Relief Partnership with the Tyson Foods Meals That Matter initiative.


 

Speed and Accuracy of Drive-Thru Orders

10/31/2018

QSR Magazine quoted in The Wall Street Journal recently evaluated drive-thru service at 10 chain restaurants. Burger King took top place with speed in executing orders taking on average 193 seconds. McDonald’s in comparison was slower at 273 seconds.

In determining the accuracy of orders, Chick-fil-A® achieved 97.3 percent accuracy followed closely by Arby’s at 95.2 and McDonalds at 92.9. Hardee’s, Taco Bell and Burger King were all above 90 percent. KFC was the laggard in the group with only 69.9 percent accuracy in fulfilling drive-thru orders denoting deficiencies in systems or training.


 

Vegetable Based Substitutes Emerging for Fish and Seafood

10/31/2018

It is calculated that the entire vegetable-based meat substitute category generated sales of $9.3 million in 2017, representing a 20 percent growth rate over the previous year. Only one percent of the substitute market is represented by fish. New technologies have resulted in ersatz salmon, eel and tuna served either in sandwiches or for the sushi market.

Although vegetable-based fish substitutes may appeal to vegans, it is noted that there are marked deficiencies in nutritional quality compared to the natural product. Three ounces of raw tuna contain 21 grams of protein compared to the Ahimi™ product from Ocean Hugger supplying only one gram of protein.

As with substitute ground beef, product development has concentrated on organoleptic properties including texture and color with proportionally less emphasis on taste. There has been practically no attempt to match nutrient content with genuine animal-based products including eggs. Nutrients are at the end of the day the reason why we eat.


 

Trucking Costs to Escalate in 2019

10/29/2018

Following escalation commencing in 2017, large trucking companies are anticipating a 25 percent increase for transport in 2019 compared to the inflated values during the current year.  This projection is made despite the reduction in the American Trucking Association tonnage index for the quarter ended September 2018.

 

All trucking companies are experiencing increased costs for diesel and especially for drivers.  The inflationary effect passed on to customers is reflected in quarterly reports which highlight increases in total revenue, operating profit and in revenue per loaded mile, an important industry benchmark.

 

Knight-Swift Transportation Holdings Inc. revealed a 31 percent increase in revenue with the Knight trucking segment increasing operating profit from $8.6 million to $56.5 million in the most recently completed quarter compared to the corresponding quarter in 2017.  Revenue per loaded mile was up by 19.9 percent.

 

Covenant Transportation Group recorded a 36.2 percent increase in revenue to $243.3 million with a revenue per loaded mile increase of 16.4 percent.

 

As reported previously in CHICK-NEWS, the shortage of drivers is a restraint to expansion and part of the escalation in trucking costs is due to disparity between demand and available capacity.  J.B. Hunt Transport Services has raised pay for drivers by double digits and T.G.S. Transportation in Fresno, CA has tripled the usual four percent annual wage increase for drivers achieving company standards for safety and fuel economy.


 

Eggin’U On! At Michigan State

10/29/2018

The AEB reports on a successful venture at Michigan State University serving a breakfast with a new “rolled omelet.” Presentation.  Nothing like nutritious real eggs containing a balanced amino acid composition, a source of both fat and water-soluble vitamins and a relatively low caloric content all in a tasty and inexpensive package.


 

Nebraska Farmers to Plead Guilty to Organic Fraud

10/29/2018

Tom Brennan, his son James and Michael Potter have agreed to each plead guilty to one count of wire fraud following an investigation disclosing widespread mislabeling of organic grains.

 

The defendants operated a farm in Overton, NE certified under the National Organic Program.  From 2010 through 2017 non-organic grain was knowingly sold to distributors harvested from non-certified fields or from acreage which received an application of nitrogen fertilizer and pesticides in violation of USDA certified organic rules.  It is understood that the Federal Government will require the defendants to forfeit $11 million and face sentencing on wire fraud charges.

 

The differential in price between conventional and organic grain creates an incentive for fraud, which in this specific case continued for approximately seven years.

 

Most domestic and imported certified organic grain is used for animal feed.  The problem of deceptive representation of commodities as organic could in large measure be reduced by applying blockchain technology.  The duration of the fraud perpetrated by the three defendants clearly indicates deficiencies in auditing as a requirement for continued organic certification.  In the absence of laboratory assay and reconciling sales volume with certified acreage, deficiencies in auditing will allow unscrupulous producers to fraudulently claim organic status.  

 


 

Salmonella Incidence Rate in the Netherlands

10/29/2018

Data on the incidence of salmonellosis in Holland shows a steady decline from 13.6 confirmed cases per 100,000 population in 2011 to 9.3 cases per 100,000 in 2015. According to a posting by Joe Whitworth on Food Safety News issued by FSN, table eggs in Holland are responsible for 15 percent of cases.  This is a questionable figure given that the commercial Dutch egg industry has effectively eliminated SE from flocks.  If SE were prevalent in flocks in Holland, it would have been detected in the populations of importing countries especially in Germany. Infection associated with table eggs imported from Poland over a five year period was detected and identified to country of origin.  

 

According to data presented, pork represented the most frequent vehicle of infection with 28 percent of incident cases attributed to products derived from hogs.


 

Instacart to Deliver for Sam’s Club

10/29/2018

Walmart intends offering Instacart grocery delivery for half of Sam’s Club stores by mid- November.  Initially stores were selected in high-density markets including New Jersey, Indianapolis, Texas and other states after an initial trial in the Dallas-Fort Worth and St. Louis markets.

 

The Instacart program supplements the Walmart Click and Collect program which will offer grocery pick-up at 3,001 Walmart stores by 2020 with delivery from 1,600 locations.


 

“Food-Delivery is not a Fad”- RBC Capital

10/29/2018

David Mell, managing director of RBC Capital Markets commenting on recent infusions of capital for food-delivery companies maintains that “the trend is not a fad”.

 

Companies which have received financial support include Instacart Inc. which secured a $600 million investment; DoorDash Inc.; Grubhub Inc. and the UberEats subsidiary of Uber Technologies.

 

To be credible, delivery companies must have a strategic partnership with a major food chain or QSR.  To date a front-runner has not emerged although all companies cited above have financial support and a presence in the field which is characterized by a low barrier of entry.

 

Jerome Scott with Mizuho Securities considers that takeout and delivery will represent 15 percent of restaurant sales by 2027 especially with the popularity of mobile apps.

 


 

McDonald’s to Debut Triple Breakfast Stacks

10/29/2018

McDonald’s will introduce triple-level breakfast items to U.S. menus on November 1.  Available as a variant of the McMuffin, McGriddle or biscuit, the new menu items will include an egg, a slice of cheese, bacon and two sausage patties.

 

This innovation follows the introduction of all-day breakfasts in 2015 which contributed to increased same-store sales.  Steve Easterbrook, CEO of McDonald’s stated, “We want to do better at breakfast.”  He added, “We’ve got some initiatives in place which we are going to see out through the next few months and also some new food news which we think will reenergize the day part.”


 

Prospects for Mycotoxicosis from 2018 Corn Crop

10/25/2018

Unusual weather conditions during cultivation of the 2018 corn crop will increase the risk of mycotoxicosis in herds and flocks in 2019. Dry weather occurred in Kansas, Missouri, Iowa and Oklahoma during the current season.  Drought during the silking stage stressed plants and created an opportunity for fungal spores to infect kernels. Drought is usually associated with Aspergillus contamination resulting in elaboration of aflatoxins.

 

Wet weather also subjected crops to infection with fungi especially during the dough and harvest stages.  Crops harvested with a high moisture content may contain fumonisin, vomitoxin, and zearalenone which although individually present at low levels will have a synergistic effect.

 

Suppliers of mycotoxin binders including Alltech, Biomin and Nutriad are warning clients of the risks of mycotoxicosis from the 2018 harvest. These companies have established programs to monitor the level of mycotoxins in corn and DDGS. Aflatoxin may be concentrated threefold in DDGS compared to the corn feedstock during the production of ethanol.

 

Producers are advised to monitor moisture content and regard corn with a level higher than 15 percent as potentially contaminated.  Sensitive, semi-quantitative rapid assays are available to monitor for the major mycotoxins of clinical significance. It is emphasized that sampling error can invalidate results with both unjustified rejection of a large consignment or alternatively acceptance of a shipment which may be deleterious to flock or herd health or product quality.  Over half of new crop corn has been harvested and early indications suggest that assay for mycotoxins is justified.

 

 Remediation of affected corn is extremely difficult although it is possible to dilute a contaminated batch if it is not rejected, by proportioning with an unaffected consignment. Corn with a moisture level in excess of 15 percent can be treated with a proprionate compound to suppress fungal proliferation but these additives will not ameliorate mycotoxins which were elaborated before harvest. A mycotoxin binder derived from yeast cell walls is available to supplement diets prepared with contaminated grain.  The product is extremely effective against aflatoxin but with relatively lower efficacy against DON and trichothecenes.

 

The bottom line is that mycotoxicosis will be a reality in late 2018 and early 2019 and producers should be aware of the risks and implement appropriate monitoring and remediation programs.


 

CoBank Issues Quarterly Economic Agricultural Outlook

10/25/2018

CoBank issued their quarterly economic outlook on October 12th highlighting uncertainty relating to trade issues and bountiful harvests for major commodities.

 

Based on supply considerations, prices will be constrained especially in view of trade uncertainties and the value of the U.S. dollar.

 

The report stresses that “the escalating trade war with China is the leading risk for U.S. agriculture and the retaliatory actions taken by China and other trading partners have raised concerns of long-lasting effects on agricultural supply chains.”

 

Other conclusions from the report include:

 

  • Growth in emerging markets will increase demand for animal protein and specialty crops.
     
  • Record yields for U.S. corn, soybeans and cotton are anticipated in 2019.
     
  • The livestock sector has benefited from prolonged low ingredient costs although there are concerns over export volumes.
     

 

Chipotle Reports on Q3 of FY 2018

10/25/2018

In a press release dated October 25th Chipotle Mexican Grill (CMG) announced results for the Third Quarter of Fiscal 2018 ending September 30th 2018.

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

3rd Quarter Ending September 30th.

2018

2017

Difference (%)

Sales:

$1,225,007

$1,128,074

+8.6

Gross profit: Sales-food & packaging

$815,794

$733,507

+11.2

Operating income:

$57,991

$30,867

+87.9

Net Income

$38,204

$19,610

+94.8

Diluted earnings per share:

$1.36

$0.69

+97.1

Gross Margin (%) Sales-food & packaging

66.6

65.0

+2.5

Operating Margin (%)

4.7

2.7

+74.1

Profit Margin (%)

3.1

1.7

+82.4

Long-term Debt:

$nil

$nil

-

12 Months Trailing:

     

Return on Assets (%)

10.1

   

Return on Equity (%)

11.9

   

Operating Margin (%)

7.3

   

Profit Margin (%)

3.7

   

Total Assets

$2,230,872

$2,045,692

+9.1

Market Capitalization

$11,800,000

   

52-Week Range in Share Price: $247.52 to $530.68

Market Close 25th Oct. post release $428.88 (+2.6 percent)

Forward P/E: 35.4 Beta: 0.5

Same-store sales growth 3.3 percent compared to Q3 FY 2017.


 

Consumer Resistance to Dihydrogen Monoxide

10/25/2018

Consumer research company InsightsNow has determined that 10 percent of young adults want “dihydrogen monoxide” removed from foods. This is an example of herd mentality coupled with ignorance since dihydrogen monoxide is water. Because food activists such as the “Food Babe” will only accept additives she can pronounce, dihydrogen monoxide would be taboo, although water is apparently acceptable to her and her web acolytes.

In the downward rush to remove beneficial additives duly approved by the FDA to create “clean labels” valuable products with beneficial properties have been eliminated.

The question is how we arrived at the farcical situation that water by another name is undesirable. This in large measure is the result of deliberate misinformation and distortion advanced by self-appointed experts using the web which has provided them with an unjustifiably loud megaphone. Food manufacturers are equally culpable in not defending their formulations and simply caving in to irresponsible demands. Agencies such as the FDA are no help in defending food manufacturers who use approved additives.


 

JUST Forms Partnership with Aramark

10/25/2018

In an October 22nd release, JUST announced that Aramark will distribute a plant-based egg substitute. JUST-Egg breakfast patties will be available for a limited time suggesting that the project is a field test.

It is noted that Aramark has been in the forefront of opposing confined production of eggs. The Company serves universities and corporate kitchens which are generally price insensitive but serving a clientele regarded as welfare and socially conscious.

The statement issued by JUST included comments from founder, Josh Tetrick, but was unsupported by any comment from Aramark.


 

McCain Foods Identified as Source of Widespread Contamination Resulting in Recalls

10/25/2018

The FDA in cooperation with state authorities has identified a Colton, California subsidiary of McCain Foods, based in Ontario Canada, as the source of frozen corn apparently contaminated with both Salmonella and Listeria. McCain Foods established in 1957 in the Province of New Brunswick is now a multinational with eight plants in Canada, 11 in the U.S., 21 in the E.U. and facilities in China, India, South Africa and Australia.

On October 18th, HyVee recalled salads served in their stores. Prepared foods and salads containing corn and possibly other ingredients including onions supplied by McCain Foods have been implicated in a chain of contamination which has resulted in the recall of close to 2,000 tons of prepared products including burritos, wraps and salads. Recalls extend from Caito Foods in Indianapolis, IN (two tons) to RUN of Dennison Texas recalling 1,200 tons. National brands are involved including Whole Foods 365, 7-Eleven and Jenny Craig.

Fortunately, there are no reports of illness and the recalls were initiated as a result of routine surveillance. The extent of food recalls which extend from the Midwest to California attest to the potential impact of one supplier providing a contaminated product. Neither Salmonella nor Listeria are usually associated with frozen corn, but the incident illustrates the need for continual surveillance of both the environment of plants and products.

The case involving numerous food processors illustrates the need for rapid trace forward which can be provided by participation in a blockchain system which permits instant recall of data and verification of source of ingredients at each step in the chain of supply and production.

McCain Foods stated “We have received no reports of illness associated with consumption of implicated products to date and this voluntary recall is being issued as a precautionary measure for the safety of consumers.” The statement added “We are working in cooperation with our customers and the appropriate regulatory authorities and will provide any appropriate updates.”


 

European Food Safety Agency Comments on AI Transmission to Humans

10/25/2018

The European Food Safety Agency has just completed an assessment of the theoretical probability of transmission of low pathogenicity avian influenza from raw poultry and eggs to humans.

At the outset it is stated that avian influenza is not vertically transmitted and should therefore not pose any danger to consumers of washed eggs. The E.U. has a greater concern because virus may be excreted in feces which may contaminate egg shells which are generally not washed in the E.U.

The assessment stated “There is no evidence that avian influenza can be transmitted to humans through eating contaminated poultry. Thorough cooking of poultry meat will destroy the virus. Epidemiologic evidence suggests infection in humans occurs rarely and only after very close contact with infected animals.”

The report also noted that certain highly-pathogenic avian influenza viruses including H5N1 and H7N9 are associated with human infection. This may relate to inherent susceptibility among patients and high levels of exposure associated with wet markets.

The report concluded that the “probability of infection by low pathogenic avian influenza through eating contaminated raw poultry meat or raw table eggs is negligible.”


 

Uber Plans Drone Delivery of Food

10/25/2018

According to a recent note in The Wall Street Journal, Uber is planning to launch a food delivery service using drones by 2021.

 

Truly pie in the sky.


 

U.K. Competition Authority Reviewing ASDA-Sainsbury’s Merger

10/23/2018

The proposed merger of U.K. supermarket giants ASDA owned by Walmart and Sainsbury’s is under review by the U.K. Competition and Markets Authority (C&MA) analogous to the U.S. FTC.

 

According to an October 17th report in Dow Jones Factiva the C&MA will examine the impact of deep discounters Aldi and Lidl and online grocery companies including Amazon.

 

In a submission to the Authority, Sainsbury’s noted the competition represented by Lidl with six percent of the market and Aldi with eight percent of grocery sales and traditional giant Tesco with 27 percent.

 

The chairman of the C&MA Stuart McIntosh stated, “Our job is to find out whether the merger will result in people paying more or being faced with less choice or a poorer quality shopping experience.”


 

McDonald’s Corp. Reports on Q3 of FY 2018

10/23/2018

In a press release dated March 23rd McDonald's Corp. (MCD) announced results for the 3rd Quarter of Fiscal 2018 ending September 3rd 2018.

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

3rd Quarter Ending.

2018

2017

Difference (%)

Sales:

Q3 2018, 46% from Company stores; Q3 2017, 53%

$5,369,400

$5,754,600

-6.7

Gross profit Company stores:

$463,100

$584,500

-20.9

Operating income:

$2,417,700

$3,079,400

-21.5

Net Income

$1,637,700

$1,883,700

-13.1

Diluted earnings per share:

$2.10

$2.32

-9.5

Gross Margin, Company stores (%)

18.7

19.1

-2.1

Operating Margin (%)

45.0

53.5

-15.9

Profit Margin (%)

30.5

32.7

-6.7

Long-term Debt: Dec. 31st 2017/2016

$29,536,000

$25,875,000

+14.1

12 Months Trailing:

     

Return on Assets (%)

16.1

   

Return on Equity (%)

-

   

Operating Margin (%)

39.2

   

Profit Margin (%)

25.3

   

Total Assets Dec. 31st 2017/2016

$33,803,000

$31,024,000

+8.9

Market Capitalization

$136,800,000

   

52-Week Range in Share Price: $146.84 to $178.70

Market Close 22nd Oct. (pre-release) $171.02 14H30 23 rd Oct. $176.92 (+6.2%)

Forward P/E: 21.5: Beta +0.7

For the 3rd Quarter global same-store sales increased 4.3%. U.S. +2.4% (compared to 2.6% consensus estimate)

MCD operates in 120 nations with 37,557 stores. U.S. had 13,948 stores at the end of Q3

For the nine-months of 2018 MCD earned $4.5 billion on sales of $15.86 billion with an EPS of $5.72. Comparative values for Q1-3 of FY 2017 were a net profit of $5.48 on sales of $17.48 billion with an EPS of $5.48

The adverse comparison between Q3 2018 and Q3 2017 is attributed to revenue of $850 million from sale of assets in China in 2017, the re-franchising program and restructuring charges.

In commenting on results McDonald's President and CEO, Steve Easterbrook stated, "In addition to achieving thirteen consecutive quarters of positive global comparable sales, we have made substantial progress modernizing restaurants around the world, enhancing hospitality and elevating the experience for the millions of customers we serve every day. We remain confident that our strategy will drive long-term, profitable growth,"


 

Adisseo to Develop Bio-Based Methionine

10/19/2018

Adisseo and biotech collective TWB have jointly developed a bio-based synthesis for L-methionine.  It is intended to develop a pilot plant by 2020.  The development follows a parallel acquisition of a bio-based methionine synthesis system by Evonik Industries from metabolic explorer in 2017.

 

Providing the bio-based methionine processors do not make use of a GMO organism, availability of a nutrient supplement which could be accepted by the National Organic Program would reduce the cost o production of eggs and poultry meat and displace conventional synthetic methionine which is subject to progressive reduction in dietary inclusion.


 

Alltech Establishes E-Commerce “Store”

10/19/2018

Alltech has developed a website “The Alltech Store”.  This will allow customers to shop for animal nutrition products to be delivered to front doors and farm gates.

 

The Alltech Store is created through an internal incubator program encouraging employees to submit their ideas for improvement.

 

Information is available from the website https://store.alltech.com

 

The Alltech Store will provide a convenient source of supplements for 4-H, and small holder operations across diverse species.


 

Development of New E. coli Vaccine

10/19/2018

Dr. John J. Maurer of the University of Georgia Poultry Diagnostic Research Center has developed new technology autogenous E. coli vaccines.  The project was funded by the U.S. Poultry and Egg Association Foundation.

 

Dr. Maurer and his colleagues were able to develop a culture method for field strains of E. coli that inhibit the production of surface.  Coli without the O antigen include the lipopolysaccharide core which can stimulate antibodies to a wide range of pathogenic E. coli.

 

The culture technique was applied to produce E. coli strains stripped of O-antigen to be incorporated in emulsion which was effective in inducing an antibody response.

 

The technique has the potential to enhance the effectiveness of autogenous vaccines since STEC strains or various subtypes may be present on a specific farm effecting successive flocks.


 

STOP PRESS

10/18/2018

The following items will be reviewed in greater detail in upcoming editions of EGG-NEWS and CHICK-NEWS:

 

No prospect of near-term trade negotiations with China: With more than a third of the U.S. corn and soybean crops harvested, farmers and traders are anxious for a resolution of the trade impasse with China. Commerce Secretary Wilbur Mills confirmed that talks “were at a hiatus”. President Trump opined that China was “not ready” to discuss issues dampening the possibility of a summit at the G-20 meeting in November. Economic Council Chair Larry Kudlow said that “recent relations have not been positive”

 

Silos at elevators filling fast: Ending stocks are competing with the 2018 harvest for storage space. Some localities are storing grain under tarpaulins with less than half of new-crop corn harvested. This has implications for quality and possible

mycotoxin contamination.

 

Impact of Hurricane Michael Quantified: The storm severely damaged or destroyed about 90 broiler houses in Georgia and led to the loss of 2 million birds in addition to plant closures and extensive disruption of operations. Total losses to state agriculture will exceed $3 billion, in part attributed to devastation of the cotton crop. Michael, followed Hurricane Florence which caused less wind damage but extensive flooding affecting hog, turkey and broiler production in North and South Carolina. 

 


 

FDA Bans Synthetic Flavoring Agents

10/16/2018

The U.S. Food and Drug Administration has removed seven synthetic flavoring substances from the Food Additives List. This action was taken under the Delaney Clause of the FD&C Act of 1958. The FDA did however determine that the various agents did not pose a risk to public health given very low levels of inclusion.

The FDA is allowing food producers to identify suitable replacement ingredients and reformulate their food products before October 9th 2020.

The move towards “clean labels” is probably preempting FDA action. The removal of the six compounds and styrene, which is no longer used as an additive, is in response to some public pressure and to avoid future litigation and Congressional pressure.


 

International Poultry Scientific Forum Contributes to USPOULTRY Foundation

10/16/2018

The net proceeds from the 2018 International Poultry Scientific Forum amounting to $44,000, were presented to the USPOULTRY Foundation by Dr. Mary Beck, Executive Director of the Southern Poultry Sciences Society. Paul Hill, past USPOULTRY Foundation Chairman stated “We are very pleased to accept this donation from the International Poultry Scientific Forum. These funds will be used to support research and student recruitment benefitting the poultry and egg industries.


 

Wegmans’ Scale-Back Area of Cary, NC. Project

10/16/2018

Wegmans has reduced the area of a new store scheduled for Cary, NC. by 30 percent to 103,000 square feet. According to Stephen Leaty of Wegmans, the Company “Adopted a smaller footprint for new stores to meet the demand of the changing marketplace.”  Leaty stated, “We are seeing changes in the way customers buy groceries and we have a design that will be more efficient.”

 

The reduction in size will reduce capital cost since the proposed parking garage beneath the store will no longer be needed. The Wegmans store will be completed during 2020 and will operate in an avowedly over-traded NC. Triangle market with Wegmans stores planned for Chapel Hill and a second in Cary.


 

Food Companies Launching Venture Funds

10/16/2018

Following the example of Tyson Foods, Kraft Heinz has established Evolve Ventures to invest in emerging companies with the potential to transform the food industry.  Bill Pescatello will lead the fund with an initial investment of $100 million.

 

Bernardo Hees, CEO of Kraft Heinz stated, “New technological innovations in the food industry create endless new opportunities to strengthen business models.”  He added, “Through Evolve Ventures, we will work with tomorrow’s most innovative founders and companies in the space, and use the full resources of Kraft Heinz to help them succeed.”

 

Pescatello has accomplished a successful venture-capital career investing as a partner at Lightbank in Chicago and the Peacock Equity Fund affiliated to GE Capital and NBC Universal.

 

The move towards investment through venture capital is a departure for the relatively stagnant food industry.  It is apparent that internal R & D is not generating new concepts and products for commercialization.  Companies are diverting funds to entrepreneurs who are evolving from incubators and universities. Creativity requires talent and the freedom to innovate without the artificial restrictions imposed in a corporate environment.


 

U.S. and Japan to Consider Bilateral Trade Agreement

10/15/2018

Following the precipitous withdrawal of the U.S. from the Trans-Pacific Partnership Agreement immediately following initiation of the present Administration, trade negotiations between Japan and the U.S. have been in limbo. After a delay of almost two years Prime Minister Abe has agreed to bilateral trade negotiations.

 

At issue is the negative trade balance of $70 billion annually coupled with restrictions on importation of U.S. agricultural products to protect the domestic industry in Japan. One-third of Japan’s 4.7 million exports of automobiles are shipped to the U.S. contributing a high proportion of the negative trade balance. Threatened retaliatory tariffs on U.S. automobiles imported into Japan have been deferred until conclusion of bilateral trade discussions.

 

It is evident that Japan will be an important ally in any trade or diplomatic action taken against China.  Withdrawal from the Trans-Pacific Partnership Agreement created an advantage for China with respect to intra-Asian trade evidently to the detriment of U.S. commercial interests


 

Hendrix Genetics Introduces GeneVision for Shell Egg Evaluation

10/15/2018

Hendrix Genetics in conjunction with electronic equipment manufacturers in Holland have developed the Eggxaminator to evaluate a range of heritable parameters associated with egg shells. Application of machine vision will expedite and extend the range of inspection and analysis.  The use of machine vision and electronic technology inherent to the system will reduce human error and subjectivity.  Enhanced evaluation of table eggs with incorporation into index selection will eventually benefit producers especially during the last third of the laying cycle.

 


 

Pearse Lyons Accelerator Soliciting Applications for 2019

10/15/2018

Following two successive annual rounds of the Pearse Lyons Accelerator, applications are invited from agriculture technology start-ups to participate in the global program.  Conceived by the late Dr. T. Pearse Lyons, selected entrants in the program receive an $18,000 stipend and substantial contributions from social media companies. 

 

The successful companies selected for the 2019 program will present their concepts at          ONE: The Alltech Ideas Conference in May 2019.  Dr. Mark Lyons, CEO and president of Alltech stated, “What other agri-tech startup puts you in front of 4,000 industry leaders and potential investors?”  He added, “If you’re looking for support from industry professionals, mentorship from the best in the agri-business and networking opportunities that have been instrumental in alumni accessing vital funding, then the Pearse Lyons Accelerator is for you.”

 

Aidan Connolly, Chief Innovation Officer at Alltech stated, “The Pearse Lyons Accelerator serves as the perfect vehicle to create visibility for us and our partners with the most disruptive ag-tech startups across the world.  He added, “A clear route to market remains a challenge for startups within the ag-tech industry. The program provides accelerated access to the global market with a comprehensive package of support to help navigate the challenge of scaling up their operations to provide service to large corporate customers.”

 

Dr. Mark Lyons added, “With this Accelerator, we carry on the legacy and entrepreneurial spirit of my late father, Dr. Pearse Lyons who had the desire and dedication to empower the next generation of entrepreneurs, who will transform the face of agriculture.”

 

Alumni of the Pearse Lyons Accelerator have collectively raised $28 million over the last three years. Ag-tech start-ups are encouraged to apply to the Pearse Lyons Accelerator program before December 7, 2018.  Information is available at <pearselyonsaccelerator.com>


 

MOBA Technical Training Center

10/15/2018

The principal technical training center established by MOBA is located near the home office in Barneveld, the Netherlands with a secondary center in Lancaster, PA.  MOBA trains more than 400 of their customers’ employees each year.  Courses include:

  • Operation of Omnia graders
  • Network and software service
  • Training on farm packers
  • Robotics
  • Ink-jet systems
  • Packing and loading

 

Further information is available on the MOBA website  www.moba.com
 


 

AEB Presents Workshop for Retailers

10/15/2018

Recently the American Egg Board presented workshops to ten major U.S. grocery chains.  Brand marketing, consumer insights and culinary issues were presented to encourage interest in eggs and egg products. The combination of market research, nutritional knowledge and logistics within the AEB and its affiliates benefits producers by stimulating demand.


 
















































































































































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