WEEKLY ECONOMY, COMMODITY & ENERGY REPORT: November 29^th 2024.

OVERVIEW

The prices for corn and soybeans diverged over the past week. Soybeans were up 0.8 percent and corn down 2.8 percent. Corn and soybean prices were influenced by domestic demand and uncertain projections of yield from Brazil and Argentine. There was minimal response to the November WASDE Report incorporating actual harvest values. Farmers are selling the remainder of the old crop and the new crop to avoid further declines in price and to make room for the completed 2024 harvest. There was some technical selling arising from geopolitical concerns and in response to revised projections for harvests in South America. Contributory pricing factors included ongoing disruption in shipping in the Red Sea and Panama Canal, carryover from the 2023 U.S. crop, export orders and the predicted ending stocks of corn and soybeans from the 2024 crop. The 2024 harvest, was in advance of the five-year average. Both crops apparently have superior condition as compared to 2023. The transition from a neutral phase to a La Nina event is underway and will intensify during the remainder of the fourth quarter but has had no effect on the 2024 harvest. The November WASDE, incorporated actual yields and harvest volumes, with USDA updates for anticipated exports, domestic use and carryover for the 2024 crop.

At close on November 27^th the CME corn quotation for December delivery was down 2.8 percent to 415 cents per bushel. Corn price was influenced by acreage planted, ethanol demand and the ending stock from the 2023 crop. Farm selling continues, given the need to make room for the new crop. USDA estimated that 44 percent of old corn stock was held on farms at the beginning of September. Export orders for the current market year have increased in response to lower prices. Volumes and price are indirectly influenced by wheat availability as influenced by weather affecting the Black Sea wheat and corn crops. Orders by China resumed at the end of the 2022-2023 market-year and continued through November despite an increase in the Dollar Index, adding to increased ocean freight. Total exports for the new 2024-2025 market year are 35.7 percent above the previous weeks of the 2023-2024 market year.

Soybeans were priced at 989 cents per bushel for January 2025 delivery, still under the 1,000-cent psychological threshold. Price was up 0.8 percent compared to 981 cents per bushel last week for January delivery. Lower prices were attributed to the projection of ending stock, farm selling and taking into account recent export orders and projections of availability from the 2024 U.S., Brazil and Argentine harvests. Total exports for the 2024-2025 market year are 13.5 percent higher than for the corresponding weeks of market year 2023-2024.

Soybean meal was priced at $291 per ton for December delivery, up $2 per ton from last week. Price is influenced by demand coupled with reestablished crush volume since September restoring the processing trend of the first half of 2024. Price will fluctuate to reflect the CME price for soybeans and the depressed demand for biodiesel due to oversupply and the consequential adverse financial situation in this sector. The market previously responded to the increased 2023 crop and higher stocks together with projections for 2024 in the updated November WASDE Report.

On November 27^th at 20H00 EDT the price for WTI was $68.50, down $0.37, (-0.5 percent) from last week. Current price is not materially affected by uncertainties and tensions in the Middle East but reassured that retaliatory by Israel did not include Iranian oil installations. Over the longer term price reflects moderate world demand for crude as economies and especially that of China have retracted, requiring central bank stimulation in late August. It is evident that U.S. production is a moderating influence on World price, attaining a record average of 13.4 million barrels per day over the third quarter with ample reserves. There was only small fluctuation in the price of WTI through November 27^th with the range during the week extending from a low of $65.80 on November 27^th up to $71.18 on November 22^nd.

Ample U.S. crude production is constraining domestic and international prices. The recent decline in energy costs during the past three months contributed to deflation influencing the FOMC in their decision to lower the benchmark interest rate 0.5 percent at the September and 0.25 percent at their November meetings.

Economic data released during the past quarter (Q2 GDP; PCE, Confidence, Productivity, Employment) confirm a growing economy but with a downward trajectory in inflation. Third quarter GDP was confirmed to be 2.8 percent consistent with preliminary projections. Federal Reserve Chair Jerome Powell and Reserve Bank Governors previously indicated one or two additional reductions in the 10-year rate during 2024 with a cut anticipated in December. The August and September Non-farm Payrolls and labor data clearly indicated the danger of prolonging the high benchmark interest rate that was negatively impacting the U.S. economy. The Federal Reserve is now addressing employment as a priority over containing inflation.

Macroeconomic U.S. factors:-

• Most economists in academia and the private sector accept that the U.S. economy has achieved a “soft landing”. This is despite the release of the Q3 2024 increase in GDP of 2.8 percent, down from 3.0 percent in Q2 but considering trends in recent economic parameters including the ECI, CPI and PPI. Annual inflation as measured by the headline PCE declined from 8.9 percent in June 2022 to 2.1 percent in September 2024. This is in part a response to a series of 11 FOMC rate raises followed by eight pauses that curbed inflation and cooled the labor market but without precipitating evident unemployment. There is obvious stability in the bank sectors in both the U.S. and Europe. Lower energy prices are contributing to deflation.
• The Federal Reserve lowered the benchmark interest rate by 0.5 percent at the FOMC meeting on September 18^th, the first of a series of actions after eighth sequential pauses. The Federal Reserve commentary indicated that progress has been made in reducing the rate of inflation. The Fed lowered the rate by a further 25 basis points on November 7^th as anticipated with a subsequent reduction of 25 basis points expected at the December meeting but with a possible pause into early 2025. Chairman Powell in Congressional testimony, and at the post-meeting press conference and also documented in FOMC minutes indicated that decisions would be based on demonstrated progress in reducing inflation as confirmed by a basket of key economic data, towards an annual 2.0 percent target by mid-2025. This now appears feasible.
• The November 27^th release by the Bureau of Economic Affairs documented Q3 2024 GDP at 2.8 percent confirming preliminary figures. The Q3 GDP compares to 3.0 percent for Q2 and 2.9 percent for entire 2023. The GDP in Q3 was supported by higher consumer spending, especially on non-durable goods and increased exports.
• The November 13^th release of the Consumer Price Index (CPI) for October showed a 0.2 percent rise over September and an annual increase of 2.6 percent consistent with prior estimates. The annual value is compared to 2.4 percent for September. Core CPI (excluding food and fuel) was up 0.3 percent in October with an annual increase of 3.3 percent, unchanged from September. Food at home was up 0.1 percent for October and 1.1 percent over 12 months. Food away from home was up 0.2 percent for October and up 3.8 percent compared to October 2023. Shelter was up 0.4 percent during October accounting for half of the inflation during the month. Notwithstanding the increase in CPI during October a reduction in benchmark interest rate is anticipated at the December FOMC Meeting.
• On November 7^th the Bureau of Economic Analysis released the Personal Consumption and Expenditure Price Index for October. The core PCE (excluding food and energy) was up 0.3 percent from the previous month, and attained 2.8 percent year-over-year. The Headline PCE was up 0.2 percent from September and 2.3 percent from October 2023, a 42-month low and consistent with projections. Food was up 0.1 percent from September. The headline PCE is closely followed by the Federal Reserve and confirms that inflation is progressively moderating but still above an annual target of 2.0 percent.
• The October Producer Price Index for Final Demand (PPI) released on November 14^th rose 0.2 percent from September consistent with expectations. This was attributed in part to a 0.3 percent increase in services and a 0.3 percent increase in food. The PPI was up 2.4 percent over the past 12-months ending in October compared with 2.8 percent for the 12-month period through September. This is compared to a 6.4 percent increase in 2022. The core PPI value excluding volatile fuel and food, was up 0.3 percent from September and 3.5 percent over the previous 12 months.
• A Federal Reserve release on November 15^th confirmed that industrial production was lower by 0.3 percent in October similar to the decrease of 0.3 percent in September. Capacity utilization was lower at 77.1 percent and was 2.6 percent below the long run 1972-2020 average.
• The November 27^th report by the Department of Commerce, Census Bureau on Durable Goods Ordered during October 2024, orders increased by 2.5 from the previous month. Shipments were up 1.8 percent. Excluding the Transportation component, new orders in November increased by 0.1 percent. Excluding the Defense category new orders were up by 0.4 percent compared to October.
• In a November 4^th release the Census Bureau confirmed that factory orders for U.S. manufactured goods fell 0.5 percent in September and compared to a revised fall of 0.8 in August. Shipments of manufactured goods were down 0.4 percent in September.
• The November 15^thS. Census Bureau release of the advanced estimate of retail and food sales data for October was up 0.4 percent from the revised September value of a 0.8 percent increase and up 2.8 percent over 12 months. Food service sales were up 0.1 percent from September and up 2.7 percent over 12 months. Grocery store sales were up 0.1 percent from the revised September value ($75,793 million) and up 2.5 percent over the past 12-months. The Federal Reserve FOMC closely monitors retail sales as a measure of the trend in inflation.
• The October 31^st release by the Institute for Supply Management (ISM®) reported a lower Manufacturing Index for October at 46.5 compared to the September value of value of 47.2. The October value was still below the bifurcation point of 50 percent between contraction and expansion. The Prices Index rose to 54.8 points in October compared to 48.3 points in September, denoting higher costs for production. U.S manufacturing does not currently reflect an improved economy, and manufacturing has yet to recover from prolonged high benchmark interest rates. The Production Index for October was 46.2 points compared to 49.8 in September.
• On October 31^st the U.S. Bureau of Labor Statistics reported a 0.8 percent increase in the Employment Cost Index (ECI) over the 3^rd quarter of 2024. The year-over-year increase in wages and salaries was 3.9 percent and with benefit costs up by 5.8 percent. The ECI is closely followed by the Federal Reserve FOMC and this data justified in part the 50 basis point drop in the benchmark interest rate in September and strengthens the possibility of additional rate cuts.
• The November 26^th Consumer Confidence Report prepared by The Conference Board for November, recorded a substantial increase to 111.7 from the revised October value of 109.6, with all segments up and representing the most optimistic values over the past two years.. The Present Situation Index measuring perceptions of current business conditions rose 4.8 points to 140.9 in November. The Expectations Index increased from a revised October value of 91.9 to 92.3 and was the fifth consecutive month above 80. Values below this threshold over consecutive months and with a downward trajectory are regarded as predicting a recession.
• The November 22^nd University of Michigan Index of Consumer Sentiment for November rose to 71.8 from the final October value of 70.5 and compared with a value of 61.3 in November 2023. The Current Economic Index was 63.9 in November, down from 64.9 in October. The Index of Consumer Expectations was 76.9 up from 74.9 in October, denoting improvement in consumer sentiment following the September and November rate cuts and lower inflation. Geopolitical factors and uncertainty over the economic policies of the incoming Administration have influenced sentiment in divergent directions depending on political persuasion. In perspective sentiment is 17.7 percent above November 2023 and 40 percent above the low in June 2022.
• Non-farm payrolls added an unanticipated low 12,000 in October, as documented by the Bureau of Labor Statistics in a November 1^st This was far lower than the anticipated 113,000, due to the impact of Hurricanes and strikes should be compared to the upwardly revised September value of 223,000. The unemployment rate held at 4.1 with 7.0 million unemployed and with 1.6 million in the long-term category. The real average hourly earnings value during October was $30.48. Average hours worked in manufacturing was higher at 34.3 hours per week. Labor participation was at 62.6 percent 0.1 percent lower from September. Wage rates increased 4.0 percent over 12-months. Wage rates are closely followed by the Federal Reserve FOMC.
• The Bureau of Labor Statistics Job Openings and Labor Survey report (“JOLTS) released on October 29^th estimated 7.44 million job openings at the end of September, unexpectedly below a forecast of 8.00 million and lower than the revised August value of 7.86 million. The September job openings number was the lowest since January 2021 and was down 1.2 percent over 12 months. The peak job openings figure was 12.2 million in March 2022 during COVID. The September hiring rate was 3.5 percent (5.5 million hires); the September total separation rate, 3.1 percent (5.2 million); the quit rate 1.9 percent (3.2 million); and the layoff rate 1.2 percent, up 0.2 percent from August at 1.8 million.
• The seasonally adjusted initial jobless claims figure of 213,000 released on November 27^th for the week ending November 23^rd was unexpectedly down by 1,000 from the revised value of 215,000 for the previous week and the lowest value since May. The weekly value was lower than the Reuters estimate of 216,000. The four-week moving average declined to 217,000. The Bureau of Labor Statistics estimated 1.907 million continuing claims for the week ending November 16^th (up 39,000 from the revised value for last week), compared to a peak on November 27^th 2021 at 1.928 million. The October unemployment rate held at 4.1 percent. There is clear evidence from data over the past three months that the labor market is cooling as confirmed by Chairman Powell in Congressional testimony and release of downward revised figures for job creation. The jobs market is still tight, but with sporadic weekly fluctuation in new claims due to weather, strikes or scheduled plant shutdowns. Unemployment data has now recovered from the confounding effects of Hurricanes Helene and Milton and the strike by Boeing machinists, now settled, that contributed to claims of 100,000 in October.
• The November 7^th Bureau of Labor Statistics report recorded a 2.2 percent increase in non-Farm Productivity for Q3 2024. Labor cost increased by 1.9 percent compared to 0.9 percent for Q2 2024. Output was up by 3.5 percent.
• The ADP® reported on October 30^th that private (excluding government data) payrolls increased by an unexpected 233,000 in October, up 74,000 from the revised 159,000 in September and compared to a consensus estimate of 111,000 jobs. The increase in employment was mostly in the service-related sectors amounting to 211,000 positions. Individual categories included the Transportation, Trade and Utilities sector, (+51,000); Construction, (+37,000); Hospitality, (37,000); and Professional and Business Services, (+20,000); Information (+7,000). Manufacturing was down 19,000. Annual pay was up 4.6 percent year-over-year for ‘job-stayers’, down 0.1 percent from August 2024. The increase as reported by ADP will not directly influence the probability of short-term future changes in interest rate since the number, although based on 25 million positions, excludes the public sector. Monthly ADP data is regarded as less reliable by the FOMC than the Bureau of Labor Statistics Monthly non-farm payroll report.

USDA Weekly Egg Price and Inventory Report, November 29^th 2024.

Market Overview

• The average wholesale unit revenue values for Midwest Extra-large and Large sizes were unchanged on average this past week. Medium size was also unchanged. The 5-day rolling National wholesale price for graded loose on November 22^nd was $2.72 per dozen down 23.2 percent from $3.55 last week. This value was approximately $0.93 above the 3-year average of $1.79 per dozen and $0.97 above the corresponding week in 2023 at $1.75 per dozen. This past week shell egg inventory was down a substantial 17.6 percent, compared to a fall of 0.6 percent during the previous week. During the past week the NYC wholesale price fell 1.0 percent but with the immediate prospect of a plateau through the coming week. The shortfall in inventory with a small decline in wholesale price denotes steady consumer demand relative to supply but with a sharp upturn in orders by chains in anticipation of Thanksgiving purchases. Despite declines in price as reported by USDA over the past few days there is an anticipation of higher margins for producers through December despite steady replacement of depopulated flocks. Relatively higher prices compared to 2023 are attributed to previous losses due to HPAI in 2024 reducing the national flock by 13 million hens with increased seasonal demand.
• Although there are predetermined weekly transfers of mature pullet flocks to laying houses, the size of the producing flock is constrained by depopulation due to HPAI. During April 2024 almost 8.4 million hens were depopulated with an additional 5.7 million during May and 3.0 million in July. USDA recorded depopulation of 2.8 million hens in October and approximately 3 million in November to date, as incident cases of the fall 2024 wave. There is currently a deficit of approximately 13 million hens compared to the 2022 flock of 326 million at the onset of HPAI.
• This past week, chains apparently widened the spread between delivered cost and shelf price. The reoccurrence of HPAI has probably created concern among chain buyers as they may previously have been reticent to place orders even with moderating prices notwithstanding the need to ensure adequate stock levels to meet demand. Inventory levels will depend on constant re-ordering to fill the pipeline into the Christmas surge. Discounters are raising prices on generics influencing mainstream retail stores. Eggs are now less competitive in price against the comparable costs for other protein foods, and have recently been highlighted as a contributor to the prevailing perception among consumers of ongoing food inflation.
• Total industry inventory was down by a noteworthy 15.2 percent overall this past week at 1.44 million cases including a 3.3 percent decrease in breaking stock, following a 2.3 percent fall during the preceding week attributed to diversion to the shell-egg market.
• It is apparent that the inventory held by chains and other significant distributors may be more important on a weekly basis in establishing wholesale price compared to the USDA regional inventory figures. Changes in stock held by DCs and in the pipeline as determined by weekly orders are probably responsible for up to three percent cyclic fluctuation in weekly industry stock, but especially evident into a holiday weekend as evidenced by inventory this past week.
• The U.S. poultry industry has moved from a quiescent period regarding HPAI into a fall upsurge with incident cases in northern Utah, southern Washington State and Oregon in October and the loss of two complexes in the Central Valley of California this month. Two outbreaks were diagnosed in non-commercial flocks in Hawaii with both under investigation. California has recorded outbreaks on broiler-growing farms in four counties recently with ongoing losses among turkey growing farms. Canada has diagnosed cases in The Fraser Valley of British Columbia and outbreaks in Alberta Quebec and Saskatchewan. Over 616 confirmed cases of bovine influenza-H5N1 have been diagnosed in dairy herds in fifteen states in 2024 with more than 335 herds in California over three months. This is a cause for concern since extension to laying flocks has occurred in Michigan, Colorado and Utah. More surveillance information should be released by USDA-APHIS as it becomes available, concerning the prevalence rate of avian carriers of H5N1 among resident domestic and migratory free-living birds. This data should be correlated with a review of molecular and field epidemiology for the past spring outbreaks in order to respond appropriately to the fall wave of HPAI in progress. The USDA has yet to identify and release specific modes of transmission for the 2022-2024 epornitic including likely airborne spread from wild birds and their excreta over short distances as suggested by current research.
• The established relationship between producers and chain buyers based on a single commercial price discovery system constitutes an impediment to a free market. The benchmark price appears to amplify both downward and upward swings as evidenced over the past three years. A CME quotation based on Midwest Large, reflecting demand relative to supply would be more equitable. If feed cost is determined by CME ingredient prices then generic shell eggs should be subject to a Midwest Large quotation.
• On November 27^th the stated total flock of 314.2 million, was down by 1.6 million from last week, including about one million molted hens that will resume lay during coming weeks plus 4.5 to 5.0 million pullets scheduled to attain production before the pre-Christmas surge in demand. Given the latest figures for depopulation in Utah, Washington State, Oregon and California it is estimated that the total egg- producing flock is approximately 13 million hens lower than the 326 million before the onset of HPAI in 2022.
• The ex-farm price for breaking stock (rounded to one cent) was down 6.7 percent to $2.72 per dozen.Checks delivered to Midwest plants were down 0.4 percent to $2.56 per dozen this past week. Prices for breaking stock generally follow the wholesale price for shell eggs but with a lag of one to two weeks that may be shorter as in the present situation with diversion to the shell market.

The Week in Review

Prices

According to the USDA Egg Market News Reports, released on November 25^th 2024, the Midwest wholesale price (rounded to one cent) for Extra-large was unchanged from last week at $4.08 per dozen. Large size was unchanged at $4.06 per dozen. Mediums were unchanged at $3.71 per dozen delivered to DCs.

The stock of Medium size was down 3.8 percent and the inventory of Small size was down 14.5 percent over the past week suggesting that additional pullets placed in August for the late November through mid-December surge in demand are progressing in production. This has implications for prices during January 2025.

Prices should be compared to the USDA benchmark average 4-Region blended nest-run cost of 74.6 cents per dozen as determined by the Egg Industry Center based on USDA data for October 2024. This value excludes provisions for packing, packaging materials and transport, amounting to 57 cents per dozen as determined in mid-2023 from an EIC survey (with a low response) and now realistically 60 cents per dozen.

President-elect Donald J. Trump has nominated Brooke Rollins as Secretary for Agriculture in his Administration.  Currently, she is the Executive Director for the America First Policy Institute.  Previously, she was Director of the Domestic Policy Council during the first Trump Administration.

Rollins is a native of Glen Rose, TX. and participated in FFA in high school.  She earned a baccalaureate degree in Agricultural Development from Texas A&M and her law degree from the University of Texas School of Law.

Her appointment has received the support of the American Farm Bureau Federation noting that she would “fight for America’s farmers in our nation’s agricultural communities”.

In her current position, Ms. Rollins has advocated for a review of SNAP eligibility requirements.  It is anticipated that she will aggressively advocate for change within USDA in accordance with pre-election commitments by the President-elect.

It is evident that many of the grant and giveaway programs favoring minorities and the “underserved” as favored by Secretary Tom Vilsack will be reversed or abandoned during her tenure.

Raw Farm Dairy, located in Fresno, has recalled raw milk produced on November 9^th.  This action follows demonstration of RNA consistent with H5 influenza virus in a retail milk sample collected by the Santa Clara Health Department. This action is in accordance with the State of California surveillance program for bovine influenza-H5N1.

The operators of Raw Farm Dairy should have recognized the possibility of bovine influenza infection based on a depression in milk yield among animals within their herd and a physical change in the appearance of milk. The dairy operators should have voluntarily withheld milk until the results of an assay for the presence of virus disclosed freedom from infection. Releasing milk of questionable wholesomeness was unethical and contrary to the health-promoting principles apparently followed by producers of ‘natural’, certified organic and raw milk and related foods.

This case illustrates the risk of consuming raw milk, since the virus if present, could result in human infection even if only producing mild respiratory infection and conjunctivitis.  The ingestion of milk containing H5N1 virus by a person infected with a seasonal strain of human influenza could result in a recombinant event.  Identification of RNA derived from H5 viral influenza in this case is an indication of the need for surveillance, given that 335 cases of bovine influenza have been diagnosed in California herds over the past three months.

The virus is effectively inactivated by pasteurization but raw milk can contain a wide range of bacterial pathogens and now evidently viruses of potential zoonotic significance

The Food and Drug Administration initiated a recall of Chicken Alfredo meal kits produced by Joseph Seviroli, LLC on October 9^th.  To date the recall has been expanded to include 683 tons of products due to possible contamination with Listeria monocytogenes. Meal kits were distributed in 15 states east of the Mississippi in addition to Wyoming and California.

Authorities in South Korea have reported two outbreaks of Highly Pathogenic Avian Influenza in flocks respectively 17,000 and 24,000 in size without specifying type.

With the cases reported in this nation together with a high incidence rate in Japan, it is evident that migratory marine birds are shedding H5N1 virus to backyard and commercial farms in southeast Asia.

If the fall outbreaks in 2024 follow the pattern of 2022, Taiwan, Japan and South Korea will be markets for both shell eggs and egg products.  At this time, U.S. prices are high, placing domestic producers at a competitive disadvantage against India and the People’s Republic of China.

The USDA has followed a policy of extensive support of small-scale farmers, “clean energy” projects and for “underserved” communities.

In a recent release, USDA identified distribution of more than $20 billion iunder the misnamed Inflation Reduction Act. Funds were allocated to:

• $4 billion in conservation funding to promote “climate-smart practices”

• Support of 7,000 farmers and rural businesses to develop clean energy and energy efficiency installations.

• Assignment of $8.3 billion in grants to support transformation of rural electric cooperatives to solar and wind powered generation, claimed to supply 10 gigawatts annually.

• $2.6 billion to reduce risk of wildfire on 1.8 million acres.

• $1.5 billion for urban and community forestry programs with special emphasis on disadvantaged communities.

• $3 billion assigned to the Partnership for Climate-Smart Commodities involving 21,000 farms.

Over the past four years the USDA has attempted to restructure the meat production industry and reduce the use of carbon-based fuels with little evidence of major changes. The USDA refers to grants as “investments”.  This presumes a quantifiable return on the capital allocated. There is apparently little oversight over projects or the evaluation of their effectiveness.

A teenager was admitted to the BC. Children’s Hospital on November 8^th with a severe respiratory infection resulting in intensive care.  Evaluation of the virus denotes changes in genes coding for the hemagglutinin protein that favor attachment to alpha 2-6 sialic receptors in the upper respiratory tract.  H5N1 virus circulating in poultry attaches to alpha 2-3 receptors predominant in avian species but enigmatically also in the conjunctival tissue of humans.  This is the reason why those involved in depopulation of flocks infected with avian influenza and workers in infected dairy herds develop conjunctivitis and only infrequently display upper respiratory involvement.

The two mutations that are evident from whole genome sequencing of the isolate from the patient are consistent with the clinical condition.  It is not known whether these mutations occurred prior to infection or during the current clinical phase.  Despite comments by Dr. Scott Hensley of the University of Pennsylvania, Perelman School of Medicine, following a review of sequence data released by the Public Health Agency of Canada, it is unlikely that the virus is of immediate pandemic concern to humans.  It is generally accepted that monitoring of isolates from humans and ongoing surveillance will be necessary to detect potential changes in pathogenicity based on the presence of mutations.

Following investigations, health authorities in British Columbia have confirmed that there was no transmission from the patient to contacts within the ten-day period following hospitalization confirming that the virus was not contagious.

It is unknown how the patient was infected since there has been no release concerning residence, occupation or possible contact with free-living birds, animals or commercial poultry.

Predictably adverse publicity and customer disaffection followed the outbreak of E.coli O157:H7 attributed to onions incorporated into Quarter Pounder sandwiches served by McDonald’s franchisees in a multistate area. To date, 104 cases have been confirmed in 14 states with 24 hospitalizations and one fatality. The Company is now committing $100 million to assist franchisees. Of this total, $65 million will support operators with a quantifiable loss in business during October.

It is apparent that the outbreak is now over, but lawsuits have been filed against both McDonald’s and Taylor Farms, operators of the Colorado packing plant in addition to onion growers in Washington State.

The speed at which health authorities including the Centers for Disease Control and Prevention responded to the outbreak attests to the capability public health authorities to respond to comprehensive databases including Food Net.  Identification of onions as the vehicle of infection and the elimination of beef patties based on laboratory assays, limited the financial consequences of the outbreak.

Observers had anticipated progress on the 2023 delayed Farm Bill in the lame duck session of the 118^th Congress.  This past week, Senator Debbie Stabenow (D-MI) introduced the Senate version incorporating an additional $39 billion in expenditure including $20 billion towards the Farm Safety Net.

Senator John Boozman (R-AR) the ranking member on the Senate Agriculture Committee characterized the proposal as a “non-starter” noting, “an eleventh-hour partisan proposal released after expiration of the current Farm Bill extension is insulting”.

The expired 2018 Farm Bill was extended through September 30, 2024 but all expenditure on agriculture will cease on December 31^st hence the need for action by Congress.  The House Agriculture Committee has presented their version of the 2023 Farm Bill but it has yet to be considered by the full House.

The question of legislation to overrule California Proposition 12 appears to be an impediment towards adoption of a comprehensive Farm Bill with strong lobbying by the National Pork Producers’ Council.

Passage of a Farm Bill will probably be easier in the 119^th Congress given that the Republican party will hold a majority in both the House and the Senate with a greater inclination to increase commodity reference of prices. This will be a major issue following the decline in exports of agricultural commodities due to tariffs on imports from China and other nations. It is anticipated that a Farm bill enacted by the 119^th Congress will place greater restrictions on SNAP eligibility and expenditure.

Jersey Mike’s Subs, a sandwich chain with 3,000 locations in the U.S., will be acquired by Blackstone Capital Partners LLP for $8 billion including debt. Jersey Mike’s was established in 1956 in Point Pleasant, NJ as Mike’s Subs.  The original business was acquired in 1975 with franchising opportunities offered in 1987.

The CEO of Jersey Mike’s, Peter Cancro, will remain as the driving force of the business with an equity position.

He stated, “Blackstone is the basis of the success of some of the most iconic franchise businesses globally and we look forward to working with them to help make significant new investments going forward.”

Blackstone has recently acquired a number of franchise operations including 7 Brewed Coffee and Tropical Smoothie Café.  Infusion of capital will position Jersey Mike’s to compete more aggressively with Subway that was acquired by Roark Capital for $10 billion in 2023.

In a November 18^th release, Archer-Daniels-Midland Corp. (ADM) posted financial results for Q3 FY 2022. The Company can be regarded as a bellwether for ‘Mega-Ag’ and the commodities trading and processing sector. Along with competitors Bunge, 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. They all operate in a competitive world environment influenced by inflation, conflict and disparity in the quality of life between industrialized and developing nations.

For Q3 FY 2024 ending September 30^th, net income was $18 million on total revenue of $19,937 million representing a profit margin of less than 0.1 percent Comparable figures for Q3 of 2013 ending September 30^th 2023 were net income of $821 million on total revenue of $21,695 million. Diluted EPS fell from $1.52 for Q3 2023 to $0.04 for the most recent quarter.

For Q3 2024 the Animal Nutrition sub-segment generated $19 million in operating profit (compared to $12 million in Q3 2023) out of a combined total of $1,037 million for all segments. Segment operating profits were:-

• Ag Services and oilseeds           $480 million
• Carbohydrate solutions              $452 million
• Nutrition (human and animal)   $105 million

ADM has been burdened with questions relating to internal accounting covering an extended period that apparently has now been resolved with restatement of accounts but without deviation from consolidated earnings. In commenting on results, Chairman and CEO Juan Luciano stated “Accuracy and transparency are important to the Company and we are pleased to have now completed the restatement and be current with our financial filing. We continue to focus on implementing enhancements to internal controls to ensure integrity and accuracy of reporting,”

He concluded “Looking ahead, while we foresee softer market conditions into next year, we are taking actions to improve performance and drive value creation. We are redoubling our focus on productivity and operational excellence, while maintaining our disciplined approach to capital allocation.”

On September 30^th 2024, ADM posted assets of $35,654 million of which $6,999 million comprised goodwill and intangibles, against long-term debt of $8,303 million. The Company had an intraday market capitalization of $25,610 million on November 20^th. ADM trades with a forward P/E of 10.8 and has ranged over a 52-week period from $48.92 to $77.35 with a 50-day moving average of $56.87.  Twelve-month trailing operating margin was 2.2 percent and profit margin 2.9 percent.  Return on assets over the past twelve months was 3.4 percent and the return on equity 10.8 percent.

Indiana University of Indianapolis received a $2 million grant from the National Science Foundation to conduct research into propagation of insects for production of animal and human food.

The principal research worker will be Dr. Christine Picard, Associate Dean for Research and Graduate Education at the Indiana University School of Science.  She is the Director of the Center for Environmental Sustainability Through Insect Farming that has collaborative arrangements with Texas A&M and Mississippi State University.

The purpose of the grant will be to develop systems to culture insects to produce protein applying both biological and genetic manipulation.

Dr. Gabriel Filippelli, a participant in the project as co-principal investigator, stated, “We cannot keep producing protein to consume the way we are now, because we don’t have the resources and our planet suffers.”  He added, “We need to rethink how we survive and thrive into the future.  We foresee a world that is much more sustainable and circular with insect-based systems being a piece of it.”

The justification for the grant is questioned given that commercial insect production is a reality albeit that application is limited to animal feed.

There has been extensive investment of venture capital in insect protein with construction of large plants in the E.U., the Republic of South and, on a lesser scale, in the U.S.  The question remains as to whether this NSF grant to obviously competent scientists is a case of reinventing the wheel or whether Indiana University can engineer a breakthrough to establish financial viability for insect-derived protein that is currently in question.

The upsurge in small “spaza” (informal) stores in urban and rural townships in South Africa have become a source of food contamination due to poor handling practices and improper storage of ingredients.  The problem was highlighted by the deaths of 22 children from organophosphate poisoning.  Terbufos™ only registered for agricultural use is inappropriately and illegally applied as a home rodenticide and pesticide and is sold alongside food in non-regulated “spaza” stores. 

Investigation of the causes of peracute mortality among children disclosed gross violations in food handling.  Regulations have been introduced to enforce registration of stores selling food.  Irrespective of municipal ordinances on traceability, repackaging and storage of food, detergents and pesticides it will be difficult to enforce regulations given the lack of resources inherent to all aspects of governments in the Republic of South Africa. 

Despite exhortations from President Cyril Ramaphosa, good intentions do not trickle down to shanty towns where there is little or no rule of law.  During the fourth quarter of 2024, approximately 900 food-related incidents involving contamination and infection have been recorded, with the documented cases possibly only the tip of the iceberg.

On November 14^th Post Holdings Inc. (POST) reported on Q4 and FY 2024 ending September 30^th.  The Company posted results consistent with consensus estimates for both revenue and earnings.

For Q4 the Company reported net earnings of $81.6 million on sales of $2,010 million with a diluted EPS of $1.28.  Comparative values for Q4 of FY 2023 were earnings of $65.7 million on sales of $1,945 million with a diluted EPS of $1.01.

Revenue was 3.3 percent higher in Q24 2024 compared to the corresponding quarter in FY 2023.  Gross margin increased from 28.3 percent to 28.6 percent for the most recent quarter. Operating margin increased from 7.9 percent to 9.5 percent for Q4 2024.

For FY 20243 the Company reported net earnings of $367 million on sales of $7,923 million with a diluted EPS of $5.64.  Comparative values for FY 2023 were earnings of $301 million on sales of $6,991 million with a diluted EPS of $4.82.

Guidance for FY 2025 comprised an adjusted EBITDA in the range of $1,416 to $1,460 million. Capital expenditure of $380 to $420 million for FY 2025 will include $85 million to complete expansion and upgrades to the Norwalk, IA. egg processing plant and Phase II conversion to cage-free housing at the Bloomfield, NE. Complex.

Post Holdings operates subsidiary, Michael Foods producing shell eggs, egg liquid and derived products that are sold through the Refrigerated Retail and Food Service segments. Egg-related brands include Almark Foods, Henningsen’s, Abbotsford, Davidson’s, Crystal Farms and Egg Beaters.

The Refrigerated Retail Segment includes cheese, sausage products, eggs and side dishes. For Q4 FY 2024, net sales for the segment amounted to $227 million, down 2.9 percent from Q4    FY 2024. Operating profit attained $13 million up 6.7 percent.

The Food Service Segment comprising egg and potato products recorded Q4 FY 2024 sales of $596 million, up 4.7 percent. The Segment generated an operating profit of $78.3 million down 8.1 percent

The Post Consumer Brands and Weetbix (U.K.) Segments have no direct involvement with eggs.

The Company release and SEC 10-Q report noted the risks and consequences of HPAI infection on company-owned complexes and those of contractors.

On September 30^th 2024 Post Holdings posted assets of $12,854 million, including $7,847 million as goodwill and intangibles, against long-term debt of $6,811 million. The Company had an intraday market capitalization of $6,450 million on November 20^th. POST trades with a trailing P/E of 19.6. The share value has ranged over a 52-week period from $83.73 to $118.96 with a 50-day moving average of $112.68. POST closed at $107.06 pre-release on November 14^th and opened November 15^th at $106.57

Twelve-month trailing operating margin was 10.7 percent and profit margin 4.5 percent.  Return on assets over the past twelve months attained 4.3 percent and the return on equity was 8.9 percent.

Generally Post Holdings with a commitment to further processing of eggs is shielded from extreme lows in the benchmark price that impacts shell egg producers and actually provides a benefit from purchased eggs. In contradistinction the company does not obtain the surge in margin when prices increase.

On November 20^th Target Corporation (TGT) the Nation’s 6^th-ranked retailer, posted results for Q3 FY 2024 ending November 2^nd. Target fell short of consensus estimates for both revenue ($25,900 million) and earnings ($2.30).  For the quarter, the Company earned $854 million on sales of $25,228 million with a diluted EPS of $1.86. For the corresponding Q3 FY 2023 ending October 28^th, Target earned $951 million on sales of $25,004 million with a diluted EPS of $2.10. Sales were higher by 0.9 percent and net earnings were 12.1 percent below Q3 FY 2023. Gross margin declined from 27.4 percent in Q3 FY 2023 to 27.2 percent for the most recent quarter. Operating margin fell from 5.3 percent to 4.6 percent.

For Q3 FY 2024, comparable same-store sales increased by 0.3 percent compared to a negative 4.9percent in Q3 FY 2023. This was due to a rise of 2.4 percent in transactions (‘traffic’) offset by a 2.0 percent decline in the value of each transaction (‘ticket’). Digital sales were up 10.8 percent during Q3 FY 2024 attributed to Target Circle with curbside and in-store pickup. The Company benefitted from the Target Circle-360 free loyalty benefits program supplanting the previous paid membership alternative with an increase in membership penetration of 17.7 percent.

In commenting on results Brian Cornell Chairman and CEO stated, "Looking ahead, our team is energized and ready to deliver the unique combination of newness and value that holiday shoppers can only find at Target, and we remain confident in the underlying strength and fundamentals of our business, and our ability to deliver on our longer-term financial goals."

The Company lowered guidance for FY 2024. Target expects flat same-store sales growth and an adjusted EPS ranging from $8.30 to $8.90 (was $9.00 to $9.70)

On August 3^rd Target posted total assets of $58,351 million, up 3.8 percent from October 28^th  2023. Long-term debt and lease obligations attained $19,831 million. Target Corporation had an intraday market capitalization of $71,870 million on November 20^th. The Company has traded over the past fifty-two weeks in a range of $120.94 to $181.86 with a 50-day moving average of $152.04.  TGT trades with a forward P/E of 15.0. On November 19^th pre-release the share closed at $156.90 but after the morning release opened at $127.81 on November 20^th down 18.6 percent

Twelve-month trailing operating margin was 6.6 percent and profit margin 4.2 percent.  The Company generated a return on assets of 7.2 percent and 34.0 percent on equity.

At the end of Q3 FY 2024, Target Corporation operated 1,978 stores with a total retail area of 248,000 square feet excluding offices and DCs. The company invested $1,960 million in property and equipment during Q3 FY 2024.

Grimmway Farms, located in Bakersfield, CA, has recalled organic carrots with “use by” dates ranging from mid-August through mid-November as a result of contamination with E. coli O157:H7.  Outbreaks have been recorded in 18 states with 39 cases to date requiring 15 hospitalizations and with one fatality.

In a statement, Grimmway Farms is cooperating with state and federal agencies to identify causation, presumed to be contamination of water used to irrigate crops.

This incident demonstrates the reality that the organic seal does not provide any assurance of protection against pathogens despite public perceptions to the contrary.

The implicated baby and whole organic carrots were marketed by Sprouts, Trader Joe’s, Wegman’s, Target, Walmart and other retailers.

In a November 19^th release, Walmart Inc. (WMT) posted financial results for Q3 of Fiscal 2025 ending October 31^st 2024. All U.S. omni-channel retailers are subject to the same pressures from increased costs for goods, transport and labor in a competitive environment with most consumer demographics and especially lower income earners concerned over expenditure. As a multinational company, Walmart faces additional risks associated with currency fluctuation, geopolitical events and adverse policies by regulators in host-nations. Walmart serves as a bellwether for U.S retail combining groceries, clothing, electronics, drugs, toiletries and household necessities.

For the 3^rd quarter of FY 2025 net income was $4,577 million on total revenue of $169,588 million that beat consensus estimates on revenue and earnings. Walmart generated a profit margin of 2.7 percent for the quarter.  Comparable figures for Q3 FY 2024 ending October 31^st 2023, were net income of $453 million on total revenue of $160,804 million with a profit margin of 0.3 percent due to a non-recurring charge of $4,750 million. Diluted EPS increased from $0.06 for Q3 FY 2024 to $0.57 for the most recent quarter.

Comparing Q3 FY 2025 with the corresponding quarter of the previous year, revenue was up 5.5 percent; comparable store sales up 5.5 percent for the U.S.; gross margin rose from 24.0 percent to 24.2 percent; operating margin increased from 3.9 percent to 4.0 percent for the most recent quarter. Global E-commerce sales grew by 27 percent and global inventory was down 1.0 percent and 0.6 percent for the U.S.

In commenting on Q3 results, in the Investors’ Call, Walmart CFO John David Rainey stated “Share gains in the third quarter, in both transaction counts and unit volumes, were primarily driven by upper-income households. We’re broadening our assortment, improving customer experience, and earning their trust, while seeing share gains as a result. We’re also realizing the benefits from the investments we’ve made in our core omni-retail business and seeing improved profitability with newer businesses.”

He added, “E-commerce remained strong, with Walmart posting a 22 percent increase year over year. Store-fulfilled delivery grew nearly 50 percent and surpassed a $2.5 billion monthly run rate. This marked the 12^th consecutive month that deliveries exceeded $2 billion. Walmart Connect grew by 26% year over year, and membership income was up by double digits”.

Rainey concluded “U.S. customers remain resilient, with behaviors largely consistent over the past four to six quarters. They continue to seek value to maximize their budgets while also choosing convenient options to save time.”

Forward guidance for FY 2025 was adjusted upwards above the upper end of previously stated ranges including:- A 4.8 to 5.1 percent increase in net revenue; An increase in adjusted operating income of 8.5 to 9.3 percent, and an adjusted EPS of $2.42 to $2.47 Capital expenditure will be equivalent to 3.0 to 3.5 percent of net sales.

For Q3 FY 2025 segment results comprised:-

• Walmart US: Net sales of $114,900 million, up 5.0 percent over Q3 FY 2024. Operating income $5,400 million with strong gains in groceries and general merchandise. Comparable same-store sales were up 5.3 percent (excluding fuel). Transactions were up 3.1 percent and ticket was 2.1 percent higher. E-commerce, was up 22 percent over the corresponding quarter of FY 2024. Inventory declined approximately 0.6 percent.
• International: Net sales of $30,300 million, up 8.0 percent. Operating income was $1,200 million, up 7.8 percent. Growth in E-commerce, 43 percent over the corresponding quarter of FY 2024.
• Sam’s Club U.S.: Net sales of $22,900 million, up 3.9 percent excluding fuel. Operating income was $600 million. Comparable same-store sales were up 7.0 percent. Membership revenue grew 15.0 percent. Growth in E-commerce, increased 26 percent over the corresponding quarter of FY 2023, attributed to curbside pick-up service and delivery.

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

On October 31^st 2024, Walmart posted assets of $263,399 million including goodwill of $27,942 million. Long-term debt and lease obligations amounted to $52,628 million. The Company had an intraday market capitalization of $675,860 million on November 19^th. WMT trades with a forward P/E of 30.9 and has ranged over a 52-week period from $49.85 to $88.29 with a 50-day moving average of $81.42.  Twelve-month trailing operating margin was 4.7 percent and profit margin 2.3 percent.  Return on assets over the past twelve months was 7.0 percent with a return on equity 18.5 percent. At close of trading on November 18^th pre-release, WMT was priced at $84.11. On November 19^th WMT opened post-release at $86.17, up 2.5 percent and closed at $86.89.  

A recent article by Jonathan Runstadler in Science* highlighted the risk of avian influenza H5 clade 2.3.4.4b to wild bird, terrestrial and aquatic mammalian populations.  Although losses to commercial poultry have been quantified, the magnitude of mortality among diverse avian taxa is unknown.  According to the Convention on The Conservation of Migratory Species of Wild Animals and the Food and Agricultural Organization, avian influenza is a panornitic that has affected as many as 500 species of wild birds since 2020.  Reflecting the situation in commercial poultry, avian influenza in wild and migratory avian species is less seasonal and now year-round in incidence.  A number of endangered species have been highlighted in attempts at understanding the magnitude of infection.  Obviously, the California condor is at extreme risk and the small remaining population justified capture and vaccination.  Other species including the Barnacle Goose, Dalmatian Pelican, Northern Gannet and Roseate Tern populations have been severely diminished. 

Emergence of H5N1 in marine mammals along the Pacific littoral demonstrates susceptibility of a wide range of seal and sea lion species with obvious animal-to-animal transmission.

The article stressed that “avian influenza in wild birds extends beyond classic epidemiologic principles of contact and incorporates the effects of climate change, habitat destruction and host species behavior.” The article called for enhanced surveillance of wildlife populations and developing an understanding of the factors contributing to infection.

It is evident that frequent and extensive outbreaks in poultry are contributing to infection of domestic resident birds including scavenger species such as black vultures and raptors.  Persistence of avian influenza H5N1 and possibly other emerging H5 and H7 serotypes will perpetuate outbreaks among commercial poultry. This suggests the need for protective vaccination given that extreme biosecurity does not provide absolute protection.  Evidence that close contact with infected flocks and dairy herds can result in zoonotic infection is obviously of concern as recombinant events and mutations may result in a more pathogenic or even contagious strain impacting the human population.

*Runstadler, J., (2024)  Global Influenza Threatens Conservation, Science 336:618-619

The Food and Drug Administration, the Centers for Disease Control and Prevention and the Colorado Department of Public Health are continuing with their investigation of the extensive outbreak of E.coli O157:H7 attributed to onions served with McDonald’s Quarter Pounder sandwiches.  As of mid-November, 104 diagnosed cases have been recorded from fourteen states with 34 hospitalizations including four cases of HUS and one fatality.

Enigmatically, the Colorado Department of Agriculture in collaboration with the Colorado Department of Public Health and Environment have failed to demonstrate the outbreak strain in the Taylor Farms processing center.  E.coli O168:H8 with a Shiga toxin gene stx2a was identified although additional samples are undergoing whole genome sequencing.

McDonald’s switched the supplier of onions and has resumed adding the ingredient to Quarter Pounder sandwiches, resulting in resumption of halitosis.

The earlier food safety concern has obviously abated.

Uzelac Industries is a major supplier of rotary dryers for the poultry and agricultural industries over the past 20 years. The company has recently embarked on construction of a metal fabrication facility in Pewaukee, WI with projected completion in mid-2025. 

At present Uzelac is offering custom fabrication in stainless steel and aluminum in addition to rolling and welding services.  Capabilities include cutting, shearing, laser and water jet cutting, roll forming and Company engineers can provide consultation on design and installation.

Uzelac has recently supplied machine guarding, mixers, silos, platforms and catwalks in addition to a comprehensive line of stock and custom drying solutions.

For further information contact Ryan Reitman (414) 529-0240 or ryan@uzelacind.com or review the company website by clicking on to the Uzelac logo on the right side of the Welcome Page

UNFI has announced that the Fort Wayne, IN. Distribution Center will be closed following previous announcements of layoffs and closure of facilities.  In October, UNFI announced that it would be outsourcing administrative functions resulting in 300 layoffs in the Phoenix, AZ. Location.  In June, UNFI closed their Harrisburg, PA distribution center eliminating 87 jobs.  Earlier in 2024 the National Labor Relations Board disapproved outsourcing of trucking to J.B. Hunt in Florida placing 80 driver positions in jeopardy.

In early November, Teamsters Local 853 in California won a grievance complaint requiring UNFI to pay $1.3 million to drivers arising from a collective bargaining agreement.  The dispute between the Teamsters Local and UNFI will now move to arbitration.

In addition to problems associated with driver retention and remuneration, the company faces a class-action lawsuit by suppliers alleging serial and longstanding underpayment.
 

Financial problems experienced by UNFI arise from loss of business with the acquisition of Whole Foods Market by Amazon and more recently adoption of in-house distribution by Ahold-Delhaize banners.

For the most recently concluded FY2024 ending August 3^rd UNFI posted a loss of $112 million on sales of $30,980 million with a negative EPS of $(1.89). Comparable values for FY 2023 were earnings of $24 million on sales of $30,272 million with an EPS of $0.40.

The GAO has completed a study extending over six years on violations of H-2A employment.  The study disclosed failure of employers of legal agricultural workers to pay wages and overtime in accordance with federal regulations.  Obviously many workers returning to their home countries have not received adequate compensation and back wages but are untraceable.  The Department of Labor (DOL) has the responsibility for enforcing compliance with H-2A regulations. 

The GAO analysis covered 2018 through 2023 and included interviews with DOL, Department of Homeland Security and state agencies and five organizations representing workers and six associations representing employers. Recommendations by the GAO included for the Department of Homeland Security to establish a procedure to process H-2A petitions electronically and to establish a mechanism to reimburse workers for back wages.

The problem of illegal migration in search of employment reflects the balance between demand for labor and the availability of potential workers.  The problem of illegal employment could be resolved in part by establishing a realistic allocation of H-2A visas and rectifying deficiencies in the E-Verify system.  These changes will be required in the event of deportation of illegal immigrants that cross borders in response to perceived financial opportunities in the U.S. where they are inevitably subject to exploitation.

Agriculture and some industries require immigrant workers on either a seasonal or continual basis and the economy of the U.S. would benefit from a regularized functional and legal system of visa allocation with appropriate controls over duration of residence in the U.S. and compliance with remuneration and housing.

Hillandale Farms has successfully completed installation of a comprehensive Ovo-Vision ERP (Enterprise Resource Planning) System incorporating logistics, planning, production, quality control, accounting and financial management.

According to a press release, the successful installation of the Ovo-Vision system at Hillandale Farms will allow the company to deliver quality eggs to consumers, monitor welfare and routine production and the control of finances.

Information on Ovo-Vision ERP systems can be obtained from the company website, accessed by clicking on to the Ovo-Vision logo on the right side of the Welcome Page.

Following outbreaks of HPAI in Washington State during mid to late October, Dr. Amber Itle, State Veterinarian justifiably encouraged owners of backyard flocks to enhance biosecurity.  Given that most backyard flocks are allowed access to the exterior of houses, the recommendation to “improve biosecurity” is impractical given the inevitability of contact between migratory and domestic carriers of infection among subsistence and non-commercial flocks.

What is of interest is the comment by Dr. Itle, that “This disease is preventable”.  If by “preventable” Dr. Itle implies that biosecurity provides absolute protection, this is contrary to reality.  Not even a high level of biosecurity in combination with vaccination will provide complete protection.  Dr. Itle is theoretically correct in recommending “Avoid contact with wild birds, bring birds undercover and away from ponds, keep feed in containers and bring flocks in at night and avoid mixing species including ducks and chickens.”  Allowing backyard flocks outside access will not “avoid contact with wild birds”.

Changing housing and management of backyard flocks to achieve even a moderate level of biosecurity is impractical.  Fortunately, backyard birds serve only as sentinels of HPAI infection in an area. Absent direct contact with commercial flocks, backyard farms are insignificant in the epidemiology of avian influenza as it applies to the commercial poultry industry.

According to a CoBank Knowledge Exchange report consumers may be turning from turkeys as the centerpiece of their Thanksgiving meals. Turkey features were down by one-third for Thanksgiving 2023 compared with five years previously.

Turkey production has declined since COVID for a number of reasons.  These include susceptibility of growout farms to avian influenza, production difficulties including turkey rhinotracheitis and other infections that affect either hatchability or growth rate. Consumption of whole birds may be limited by fewer large family gatherings for Thanksgiving.

USDA project 2025 turkey production at 5,165 million lbs. approximately 6.4 percent lower than in 2024.  This is reflected in a decline in per capita consumption to 13.7 lb. in 2025 partly compensated by a 2.9 percent in exports to 530 million lbs. representing 10.3 percent of production.

Negotiations to reach a Master Contact between the U.S. Maritime Alliance (USMX) and the Longshoremen’s Association (ILA) representing workers on East coast and Gulf ports has reached an impasse over the final issue relating to automation.  Most outstanding items have been resolved after four days of intense negotiations.  The ILA is accusing USMX of failing to adhere to a commitment not to introduce various forms of automation.  According to USMX the introduction of automation will improve efficiency but not at the expense of jobs.  Modernization is necessary to maintain the viability of ports and to improve working conditions and safety.

Understandably, ILA is concerned over job security having observed the effect of mechanization and robotics in the auto industry. ILA regard semi-automation as a slippery slope ultimately developing into full automation and the inevitable loss of jobs.

In early October, after a brief strike, the ILA agreed to continue working with a tentative agreement extending to mid-January 2025.  Political considerations during the pre-election weeks resulted in a hands-off approach by the White House concerned over disaffection of unions if it intervened directly and relying on jawboning.  The situation will be different under the incoming administration since the Taft-Hartley Act would certainly be invoked, forcing workers to return to work in the event of a strike. This places pressure on both the ILA and the USMX to reach an agreement. Based on the weaker position of the ILA, it is anticipated that the dispute will be resolved by acceptance of limited automation before the January 15^th deadline.

The Food and Drug Administration in cooperation with the Environmental Protection Agency has announced the registration of an antimicrobial additive for irrigation water to reduce or eliminate contamination of green produce.  According to the press release, use of the compound is intended to “significantly mitigate risks and improve the safety of the water used in growing crops”.  The University of Arizona has assisted the two federal agencies to develop a protocol to test compounds and to establish efficacy.

Surely the FDA is looking through the wrong end of the telescope in attempting to mitigate foodborne bacterial infections.  Pathogen reduction should not be achieved through treating vast quantities of contaminated water used to irrigate fields.  Emphasis should be placed on decontaminating the product during processing and prior to packaging.  Treatment of irrigation water appears to be the hit-or-miss approach compared to application of a positive kill step prior to distribution. Whether as a spray, immersion or applying electron beam irradiation, a suitable process would be easier to control at packing and would conform to an HACCP approach to ensuring freedom from foodborne bacterial pathogens.

Following Federal Aviation Administration approval of the MK30 Delivery Drone, Amazon has commenced delivery from their Tolleson, AZ. distribution center.  The MK30 drone can deliver payloads of up to five lbs. in weight and will be suitable for delivery of prescriptions and urgently required small items.

The Amazon Prime Air service follows initiatives by Walmart in cooperation with Wing in Dallas that has proven to be both practical and popular.

Agricultural organizations representing poultry and red meat producers in the E.U. have raised strenuous objections to the proposed Mercosur Trade Agreement that will open the market to imports from Argentina, Brazil, Paraguay and Uruguay.  Although prompted by concern over competition, opponents of the trade agreement have raised valid issues.  The reliability of meat inspection in Brazil is questioned based on the “Carne Fraca” scandal that demonstrated corruption and deviation from acceptable standards. Procedures appear inferior to those in effect in the E.U.  The meat inspection problems that occurred in 2017 have apparently been corrected by the Brazilian Ministry of Agriculture Livestock and Food. 

A recent audit conducted by Germany questioned the use of banned antibiotics including chloramphenicol and oxytetracycline, pesticides and hormones including estradiol in production.  Residues of banned substances have been detected in poultry and meat from the Mercosur nations.

Adoption of the E.U.-Mercosur Agreement would increase exports of poultry and meat products to the group of 27 nations in excess of 41,000 metric tons of beef and 59,000 tons of poultry meat imported in 2023 from E.U.-approved abattoirs and poultry processing plants.

It would appear that E.U. agricultural organizations are advancing food safety considerations as a means to block competition from nations and principally Brazil, that have lower production costs despite the additional expense of transport.

The Minister of Labor, Steven McKinnon, has invoked Section 107 of the Canada Labor Code forcing striking workers at ports to return to work and to impose binding arbitration on unions and employers.

The Liberal Party government opted for intervention despite the reality of disaffection among union voters. The reality forced action recognizing the $1 million per day impact on the economy and disruption of supply chains.

Workers at the ports of Montreal, Quebec, Vancouver and other British Columbia trade portals will resume operations.  Since the strikes have been ongoing since the beginning of November, it will take weeks to clear the backlog of containers and especially containers that has affected movement between the U.S. and Canada.

The move by the government of Justin Trudeau was welcomed by the Retail Council of Canada and similar organizations, including importers and exporters in the U.S.

In justifying the action, Minister McKinnon stated that negotiations between unions and employers had reached a total impasse and continuation would impose economic and reputational damage to Canada.

Government intervention is similar to the action taken in August to force workers employed by Canadian-Pacific Kansas City and the Canadian National Railway companies to resume operations.

According to a survey conducted by market research company Expana, the cost of a traditional Thanksgiving meal in 2024 has dropped by three percent.  The Expana Main Meal Index includes turkey, ham, vegetables, starches and dessert.

Turkey prices are lower than 2023 despite reduced production.  Ground beef currently averaging $4.83 per lb. is 4.1 percent lower than for Thanksgiving 2023, chicken breast at $4.23 per lb. is up 2.1 percent and chicken legs at $1.45 per lb. down 5.8 percent year-over-year.

The American Farm Bureau Federation projection of the cost of a Thanksgiving meal using a standard basket  will cost $58 for 10 guests. The total will be 5 percent less than for 2023 but up 20 percent over five years relecting the post COVID years of inflation. The 16 lb. turkey comprised 44 percent of the cost of the meal.

A review of recent submissions to the World Organization for Animal Health (WOAH) indicate the extent of reported outbreaks of highly pathogenic avian influenza.  During the first half of November, diagnoses among commercial poultry were reported from Ukraine, Portugal, Bulgaria, Hungary and the United Kingdom.

In almost all cases, H5N1 virus was isolated from free-living migratory and resident birds before outbreaks in commercial poultry. Reports on cases follow sequence initially involving backyard farms followed by larger commercial units.

Avian influenza has been recorded on six continents including Antarctica and has involved terrestrial mammals including scavenging and carnivorous species.  The emergence of bovine influenza-H5N1 with limited zoonotic transmission without contagion has occurred since March 2024. Substantial mortality among marine mammals along the Pacific coastline of South America suggests animal-to-animal transmission among seals and sea lions.

Asia has also reported recent outbreaks of H5N1 among wild birds.  Commercial flocks have been affected in Taiwan, Korea and presumably China. This nation employs vaccination but reports of outbreaks in commercial flocks and among human contacts are subject to central government policy on limited release of information.

Avian influenza has attained panornitic status with the potential to disrupt production and trade in eggs and poultry meat and representing a threat to the survival of endangered susceptible avian species.

Shareholders have filed a lawsuit, Stradford v Chipotle Mexican Grill in the U.S. District Court, for the Central District of California. The plaintiffs allege that management overreacted to consumer complaints over portion size. Following the “please sir, can I have some more” postings on social media, Chipotle apparently overcompensated by serving “generous portions” at 3,600 restaurants that reduced margins.

The lawsuit seeks damages for stockholders and those with options over the period February 8 to October 29, 2024.  Despite resignation as CEO and Board Chairman, Brian Niccol, was named as a defendant along with CFO Jeff Hartung, Personnel and Chief Strategy Officer and Scott Boatright the current CEO and successor to Brian Niccol.

Grubhub the third-ranked U.S. food delivery service owned by Just Eat Takeaway (JET) based in the Netherlands was acquired in 2020 for $7.3 billion.  Wonder will now pay $650 million for the business, representing a considerable markdown for JET.

Wonder based in New York operates ghost kitchens and operates a delivery service from 28 locations.  Their business model is to prepare meals in central kitchens to be transported to restaurants for final preparation and serving.

The Grubhub acquisition will be complimentary to the existing network of Wonder drivers given a resource comprising 200,000 carriers and a claimed 400,000 businesses served.

USDA -APHIS has confirmed H5N1 avian influenza in a non-commercial flock in Honolulu County, Hawaii.  This is the first diagnosis in the state during the ongoing HPAI epornitic that commenced in the ‘Lower 48’ in 2022. At the time of publication a second case has been recognized

In the absence of reports on sequencing of the H5 isolate the source is a matter of speculation. Migratory marine birds may have introduced infection since Hawaii falls within the Pacific flyway. Alternatively the virus could have been carried to the state by fomites or following illegal clandestine movement of game fowl from the U.S. mainland, Guam or other areas.

A concerning observation is a report of isolation of H5 RNA in wastewater sampled from Oahu on November 7^th. The isolate is currently undergoing characterization to determine whether it is an H5N1 strain.

Hawaii would be a suitable test location to evaluate the benefit of vaccination since the state does not export poultry.  The County of Honolulu includes a number of commercial egg production farms that could be protected. By selective vaccination outbreaks of HPAI in the County of Honolulu could be compared to the incidence in backyard flocks and the feral chicken population of other islands over coming months. This could confirm the benefit of vaccination.

Measure J was soundly defeated by a margin of 85 to 15 percent. If adopted it would have effectively eliminated commercial-scale poultry and livestock production in the heavily rural county.  The Sonoma County Economic Development Board estimated that 11 CAFOs and 49 medium-sized facilities would have been affected, creating unemployment and reducing the availability of both poultry and red meat and limiting revenue for the county.

The result of the ballot on Measure J should deter organizations pursuing vegan and extremist environmental agendas to refrain from attempts at disrupting livestock agriculture conducted in accordance with state and federal recommendations.

On November 5^th Costco Wholesale Corporation (COST) reported sales for October 2024 covering the four weeks ending November 3^rd.  For the period, sales attained $20,030 million, up 7.2 percent from the value of $18,680 million during the corresponding month in 2023.

Same store sales (excluding fuel and foreign exchange) increased 5.8 percent for the U.S.; 8.7 percent for Canada and 8.4 percent for international warehouses.  Overall, same-stores sales advanced by 6.5 percent and E-commerce was 19.3 percent higher.

Costco closed on November 6^th after release of the data at $896.00 subsequently rising in the post-election surge to an open of $936.57 on November 12^th.  COST market capitalization was $413,330 million on November 12^th and the share has traded over a 52-week range of $572.24 to $962.00 with a 50-day moving average of $894.30.

Costco Wholesale Corporation operates 892 warehouses with 615 in the U.S.; 108 in Canada; 40 in Mexico and the remainder in nine other nations.

Veterinary authorities in England have identified a case of Highly Pathogenic Avian Influenza on a commercial farm (presumably free-range table egg production) attributed to H5N5 strain in the county of Yorkshire.

Appropriate quarantine with depopulation of the flock and zone surveillance was implemented.

This case was preceded by isolation of both H5N1 and H5N5 strains in migratory and free-living birds consistent with observations in Canada, the U.S. the E.U and in Asia.

The announcement of the outbreak was accompanied by recommendations to enhance biosecurity. It is evident that the free-range producers will have to confine flocks in high-risk areas.  The U.K. Chief Veterinary Officer, Dr. Christine Middlemiss, issued the usual statement reassuring consumers that the infection is not transmissible to humans.

In the November 5^th election, Denver voters rejected Ordinance 309 by a 65 percent margin.  Promoted by Pro-Animal Future, a welfare advocacy group, the ordinance would have forced closure of Superior Farms, the only remaining slaughter plant within the City of Denver. Adoption of the ballot initiative would have displaced 160 workers and required alternative processing facilities for up to 1,500 lambs each working day.  Ordinance 309 was supported by various welfare and pro-vegan entities that collectively raised $300,000 to support the initiative. 

After an initial failure to actively oppose 309, civic organizations and the meat industry organized an aggressive campaign with the formation of groups including “Hands Off My Hat Denver” and “Stop the Ban, Protect Jobs” and “Local Food, Strong Denver”.  Contributors to the opposition campaign included the Meat Institute, the Colorado Livestock Association, the American Sheep Industry Association and a substantial amount from Superior Farms, an employee-owned enterprise.

Concurrently, voters also rejected Ordinance 308 that would have banned the processing and sale of animal fur within Denver.

The response by civic organizations, labor unions and the meat industry to proposed Ordinance 309 is significant since organizations opposing meat processing will attempt to introduce bans affecting slaughter plants in other jurisdictions.  The response by voters demonstrates a disinclination to respond to pro-vegan and woke ballot initiatives.

The USDA will offer $10,000 grants to educational institutions, trade associations and non-governmental organizations under the Sustainable Agricultural Research and Education program.  Grants can be used to conduct training and networking projects for local and regional meat and poultry production systems that incorporate sustainable practices including pasture raised management.  Recent grants have encouraged the production of small-flock poultry operations that are inherently less efficient and less sustainable than the conventional contract-integrator model using confined housing.

The SARE program is yet another example of using taxpayer funds in a futile attempt to create an alternative to the existing, functional and highly efficient commercial production of red meat and poultry. Since assuming office USDA Secretary Tom Vilsack and his appointees in the outgoing Administration have attempted to promote and support a non-sustainable and financially non-viable model based on small-scale production.

Cecelia Glembocki, Director of the Virginia Egg Council, has retired after a distinguished career extending over four decades. She was responsible for developing a Lunch and Learn program for hospitals to promote egg dishes for patients.  She served as a liaison between the egg industry and the White House facilitating sponsorship of the Easter Egg Roll now organized by the American Egg Board.

Cecelia will be succeeded by Kirby Moir, a registered dietitian with considerable experience in outreach and education.  Mary Rapaport will continue as spokesperson for the Virginia egg industry and will work with extension agents and consumer organizations to promote eggs both in Virginia and the Delmarva region.

In research sponsored by the USPOULTRY Foundation, Dr. Donald Reynolds of the School of Veterinary Medicine and Biomedical Sciences, University of Nebraska developed an embryo lethality assay to distinguish between highly virulent and pathogenic strains of Enterococcus faecalis.  Concurrently, his laboratory applied matrix assisted laser desorption/ionization mass spectrometry (MALDI-TOF MS) to distinguish among isolates. 

Research was conducted on 52 isolates of E. faecalis obtained from broilers, laying hens, turkeys and game birds.  The embryo lethality assay provided a semi-quantifiable index of pathogenicity.  This is necessary since additional molecular assays on either high or low pathogenicity strains would indicate the exotoxins produced that are responsible for embryo mortality and specific pathology.  The MALDI-TOF MS assays could distinguish between virulent and innocuous strains but lacked the ability to distinguish among strains of intermediate pathogenicity suggesting additional research to refine the technique.

In a November 8^th release, the American Egg Board announced a trade mission to Mexico over the period November 11-14.  The objective was be to strengthen long-term relationships in the most important U.S. export market.

Emily Metz president and CEO of the AEB commented, “Our commitment to taking our egg farmers on international missions like this one to Mexico is a key component of our broader global strategy to increase egg industry exports over the next five years.”

The trade mission will be in partnership with the USA Poultry and Egg Export Council and will establish and reinforce relationships with buyers, traders and processors in Mexico.

Participants in the trade mission will include Nick Jones, the Director of International Marketing for the AEB and representatives of Deb El Food Products, Rose Acre Farms, S&R Egg Farm and Versova.

Significant contacts will include Sigma Alimentos a major food processor, Supermercados Internationales-HEB a major supermarket chain with 62 branches and Sorina, a grocery and department store retail chain with 824 stores under various banners.

In 2023, Mexico imported 15 million dozen eggs valued at $17.4 million an almost three-fold increase over the previous year.  Over the same period, Mexico imported 4,704 metric tons of egg products valued at $22.8 million.  For the first eight months of 2024 Mexico imported 1.6 million dozen shell-eggs valued at $2.8 million and 294 metric tons of egg products valued at $2 million. These values were approximately 60 percent lower compared to the corresponding period in 2023 when lower prices prevailed. 

Decisions by Mexico as with all importing nations are based on need, availability and above all price.  Due to seasonal outbreaks of HPAI since 2022, escalation in U.S. prices for shell eggs and products and the needs of Mexico have determined the volume of production independently of promotion, relationships and marketing endeavors.

It is evident that a proportion of workers depopulating flocks diagnosed with H5N1 or in close contact with herds excreting the virus in milk are susceptible to infection   Approximately fifty cases of clinical H5N1 have been documented without contagion although structured sampling for virus and antibody response has yet to be conducted.

Notwithstanding the limited zoonotic ability of H5N1 at present, a leading specialist in the molecular biology of influenza viruses is concerned over emergence of infection in both marine and terrestrial mammals. Dr. Richard Webby, the Director of the World Health Organization Collaborating Center for Studies on the Ecology of Influenza in Animals and Birds at St. Jude Children’s Research Hospital expresses a conservative view on the potential for extensive infection of humans based on current studies of viruses isolated from dairy cattle and poultry flocks.  He stated, “From where we are now to a pandemic virus, reassortment alone is not going to get us there.”  He added, “ It is going to take reassortment followed by some critical mutations necessary for the virus to spread efficiently among humans.  The specific changes in the genome that would facilitate person-to-person spread (contagion) have not been detected in any of the genetic sequences of isolates from human cases.  In the event that mutations do occur in the future to increase the ability of the virus to infect the lower respiratory tract, or to result in contagion, the situation will obviously change.

It is considered essential that all people coming into contact with live poultry at farm and processing level should be vaccinated against the seasonal influenza viruses.  This would reduce the probability of a reassortment event leading to a novel potentially zoonotic strain.  Reassortment was in all probability the origin of the 1918 worldwide pandemic with catastrophic mortality. The 2009 H1N1 swine flu event was responsible for both clinical cases and a limited number of fatalities compared to the post-World War I outbreak.

Until H5N1 vaccines are deployed among farm workers in the U.S., sensible precautions including the effective use of PPE should be followed.

Health authorities have confirmed that a teenager in critical condition is currently undergoing treatment at the BC Children’s Hospital following infection with an H5 strain of influenza.  Epidemiologic investigations are in progress to determine the source of exposure.  Contacts of the patient are undergoing examination but without reports of symptoms consistent with infection.

Dr. Bonnie Henry, Health Officer for British Columbia stated, “This is a rare event and while it is the first detected case of H5 in a person in Canada there have been a number of human cases in the U.S. and elsewhere.”

To date, 2.7 million pounds of products processed at the Jarratt, VA plant operated by Boar’s Head have been returned.  This represents approximately 40 percent of the total recall and assumes that 4.3 million pounds comprising 71 processed products were consumed since product is presumably now beyond expiry date. 

The Centers for Disease Control and Prevention have documented 59 cases of listeriosis with ten fatalities among nineteen states.  Since no incident cases have been recorded in recent weeks, the event is probably now over, notwithstanding an incubation period that may extend to 70 days.  It is evident that many mild cases of listeriosis occurred that were not diagnosed.  The elderly, pregnant and immunosuppressed are most susceptible to listeriosis and developed symptoms requiring medical intervention.

At this time, the Jarratt plant remains indefinitely closed.  The brand image of Boar’s Head and Old Country are profoundly degraded, and the sales volume of deli meats has fallen sharply since July.

Apart from the legal claims, the integrity of the Food Safety and Inspection Service and the Virginia Department of Agriculture inspectors responsible for overseeing the plant is in question by Congress. The consequences of the outbreak are expected to resonate throughout the processed meat industry through to 2025.

Albertson’s Companies recently settled with the state of California for $4 million to resolve allegations that their banners operating in the state “unlawfully charged customers prices higher than their lowest advertised or posted price” In addition it was alleged that inaccurate weights were printed on labels. The settlement covered 589 stores in California under banners owned by the Albertson’s chain including Safeway and Vons.

The settlement elicited the intervention of Senator Elizabeth Warren (D-MA) and Rep. Adam Schiff (D-CA) who are calling for a federal investigation by the Federal Trade Commission and the Department of Agriculture to determine whether Albertson’s activities represented deceptive acts in violation of Section 5 of the Federal Trade Commission Act and the Fair Packaging and Labelling Act.  The initiative by Senator Warren and Rep. Schiff is supported by fourteen members of Congress.

In response Albertson’s Companies stated that they are committed to ensuring that customers pay the lowest advertised prices for products.  The Company maintains that they follow local pricing rules and regulations and will correct discrepancies.  Albertson’s maintains that it has made changes to reduce the risk of repetition of “errors” relating in overcharging.

It is evident that the recent history relating to Albertson’s in California and allegations raised in the Oregon, Washington and Colorado litigation will influence the final decision regarding the Kroger-Albertsons merger.  The results of the November 5^th election and the anticipated changes that will take place in the DOJ and FTC may alter the outcome of Federal opposition to the merger of the two pure-play supermarket giants.

The TGI Friday’s chain of company-owned U.S. restaurants co-owned by TriArtisan Capital Advisors and Sentinel Capital Partners, has filed for Chapter 11 bankruptcy.  The Bank of San Antonio is providing bridging funding while the company restructures.  Currently TGI Friday’s operates 39 company-owned restaurants in the U.S.  The bankruptcy filing does not affect franchised operations that are independently owned and the TGI Friday’s franchisor that owns the brand and intellectual property.  The TGI Friday’s chain posted sales of $728 million in 2023 continuing a downward trajectory associated with suspension of operations in numerous locations since 2021 marking the beginning of COVID restrictions.

Casual dining has undergone a loss of patronage as customers have either moved down-market to QSRs or have continued with a preference for eat-at-home.  Bankruptcies in 2024 have included Red Lobster, essentially the result of self-inflicted mismanagement but also other fast casual chains including Tijuana Flats.

Introduced in 2022 and conforming to the supply chain standard GS1, Walmart is apparently leading in adoption of 2D barcodes among retailers.  The 2D barcode is imprinted with thousands of digits that will incorporate sale-by date, available discounts and will allow stores to track inventory and to implement recalls.  Consumers who scan 2D barcodes will have information on nutritional content, allergens, promotions and food preparation.

Walmart is also evaluating AI voice applications to facilitate repeat orders and for customer convenience using online ordering and curbside pickup.

In a November 1^st announcement, the USDA announced that families of students receiving free and reduced-price school meals will not be charged supplementary fees.

Secretary of Agriculture Tom Vilsack stated, “While today’s action to eliminate extra fees for lower income households is a major step in the right direction, the most equitable path forward is to offer every child access to healthy school meals at no cost.  We will continue to work with Congress to move forward that goal, so that all kids have the nutrition they need to reach their full potential.”

Children from families with incomes under 185 percent of federal poverty guidelines will be eligible, representing approximately one million recipients for reduced-price meals.  Ultimately the ban on junk fees will be extended to a total of 30 million children receiving school meals each day. 

The action taken is in response to investigations by the Consumer Protection Financial Bureau that identified onerous charges in the form of  ‘processing fees’ imposed by third party agencies. In some cases fees exceeded the cost of breakfasts and lunches.  Fees will be capped at 30 cents and 40 cents respectively for these meals.

Ovo-Vision, based in Holland, a leader in ERP software solutions for the egg industry, has established a strategic partnership with Innovia Consulting of Wisconsin to expand software services in the U.S., Canada and Mexico. This collaboration, will allow Ovo-Vision to expand their existing U.S. team by leveraging the expertise of sixty Innovia consultants experienced in Microsoft Dynamics 365 Business Central as applied to agricultural and food industries.

The strategic partnership will strengthen the presence of Ovo-Vision in North America and expand services to meet the growing demand for integrated software solutions for egg producers and packers across the U.S., Canada and Mexico. Jack Jenniskens, CEO of Ovo-Vision stated “Our partnership with Innovia Consulting represents a significant milestone for Ovo-Vision as we continue to scale and deliver exceptional value to our clients in North America. He added, “Innovia’s extensive experience with Microsoft Dynamics 365 Business Central and its strong presence in food and agriculture aligns perfectly with our vision to deliver innovative software solutions to the egg industry that support the specific needs of our clients.”

Innovia Consulting has a proven track record of success with Microsoft Dynamics 365 Business Central, and their dedicated team has helped numerous organizations in food and agriculture streamline their operations and drive growth. Alan Wyne, CEO of Innovia Consulting stated, “We’re excited to collaborate with Ovo-Vision to bring our extensive expertise in applying Microsoft Dynamics 365 Business Central to a new segment of agribusiness.” He added “With this partnership, we’re well-positioned to provide high quality, scalable solutions that empower businesses to thrive in an increasingly competitive and more complex landscape.”

Ovo-Vision is a dedicated and dynamic team of developers and consultants, committed to

delivering innovative ERP software solutions tailored to the unique needs of egg businesses for over 25 years. With a strong presence in Europe, Ovo-Vision has built a reputation for excellence in providing integrated software solutions that drive operational efficiency and growth.

Innovia Consulting has supported clients with software and applications for over forty years. Innovia is a leading provider of Microsoft Dynamics 365 Business Central services to a wide variety of clients in agriculture and food processing to achieve efficiency and growth.

In a July 24^th release, Chipotle Mexican Grill (CMG) reported on the 3^rd quarter of fiscal 2024 ending September 30^th.

For the period, the company earned $387 million on total revenue of $2,794 million including delivery payments, generating a diluted EPS of $0.28.  For comparable Q3 of fiscal 2023, Chipotle earned $313 million on total revenue of $2,472 million.  

Total revenue increased by 13.1 percent over Q3 FY 2023 and comparative same store sales were up by 6.0 percent. Digital sales represented 34 percent of revenue in the most recent quarter. Restaurant operating margin increased from 16 percent to 16.9 percent in Q3 2024.

During Q3, Chipotle opened 86 new stores, with 73 equipped for drive-through service. Chipotle operates 3,662 stores with average annual sales of $0.8 million.

In commenting on results, Scott Boatwright, Interim CEO stated “ Our focus on exceptional people, food and throughput and the long-awaited return of Smoked Brisket drove another quarter of strong results led by transaction growth," said, Chipotle. "Our teams work hard to deliver extraordinary value to our guests as they provide our fresh, delicious and customizable culinary experience, at accessible prices to millions of people every day. They are the backbone of Chipotle and, together with our support centers, we will continue to execute against our five key strategies that help us win today, while we grow our future. This will help us to achieve our long-term target of reaching 7,000 restaurants in North America and move towards a more global brand."

For 2024 Management retained projections with a sales increase of “mid to high single digits,” a range of 285 to 315 new stores with 80 percent equipped for drive through delivery.

On September 30^th Chipotle Mexican Grill posted assets of $9,011 million with long-term lease obligations of $4,213 million.  Market capitalization was $79,320 million on November 7^th.  During the past 52-weeks, CMG has traded over a range of $41.92 to $69.26 with a 50-day moving average of $57.35. CMG closed pre-release on October 29^th at $60.49 but closed on October 30^th post-release at $55.75. On a trailing twelve-month basis, operating margin was 17.5 percent and profit margin 13.5 percent.  The Company generated returns of 14.0 percent on assets and 45.7 percent on equity.

In a November 7^th release, Vital Farms Inc. (VITL), a Certified B Corporation posted financial results for the 3^rd quarter of FY 2024. Earnings exceeded consensus by 14 percent but revenue was consistent with estimates. This specialty egg producer competes directly with Eggland’s Best and Hidden Valley, both cooperatives and and other producers and distributors of USDA Certified Organic and pasture-raised products including the Happy Egg/Egg Innovations combination and Pete and Gerry’s. The Company experiences the same pressures of feed cost, contractor remuneration, labor and transport as competitors in a fluctuating market environment less restrained by consumer concern over inflation.

For Q3 FY 2024 ending September 24^th 2024, net income was $7.5 million on revenue of $145.0 million with a diluted EPS of $0.17.  Comparable figures for Q3 2023 ending September 29^th were net income of $4.5 million on revenue of $110.4 million with a diluted EPS of $0.11.

Revenue increased 31.3 percent over Q3 2023. Gross margin was 36.9 percent for the most recent quarter (35.2 percent Q3 FY 2023). Operating margin was 6.4 percent (4.7 percent in Q3 2023)

In commenting on Q2 results Russell Diez-Canseco, president and CEO expressed appreciation to employees and the approximately 375 contractors. He confirmed that plans for the second packing plant in Seymour, IN. were in an advanced state.

The Company increased guidance for FY 2024 above the August Q2 2024 report, now projecting revenue of $600 million, (was $590 million) an adjusted EBITDA of $80 million (was $75 million) with reduced capital expenditure of $30 to $40 million due to extended scheduling of projects.

On September 29^th 2023, VITL posted assets of $344.6 million, of which $6.5 million comprised intangibles against long-term debt and lease obligations of $12.7 million. The Company had an intraday market capitalization of $1,590 million on November 7^th compared to $653 million on November 7^th 2023. VITL trades with a forward P/E of 208 and has ranged over a 52-week period from $11.55 to $48.41 with a 50-day moving average of $34.99.  Twelve-month trailing operating margin was 11.6 percent and profit margin 8.7 percent.  Return on assets over the past twelve months was 12.5 percent with a 22.7 percent return on equity.

At close of trading on November 6^th pre-release, VITL was priced at $36.87. Post-release on November 7^th VITL opened at $34.52, subsequently closing at $31.30.

Approximately 35 percent of VITL equity is held by insiders with 77 percent owned by institutions. As of October 15^th 33.5 percent of the float was short.

The November 5^th release of the Purdue University-CME Group Economy Barometer Index for row-crop production showed an unexpected rise in October by a substantial 27 points to 115 points. The Index of Current Conditions was up 19 points from September to 95. The Future Expectations Index was up 30 points points to 124. The Index is derived from the responses of 400 U.S. farmers and was conducted from October 14^th to 18^th.

Evident conclusions from the survey are that farmers were more optimistic in October compared to September but there are still concerns over the prices for their commodities despite (but due to) bountiful yields in 2024. In contrast sentiment is reinforced by declining inflation, lower interest rates and hence production costs. The outstanding concerns were:-

• A decline in prices for corn and soybeans reflecting disparity between supply and demand
• Declining prospects for exports with competition from South American producers and declining demand by China
• High prices for seed, fertilizer and other inputs
• The prospect of higher energy costs with turbulence in the Middle East
• The outcome of the 2024 national election creating uncertainty over farm policy and support
• Failure of Congress to pass a Farm Bill
• Decreased demand for biofuels

Many respondents indicated that they would carry higher debt burdens through 2024 and into 2025 mainly due to increased costs of inputs including seed, fuel and fertilizer for the current season. More than half of the participants considered that the financial condition of their farms was inferior to 2023 with the Farm Financial Performance Index at 90 for October 2024 compared to 93 for October 2023. The September 2024 value was only 68, indicating a surge in positive sentiment from the preceding month.  

USAPEEC Latin America participated in organizing a seminar on avian influenza held in Bogota, Columbia from August 21^st through August 24^th.  Thirty-three participants representing government and veterinary agencies in 14 Central and South American countries participated. 

Topics presented included the National Poultry Improvement Plan, the National Avian Influenza Prevention Surveillance and Control Program and the National Plan for AI Response.  Presentations by APHIS confirmed the measures employed by USDA to ensure a safe, secure and wholesome poultry supply from the U.S.

 It is evident that the emphasis of the USAPEEC the program was on acceptance of the World Organization of Animal Health avian influenza standards that allow for trade during ongoing AI outbreaks. The overriding principles should be acceptance of ‘compartmentalization’ for breeding operations and ‘regionalization’ for commercial production destined for export.

USPOULTRY recently funded an economic impact study of the U.S. poultry industry conducted by Dunham and Associates.  It was calculated that the egg industry is responsible for 164,000 jobs generating $10.5 billion annually in wages, $58 billion in economic activity and $4.7 billion in government revenue. 

Nath Morris president of USPOULTRY stated, “This valuable report shows the positive economic impact the poultry and egg industry has on our Nation and communities and we are pleased to continue funding the annual review.”  Data is posted on interactive websites that can be viewed and categorized by state, congressional district or county.  Access www.eggsfeedamerica.com

Indonesia and Malaysia, collectively responsible for 85 percent of palm oil production are experiencing problems in maintaining output. Recent data suggests a decline of approximately five percent year to date.  This is due to drought induced by the El Nino event, aging trees, cost reductions and a smaller available labor pool.

The USDA October Oil Crops Outlook confirmed that palm oil stocks declined 1.5 million tons from September to 16.1 million tons.  Production in Indonesia for the 2024-2025 season well down by 500,000 metric tons to 46.5 million metric tons. 

Indonesia will use a higher proportion of palm oil in biodiesel increasing blend from 25 percent to 40 percent. This will reduce availability and lead to higher vegetable oil prices.

Northland Boom has released the E-Drive Vaccinator developed specifically for aviary and barn housing.  The unit is self-propelled and is designed for optimal ergonomic operation.  The E-Drive Vaccinator uses a dual battery system to power the drive unit and the sprayer respectively allowing operation for two hours on a single charge.

The single boom is equipped with adjustable nozzles to achieve droplets size ranging from 20 microns (extremely fine) to 200 microns (very coarse) with a delivery rate of 4 to 28 gallons per hour depending on adjustment of nozzles.  For additional details and pricing access www.northlandboom.com or contact brent@northlandboom.com

Following dismissal of lawsuits against McDonald’s, Wendy’s and Taco Bell, a new lawsuit alleging misrepresentation in advertising has been filed against Subway.  According to the complaint, advertisements show the Subway Steak and Cheese sandwich “with meat bursting from within reaching as about as high as the surrounding bread.”  The lawsuit claims that the reality is a more meager inclusion of meat with an allegation that advertisements show double the filling than actuality.

QSRs should obviously exercise more restraint in their depictions of sandwiches since they create anticipation that is not recognized by customers.

Producers in Florida holding crop insurance through the Hurricane Insurance Protection-Wind Index Program and also the Tropical Storm option will receive $143 million in indemnities as a result of Hurricane Milton.  This program has disbursed $776 million to farmers in 2024 to date with Florida receiving $340 million since the program was introduced in 2020.  Hurricane Milton severely damaged citrus, and cotton crops and timber as previously reported.

In announcing the payments, Secretary of Agriculture Tom Vilsack stated, “Florida farmers, livestock producers and forestland owners have been hit hard by hurricanes this year and we are continuing our efforts to help producers recover following hurricanes including Milton.”  In addition to crop insurance the USDA Farm Service Agency is offering additional disaster assistance including loans for forest rehabilitation, replacement of fences and herd mortality.

On October 22^nd, a delegation from Mexico visited Iowa as arranged and coordinated by USAPEEC to establish commercial contacts and to gain a perspective of egg production in the state.  After meetings with Iowa Department of Agriculture officials including the Secretary, Mike Naig, visitors interacted with faculty at Iowa State University and visited Versova, a leading egg producer in the state.

The USPOULTRY Foundation has awarded grants totaling $324,215 to allow universities and colleges to recruit students to poultry-related programs.  Universities with poultry science departments will receive grants ranging from $30,000 to $50,000 each.  Twenty-two other institutions across the U.S. with poultry-related programs and significant in-state industries will receive from $2,500 to $10,000 each.

Jarod Morrison, Chairman of the USPOULTRY Foundation, stated, “Our industry thrives on the creativity and passion of the next generation.  By showcasing the diverse career opportunities available, we empower talented young individuals to step into leadership roles.”   He added, “The USPOULTRY Foundation recruiting grants play a crucial role in guiding colleges and universities to inspire students to pursue careers in the poultry sector.

In accordance with newly implemented regulations, manufacturers of food products in the E.U. must discriminate against suppliers that indirectly contribute to deforestation.  Major producers including Nestle, Unilever and Danone have indicated that they will source soybeans from nations other than Brazil based on extensive deforestation of the Amazon rainforest.  Despite the fact that the E.U. Commission has proposed a 12-month delay in implementation, importers are already purchasing from alternative sources. Hopefully the U.S. may benefit notwithstanding the GMO status of all but a sliver of our domestic production. 

Aprosoja representing soybean producers in Brazil has condemned the Danome decision that apparently disregards the claimed natural regeneration of Rainforest.  The group is calling for a boycott of Danone products in Brazil.  Within that nation, Danone uses local soybeans, but the European component of the Company is abiding by the E.U. directive.  The Agriculture Ministry of Brazil has characterized the E.U. directive as “discriminatory, unreasonable and untimely”.

If the American Soybean Association is looking for an issue to differentiate U.S. soybeans from those produced in Brazil, deforestation would appear to be an important market attribute.

According to the Ministry of Agriculture, Food and Rural Affairs of South Korea, an outbreak of Highly Pathogenic Avian Influenza was reported in a small flock of less than 1,000 chickens and ducks.  The farm is located in Donghae in the northeastern quadrant of the nation.  This is the first case reported for the fall season and five months after the last diagnosed outbreak.

In previous years a pattern of initial isolation of H5N1 virus from migratory waterfowl was followed by sporadic outbreaks in free-range ducks and geese and then spread to large egg and broiler farms.

 Effective prevention will require vaccination as an adjunct to biosecurity that is in any event inoperative for free range flocks exposed to virus shed by waterfowl.

In an October 30^th release, Bunge Global Limited (BG) posted financial results for the 3^rd quarter of FY 2024. The Company exceeded analysts’ projections on adjusted earnings by 7 percent. Bunge can be regarded as a bellwether for the commodities trading and processing 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 and Middle East.

For Q3 of FY 2024 ending September 30^th, net income was $221 million on total revenue of $12,908 million.  Comparable figures for the 3^rd quarter of fiscal 2023 ending September 30^th were net income of $373 million on total revenue of $14,227 million. Diluted EPS fell from $2.47 for Q3 of FY 2023 to $1.56 for the most recent quarter. Revenue was down 9.3 percent from Q3 FY 2023. Gross margin declined from 7.4 to 6.0 percent and operating margin fell from 4.2 to 2.6 percent for the most recent quarter compared to Q3 FY 2023.

In commenting on results Greg Heckman, CEO, stated “Our team delivered a strong third quarter, staying nimble and leveraging our global platform to capture opportunities against shifting market dynamics around the world. We made progress on key priorities, including closing the sale of the BP Bunge Bioenergia joint venture and delivering value to our shareholders through share repurchases. At the same time, we continued to advance integration planning for our announced combination with Viterra, and have made progress toward the remaining regulatory approvals. He concluded “The third quarter has again proven the value of our global footprint, operating model and approach, which underscores the benefit of further diversification across geographies and crops that our combination with Viterra will bring.”

Bunge retained the FY 2024 projection for adjusted EPS at $9.25 based on evident headwinds and segment performance year to date. Capital expenditure will range from $1,200 to $1,400 million.

On June 30^th 2024, Bunge posted assets of $25,267 million, against long-term debt and other obligations of $6,415 million. The Company had an intraday market capitalization of $11,540 million on November 1^st. BG trades with a forward P/E of 8.7 and has ranged over a 52-week period from $82.45 to $114.92 with a 50-day moving average of $95.61. Twelve-month trailing operating margin was 3.1 percent and profit margin 2.1 percent.  Return on assets over the past twelve months was 5.0 percent and the return on equity 10.9 percent.

BG closed at $87.95 on October 29^th and closed at $86.86 post release on October 30^th.