The rail strike in Canada, albeit of short duration has ended.  The Federal Government invoked Section 107 of the Canadian Labor Code requiring binding arbitration between the Teamsters Canada Rail Conference and the two major rail operators, Canadian National Railway (CNR) and Canadian Pacific Kansas City (CP-KC).

As noted in postings in the August 23^rd edition of EGG-NEWS, the Union demanded increased wages and benefits and above all, rationalization of work schedules especially affecting long- distance freight to enhance safety and morale.

The Liberal Party government that is generally Union-friendly was forced to act by the impact of a rail strike on all aspects of the Canadian economy.  Moody’s the multinational ratings agency estimated that the strike could impose a cost of $250 million per day.

Associations representing segments of Canadian agriculture including the Meat Council, Pork Council and others petitioned the Government for intervention since transport involving perishable commodities requires stable and reliable rail operation to support supply chains and avert waste.  The associations cited the 2023 strike in the Port of Vancouver that extended over 35 days and disrupted trade to the value of $8 billion.

It is not only Canada that would have been affected by a major rail strike.  The two operators intersect with U.S. operators, BNSF Railway, Union Pacific, Norfolk Southern and CSX.  Canadian National Rail links extend to New Orleans, LA. and CP-KC extends to Gulfport, MS. and on to Tampico on the east and Lazaro Cardenas on the west coast of Mexico. Approximately one-third of all traffic moved by the two major rail operators in Canada crosses the border with the United States.

Commodities affected by even a short-term rail strike in Canada would include ethanol, potash, grains, oilseeds, oils and above all fresh meat.  Apart from agriculture, industry would be impacted since Mexico manufactures automobile parts that are required to assemble vehicles in the U.S. and Canada. In turn, Canada exports wheat, meat and aluminum southward to the U.S. and Mexico.

In 2023, the U.S. exported $30 billion in agricultural products to Canada, balanced by imports of valued at $40 billion.  Combined trade between Canada and Mexico amounted to $40 billion.

The economies of Canada, the U.S. and Mexico are interconnected requiring reliable and efficient transport. Disruption in any of the three conjoined USMCA partners will have serious impacts on the economies of the other two.

The consequences of rail strike in Canada should generate a sense of urgency to conclude negotiations for a labor contract between longshoremen along East coast and Gulf ports and operators of these critical facilities.  Time is running out with a September deadline now imposed by the International Longshoremen’s Union.

As with Canada, strikes affecting major industries and especially the transport sector have political implications.  This is even more critical in a U.S. election year and also in Canada where the governing party has a tenuous hold on power.

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

Market Overview

• The average wholesale unit revenue values for Midwest Extra-large and Large sizes were up 2.1 percent on average this past week. Medium size was up 14.5 percent. The 5-day rolling National wholesale price for graded loose on August 30^th at $2.77 per dozen was 7.7 percent down from last week. This value was approximately $1.42 per dozen above the 3-year average of $1.35 per dozen and up $1.57 from the corresponding week in 2023 at $1.20 per dozen. This past week shell egg inventory was up 4.3 percent, following a rise of 9.0 percent during the previous week. Small fluctuation in inventory with low to moderate incremental weekly increases in price during late summer suggests higher margins for producers through the current quarter despite replacement of depleted flocks. Higher prices compared to 2023 are attributed to losses due to HPAI depletion reducing the national flock by 20 million hens and with sustained demand.
• Although there are weekly transfers of mature pullet flocks to laying houses, the size of the producing flock is constrained by depopulation due to HPAI. Close to 13 million hens were lost during the 4^th Quarter of 2023 that have not yet been completely replaced. During April 2024 almost 8.4 million hens were depopulated with an additional 5.7 million during May and 3.0 million in July.
• This past week, chains apparently widened the spread between delivered cost and shelf price. There is a presumption that buyers held back on orders in the face of high prices to “bend” the trajectory of the benchmark price to their advantage. This is evidenced by the short-term increase in inventory despite reduced supply albeit with softening demand. The cessation of incident cases of HPAI has probably provided buyers with the confidence to hold orders and run down stock. Inventory levels will depend on constant re-ordering to fill the pipeline through mid-September. Discounters are holding prices on generics influencing mainstream retail stores. Eggs are still highly competitive in price against the comparable costs for other protein foods, but highlighted as a factor in food price inflation.
• Total industry inventory was up by 5.7 percent overall this past week at 1.57 million cases with a concurrent 11.8 percent increase in breaking stock, due to a shortened processing week, following a 3.9 percent fall during the preceding week.
• It is now apparent that the inventory held by chains and other significant distributors may be more important over the short term in establishing wholesale price compared to the USDA regional inventory figures. Changes in stock held by DCs and in the pipeline as determined by weekly orders are probably responsible for up to three percent cyclic fluctuation in weekly industry stock, especially into and after a holiday weekend.
• The number and extent of possible HPAI outbreaks during coming months cannot be projected but the industry has moved into a quiescent period. Over 195 confirmed dairy herds in fourteen states is a cause for concern. More surveillance information should be released by USDA-APHIS as it becomes available, concerning the prevalence rate of avian carriers of H5N1 among resident domestic free-living birds together with a review of molecular and field epidemiology for the current spring and future fall waves of HPAI. The USDA has yet to identify and release specific modes of transmission for the 2022-2024 epornitic including likely airborne spread from wild birds and their excreta over short distances.
• The current relationship between producers and chain buyers based on a single commercial price discovery system constitutes an impediment to a free market. The benchmark price appears to amplify both downward and upward swings as evidenced over the past three years. A CME quotation based on Midwest Large, reflecting demand relative to supply would be more equitable. If feed cost is determined by CME ingredient prices then generic shell eggs should be subject to a Midwest Large quotation.
• On September 4^th the stated total flock of 306.3 million, was up by 0.4 million from last week, including about one million molted hens that will resume lay during coming weeks plus 4.5 to 5.0 million pullets scheduled to attain production. Given the latest figures for depopulation it is estimated that the total flock is at least 20 million hens lower than the 326 million before the onset of HPAI in 2022. The loss of 3 million hens in July may not be reflected in the latest release of data. Figures released on September 4^th may overestimate flock size especially if more recent losses are not included.
• The ex-farm price for breaking stock (rounded to one cent) was down 0.5 percent to $2.74 per dozen.Checks delivered to Midwest plants were down 1.1 percent to $2.65 per dozen this past week. Prices for breaking stock generally follow the wholesale price for shell eggs usually with a lag of one to two weeks.

The Week in Review

Prices

According to the USDA Egg Market News Reports, released on September 3^rd 2024, the Midwest wholesale price (rounded to one cent) for Extra-large was up 2.1 percent from last week to $4.37 per dozen. Large size was up 2.1 percent to $4.35 per dozen. Mediums were up 0.8 percent to $2.65 per dozen delivered to DCs. It is emphasized that these prices are for the previous week. 

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

Prices should be compared to the USDA benchmark average 4-Region blended nest-run cost of 73.33 cents per dozen as determined by the Egg Industry Center based on USDA data for August 2024. This value excludes provisions for packing, packaging materials and transport, amounting to 57 cents per dozen as determined in mid-2023 from an EIC survey (with a low response) and now realistically 60 cents per dozen.

Currently producers of generic shell eggs should be operating with strong positive margins irrespective of region and customer-supply agreements. The progression of prices for loose eggs during 2023 and 2024 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

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

Flock Size 

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

USDA Data On Cage-Free Production For August 2024

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

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

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

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

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

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

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

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

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

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

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

OVERVIEW

The prices for corn and soybeans were sharply up from the previous week reversing the declines over preceding weeks. Corn and soybean prices were influenced by the August 2024 WASDE Report, the Pro Farmer Crop Tour and by farmers selling to avoid further declines and to make room for the 2024 harvest beginning in mid-to late September. More moderate weather conditions suggested high corn and soybean yields and proportionally lower prices as confirmed in the August WASDE. There was some technical selling arising from geopolitical concerns and in response to revised projections for harvests in Brazil and Argentine. Contributory factors included ongoing disruption in shipping in the Red Sea and Panama Canal, carryover from the 2023 U.S. crop, export orders and the predicted ending stocks of corn and soybeans from the 2024 crop. The August WASDE Report contained updated values from the extensively revised June/July Reports. A fifth of the 2024 corn crop is now mature. Concurrently almost all (95 percent) of the soybean crop is setting pods and ten percent dropping leaves consistent with the five-year average but apparently with superior crop condition as compared to 2023. The transition from a neutral phase to a La Nina event is expected during the fourth quarter but will not affect the 2024 harvest. The September WASDE and USDA Survey and field evaluations should provide updated projections of yields, anticipated exports and adjusted prices for the 2024 crop.

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

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

Soybean meal traded at $319 per ton for September delivery, up 2.3 percent to $312 from $307 per ton last week. Price was influenced by demand coupled with high crush volumes for consecutive months from December 2023 through July 2024 inclusive, although with a lower volume in June. Price will fluctuate to reflect the CME price for soybeans and the demand for biodiesel despite the adverse financial situation in this sector. The market previously responded to the increased 2023 crop and higher stocks together with projections for 2024 in the Revised August WASDE Reports updated from July.

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

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

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

Macroeconomic U.S. factors:-

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

Status of the 2024 Corn and Soybean Crops

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

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

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

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

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

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

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

EGG-NEWS will report on the progress of the two major crops as monitored by the USDA through the end of the 2024 harvest in November.

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

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

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

 The legislators suggested concerted action by the USDA including: -

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The iHotraco Farm Manager offers: -

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In an address at the Farm Progress Show on August 28^th, Secretary of Agriculture Tom Vilsack announced that the USDA Center for Veterinary Biologics will consider protocols to evaluate a vaccine suitable for cattle against H5N1 strain B3-13.  This change in policy relating to avian influenza vaccine represents a radical departure from the ‘No vaccines ever-we have this in hand-- almost eradicated” policy in response to the trade implications of immunizing poultry.  According to the USDA notice, field trials can be conducted on inactivated vaccines outside of containment facilities and without disposal of milk.  Previously the Center for Veterinary Biologics mandated that all research and evaluation should be conducted in biological containment facilities.

There is an obvious disparity between the approach by the USDA toward vaccination of poultry  in contrast to dairy cattle.  Close to 100 million commercial poultry comprising mainly egg-laying hens, turkeys and to a lesser extent broilers, have been depopulated at considerable expense to the Federal government, producers and consumers. 

The USDA continues to promote biosecurity as a protective measure in the knowledge that even comprehensive structural and diligent operational biosecurity are not absolutely effective. Slogans such as “Defend the Flock” and posters issued by the USDA are more for internal departmental self-assurance rather than to provide meaningful protection as adjudged by outcomes.  While strict biosecurity is regarded as partially protective, the incidence rate of outbreaks and their severity during the periods of migration of waterfowl have confirmed the inadequacy of this modality. Vaccination of egg-producing flocks and turkeys in high-risk regions of the U.S. is overdue by about two years and 100 million birds. Vaccination against HPAI, accompanied by surveillance, is accepted by the World Organization for Animal Health as an adjunct to biosecurity. France is applying vaccine for the second consecutive year. Successful field evaluation has concluded in the Netherlands and extensive vaccination programs have been in effect in Mexico and China for over a decade. This suggests that the U.S. is either behind the curve on recognition of the protective benefits or is influenced in its policy by misplaced concerns over export of broiler leg quarters.

The new-found recognition that vaccination can be part of a preventive program for dairy herds and the relaxations of restrictions for field evaluation of inactivated vaccines demonstrates a responsiveness to the emergence of an infection in a novel species and with an additional concern over zoonotic transmission. The decision to deploy vaccination for egg production flocks, turkey breeders and commercial grow-out units in high-risk areas separated from the broiler industry should have been implemented in 2022.  Creation of immune flocks would have reduced the probability of infection and saved a great deal of time and anguish, not to mention taxpayer funds.

The need to create immune populations among poultry in areas of high population density is evidenced by the mutations that have occurred in the avian H5N1 clade 2.3.4.4b to allow adaptation to dairy herds. The emergence of avian influenza in wild terrestrial and marine mammals should have been an indicator of the need to protect herds and flocks as a component of the One Health approach to prevention of infections with pandemic potential.

In the immediate term, the imposition of mandatory milk testing by Colorado veterinary regulators following the emergence of bovine influenza-H5N1 in dairy herds will allow quarantine for the duration of shedding of virus. In addition Michigan and Colorado have facilitated cooperation among Federal and state agricultural and public health and wildlife agencies to implement a comprehensive surveillance program for livestock and workers. Their efforts are worthy of adoption by the other 12 affected states including California. Containment of infection is an immediate priority since vaccination is months into the future.  Anything less than an intensive and immediate program of detection with quarantine of affected herds will result in an endemic status in the U.S. dairy industry. Self-serving and inadequate programs as required for interstate movement by the USDA-APHIS or outright institutional denial as in some states, represent a slow-motion train wreck. Vaccination of dairy herds in the future may or may not be effective but appropriate action is required now.

To apply an old English adage, What is sauce for the goose is sauce for the gander.  If H5N1 vaccine can be evaluated and then deployed for dairy herds, then susceptible poultry operations in high-risk areas should be afforded the same consideration.