The domestic U.S. prices of corn and soybeans are in large measure determined by export volume in relation to demand and availability. For the 2014 crop USDA project 38 percent of soybeans and 14 percent of corn will be exported. Policy decisions following the 2024 general election and fiscal legislation to be passed by the 119^th Congress will determine future prices of corn and soybeans, given relatively constant volumes of production through 2026.  The change in Administration will witness the imposition of tariffs on our USMCA neighbors and the People’s Republic of China based on pre-election promises and subsequent statements.  This will inevitably result in countervailing tariffs by exporters to the U.S. placing commodity exports at a disadvantage to other suppliers.  

During the first term of President Trump, a spokesperson for the American Soybean Association optimistically stated that if China reduced imports from the U.S., it would obtain supplies from other producing nations, creating equivalent export opportunities for the U.S.  This self-serving presumption was based on finite world production and constant demand. The statement ignored the reality that Brazil has been able to vastly increase soybean production albeit through deforestation of the Amazon Rainforest.

In 2023, it is estimated that Brazil supplied China with close to 70 million metric tons of soybeans compared to approximately 22 million tons from the U.S.  During 2022, exports from Brazil increased by 12 million metric tons to the disadvantage of the U.S.

In 2018, China imposed a reciprocal 25 percent duty on U.S. farm products, impacting the considerable reliance of China on the U.S for 40 percent of their soybean imports.  This proportion has declined to 18 percent with Brazil supplying the difference. Despite the signing of the Phase 1 Trade Agreement, China has reduced both total pork production and concurrently has restricted inclusion of soybean meal in hog diets.  Policymakers in China recognized their dependence on soybean imports to maintain a supply of pork, the major animal protein.  China increased domestic production of soybeans to 20 million metric tons in 2024 and is making greater use of locally manufactured synthetic amino acids in hog diets.

Events in Brazil during mid-January point to the future dependence of China on Brazil to the exclusion of the U.S.  President Xi Jinping attended the G-20 Leaders’ Summit in Rio de Janeiro on November 18^th and 19^th.  Subsequently he traveled to the nation’s capital, Brasilia, and met at length with President Luiz Inacio ‘Lula’ da Silva and his top officials to negotiate and conclude 37 trade agreements.  These included the purchase of soybeans and fruit, and exports of electrical vehicles and batteries and to obtain satellite technology establishing a relationship between SpaceSail of China and Telebras of Brazil.

Brazil and China will pay for each other’s purchases in their respective currencies, eliminating the U.S. dollar.  Attempting to coerce nations to continue using the dollar as suggested by the incoming Administration through imposing punitive tariffs will be unsuccessful and will have severe and lasting consequences.

A trade war with China and even with our USMCA neighbors as recently suggested will result in a sharp decline in exports of soybeans and corn with a resulting depression in domestic prices. It is doubtful whether the U.S. could establish new markets at prices that would compensate for the loss of China and Mexico as major importers.

Domestic poultry and hog producers would benefit from lower prices but would forego exports to China and possibly USMCA neighbors.  This reality together with predictions of CME prices below cost of production has delayed passage of the 2023 Farm Bill. A major stumbling block has been the revision of price supports for agricultural commodities.  If farmers are to be compensated for losses that arise as a result of geopolitical decisions by the Administration, it will represent a detrimental increase in the national debt. Effectively, consumers and their succeeding generations will bear the cost of a misguided trade and tariff policy.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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 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.

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

To date, there have been 53 confirmed human cases of H5N1 avian influenza in seven states according to the U.S. Centers for Disease Control and Prevention.  Half the cases were attributed to exposure to infected dairy herds in California with 385 cases confirmed.  The remainder involved workers depopulating flocks infected with HPAI in Colorado, Washington State, Michigan and Oregon.  All the poultry and bovine-acquired cases were characterized by conjunctivitis and in some cases mild transitory upper respiratory symptoms.

The California Department of Public Health is investigating a sporadic case in a child demonstrating mild upper respiratory involvement.  The case responded to antiviral and supportive therapy, unlike the case in British Colombia where the patient is receiving  intensive care.

Public health authorities in numerous states recommend seasonal influenza vaccination for all personnel coming into contact with live poultry in order to avert a possible recombinant event. This may be possible between H5N1 avian influenza virus in a flock and a human strain that may result in a new zoonotic virus that may develop the capability for contagion subject to further mutations.