Unless a legislative miracle reverses the trajectory towards a shutdown of the federal government on Saturday at midnight there will be serious repercussions. The shutdown will affect those that are most in need of support and with the least political influence.

In the absence of statesmanship, moral courage, pragmatism and sheer patriotism the House has stumbled towards the deadline without concern for the consequences. Those whom we send to Congress and entrust with the management of the nation have precipitated a potential wave of hardship and inconvenience affecting us all. In an interview one holdout acknowledged that most Americans were living from paycheck to paycheck but failed to comprehend that a shutdown would deprive the military and essential workers of pay. He condoned this by stating that they would eventually receive back pay. His illogical standpoint is especially galling given that he will be receiving his Congressional salary and benefits.

Failure to compromise and to recognize the harm and inconvenience to both workers and users of government services is inexcusable. Unless a continuing resolution is passed as in previous years, many government functions will cease with considerable disruption to essential services.

Some of the impacts will include:-

• Suspension of benefits to seven million mothers and 39 percent of U.S. infants under the Special Supplementary Nutrition Program for Women, Infants and Children (WIC).

• Essential services will continue but the government employees and service people responsible will not be paid.  Active-duty U.S. military personnel will continue to serve at their posts but civilian employees will be furloughed.  The FBI, DEA, Secret Service and federal prison employees will continue to work without pay. Criminal cases will continue although civil litigation would be deferred.

• Farmers will not be able to obtain services from the USDA as FHA offices will be closed.

• The Department of Homeland Security will continue to provide essential activities including border control and airport security screening but at a lower level of efficiency due to sick-outs and demotivation. 

• The Department of Transportation will maintain air traffic control but delays will occur with protest and stress-induced absences.

• The USDA will cease all research activities, disrupting or terminating experiments in progress and delaying publication of results. Diagnostic services by NVSL will be delayed, if it all available, with a slow recovery as the backlog is processed.

•  Reports from the ERS, FAS and NASS that form the basis of agribusiness decisions on trading and investment will be terminated for then duration of the shutdown. Weekly and monthly statistical postings on both EGG-NEWS and CHICK-NEWS will be curtailed. 

• Research and related activities at the National Institutes of Health, the National Science Foundation and the National Oceanic and Atmospheric Administration will almost completely cease as the majority of employees are subject to furlough.  Activities at the Centers for Disease Control and Prevention will continue in the areas relating to ongoing outbreaks, but research and non-essential functions will be halted for the duration of a shutdown. 

• Regulatory agencies including the FTC and SEC will only respond to emergencies with most employees standing down.  The Federal Reserve will continue operations.

• Meat inspection by FSIS will continue and AMS will maintain egg inspections in plants as these activities are supported by user fees.

• An important consideration at a time of increased union militancy is that the National Labor Relations Board will not be able to participate in mediation of labor disputes. 

• The U.S. Postal Service that is mostly self-funded and will continue operation but the Agency is dependent on periodic Congressional infusions of working capital.

In decades to come political scientists will study and publish on how our Nation, with the largest economy in the world and as the leading democracy became the thrall of a handful of extremist members of the House exercising their own narrow political agenda and protecting their prospects for reelection, only to gain a pyrrhic victory. To avert the annual exercise in continuing resolutions that simply kick the can representing the budget further down the road there will have to be procedural changes especially in the House. With competent leadership it should be possible for two parties, even with polarization, to negotiate in good faith and to exercise compromise early enough in the fiscal year to reach agreement on required services and level of spending. We deserve better from our incumbent legislators.

USDA Weekly Egg Price and Inventory Report, September 27^th 2023.

Market Overview

• The average wholesale unit revenue values for Midwest Extra-large and Large were down 7.9 percent this past week below seasonal summer values. Medium size was down 3.6 percent from last week. This past week shell egg inventory was down 2.7 percent, following a rise of 1.3 percent the previous week. The decrease in inventory was attributed to higher demand with lower shelf prices for generics. Supply is increasing due to a small but progressive weekly increase in the national flock from July onwards and continuing through September. This past week chains narrowed the spread between delivered cost and shelf price that will result in a lower level of generic stock if retail prices remain low. Deep discounters are restraining prices on generics. Eggs are still highly competitive in price against the comparable costs for other protein foods.
• Total industry inventory was down by 2.0 percent overall this past week to 1.75 million cases with a concurrent 1.2 percent increase in breaking stock, compared to a decrease of 2.4 percent last week. Demand for egg products will presumably decline into fall with reduced travel and entertainment. Egg products are required for the food service and manufacturing sectors although exports are depressed. Wholesale prices compare with 2020 and 2021, also characterized by low ex-plant unit revenue. Benchmark prices were approximately $1.70 per dozen lower than the corresponding week in 2022, that was influenced by flock depletions following HPAI and extreme demand.
• 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 than the USDA regional inventory figures. Changes in stock held by DCs and in the pipeline as determined by weekly orders are probably responsible for relatively small cyclic fluctuation in weekly industry stock.
• Low unit revenue compared to pre-HPAI will persist through the remainder of September. Sporadic outbreaks of HPAI are unlikely given that the seasonal Fall migration of waterfowl is three weeks away. The number and extent of future possible outbreaks during late fall and early winter of 2023 cannot be assessed until more information is available concerning the molecular and field epidemiology of the 2022 spring and fall waves of HPAI. The USDA has yet to identify specific modes of transmission for the 2022 epornitic including possible 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 year. 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.
• According to the USDA the U.S. flock in production was almost unchanged at 313.0 million during the week ending September 27^th. The total flock of 320.0 million hens included about 3.0 million molted hens that will resume lay during coming weeks plus 4.0 million pullets attaining production. Given the latest figures it is estimated that the producing flock is still 4 million hens lower than before the onset of HPAI.
• The ex-farm price for breaking stock was down 8.3 percent this past week to 83 cents per dozen.Checks delivered to Midwest plants were down 8.8 percent to 73 cents per dozen. Prices for breaking stock will remain low until there is a substantial increase in wholesale price for shell eggs.

The Week in Review

Prices

According to the USDA Egg Market News Reports released on September 25^th the Midwest wholesale price (rounded to one cent) for Extra-large was down 7.8 percent from last week to $1.18 per dozen. Large was down 7.9 percent to $1.16 cents per dozen. Mediums were down 3.6 percent to $1.07 per dozen delivered to DCs. Prices should be compared to the USDA benchmark average 6-Region blended nest-run cost of 82.9 cents per dozen as determined by the USDA for August 2023. This excludes provisions for packing, packaging materials and transport, amounting to 57 cents per dozen as determined in mid-2023, from an EIC survey with low response. Currently producers of generic shell eggs are operating with negative margins depending on region and customer-supply agreements. The progression of prices during 2023 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

The September 25^th 2023 edition of the USDA Egg Market News Report documented a decrease of 18.2 percent in the USDA Combined Region value rounded to the nearest cent, to $1.34 per dozen delivered to warehouses for the week ending September 22^nd 2023. This average price lags current benchmark Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $1.26 per dozen. At the high end of the range, the price in the South Central region attained $1.42 per dozen. The USDA Combined Price last week was approximately 40 cents per dozen below the 3-year average of $1.75 per dozen. This past week Midwest Large was approximately $1.70 per dozen below the corresponding week in 2022 that was elevated by low supply following losses due to HPAI and strong inflation-driven demand.

Weekly Economy, Energy and Commodity Report: September 28^th 2023.

 OVERVIEW

At 14H00 on September 28^th the CME price for corn was up 2.9 percent compared to the previous week to 489 cents per bushel for December delivery. Prices of commodities were influenced by weather conditions at the commencement of the harvest, export orders and indirectly by events in the Black Sea. Other factors included movement in the wheat market, with the crop in Australia projected one third down due to El Nino. During the past week, 58 percent of corn acreage was located in drought areas compared to 54 percent a week ago. Orders by China resumed at the end of the 2022-2023 market year extending into September. Despite concern over weather as the crop matures, the demand for ethanol and a projection for lower ending stock of corn, prices are remaining substantially unchanged week-to-week.

Soybeans were up 0.8 percent from last week to 1,300 cents per bushel for November delivery. Prices during the week generally responded to events in Ukraine, predictions of crop size and ending stocks and some profit taking.  During the week 53 percent of soybean acreage was located in drought areas up from 43 percent last week.

Soybean meal was up 0.8 percent to $392 per ton for December delivery, reflecting higher domestic and export demand. Price will fluctuate to reflect the CME price for soybeans and the demand for soy oil. The market has now accepted projections of crop size and higher stocks for the old crop as documented in the April WASDE Report and the forecast included in the September WASDE Report for the 2023 crop and the August 25^th report on the Pro Farmer crop tour.

 WTI was up 6.1 percent from last week rising $5.40 to $94.50 per barrel at 19H00 on September 27^th attributed to higher demand and strengthening of the U.S. Dollar. There was considerable fluctuation in price during the week with WTI trending upwards. The May announcement of an ‘agreed’ production cut by OPEC and an intended 1 million barrels per day voluntary cut by Saudi Arabia announced on June 4^th and extending through December is now materially contributing to inflation. Oil storage other than the Strategic Reserve is at 22.0 million barrels, seasonally down but at a five-year low.

Factors influencing commodity prices in either direction over the past four weeks included:-

• Variable weather conditions in areas growing corn and soybeans with projected lower yields despite reduced speculation in commodities.  (upward pressure).

• Geopolitical considerations moved markets this past week. Cancellation of the BSGI in July and ongoing attacks on Ukraine port facilities continue to impact prices of wheat, corn, oilseeds and vegetable oils. Exports from Ukraine will be severely restricted even with E.U. support. Russia has unsuccessfully attempted to implement a Black Sea blockade on Ukraine that raises prospects for further asymmetric responses by Ukraine and even possible NATO assistance or intervention. Loaded bulk vessels have sailed from Chornomorsk and Odesa and also Danube ports to various destinations. (Upward pressure on corn and wheat and an indirect effect on soybeans)

• Macroeconomic U.S. factors:-

• Most economists in academia and the private sector are forecasting a “soft landing” of the economy following upgraded forecasts for Q3 GDP and economic parameters as detailed below. Inflation has declined from 9.1 percent month-over-month to 4.0 percent as a result of 11 FOMC rate cuts without materially increasing unemployment. There is evident stability in the bank sectors in both the U.S. and Europe. Large U.S. banks passed stringent “stress tests” in June.
• The Federal Reserve held the benchmark interest rate at the monthly FOMC meeting on September 20^th.  The Fed. commentary indicated that the rate would be held high for a prolonged period in the range of 5.25 to 5.50 percent.  Chairman Powell in Congressional testimony and through FOMC minutes indicated that additional increases should be expected with observers anticipating one more rate hike in late 2023 or early 2024 to restore inflation to near an annual 2.0 percent target that is now being questioned for validity.
• The Department of Commerce announced that the inflation rate for Q2 attained 2.6 percent down from the Q1 level of 4.1 percent.
• The September 28^th announcement of Q2 GDP confirmed a 2.1 percent annualized increase, unchanged from the August revision and consistent with expectations. Growth estimates for the third quarter are now suggesting a 4.5 percent rate
• The September 13^th release of the August 2023 CPI confirmed an annualized increase of 3.7 percent  (3.2 percent July) with a core value of 4.3 percent. Food at home was up 0.2 percent from the previous month and 3.0 percent above July 2022. Food away from home was up 0.3 percent from July and up 6.5% from July 2022. Energy was up 5.2 percent, mainly due to gasoline, higher by 10.1 percent. The macro trend is clearly towards reduced inflation but with concern over escalation in energy prices.
• The August Producer Price Index (PPI) released on September 14^th rose 0.7 percent over July. The increase is attributed mainly to a rise in energy costs but with the core value excluding volatile fuel and food, was steady at 0.1 percent. Wholesale food was down 0.5 percent compared with a 0.4 percent increase in July.
• The September 14^th release of retail sales showed a monthly rise of 0.6 percent over August and 2.5 percent from August 2022. The Federal Reserve closely monitors this index as a measure of the trend in inflation. 
• The Conference Board Consumer Confidence Index released on August 29^th for July/August, declined to 106 points, down from 114 in June/July
• Non-farm payrolls increased to 187,000 during August, lower than the 12-month average of 240,000 as documented by the Bureau of Labor Statistics on September 1^st The unemployment rate rose to 3.8 percent from 3.5 percent in July. Average hourly wage rate in August was up 0.2 percent from July to $29.00. Wage rates are closely followed by the Federal Reserve FOMC. Job openings declined to 8.8 million on July 31^st down 4.4 percent from 9.2 million on June 30^th 2023.
• Initial jobless claims released on September 28^th attained 204,000 for the week ending September 23^rd, up 2,000 over a revision. The Bureau of Labor Statistics estimated 1.67 million continuing claims as of the third week in September.
• A Bureau of Labor Statistics report on September 7^th recorded a 3.5 percent increase in Productivity for Q2; Unit Labor Cost was up by 2.2 percent on a normalized basis and Hours Worked down by 1.5 percent in Q2
• The ADP reported on August 30^th that private payrolls increased by 177,000, down 52.2 percent from July compared with an estimate of 195,000. This decline will not directly influence the probability of short-term future rate hikes or pauses. The ADP is regarded by the FOMC as an unreliable statistic

FACTORS INFLUENCING COMMODITY PRICES

• Dry weather in the Midwest during early June transitioned to intermittent rain effectively lowering prices for corn and soybeans in July and early August. Drought conditions prevailed in 58 percent of corn areas and 53 percent of soybean acreage this past week. (Downward pressure on prices with firmer indications yields in the October WASDE)
• The Pro-Farmer crop tour recently lowered yield estimates for corn and soybeans from the revised September WASDE estimates by 1.0 and 0.8 percent respectively, based on adverse weather conditions.

• It is evident that both polarization in the closely divided chambers of Congress and intra-party conflict between and among both sides of the House will delay adoption of appropriations bills. Passage of the 2023 Farm Bill will be contentious and now most likely to be delayed until the end of the year over SNAP eligibility and other entitlements that collectively represent 75 percent of total expenditure. The August 2^nd downgrade of U.S. debt from AAA to AA+ by Fitch Ratings recognizes Congressional dysfunction. The Agency cited “a steady deterioration in the standard of governance”. The House has failed to pass 11 appropriations bills or a continuing resolution necessary to avoid shutdowns at the end of the Federal fiscal year. In contrast the Senate has completed its work through bipartisan cooperation. A September 31^st shutdown of the Federal Government except for essential services appears inevitable. This situation is creating uncertainty and will impact equity and commodity markets and the image of the U.S. governmental system.

• The September 12^th WASDE #640 updated soybean production and a near record corn harvest for the new crop with high world availability despite drought in the Argentine. The September WASDE confirmed the damage caused by the transitory drought in the Midwest during late May through early July by reducing the projected yields of both soybeans and corn from the August report. The U.S. will export 12 percent of both old and new crop corn resulting in lower ending stocks. Soybean exports will comprise 44 percent of the old crop and 40 percent of the new crop with a reduction in ending stock.  (See WASDE Report in this edition confirming availability, use and ex-farm price projections)

• There is an expectation that for market-year 2023-2024, Brazil  has commenced planting soybeans and expects to attain a record harvest of 159 million metric tons (5,842 million bushels) with export of 55 million metric tons (7,205 million bushels). A corn harvest of 131 million metric tons (5,156 million bushels) is anticipated with export of 55 million metric tons (7,205 million bushels). (Lower prices in the future subject to favorable reports on crop progress and actual harvests)

• The Dollar Index (DXY) was 106.6 on September 27^th,  up 1.0 point from last week. The DXY has ranged from 99.6 to 110.8 over the past 52-weeks. The dollar index influences timing and volume of export orders and the price of WTI crude.

Status of 2023 Corn and Soybean Crops

The USDA Crop Progress Report released on September 25^th confirmed moderate advances in soybean and corn development, with onset of harvest, both slightly ahead of their five-year averages.

Relief of drought conditions in the Midwest has stalled with corresponding deterioration in soybean condition this past week as a result of heat stress and drought. The quality of both corn and soybeans compared to the 2022 crop for the corresponding week, is quantified in the table below. The combined highest categories of “good” and “excellent” for corn amounted to 53 percent this past week up from 51 percent last week and compared to 52 percent for the corresponding week in 2022. Soybean condition for the two highest categories was 50 percent this past week compared to the previous week at 52 percent and 55 percent for the corresponding week in 2022. As of September 19^th, 58 percent of corn acreage (was 54 percent last week) and 53 percent of soybean acreage (was 48 percent last week) were located in drought-affected regions.

Based on the sum of the “adequate” and “surplus” categories, surface and subsoil moisture levels were only slightly changed compared to the corresponding weeks in 2022. For the past week surface and subsoil moisture values for 2023 were 48 and 43 percent respectively for the two highest categories. These levels were similar to the previous week with values of 42 percent and 41 percent respectively. The most recent values for surface and subsoil moisture can be compared to 46 percent and 44 percent respectively for the corresponding week in 2022. It is to late for the transition to an El Nino to affect crop condition in coming weeks but unseasonable rain may complicate the harvest.

Reference is made to the September 12^th WASDE Report #640 and the weekly Commodity, Economy and Energy Report in this edition, documenting acreage to be harvested, yields and ending stocks. The Pro Farmer crop tour released on August 25^th projected an average corn yield for the 2023 harvest of 172 bu. per acre, down 1.0 percent from the 173.8 bu. per acre as documented in the September WASDE. Soybean yield was projected at 49.7 bu. per acre, 0.8 percent below the 50.1 bu. per acre as documented in the September WASDE. The USDA incorporated the results of the NASS September survey of farmers to forecast yields for 2023 corn and soybean crops that were included in the Crop Production Report and September WASDE released on September 12^th.

WEEK ENDING   Crop Sept. 3rd 2023 Sept 10th 2023 5-Year Average Corn dough (%) 100 100 100 Corn dented (%) 90 95 93 Corn mature (%) 54 70 60 Corn harvested(%) 9 15 13         Soybean Status 18 States       Soybeans setting pods (%) 100 100 100 Soybeans dropping leaves (%) 54 73 62 Soybeans harvested (%) 5 12 11
Crop Condition V. Poor  Poor Fair Good Excellent Corn 2023 (%) 6 12 29 44 9 Corn 2022 (%) 9 12 27 42 10 Soybeans 2023 (%) 6 12 32 42 8 Soybeans 2022 (%) 5 10 30 46 9
Parameter 48 States V. Short Short Adequate Surplus   Topsoil moisture: Past Week 20 33 45 2 Past Year 21 33 43 3 Subsoil moisture: Past Week 23 35 40 2 Past Year 23 33 43 1

EGG-NEWS will report on the progress of the two major crops as monitored by the USDA through the end of the 2023 harvest in November.

In a September 28^th announcement, Cal-Maine Foods (CALM) announced the purchase of “substantially all of the assets of Fassio Egg Farms Inc.” located in Erda, Utah. The transaction includes land, a feed mill, rearing and laying housing and an egg packing plant supporting 1.2 million hens mostly housed cage free.

Fassio Egg Farms is a family owned enterprise established in 1915.

On September 26^th Costco Wholesale Corporation (COST) posted results for Q4 and FY2023 ending September 3^rd. This big-box club chain serves as a bellwether for hybrid retail in-store and on-line spending and is a barometer of consumer confidence, offering groceries and household necessities in bulk in addition to discretionary appliances, recreational, luxury and electronic items.

The Company beat consensus on both the bottom and top lines by 0.5 and 3.2 percent respectively. For the most recent quarter, the Company earned $2,160 million on revenue (including fuel and membership fees) of $78,939 million with a diluted EPS of $4.86. For the corresponding Q4 of FY2022, Costco earned $1,868 million on equivalent revenue of $72,091 million with a diluted EPS of $4.20.  Revenue was 9.5 percent higher than in Q4 of FY2022 and net earnings were up by 15.6 percent. Gross margin for Q24 FY2023 was 12.3 percent, higher than the corresponding Q4 of FY2022 at 11.8 percent percent. Concurrently operating margin was unchanged at 3.5 percent for both 4^th quarters despite increased freight, transport, wages and utilities.

For FY 2023, the Company earned $6,292 million on revenue (including fuel and membership fees) of $242,290 million with a diluted EPS of $14.16. For FY2022, Costco earned $5,844 million on equivalent revenue of $226,954 million with a diluted EPS of $13.14

Comparable global same-store sales for Q4 2023 (excluding fuel and foreign exchange) attained 3.8 percent. U.S. same store sales were up 3.1 percent; Canada by 7.4 percent and the Other International category, 4.4 percent. E-Commerce was down by 0.6 percent. According to CFO Richard Gallanti, on the investors’ call consumers made more trips to Costco with traffic up 5.0 percent but they spent less with the average transaction down 4.5 percent. According to Gallanti, customers selected groceries, household goods and clothing but avoided big-ticket items. Costco did not raise membership fees as expected but Gallanti commented this is a situation of “when and not if”. There are currently 32.3 million Executive Level memberships at $120 annually representing 45 percent of the total but accounting for 73 percent of sales.

On September 3^rd Costco posted total assets of $68,994 million. Long-term debt and lease obligations attained $10,353 million. Costco had an intraday market capitalization of $247,550 million on September 26^th. COST trades with a forward P/E of 36.5 and has ranged over the past fifty-two weeks from $447.90 to $571.16 with a 50-day moving average of $553.99. Costco closed pre-release at $552.96 on September 26^th but rose on a declining market attaining $561.74 at 13H00 on Wednesday 27^th. Twelve-month trailing operating margin was 3.5 percent and profit margin 2.6 percent.  The Company generated a return on assets of 7.9 percent and 27.3 percent on equity.

At the end of Q4 FY2023, Costco operated 861 warehouses. There are 591 in the U.S; 107 in  Canada; 40 in Mexico; 33 in Japan; 29 in the U.K. and 62 others in seven other nations among the E.U., Asia and Australia.

On September 21^st Darden Restaurants Inc. (DRI) posted the results for the first quarter of fiscal 2024 for the period ending August 27^th beating consensus estimates on the top and bottom lines. Darden Restaurants is a bellwether for both casual and fine dining, confronted with problems of reduced discretionary spending, availability and cost of labor and food.

For the quarter, Darden earned $195 million on revenue of $2,731 million with an EPS of $1.59.  Comparative values for the first quarter of fiscal 2023 were net earnings of $193 million on revenue of $2,446 million with an EPS of $1.56.  Comparing the first quarters of 2023 and the previous fiscal year, revenue was up by 11.7 percent; Operating margin up by 2.0 percent to 10.2 percent but with a decline in profit margin by 10.1 percent.

The Company reported the following sales and segment contributions:-

Darden Restaurants operates 1,998 locations including 906 Olive Garden locations, 549 LongHorn Steakhouses, 77 newly acquired Ruth’s Chris Steakhouses and 452 other units including both casual and fine dining restaurants under seven brands. 

For the quarter, Darden posted a 5.0 increase in same restaurant sales with the fine dining group posting a 28 percent decline, offset by a 6.1 percent gain by the Olive Garden and 8.1 percent by LongHorn.

In commenting on performance, Rick Cardenas, president & CEO stated, “Looking across our entire portfolio, I am pleased with our first quarter results," He continued "Our strategy is working.  We continue to grow share, strengthen margins, and make meaningful investments in our business while returning capital to shareholders."

In reviewing strategy in the post-COVID period, Cardenas stated on the Investor’s call that the Company will reduce promotions and advertising “Whatever we do is going to elevate brand equity. If it means that our traffic is at the lower end of our guide, then it’s at the lower end of our guide. We’re not going to do things that are going to impact us in the long-term just for short-term.”

On September 20, 2023, the Darden Board of Directors unanimously elected Cynthia (Cindie) T. Jamison as Chair of the Board, succeeding Eugene (Gene) I. Lee, Jr. who, as previously announced, retired from service as a director of the Company on that date. Cardenas stated "I look forward to the opportunity to continue working with Cindie in her new role as Chair. She has been a tremendous steward of our company since joining the Board nine years ago”.

The Company confirmed guidance for FY 2024 with a projected diluted EPS range of $8.55 to $8.85.

Darden Restaurants posted total assets of $11,269 million of which $2,525 million comprised goodwill and trademarks.  The company carries long-term debt and lease obligations of $6,796 million.  Darden Restaurants had an intraday market capitalization of $18,070 million on September 21^st.  The company has traded over the past fifty-two weeks in a range of $120.20 to $173.06 with a 50-day moving average of $159.96 and with a forward P/E of 17.0

Over the trailing twelve months, operating margin was 11.4 percent and profit margin 9.4 percent.  Return on assets was 7.3 percent and on equity 44.7 percent. 

Arabella Schorghuber, an acknowledged vegetarian, is responsible for the Paulaner-sponsored Festzelt, one of the major tents serving attendees at the 2023 Munich Oktoberfest.  Ms. Schorghuber decreed that only organic chicken would be served at the event under her management. This decision resulted in a 50 percent increase in cost to $22 per half-Cornish hen. A liter of beer costs $16, up approximately six percent from 2022.  The decision relating to the cost of Paulaner-served chicken has evoked widespread criticism expressed as “woke wiesn”.

It is anticipated that the 2023 Oktoberfest, the first since the onset of COVID, will attract over seven million attendees over an 18-day festival that commenced on September 16^th.  Collectively, 500,000 chickens were served at the 2019 Oktoberfest that includes 15 large tents sponsored by individual breweries with a collective seating of 100,000.

According to official statements, the Philippines will introduce vaccination in an attempt to control highly pathogenic avian influenza.  The nation will purchase vaccine from PT Vaksindo Satwa Nusantara of Indonesia.

Ferdinand Martin Romualdez, spokesperson for the Presidential Communications Office, stated, “The early delivery of vaccine could spur the revitalization of our country’s poultry industry which has faced serious challenges due to the continuing threat of avian influenza.”

Following the depopulation of ten million hens, the nation has experienced a shortage of eggs with a proportional rise of 26 percent in market price.

The need for vaccine is recognized by President Ferdinand R. Marcos, Jr., who met with potential suppliers during the recent 43^rd ACEAN Summit in Jakarta.

The government intends funding an Institute of Virology and Vaccinology for the Philippines to conduct research and produce diagnostic kits and vaccines for human, animal and plant infections.

Authorities in Peru have reported a case of HPAI on a commercial duck farm in Chancay.  Affected ducks showed neural, respiratory and digestive abnormalities with initial mortality attaining 10 percent of the flock at the time of diagnosis.  Approximately 3,500 birds were depopulated.

The second case involved a commercial laying flock of approximately 6,000 hens in Grocio Prado.  The diagnosis was made following mortality in the flock with typical clinical signs of HPAI.

Brazil reported cases of HPAI strain H5N1 from migratory waterfowl but to date, has not reported any cases in commercial poultry.  Argentina and Uruguay have recently documented mortality in sea lions consistent with previous reports along the Pacific coastline.

The USDA has announced a program to transfer $2.5 billion from the Commodity Credit Corporation to promote trade and provide food aid.  $1.4 billion will fund the Regional Agricultural Promotion Program, with some allocated to supplement the Market Access Program and the Foreign Market Development Program. An amount of $1 billion will fund commodity-based international food aid.

The USDA initiative was motivated by the Senate Agriculture Committee with the Chair Senator Debbie Stabenow (D-MI) and Ranking Member Senator John Boozman (R-AR) emphasizing the need for “better market opportunities for U. S. farmers by addressing trade promotion and in-kind international food assistance”.

The additional commodity promotion and aid funding is intended to move more agricultural products to developing markets and reduce the dependency on China.

Amazon plans to hire 250,000 workers for the holiday period representing a 67 percent increase over 2022.  Hourly pay will be increased to $20 in customer fulfillment centers and in transportation.  In anticipation of the holiday period, Amazon has opened fifty fulfillment centers including those designated for same-day delivery.

There is optimism over seasonal sales with spending anticipated to exceed 2022 by five percent and with a sharp increase in E-commerce.

Parties involved in the proposed Kroger – Albertsons merger have announced that as many as 420 stores would be sold to C&S. This action is intended to allay concerns by the Federal Trade Commission that the proposed merger would be noncompetitive.

Members of the United Food Commercial and Warehouse union have questioned the viability and legitimacy of the proposed transaction and point to previous experience with the acquisition of Safeway by Albertsons. Sale of stores to Hagen resulted in a filing for bankruptcy within months after the transaction.

Economists for the UFCW Union point to the apparent low price for the stores.  They estimate that eight warehouses in the transaction are worth between $400 to $800 million, and the 413 stores could have a collective value of $3 billion.  They regard the $1.9 billion sale price as unrealistic. The UFCW regards the proposed C&S sale as “Hagen 2.0” with a similar outcome.

The Union questions the ability of C&S to effectively manage over 400 stores.  Currently, the Company operates 55 acquired locations and franchises about 100 stores.  C&S has a history of eliminating union positions that would be to the detriment of workers if the transaction were to proceed.   

California has forwarded three bills to Governor Gavin Newsom, requiring severance pay for workers and providing for other protection in the event that the merger is concluded.

According to a ProMed Mail posting on September 20^th, the Animal and Plant Health Agency of Scotland confirmed a diagnosis of HPAI in a commercial flock. The Agency oversaw depopulation of the 221,000 hen complex and initiated surveillance within a statutory control zone.

The source of the outbreak has yet to be determined but in all probability the virus was introduced by infected migratory marine birds.

Since the Russian Federation effectively reduced exports of Ukrainian grain through the Black Sea, product has flooded neighboring eastern European nations to the detriment of local farmers but benefitting livestock producers.  Despite initial unity in the face of Russian aggression, concern in the farming community has become a major political issue, especially with the ruling party in Poland facing an election that will require the support of farmers. 

Poland, Hungary, Slovakia and Croatia have banned some Ukrainian commodities resulting in a complaint by Ukraine to the World Trade Organization.   Andrzej Duda, President of Poland, noted, “Ukraine is behaving like a drowning person clinging to everything he can but we have the right to defend ourselves against harm being done to us.”

The resolution of this problem will depend on restoration of grain shipments from Black Sea and Danube Delta terminals. This will relieve pressure on the neighbors of Ukraine. Some bulk shipments along a new sea-lane have commenced.

Quantum Foods announced that it lost 1.5 million egg production and breeder hens during the current outbreak of H7 Highly Pathogenic Avian Influenza.  During April, the company lost close to 500,000 birds in an earlier outbreak on a complex in the Western Cape Province.  Quantum will post a loss in the current financial year.

Problems facing egg producers in South Africa extend beyond HPAI.  Power brown-outs and “load shedding” as a result of deficiencies in the national grid and inadequate power generation have impacted production and packaging. 

In an attempt to reduce dissemination of avian influenza, trade in culled hens has been banned.  Traditionally, the egg industry in the Republic of South Africa relies on sale of culled hens through a network of middlemen to offset the cost of rearing replacement pullets.  The regulation will deprive poor, rural communities of a source of protein, and deny producers of a source of revenue. An unintended and inevitable consequence will be unregulated clandestine distribution of hens further complicating control.

Given the situation in South Africa, deployment of vaccines will be the only effective method of suppressing infection.

A draft regulation has been circulated to member states that if approved would extend the use of glyphosate for an additional ten years.  Member states opposed to this action have the opportunity to amend or block proposed regulations in October as the vote by the Standing Committee on Plants, Animals, Food and Feed.

The European Commission decision on glyphosate is based on an intensive review of the risks and safety of the compound which is the most widely used agricultural herbicide.  The E.U. Food Safety Authority notes that there are some deficiencies in literature relating to the possible toxicity or mutagenicity of glyphosate but this is common to all compounds.

 Stefan de Keersmaecker a spokesperson for the European Commission noted that the proposal to extend the registration of glyphosate was “based on scientific, solid information considering different active substances involved.”  In commenting on the apparent deficiencies in the literature, the Commission spokesperson stated that “the issues in question do not constitute a risk to human health or the environment.”

In all probability the registration of glyphosate will go forward but possibly with certain conditions or restrictions to satisfy those opposed to the proposed extension.  Continued use of glyphosate in the E.U. will be a prerequisite for adoption of GM cultivars that will enhance yield and effectively contribute to sustainability.  The E.U. does not currently allow propagation of GM varieties but imports GM corn and soybeans for animal feed, industrial and human food requirements.

EGG-NEWS has reported on opposition to glyphosate commencing with the contentious IARC report that glyphosate was potentially carcinogenic. (Enter ‘Glyphosate’in SEARCH block). The IARC document was subsequently criticized by environmental toxicologists affiliated to industry and academia. The principal author had an undisclosed conflict of interest since he was serving as an expert witness for attorneys representing plaintiffs claiming lymphoma from contact with the compound.  The FDA conducted epidemiologic evaluation among farm workers without ascertaining that there was any statistical correlation between exposure and any form of cancer.

Extension of the registration of glyphosate in the E.U. would in large measure invalidate the claims by the government of Mexico regarding the compound and by corollary their intent to ban importation of GM corn.

EGG-NEWS has previously reported on pressure exerted by the Government of France on the major supermarkets to reduce the prices over a broad range of food items to lower inflation.  This has predictably resulted in the major supermarket chains transferring pressure onto suppliers in order to maintain margins. 

Major food manufacturers including Unilever and Nestle have imposed price increases based on raw material, energy and labor costs and claim that the recent escalations in wholesale prices are justified. 

Traditionally, discussions on price take place during the first quarter annually. The Government is now proposing that negotiations between suppliers and retailers should be brought forward and concluded by mid-January of 2024.

Amazon plans to hire 250,000 workers for the holiday period representing a 67 percent increase over temporary positions in 2022.  Hourly pay will be increased to $20 in customer fulfillment and in transportation.  In anticipation of the holiday period, Amazon has opened fifty fulfillment centers including those dedicated to same-day delivery.

There is optimism over seasonal sales with spending anticipated to exceed 2022 by five percent with a sharp increase in the proportion represented by E-commerce.

The Federal Railroad Administration has approved 70 projects requiring $1.4 billion in federal grants.  The projects including 40 bridges were selected from 234 applications with funding provided from the $1 trillion Infrastructure Bill.

The grants were based on the probability of improving safety, increasing capacity and generating economic benefits.

Of the total, $600 million is allocated to freight-railroad projects and replacement of critical bridges that carry high levels of freight that are considered in need of repair.

Secretary of Transportation, Pete Buttigieg, noted, “It’s fair to say that people look at America’s rail system and correctly say that it needs improvement.”  He cited, “Derailments on freight lines, protracted blocked crossings and lagging intercity passenger rail as symptomatic of a decline in service.”

The freight railroads claim to have spent upwards of $23 billion annually on the networks according to their trade association.  Despite this claim, the nation has been impacted by numerous derailments some of which have involved hazardous cargos.

 It is questioned whether federal funds should be assigned to improvement projects for track owned by either private our public traded companies.  A prerequisite of the grants should be that companies refrain from buy backs equivalent to federal funding and that funding should require at least some Company match.

Irrespective of funding, a viable and functional rail system is critical to the operation of the poultry industry. This is currently even more important with a seasonal drought-related decline in capacity on the Mississippi River system accompanied by soaring freight rates.

The USAPEEC office in Mexico organized a seminar entitled Technical and Sanitary Aspects of Day-Old Chick, Fertile Egg and Export Protocols from the U.S. to Mexico.  The event was attended by 162 representatives of the industry in Mexico.  Principal speakers were Dr. Quesada Fox and Dr. Alberto Torres who reviewed aspects of import regulations and the management of products.

Following the collapse of the Black Sea Grain Initiative and deliberate attempts to destroy port installations by the Russian Federation, Ukraine has managed to restore navigation to facilitate bulk grain exports.  This is being achieved by the used of drones and remotely controlled surface weapons that have successfully attacked Russian naval vessels and port installations.

 During August, the Danube Delta ports Izmail, Reni and Kiliya collectively handled 3.2 million tons of cargo of which 2.5 million metric tons were commodities.  The Port of Odessa exported 4.2 million tons in August while the grain deal was still in operation.  Low water levels in the Danube Delta limit the size of shipments to 10,000-ton capacity, far below the Panamax vessels that load from the major Black Sea ports including Odessa. 

Extending the scope of asymmetrical warfare conducted by the Ukraine will allow resumption of unmolested navigation southward from the Black Sea ports to the Bosphorus. Recent initiatives include attacks on the Kerch Bridge, damage to naval vessels in dry dock and the attack on the headquarters of the Russian Black Sea fleet in Crimea. The deterrent effect on Russian capabilities would be even more likely if Ukraine could deploy air cover to support naval operations.

Governor Maura Healey of Massachusetts has issued an order banning the purchase of beverages and water in sealed plastic bottles.  In addition, executive offices and agencies in Massachusetts  must report each year on the action taken to reduce the sale of bottles at state properties including parks. 

This action follows bans enacted on disposal of plastic waste and textiles imposed by the Massachusetts Department of Environmental Protection.  The action by Governor Healey is supported by environmental groups active in preventing contamination of waterways and the Atlantic Ocean.

The STEC infection potentially affecting eleven daycare centers in Calgary, Alberta has become a political issue.  As of September 15^th, public health authorities have identified 337 confirmed cases of E.coli infections with the majority of patients under five years of age.  There were 26 secondary cases, mainly among the siblings of those affected.  Of the confirmed cases, 37 required hospitalization with 11 developing hemolytic uremic syndrome and six children underwent dialysis.

The Premier of Alberta, Danielle Smith, organized a press conference on September 15^th in response to widespread negative publicity and a petition with more than a thousand signatures protesting lack of transparency.  The outbreak was recognized on September 4^th, but provincial authorities did not respond with a public meeting until Friday, September 15^th.  The position of the Government is that they responded quickly through Alberta Health Services, contacting parents as the outbreak progressed. 

The kitchen, recognized as the source of infection, Kids U Centennial Inc. was closed along with the six affected and five related daycare centers. On September 4^th, inspectors observed violations including insect infestation, accumulation of water on floors and other deficiencies in the kitchen. A factor contributing to the extent of the infection was that food was distributed from the central kitchen to daycare centers in a non-refrigerated vehicle with transit times of up to 90 minutes. Thermal abuse of a contaminated food item obviously promoted proliferation of the pathogen.

The Alberta Minister of Health, Adriana LaGrange, defended the Provincial Program of Disease Prevention noting the extent and frequency of inspections of kitchens and daycare centers.

As a concession to affected families, the Province will make a one-time compassionate payment of C$2,000 per outbreak patient.  Children who developed HUS will require extensive medical surveillance through adulthood and in some cases children requiring dialysis may at some stage in their future require kidney transplantation.

The literature contains many examples of foodborne infection in schools and daycare centers attributed to E. coli O157:H7.  The extent of the Calgary outbreak points to the risk associated with central catering facilities.  As with outbreaks investigated in a retrospective study in Switzerland, it was determined that benefits accrue to placing an emphasis on high-risk kitchens and commissaries with frequent in-person inspections and enforced high standards of cleaning of work surfaces, utensils, equipment and with appropriate training.  The Calgary daycare center outbreak represent an opportunity for the FDA and CDC in addition to local health authorities to review regulations and inspection procedures including frequency of inspections , monitoring of cold chains and sampling food ingredients for wholesomeness.