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EGG‑NEWS.com
Egg Industry News, Comments & More by
Simon M.Shane
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Egg Industry News
Commodity Report
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10/25/2024 |
WEEKLY ECONOMY, COMMODITY & ENERGY REPORT: October 24th 2024.
OVERVIEW
The prices for corn and soybeans were appreciably higher over the past week reversing declines. Soybeans were up 2.6 and corn up 4.5 percent. Corn and soybean prices were influenced by uncertainty over yields in Brazil and Argentine. There was minimal response to the October WASDE Report. Farmers were selling both old and new crop to avoid further declines and to make room for the approaching 2024 harvest continuing in strength this week. There was some technical selling arising from geopolitical concerns and in response to revised projections for harvests in Brazil and Argentine. 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. Two thirds of the 2024 corn crop is “in the bin”. Concurrently 80 percent of the soybean crop has been harvested, in advance of the five-year average and apparently with superior crop condition compared to 2023. The transition from a neutral phase to a La Nina event has commenced and will intensify during the fourth quarter but will not affect the 2024 harvest. The October WASDE, incorporating the September remote USDA Survey together with the Pro Farmer August field evaluations provided updated projections of yields, with USDA updates for anticipated exports and adjusted prices for the 2024 crop.
At 12H00 EDT on October 24th the CME corn quotation for December delivery was up 4.5 percent to 422 cents per bushel. Corn price was influenced by acreage planted, ethanol demand and the ending stock from the 2023 crop. Farm selling has increased, 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 and events in the Red Sea. Orders by China resumed at the end of the 2022-2023 market-year and continued through August, despite an increase in the Dollar Index, adding to increased ocean freight. Total exports for the new 2024-2025 market year are 33.0 percent above the first six weeks of the 2023-2024 year.
Soybeans were priced at 1,003 cents per bushel for November 2024 delivery, rising above the 1,000-cent psychological threshold. Price was up 2.6 percent compared to 978 cents per bushel last week for November delivery. Higher prices were attributed to the projection of ending stock, despite 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 1.4 percent higher than for the corresponding first six weeks of market year 2023-2024.
Soybean meal was priced at $312 per ton for December delivery, down $5 per ton (-2.3 percent) from last week. Price is influenced by demand coupled with a reestablished crush volume in September restoring the processing trend during 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 revised October WASDE Reports updated from September.
On October 23rd at 15H00 EDT the price for WTI was $71.02 up $0.78, (+1.1 percent) from last week. The current price now reflects from recovery from Hurricane Milton. Current price is not materially affected by uncertainties and tensions in the Middle East but excluding possible retaliatory action as announced by Israel on 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 in July with ample reserves. There was fluctuation in the price of WTI through October 27th with the range during the week extending from $71.93 on October 22nd down to $68.05 on October 18th.
Ample U.S. crude production is constraining domestic and international prices. The recent decline in energy costs during the past two months contributed to deflation influencing the FOMC in their decision to lower the benchmark interest rate at the September meeting.
Economic data released during the past quarter (Q2 GDP; PCE, Confidence, Productivity, Employment) confirm a growing economy but with a downward trajectory in inflation. Second Quarter GDP was revised upward to 3.0 percent from the previous projection of 2.8 percent. The data-driven Federal Reserve FOMC lowered the benchmark interest rate by 50 basis points on September 18th. Federal Reserve Chair Jerome Powell and Reserve Bank Governors indicated one or two additional reductions in the 10-year rate during 2024. 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.
Macroeconomic U.S. factors:-
- Most economists in academia and the private sector are still confident of a “soft landing” for the economy despite the release of the Q2 2024 increase in GDP to 3.0 percent and coupled with recent economic parameters including the ECI, CPI and PPI. Annual inflation as measured by CPI declined from 8.9 percent in June 2022 to 2.5 percent in August 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 monthly FOMC meeting on September 18th, 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 with subsequent reductions of 25 basis points at the two remaining meetings in 2024 and extending into 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 September 26th release by the Bureau of Economic Affairs documented the third estimate of Q2 2024 GDP of 3.0 percent unchanged from the previous estimate but above the Q1 value of 1.4 percent. The latest estimate of the Q2 GDP was influenced by higher consumer spending.
- The October 10th release of the Consumer Price Index (CPI) for September showed a 0.2 percent rise over August and an annual rise of 2.4 percent. The monthly value is compared to an anticipated 0.1 percent. Core CPI (excluding food and fuel) was up 0.3 percent in September with an annual increase of 3.3 percent. Food increased 0.4 percent with eggs highlighted at 8.4 percent and chicken up 0.7 percent. For September shelter was up 0.2 percent. Notwithstanding the unexpected increase in CPI during September additional reductions in benchmark interest rates are anticipated during this quarter.
- On September 27th the Bureau of Economic Analysis released the September Personal Consumption and Expenditure Price Index. The core PCE (excluding food and energy) was up 0.1 percent from the previous month, below a 0.2 percent estimate and attained 2.7 percent year-over-year and compared to a consensus of 2.3 percent. The Headline PCE was up 0.1 percent from August and 2.2 percent from August 2023. Food was up 0.1 percent from August and 1.1 percent from August 2023.. 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 September Producer Price Index for Final Demand (PPI) released on October 11th was unchanged from August against an expectation of a 0.2 percent rise. This was attributed in part to a 0.2 percent increase in services and a 1.0 percent increase in food. The PPI was up 1.8 percent over the past 12-months ending in September compared with 1.9 percent for the 12-month period through August. This is compared to a 6.4 percent increase in 2022. The core PPI value excluding volatile fuel and food, was up 0.2 percent from August and 2.8 percent over the previous 12 months.
- A Federal Reserve release on September 17th confirmed that industrial production was higher by 0.9 percent in August compared to a decrease of 0.6 percent in July. Capacity utilization was higher at 77.2 percent and 1.1 percent below the long run 1972-2020 average.
- The October 7th report by the Department of Commerce, Census Bureau on Durable Goods Ordered during September 2024 increased by 0.2 from August and 12.1 percent year-to-date, following a 0.6 percent decline during August. Excluding the Transportation component, new orders in September increased by 1.7 percent compared to an increase of 2.8 percent in August. Shipments of durable goods in the non-defense category were down 0.9 percent in September from the previous month ultimately to be reflected in the quarterly GDP.
- In an October 3rd release the Census Bureau confirmed that factory orders for U.S. manufactured goods fell 0.2 percent in August against an estimate of no change and compared to a revised rise of 4.9 percent in July.
- The October 15thS. Census Bureau release of the advanced estimate of retail and food sales data for September was up 1.5 percent from the revised August value and up 7.7 percent over 12 months. Food service sales were up 0.7 percent from August and up 9.4 percent over 12 months. Grocery store sales were down 0.6 percent from the revised July value and up 4.0 percent over the past 12-months. The Federal Reserve FOMC closely monitors retail sales as a measure of the trend in inflation.
- The October 1st release by the Institute for Supply Management (ISM®) reported an unchanged Manufacturing Index for September at 47.2 against an expected value of 47.5. The September value was still below the bifurcation point of 50 percent between contraction and expansion. The Prices Index fell by 5.7 points to 49.8 in September, denoting lower 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 September was up 5.0 points from 44.8 in August to 49.8 in September.
- On July 31st the U.S. Bureau of Labor Statistics reported a 0.9 percent increase in the Employment Cost Index (ECI) over the 2nd quarter of 2024 against a consensus estimate of 1.0 percent. The year-over-year increase was 4.1 percent and with benefit costs up by 3.8 percent. The July ECI of 0.9 percent compares with a value of 0.9 percent for the 4th quarter of 2023. 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 in the 4th quarter as suggested by Federal Reserve Chairman Powell.
- The September 24th Consumer Confidence report prepared by The Conference Board for the period ending September 17th, confirmed a substantial decrease to 98.7 from the revised August value of 105.6, with all segments down, representing the largest decline since September 2021. The Present Situation Index measuring perceptions of current business conditions fell to 124.3 from 133.4 in August. The Expectations Index fell from a revised August value of 86.3 to 81.7 but the third consecutive month above 80. Values below this threshold over consecutive months and with a downward trajectory are regarded as predictive of a recession.
- The October 11th University of Michigan Index of Consumer Sentiment for October fell to 68.9 from a revised September value of 70.1. The Current Economic Index was 62.7 in October down from 63.3 in September. The Index of Consumer Expectations was 72.9 down from 74.4 in September, denoting deterioration in consumer sentiment despite the September rate cut and lower inflation. Geopolitical factors and uncertainty over the upcoming election have adversely influenced sentiment. In perspective sentiment is up 8 percent above September 2023 and 40 percent above the low in June 2022.
- Non-farm payrolls added an unanticipated high 254,000 in September, as documented by the Bureau of Labor Statistics in an October 4th This was higher than the anticipated 140,000, and should be compared to the upwardly revised August value of 159,000.. The unemployment rate fell to 4.1 from 4.2 percent with 6.8 million unemployed and with 1.6 million in the long-term category. Real average hourly earnings during September showed a 0.4 percent increase over August to $35.36. Average hours worked in manufacturing declined fractionally to 33.7 hours per week. Labor participation was unchanged at 62.7 percent from August. Wage rates increased 4.0 percent over 12-months. Wage rates are closely followed by the Federal Reserve FOMC.
- The August 21st preliminary revision of job growth by the Bureau of Labor Statistics based on state data suggested that 818,000 fewer jobs were actually created from April 2023 through March 2024 than previously estimated. The discrepancy represented an apparent overstatement of 68,00 new jobs per month on average. Less than half of the overestimate was in the Professional and Business category (358,000); Leisure and Hospitality, (150,000) and Manufacturing (115,000). The preliminary revision that has mainly political implications should increase the magnitude of the reduction in benchmark rate at the September FOMC Meeting.
- The Bureau of Labor Statistics Job Openings and Labor Survey report (“JOLTS) released on October 1st estimated 8.04 million job openings at the end of August unexpectedly above a forecast of 7.68 million and higher than the revised July value of 7.71. The August job openings number should be compared with August 2023 at 7.51 million and the peak March 2022 value of 12.2 million job openings during COVID. The hiring rate was 3.3 percent (5.3 million hires); the August total separation rate, 3.1 percent (5.0 million); the quit rate 1.9 percent (3.1 million); and the layoff rate 1.0 percent, (1.6 million).
- The seasonally adjusted initial jobless claims figure of 227,000 released on October 24th for the week ending October 19th was down by an unexpected 15,000 from the revised value of 242,000 for the previous week. The weekly value was lower than the Reuters estimate of 243,000. The four-week moving average rose to 238,50. The Bureau of Labor Statistics estimated 1.897 million continuing claims for the week ending October 5th (up 9,000 from the revised value for last week), compared to a peak on November 27th 2021 at 1.928 million. The September unemployment rate fell to 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. Reports in future weeks will be distorted by the effects of Hurricanes Helene and Milton and the strike by Boeing machinists.
- The September 5th Bureau of Labor Statistics report recorded a 2.5 percent increase in non-Farm Productivity for Q2 2024 up from 0.4 percent in Q1 2024. Labor cost increased by 0.9 percent compared to 4.0 percent for Q1 2024. Output was up by 3.5 percent and hours worked were 1.0 percent higher.
- The ADP® reported on October 2nd that private (excluding government data) payrolls increased by 143,000 in September, up 40,000 from the revised 103,000 in August and compared to the Dow Jones estimate of 120,500 jobs. The increase in employment was mostly in the Transportation, Trade and Utilities sector, (+14,000); Construction, (+26,000); Hospitality, (43,000); and Professional and Business Services, (+20,000); Professional and Business Services, (+16,000). The Information sector was down (-10,000). Annual pay was up 4.7 percent year-over-year for ‘job-stayers’, down 0.1 percent from August 2023. 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.
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Egg Week
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10/23/2024 |
USDA Weekly Egg Price and Inventory Report, October 23rd 2024.
Market Overview
- The average wholesale unit revenue values for Midwest Extra-large and Large sizes were up 36.1 percent on average this past week. Medium size was up 35.9 percent. The 5-day rolling National wholesale price for graded loose on October 21st was $2.66 per dozen up 16.2 percent from $2.29 last week. This value was approximately $1.36 above the 3-year average of $1.30 per dozen and up $1.81 from the corresponding week in 2023 at $0.85 per dozen. This past week shell egg inventory was up 5.9 percent, more than reversing the drop of 3.8 percent during the previous week. During the past week the NYC wholesale price increased sharply after a market plateau with the immediate prospect of increases in coming weeks. The rise in inventory with an escalation in wholesale price denotes higher demand relative to supply predicting higher margins for producers through the 4th quarter despite replacement of depleted flocks. The rise in inventory may be a reflection of chains withholding orders. Relatively higher prices compared to 2023 are attributed to previous losses due to HPAI in 2024 reducing the national flock by 17 to 19 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. With 2.6 million hens depopulated in August, as the first incident cases of the fall 2024 wave there is currently a deficit of 17 to19 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 resulting in orders to ensure adequate stock levels to meet demand. Inventory levels will depend on constant re-ordering to fill the pipeline into November. Discounters are raising prices on generics influencing mainstream retail stores. Eggs are 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 up by 3.8 percent overall this past week at 1.58 million cases with a concurrent 4.2 percent decrease in breaking stock, following a 4.2 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, especially into and after a holiday weekend.
- The U.S. poultry industry has moved from a quiescent period regarding HPAI over the past week with incident cases in northern Utah and southern Washington State in mid October. Tulare County California recorded an outbreak on a broiler-growing farm with 900,000 birds. Over 333 confirmed cases of bovine influenza-H5N1 have been diagnosed in dairy herds in fourteen states with more than 123 herds California. This is a cause for concern since spill-over to laying flocks occurred in Michigan and Colorado. 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 that appears to have commenced. 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 October 23rd the stated total flock of 313.5 million, was up by 4.1 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 and Washington State it is estimated that the total flock is approximately 17 to 19 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 up a substantial 32.2 percent to $2.03 per dozen.Checks delivered to Midwest plants were up a noteworthy 25.0 percent to $1.85 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 an upward swing in price.
The Week in Review
Prices
According to the USDA Egg Market News Reports, released on October 21st 2024, the Midwest wholesale price (rounded to one cent) for Extra-large was up 35.9 percent from last week to $2.96 per dozen. Large size was up 36.2 percent to $2.94 per dozen. Mediums were up 35.9 percent to $2.69 per dozen delivered to DCs. It is emphasized that these prices are for the previous week.
The stock of Medium size was up 0.7 percent down by 4.2 percent and the inventory of Small size was up by 19.0 percent over the past week suggesting pullet flocks placed for the November-December surge in demand have matured but with additional younger pullets entering production. This has implications for prices during early November.
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 September 2024. This value excludes provisions for packing, packaging materials and transport, amounting to 57 cents per dozen as determined in mid-2023 from an EIC survey (with a low response) and now realistically 60 cents per dozen.
Currently producers of generic shell eggs should be operating with strong positive margins irrespective of region and customer-supply agreements. The progression of prices for loose eggs during 2023 and 2024 to date is depicted in the USDA chart reflecting three years of data, updated weekly.
The October 18th edition of the USDA Egg Markets Overview confirmed that the USDA Combined Region value in cartons (rounded to the nearest cent), was up 13 cents per dozen (+6.1 percent) to $2.25 per dozen delivered to warehouses one week ago. The USDA Combined range for Large in the Midwest was $2.16 per dozen. At the high end of the range, the price in the South Central region attained $2.32 per dozen.
Flock Size
The loss of 17.3 million hens from April through July 2024 should now be reflected in the most recent weekly data. The loss of approximately 2.6 million laying hens in Utah and Washington State in mid-October may not be reflected in U.S. flock size. Any delay in posting accurate and updated data, during fall outbreaks, should be avoided given the importance of weekly flock numbers in pricing. Accurate and current values for both the producing and total flocks are required by farmers, packers, breakers and buyers.
According to the USDA the number of producing hens reflecting October 23rd 2024 (rounded to 0.1 million) was up 3.1 million to 306.9 million suggesting that the rate of routine flock depletion is lower than the replenishment of flocks through molting and transfer of started pullets. The total U.S. flock includes about one million molted hens due to return to production Approximately 4.5 to 5.0 million pullets on average reach maturity each week, based on USDA monthly chick-hatch data for 20-weeks previously. The increase is offset by routine flock depletion and an additional loss of approximately 17 million hens due to HPAI through July and 2.6 million in October.. Many flocks have been replaced on a rotational basis and routine flock depletion is delayed subject to availability of housing. Based on inventory level and prices, the population of hens producing table eggs and breaking stock should now be less than mid-October demand by consumers. Industrial and food service off-take is stable, attaining pre-COVID levels. Prices for shell eggs declined in August establishing a plateau in late September followed by a progressive rise through October to high seasonal levels before the anticipated post-Halloween increase.
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Aldi Continuing with Winn-Dixie Conversion
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10/23/2024 |
Jason Hart, CEO of Aldi confirmed that the company is actively converting some Winn-Dixie and Harvey’s Supermarkets acquired in a 2023 transaction. Stores are located in Alabama, Georgia, Louisiana, Mississippi and Florida. Some stores will be re-bannered as Aldi but a “meaningful number” of Harvey’s and Winn-Dixie stores will retain their identity.
Naturally Aldi will introduce to their acquired stores a high proportion of private brands, reduce SKUs and introduce efficiencies that have contributed to expansion over the past decade.
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Amazon Opens new Grocery Store Format
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10/22/2024 |
The first of a series of planned Amazon Grocery locations was opened in downtown Chicago last week. The prototype comprises a 4,000-square-foot area offering 3,500 SKUs including coffee, prepared meals and commonly needed grocery items. Based on location and products offered, Amazon Grocery will appeal to urban residents and commuters and will serve as an upscale convenience store.
Since acquisition of Whole Foods Market with close to 520 locations in the U.S., Amazon has experimented with various permutations of brick-and-mortar formats including Amazon Fresh. Stores have opened and closed without evidence of a coordinated strategy or commitment to enter the quick- service grocery segment.
How this new concept will interlock with subsidiary Whole Foods Market‘s Daily Shop is Unknown, although it is evident that the latest iteration is approximately half the size of a Daily Shop although appealing to a similar clientele.
Depending on the success of the Chicago store, Amazon may extend what is obviously a market probe into additional stores but based on past history, the parent company may shift gears again and develop an alternative concept for evaluation.
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Foodborne Infection in International Travelers Tracked by Mobile App.
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10/22/2024 |
EGG-NEWS recently commented on dangers associated with foodborne infection as a result of improper procedures in food preparation, storage and serving in air travel.
A central kitchen supplying a large international or hub airport can potentially infect thousands of travelers with diverse destinations thereby obscuring the emergence of an infection. The University of Zurich in association with the World Health Organization has developed the Illness Tracking in Travelers app. This facilitates reporting of symptoms and provides details relevant to identifying a foodborne outbreak and relating it to a specific source.
According to a recent release by the University of Zurich, gastrointestinal symptoms were reported for 19 percent of 470 air trips. The Illness Tracking in Travelers app will be validated by more extensive use and will obviously be refined based on experience gained.
The app. may have application in identifying outbreaks of infections other than those affecting the intestinal tract. If correctly configured it could be useful as an early warning system for contagious diseases that may be spread within the confines of an aircraft or terminal.
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Munters AB Acquires Hotraco
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10/22/2024 |
Munters, a major manufacturer of ventilation equipment for agriculture and industry, has announced acquisition of Hotraco of the Netherlands. This company develops control systems and sensors that are widely used in agricultural buildings including for poultry production.
In commenting on the transaction, Klas Forsstrom. President and CEO of Munters, stated, “The acquisition is fully in line with our digital strategy for the FoodTech and Munters agenda. He added, “Hotraco is a perfect complement to our market leading offerings.
Brantgarde Linder, President of the FoodTech business segment, stated, “The acquisition supports our vision to provide insight for optimization across the entire value chain to improve yield, sustainability, transparency and animal welfare.” He added, “Hotraco strengthens our European presence and expands the amount of data integrated into our ecosystem around the global food supply chain.”
Recently, Munters announced an equity position in U.S.-based AEI, a supplier of control equipment for egg collection and for control of ventilation.
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SNAP Participation at a High Level in 2022
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10/21/2024 |
The USDA Food and Nutrition Service recently reported on participation in the 2022 Supplemental Nutrition Assistance Program (SNAP). According to the Annual Report, 88 percent of eligible individuals took advantage of SNAP, the highest level in 50 years. Recipients of SNAP represented both low- and non-income demographics, all below the federal poverty guidelines. Half of eligible households with incomes above the poverty line participated in the program. A breakdown of participants demonstrated 55 percent participation by eligible citizens over the age of 60 with a 94 percent rate for rural households with children.
Data assembled by USDA confirmed the need to continue SNAP to maintain food security among financially disadvantaged households in both rural and urban areas.
SNAP represents the bulk of the long-delayed Farm Bill. Funding was extended through December 20th despite the expiry of the 2018 Farm Bill that was delayed from 2023.
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Crop Progress
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10/21/2024 |
Status of 2024 Corn and Soybean Crops
The USDA Crop Progress Report released on October 21st recorded 81 percent of the soybean crop harvested, an advance of 14 percent this past week. Ninety eight percent of the corn crop has has been harvested, up 18 percent from last week. Both crops were ahead of the 5-year averages for the corresponding week.
Consistent with seasonal temperatures and previous rainfall across the Midwest and Plains states, crop condition was assumed to be unchanged during the past week. USDA did not release data on the condition of the soybean and corn crops this past week. Prospects for high corn and soybean yields were reflected in lower price projections in the October WASDE and CME futures prices for November and December (‘new crop’) delivery.
Heat stress that occurred previously during silking predisposes corn to fungal infection leading to mycotoxin contamination of kernels. Unseasonal rain during the immediate pre-harvest period for corn will also contribute to the elaboration of mycotoxins. The status of the 2024 crop will require monitoring at harvest in affected areas and especially if unseasonal precipitation occurs during the late harvest period.
Reference is made to the September 13th WASDE Report #652 and the weekly Commodity, Economy and Energy Report, both in this edition, documenting acreage to be harvested, yields, weekly prices and ending stocks.
The October WASDE presumably incorporated the results of the USDA-NASS annual remote survey on yields and final production. Pro Farmer completed their annual crop tour in mid-August. The August 23rd report estimated U.S. corn yield at 181.1 bushels per acre (compared to the Pro Farma estimate of 183.8 bushels per acre) with a projected crop of 14.98 billion bushels. (15.20 billion bushels). The corresponding values for soybeans were a yield of 54.9 bushels per acre (53.1 bushels per acre) contributing to a 2024 crop of 4.74 billion bushels. (4.93 billion bushels).
EGG-NEWS will report on the harvest of the two major crops as monitored by the USDA through the end of the 2024 season in two weeks.
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WEEK ENDING |
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Corn Status (18 states) *
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October 6th
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October 13th
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5-Year Average
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Corn Dented (%) |
100 |
100 |
100 |
Corn Mature (%) |
75 |
87 |
81 |
Corn Harvested (%)
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21
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30
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27
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Soybean Status (18 states) |
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Soybeans Setting Pods (%) |
100
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100
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100
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Dropping Leaves (%) |
81 |
90 |
85 |
Soybeans Harvested |
26 |
47 |
35 |
*Representing an average of 95% of U.S. 2024 acreage planted |
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Crop Condition
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V. Poor |
Poor
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Fair
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Good |
Excellent |
Corn 2024 (%)
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4 |
8 |
24 |
49 |
15 |
Corn 2023 (%) |
6 |
12 |
29 |
43 |
10 |
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Request to Limit Clean Fuel Credits to Crops Grown in the U.S.
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10/21/2024 |
The National Corn Growers Association and the American Soybean Association have urged the Administration to confine credits under the Clean Fuel Production and Sustainable Aviation Fuel Programs to feedstock grown and processed in the U.S. Current regulations would theoretically permit another nation to take advantage of credits to the detriment of U.S. farmers.
“Zippy” Duvall, President of the American Farm Bureau, requested a rapid response to the request given that credits are scheduled be effective in 2025.
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Investigations into USDA Response to Boar’s Head Listeria Outbreak
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10/21/2024 |
Following requests from Senator Richard Blumenthal (D-CT) and Rep. Rosa DeLauro (D-CT), the Office of the Inspector General of the USDA has initiated an investigation into possible negligence by FSIS inspectors with respect to the Virginia Boar’s Head plant implicated in the extensive outbreak of listeriosis. To date, the outbreak has resulted in 59 hospitalizations and 10 fatalities with a considerably higher number infected from consuming liverwurst and possibly other products produced by Boar’s Head in the facility now shuttered.
At issue are reports documenting profound deviations from acceptable hygienic and operational procedures extending over a number of years before the outbreak. Apart from identifying those responsible for negligence, the FSIS will have to amend procedures to ensure that there is not a repetition.
The question arises as to how many other plants other than the implicated operation may be producing RTE products vulnerable to contamination with Listeria and other pathogens. Among other questions will be the relative responsibilities of FSIS and the personnel of the Virginia Department of Agriculture who participated in inspections.
Irrespective of the outcome of the USDA investigation, circumstances related to the outbreak will be the subject of legal discovery as numerous lawsuits have been filed as a result of illness and death.
Previous postings on EGG-NEWS and CHICK-NEWS relating to the outbreak can be retrieved by entering Boar’s Head in the Search block.
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Botulism Impacts Wild Birds at the Tule Lake National Wildlife Refuge in Oregon
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10/20/2024 |
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Biologists at the Klamath Basin National Wildlife Refuge Complex are currently combating an outbreak of avian botulism affecting a wide range of migratory and domestic species. Birds affected in the Tule Lake National Wildlife Refuge include dowitchers, stilts, pintails and wigeons.
Botulism occurs in lakes and water systems that have been stressed by drought resulting in concentration of birds, lowered water levels and exposure to rotting vegetation. Birds that ingest botulinum toxin are then responsible for perpetuation of outbreaks since unaffected birds consume maggots feeding on rotting carcasses that contain lethal quantities of toxin. Volunteers are gathering dead birds for safe disposal and are transporting mildly affected birds showing paresis to rehabilitation centers to receive supportive care.
Outbreaks of avian botulism occur frequently along the Mississippi, Pacific and Central Flyways associated with disturbances in water level as a result of drought or imprudent management of water systems.
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Protective Tariffs Will Impact U.S. Agricultural Exports
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10/20/2024 |
A study conducted by the World Agricultural Economic and Environmental Services commissioned by the American Soybean Association and the National Corn Growers Association predicts dire consequences from imposing punitive tariffs on imports from China. The topic is currently front and center in the Presidential campaign.
Economists responsible for the report calculated that in the event of high tariffs imposed on China, exports to that nation would decline by 52 percent from baseline levels for soybeans and 84 percent for corn. Brazil and Argentine have the capacity to compensate for the shift from the U.S. and it would not be possible to find new markets to offset the loss to China. A steep drop in exports would reduce prices to farmers resulting in negative outcomes for rural areas.
There are two sides to every coin. Lower corn and soybean prices would be reflected in reduced costs of production for eggs and poultry meat, benefiting producers and integrators and if passed on to consumers would increase domestic consumption.
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Egg Projection October 2024
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10/19/2024 |
Updated October 2024 USDA Projection for U.S. Egg Production and Consumption.
On October 18th 2024 the USDA Economic Research Service (ERS) issued actual values for egg production during 2023 with a projection for 2024 and a forecast for 2025. Production, consumption and prices were revised from the previous August 16th 2024 report.
Projected egg production for 2024 was adjusted downward from the September 2024 Report to 7,786 million dozen This will be 1.0 percent less than in 2023 due to progressive depletion of hen flocks due to HPAI through July with incident cases reoccurring in October. The per capita consumption of shell eggs and liquids combined for 2024 will be 274.1 eggs down 5.2 eggs (-1.9 percent) from 2023. The projected average 2024 benchmark New York bulk unit price was raised 78 cents to 270 cents per dozen.
Subsequent USDA projections will provide greater clarity on the recovery in consumption in an economy that is undergoing deflation. The 2023 Midwest in-carton national wholesale price peaked at $5.17 per dozen on January 3rd 2023 but fell precipitously to a market bottom of $0.78 per dozen on May 8th 2023. Midwest Large wholesale price was restored during May 2024 and despite substantial declines during late August through September attained $2.16 per dozen for eggs in cartons delivered to DCs on October 18th 2024. The Midwest wholesale Large value should be compared to the USDA/EIC projection of the combined nest-run July 2024 cost of 75 cents per dozen for caged white Large, plus a provision for processing, packaging and transport of 60 cents per dozen amounting to $1.35 cents per dozen.
Restoration in flock size after HPAI flock depletions in 2022 progressed at a rate of approximately 0.5 million per week but placements were limited by the availability of pullet chicks and in some companies the rate of conversion to alternative housing systems. Restoration of the national flock was compromised by a resurgence of HPAI with 13.0 million layers depleted during the 4th quarter of 2023 representing 4.0 percent of the nominal producing flock of 326 million hens, mainly on complexes averaging over one million hens. Unpredictable factors affecting price will include the extent of anticipated losses during the fall migratory season that to date has claimed two complexes with a total of 2.6 million birds. Approximately 19 million hens were lost to HPAI year-to-date in four states. At present the national egg-producing flock is down by 18 to 20 million hens compared to the complement of 326 million at the beginning of the 2022 epornitic.
Exports of eggs and products at approximately 2.4 percent of total production over the first half of 2024 did not materially affect the domestic price.
The USDA forecast for 2025 includes production of 8,125 million dozen, up an optimistic 4.5 percent from 2024. Projected consumption of 286 eggs per capita, would be a speculative 12 egg (4.4 percent) increase over 2024 This forecast probably presumes complete control of HPAI and an adequate supply of replacement chicks and pullets, both unrealistic assumptions. The increase, if it were to transpire would depress the NY Large benchmark price to $1.88 per dozen.
During 2023 shell egg exports attained 89.4 million dozen, up 28.6 percent compared to 2022 when high domestic prices prevailed. Egg products were up 18.2 percent to 20,814 metric tons compared to 2022.
Over the first seven months of 2024, 53.2 million dozen shell eggs were exported valued at $117.3 million. Volume was 10.1 percent lower and value was 5.1 percent higher compared to the corresponding months in 2023.
Over the seven months of 2024, 17,730 metric tons of egg products were exported valued at $78.7 million. Volume and value were respectively 16.5 and 13.0 percent lower compared with the corresponding months in 2023.
Updated October 2024 USDA data is shown in the table below:-
Parameter
|
2021
(actual)
|
2022*
(actual)
|
2023
(actual)
|
2024*
(projection)
|
2025
(forecast)
|
% Difference
2023-2024
|
|
|
|
|
|
|
|
Production (million dozen)
|
8,031
|
7,825
|
7,864
|
7,786
|
8,125
|
-1.0
|
Consumption (eggs per capita)
|
282.5
|
280.5
|
279.3
|
274.1
|
286.0
|
-1.9
|
New York price (c/doz.)
|
119
|
282
|
192
|
270
|
188
|
+40.6
|
*Data influenced by HPAI losses. Recovery in 2025 considered unrealistic
Source: Livestock, Dairy and Poultry Outlook released October 18th 2024
Subscribers to EGG-NEWS are referred to the postings depicting weekly prices, volumes and trends and the monthly review of prices, exports and related industry statistics.
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Extensive SE Outbreak in the Netherlands Traced to Specific Farms
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10/17/2024 |
Public Health Authorities in the Netherlands have investigated an ongoing outbreak of Salmonella Enteritidis (SE) since September 2023. To date there have been 171 laboratory-confirmed cases with the presumption that the real incidence exceeds this figure by a factor of 10 to 20.
Whole genome sequencing on SE isolates from patients demonstrated two separate clusters, one associated with floor housed flocks and the other from hens with outside access. Salmonella Enteritidis isolated from 14 laying farms could be corelated with isolates obtained from patients.
Investigation disclosed a problem of recycling eggshell that was improperly heat treated before inclusion into feed as a mineral supplement thereby perpetuating infection.
Salmonella infection should be identified proactively in flocks and not in patients. A mandatory monitoring system such as the FDA Final Rule or state EQAPs or those imposed by individual companies are required. It is difficult to understand how in an industrialized nation such as the Netherlands a prolonged SE outbreak could persist without appropriate diagnostic and corrective action to protect consumers. It is hoped that investigators involved will publish on the epidemiology of the extended outbreak.
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Sad Passing of Scott Braswell
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10/17/2024 |
Scott Braswell a driving force for Braswell Family Farms, a 4th generation egg and feed production enterprise headquartered in Nashville NC. passed at the age of 68 on October 16th in Durham after a long illness. An obituary will be posted in a subsequent edition describing his many accomplishments and contributions to the egg industry and his community.
Condolences are extended to his widow Mary Lou and to his son Ronald Trey Braswell III, CEO of Braswell Family Farms and daughter Nary Scott (Anderson) and their respective families.
May he rest in peace.
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Airline Kitchens as A Source of Foodborne Infection
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10/17/2024 |
According to Food Safety News it is estimated that one billion meals in flight are served each year by airline operators. The potential for foodborne infection from central kitchen serving major international and U.S. hub airports is self-evident.
There are documented cases of foodborne infection attributed to either contaminated food ingredients or deficiencies in food handling, storage and preparation, with severe consequences. The salmonellosis outbreaks emanating from Heathrow London in 1984 through to a case involving a tourist group consuming contaminated food loaded at Dar es Salaam in 2011 are well documented examples of infection from consuming air-catered food.
Recent reports confirm that companies preparing and serving meals may deviate from acceptable standards. Gate Gourmet, LSG and Flying Food Group have been cited by the FDA or by their major airline customers for violations. Airports with problems include Minneapolis, Dallas International, San Diego, and Detroit Metro. Violations include rodent and insect infestation of premises, failure to maintain appropriate hot or refrigeration temperatures, inadequate training and supervision all contributing to the potential of foodborne infection.
Airlines cannot simply transfer responsibility for acceptable food practices to contract flight kitchens. Customer satisfaction is a component of goodwill, and passengers hold an airline responsible for the quality and safety of food served in flight.
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Parent Company to Close Some U.S. 7-Eleven Stores
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10/16/2024 |
Parent company Seven & i Holdings of Japan has announced that as many as 444 7-Eleven stores will be closed in North America. The company is facing pressure from financial institutions to increase profitability. Seven & I Holdings is currently the subject of a takeover bid from Alimentation Couche-Tard of Canada, operator of Circle K in the U.S. and convenience stores and gas stations in Europe.
It is anticipated that the holding company will benefit from closing unprofitable locations. The intended action represents less than four percent of the 13,000 U.S. locations in the U.S. The initiative may be too little and too late to lift profitability in the face of intense competition from larger convenience stores with forecourt filling stations located on major interstates throughout the U.S. and along arteries leading from cities to suburbs.
Seven & i Holdings has created a separate company, York Holdings to operate supermarkets and specialty stores as a precursor for divestment.
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SpartanNash Acquires Fresh Encounter Inc.
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10/16/2024 |
SpartanNash, an integrated food distributor and operator of supermarkets in the Midwest has acquired a chain of 49 Fresh Encounter stores in Ohio, Indiana and Kentucky. The company is a third-generation grocer that has been served by SpartanNash for close to sixty years.
Tony Sarsam CEO of SpartanNash noted, “This acquisition is a exciting milestone in our company’s strategic growth plans.” He added, “We will welcome 2,500 new associates to the SpartanNash family and will begin serving shoppers in Kentucky and grow our existing footprint across Ohio and Indiana.”
With the recently announced acquisition and the earlier purchase of Metcalfe’s Market comprising three stores earlier in 2014, SpartanNash will operate 196 locations with banners including Family Fare, and Martin’s Super Markets with many locations having pharmacies and fuel centers.
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Egg Week
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10/16/2024 |
USDA Weekly Egg Price and Inventory Report, October 16th 2024.
Market Overview
- The average wholesale unit revenue values for Midwest Extra-large and Large sizes were up 5.9 percent on average this past week. Medium size was up 5.9 percent. The 5-day rolling National wholesale price for graded loose on October 15th was $2.29 per dozen up 33.9 percent from $1.71 last week. This value was approximately $1.04 above the 3-year average of $1.25 per dozen and up $1.46 from the corresponding week in 2023 at $0.83 per dozen. This past week shell egg inventory was down 3.8 percent, following a drop of 1.9 percent during the previous week. During the past week the NYC wholesale price increased after a market plateau with the immediate prospect of increases in coming weeks. Declines in inventory with a rising price denote higher demand relative to supply predicting higher margins for producers through the 4th quarter despite replacement of depleted flocks. Relatively higher prices compared to 2023 are attributed to previous losses due to HPAI in 2024 reducing the national flock by 16 to17 million hens with restored seasonal demand.
- Although there are weekly transfers of mature pullet flocks to laying houses, the size of the producing flock is constrained by depopulation due to HPAI. During April 2024 almost 8.4 million hens were depopulated with an additional 5.7 million during May and 3.0 million in July with a current deficit of 16 to17 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 resulting in orders to ensure adequate stock levels to meet demand. Inventory levels will depend on constant re-ordering to fill the pipeline into November. Discounters are raising prices on generics influencing mainstream retail stores. Eggs are 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 1.8 percent overall this past week at 1.52 million cases with a concurrent 6.7 percent increase in breaking stock, following a 0.5 percent fall during the preceding week attributed to less 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, especially into and after a holiday weekend.
- The industry has moved from a quiescent period regarding HPAI over the past week with an incident case in northern Utah. Over 305 confirmed cases of bovine influenza-H5N1 have been diagnosed in dairy herds in fourteen states and spreading with 100 herds California as a cause for concern over spill-over to poultry. More surveillance information should be released by USDA-APHIS as it becomes available, concerning the prevalence rate of avian carriers of H5N1 among resident domestic free-living birds together with a review of molecular and field epidemiology for the past spring outbreaks to respond to the fall wave of HPAI that appears to have commenced. 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 October 16th the stated total flock of 309.4 million, was up by 0.4 million from last week, including about one million molted hens that will resume lay during coming weeks plus 4.5 to 5.0 million pullets scheduled to attain production. Given the latest figures for depopulation it is estimated that the total flock is approximately 16 to 17 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 up a substantial 19.5 percent to $1.54 per dozen.Checks delivered to Midwest plants were up a noteworthy 25.4 percent to $1.48 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 an upward swing in price.
The Week in Review
Prices
According to the USDA Egg Market News Reports, released on October 15th 2024, the Midwest wholesale price (rounded to one cent) for Extra-large was up 5.8 percent from last week to $2.18 per dozen. Large size was up 6.0 percent to $2.16 per dozen. Mediums were up 5.9 percent to $1.98 per dozen delivered to DCs. It is emphasized that these prices are for the previous week.
The stock of Medium size was down by 4.2 percent and the inventory of Small size was down by 7.2 percent over the past week suggesting pullet flocks placed for the November-December surge in demand have matured but with additional younger pullets entering production. This has implications for prices during early November.
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 September 2024. This value excludes provisions for packing, packaging materials and transport, amounting to 57 cents per dozen as determined in mid-2023 from an EIC survey (with a low response) and now realistically 60 cents per dozen.
Currently producers of generic shell eggs should be operating with positive margins irrespective of region and customer-supply agreements. The progression of prices for loose eggs during 2023 and 2024 to date is depicted in the USDA chart reflecting three years of data, updated weekly.
The October11th edition of the USDA Egg Markets Overview confirmed that the USDA Combined Region value in cartons (rounded to the nearest cent), was unchanged at $2.13 per dozen delivered to warehouses one week ago. The USDA Combined range for Large in the Midwest was $2.04 per dozen. At the high end of the range, the price in the South Central region attained $2.20 per dozen.
Flock Size
The loss of 17.3 million hens from April through July 2024 should now be reflected in the most recent weekly data. The loss of approximately 1.5 million laying hens in Utah this past week has yet to be recorded by the USDA. Any delay in posting accurate and updated data, during fall outbreaks, should be avoided given the importance of weekly flock numbers in pricing. Accurate and current values for both the producing and total flocks are required by farmers, packers, breakers and buyers.
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Grocery Chains Committed to Private Brands
|
10/16/2024 |
Private brands now represent close to twenty percent of grocery purchases with these labels now available for packaged goods, dairy including eggs, OTC pharmaceuticals and even cosmetics.
At the recent Groceryshop Conference in Las Vegas, speakers representing major chains indicated their commitment to private brands. Ahold-Delhaize has the intention of achieving 45 percent of sales through private brands with the company currently at the thirty percent level. Sam’s Club considers that national brands will provide greater value and innovation. Amazon has unveiled Amazon Saver; a new discount line and Albertsons has even introduced a private label wine following the example of Costco.
Major chains are following a narrow path between expanding private label but maintaining mutually acceptable commercial relationships with CPG manufacturers.
During the inflationary period through 2021-2023, consumers opted for lower-priced private brands finding them equivalent in quality to familiar national brands. Reversion to these products appears to be slow given acceptance of private label items shelved alongside national brands at lower prices.
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Sam’s Club Innovates with Technology
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10/16/2024 |
Based on the investment in technology by parent Walmart Stores, Sam’s Club has opened an all-digital store in Grapevine, TX. The warehouse has automated scanning of inventory allowing workers to restock shelves more efficiently and expeditiously. At present, thirty percent of Sam’s Club members use the Scan&Go checkout without using a conventional cashier-manned line.
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Scanning purchases
|
Scanners in Re-opened Sam's Warehouse
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Re-opened high tech Sam's Club Warehouse
Grapevine, TX.
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|
USDA Supports Beginning Farmers
|
10/15/2024 |
USDA has announced grants totaling $46 million to support veteran, underserved and beginning farmers to establish operations and to improve skills.
The Beginning Farmer and Ranch Development Program administered by the National Institute of Food and Agriculture will fund 46 projects valued at $24 million. Some activities will include providing technical assistance to aspirant farmers and assistance in acquiring farms. A Detroit, MI. project will focus on hydroponic farming.
USDA is encouraging young farmers based on the reality that existing producers are advancing in age with more than one third over 65 consistent, with aging of the U.S. population.
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|
|
France Initiates Avian Influenza Vaccination
|
10/15/2024 |
Following the decision of then Minister of Agriculture, Marc Fa00 during the previous season. Over 60 million waterfowl will be vaccinated with the government paying 70 percent of the cost estimated at $110 million. This appears to be a high figure at $1.80 per bird even with the labor involved for individual parenteral administration.
Vaccination will be mandatory for farms with more than 250 waterfowl including ducks, geese and muscovies and their hybrids. Continental France and Corsica will be covered by the mandate that will include 2,500 farms with an average of 25,000 birds per unit.
Vaccines will be provided by Boehringer-Ingelheim and Ceva Animal Health.
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|
|
Growing Concern Over Chemicals in Packaging
|
10/15/2024 |
Whether cardboard, plastic or metal, food packaging incorporates a wide range of chemical compounds that can leach into food. A recent study identified over 3,000 food contact chemicals in blood samples through a bio-monitoring program. A second study disclosed that a proportion of these chemicals are potential carcinogens with detection of the specific compounds in blood and human tissues.
Concerns arise as a result of advances in analytical technology that can detect chemicals down to picogram levels in tissues that may not be of biological significance. Notwithstanding this caution, known carcinogenic compounds including bisphenols, styrene and phthalates should be excluded from packaging given their ability to transfer to food.
In many respects, eggshells although susceptible to cracks and leakage with mishandling representing a problem for producers, protect the egg contents from food contact chemicals in packaging.
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Crop Progress
|
10/15/2024 |
Status of 2024 Corn and Soybean Crops
The USDA Crop Progress Report released on October 15th recorded 95 percent of the soybean crop dropping leaves and 67 percent harvested, a major advance of 20 percent this past week. Ninety four percent of the corn crop is now mature and 47 percent has been harvested, up 17 percent from last week. Both crops were ahead of the 5-year averages for the corresponding week.
Farmers managed 6.6 days on average this past week suitable for field-work over the nine states with the highest corn and soybean production (range 6.0 days for PA. up to 6.9 days for IL, KS and MO.). This contributed to the advance in harvesting in most states and areas and compares with 5.9 days for last week.
Consistent with seasonal temperatures and previous rainfall across the Midwest and Plains states, crop condition was almost unchanged during the past week. Corn attained 64 percent for the two highest categories of “Good” and “Excellent,” unchanged from last week. The October 15th value for corn quality was considerably higher than the 53 percent recorded for corn for the two highest categories during the corresponding week in 2023. USDA did not release data on the condition of the soybean crop this past week based on the reality that two thirds has been harvested. Prospects for high corn and soybean yields were reflected in lower price projections in the October WASDE and CME futures prices for November and December (‘new crop’) delivery.
It is unlikely that the transition to a La Nina event will have any impact on U.S. crop condition through harvest. Prolonged dry and hot weather apparent at this time interspersed with rain will not depress corn and soy yields depending on timing and severity.
Heat stress that occurred previously during silking predisposes corn to fungal infection leading to mycotoxin contamination of kernels. Unseasonal rain during the immediate pre-harvest period for corn will also contribute to the elaboration of mycotoxins. The status of the 2024 crop will require monitoring at harvest in affected areas and especially if unseasonal precipitation occurs during the late harvest period.
Reference is made to the September 13th WASDE Report #652 and the weekly Commodity, Economy and Energy Report, both in this edition, documenting acreage to be harvested, yields, weekly prices and ending stocks.
The October WASDE presumably incorporated the results of the USDA-NASS annual remote survey on yields and final production. Pro Farmer completed their annual crop tour in mid-August. The August 23rd report estimated U.S. corn yield at 181.1 bushels per acre (compared to the Pro Farma estimate of 183.8 bushels per acre) with a projected crop of 14.98 billion bushels. (15.20 billion bushels) . The corresponding values for soybeans were a yield of 54.9 bushels per acre (53.1 bushels per acre) contributing to a 2024 crop of 4.74 billion bushels. (4.93 billion bushels).
EGG-NEWS will report on the harvest of the two major crops as monitored by the USDA through the end of the 2024 season in November.
|
WEEK ENDING |
|
Corn Status (18 states) *
|
October 6th
|
October 13th
|
5-Year Average
|
Corn Dented (%) |
100 |
100 |
100 |
Corn Mature (%) |
75 |
87 |
81 |
Corn Harvested (%)
|
21
|
30
|
27
|
Soybean Status (18 states) |
|
|
|
Soybeans Setting Pods (%) |
100
|
100
|
100
|
Dropping Leaves (%) |
81 |
90 |
85 |
Soybeans Harvested |
26 |
47 |
35 |
*Representing an average of 95% of U.S. 2024 acreage planted |
|
|
|
|
|
|
Crop Condition
|
V. Poor |
Poor
|
Fair
|
Good |
Excellent |
Corn 2024 (%)
|
4 |
8 |
24 |
49 |
15 |
Corn 2023 (%) |
6 |
12 |
29 |
43 |
10 |
|
|
|
|
|
|
|
|
|
|
Recent drought monitor with 'hot-spot' affecting SW PA and central OH
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Impact of Hurricane Milton on Florida Agriculture
|
10/15/2024 |
Initial estimates suggest that the cotton crop in Georgia will be reduced by 20 percent, down 400,000 bales from the pre-hurricane estimate. Florida Citrus Mutual representing growers and packers confirmed a similar reduction in citrus production among the five largest growing counties in central Florida. Crop damage from wind and flooding is financially devastating to growers who are still recovering from an outbreak of citrus greening that has affected 90 percent of the state industry.
It is inevitable that orange juice will increase in price since supplies from Brazil will be limited by that nation’s ongoing drought.
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Italy Reports HPAI in Layer Complex
|
10/15/2024 |
Italy has informed the World Organization of Animal Health of an outbreak of H5N1 HPAI in an egg production complex holding one million hens located in the northeast quadrant of the nation. This outbreak follows reports of H5N1 emerging in Bulgaria, the Czech Republic and France accompanied by concurrent diagnoses of outbreaks in backyard farms and migratory birds.
The extent of losses and concern over future outbreaks is leading to a seven percent rise in the price of shell eggs from late August through mid-September attaining $1.75 per dozen for graded unpacked product. Diversion of eggs to the shell market at the expense of breaking supply is apparently the reason for recent imports of egg products from the U.S.
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Rose Acre Farms Announces New CEO
|
10/14/2024 |
Rose Acre Farms has announced that Tony Wesner currently COO has been promoted to CEO and Chairman of the Board of the family-owned enterprise. Wesner joined Rose Acre Farms in 1981 and is familiar with all aspects of operation under the mentorship of Marcus Rust.
Wesner is a familiar figure in the industry participating in UEP, IEC and USPOULTRY committees and events.
In commenting on the promotion Wesner stated, “I am grateful for the trust that the Rust family has placed in me including Marcus and extending to the current generation whom I have had the pleasure of seeing grow up.”
Marcus Rust will assume a guiding role in the Company as the Chief Visionary Officer.
Terry Anderson was named Chief Operating Officer to succeed Tony Wesner.
|
STOP PRESS
|
10/14/2024 |
Cache County, UT. and Franklin County WA. Complexes Diagnosed with HPAI
According to the Utah Department of Agriculture and the USDA-APHIS a complex with 1.8 million birds (presumably mature layers and replacement pullets) will be depopulated following confirmation of HPAI on October 15th.. Oakdell Farms located in Lewiston, UT. is the single large producer in Cache County and is presumed to be the affected operation. A second case in Franklin County Washington State was diagnosed on October 15th involving a flock of 830,000 hens. Oakdell Farms is the major producer in the county that is traversed by the Columbia River.
The question arises as to whether this outbreak in northern Utah represents the start of a series of Fall cases. The recent diagnoses of HPAI in non-commercial flocks in neighboring Idaho, suggests dissemination of virus with seasonal southward migration of waterfowl. It is possible that movement between complexes with common ownership could have resulted in a common infection.
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Costco Reports on September 2024 Sales
|
10/14/2024 |
On September 9th Costco Wholesale Corporation (COST) reported sales for September 2024 covering the four weeks ending October 6th. For the period, sales attained $24,620 million, up 9.0 percent from the value of $22,590 million during the corresponding month in 2023.
Same store sales (excluding fuel and foreign exchange) increased 9.3 percent for the U.S.; 6.3 percent for Canada and 9.6 percent for international warehouses. Overall, same-stores sales advanced by 8.9 percent and E-commerce was 22.9 percent higher.
Costco closed on Sept 9th at $909.60 and opened on October 10th post-release at $910.12. COST market capitalization was $393,910 million on August 14th and the share has traded over a 52-week range of $540.23 to $923.83 with a 50-day moving average of $882.75.
Costco Wholesale Corporation operates 891 warehouses with 614 in the U.S.; 108 in Canada; 40 in Mexico and the remainder in nine other nations.
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Endangered Denver Lamb Plant Settles with EPA
|
10/14/2024 |
Superior Farms, the only remaining meat-packing facility within the city of Denver has settled with the Environmental Protection Agency for improper handling of anhydrous ammonia. The plant was cited for safety violations including failure to minimize risks of accidental release. The company will pay a $120,000 civil penalty and will invest $250,000 in a supplemental environmental project to upgrade equipment and prevent future leaks.
Superior Farms Inc. operating the plant in North Denver is the subject of a ballot initiative banning animal processing within the city. Animal rights and vegan organizations initiated the ballot that if passed, would result in closure of the plant that was selected by activists for its vulnerability.
The ballot proposal was regarded as a toss-up a few weeks ago. More recently civic organizations, labor unions, the restaurant industry and other business organizations in Denver have come to the defense of Superior Farms. There is now more structured opposition to the ballot proposal with publicity on the risks and potential consequences of approval.
Activists continue to make use of ballots to promote their vegan principles, imposing their views on the general public often with profound cost implications. This rise in activism is represented by the proposal to ban CAFOs in Sonoma County, California. Adoption would result in closure of many family-owned and operated farms and reduce egg, poultry, dairy and beef production to the detriment of consumers and County revenue.
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USDA Attempting to Promote Competition
|
10/14/2024 |
During the Farmers and Ranchers in Action event, Secretary of Agriculture, Tom Vilsack identified areas in which the Department is attempting to increase competition and establish fair markets for food producers. The USDA will evaluate Alternative Marketing Agreements relating to the activities of beef packers with respect to spot prices paid and the formulas used to calculate values. USDA will issue an Advance Notice of Proposed Rulemaking and will solicit comments on potential interventions.
As a result of interviews and review of over 1,000 comments the USDA has identified alleged hidden fees and anticompetitive pricing strategies in the beef market. Appropriate corrective action will be taken to promote transparency and competition and to eliminate unjustified charges.
The current Administration has been active in opposing consolidation and oligopoly in the beef and pork sectors of meat production but has extended their concern to the concentration of broiler and turkey production among integrators. Over the past four years the USDA has attempted to restructure meat production by financially supporting the emergence of small plants that are less efficient than large facilities, ultimately reducing prices to consumers.
With respect to the broiler industry, the USDA recognizes integration and competition given the larger number of producers relative to beef and pork. The USDA has however intruded into the relationship between integrators and growers with special reference to the tournament system, no poach agreements and other claimed irregularities that have led to new rules under the Packers and Stockyards Act.
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Proposal to Ban Paraquat
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10/14/2024 |
Representative Greg Casar (D-TX) is leading a group of 50 members of Congress to direct the Environmental Protection Agency to ban paraquat, a herbicide with potential neurologic effects* in both children and adults.
In a letter addressed to Michael S. Regan the EPA Administrator, legislators, supported by a wide range of consumer protection, health promotion and farm worker rights organizations urged the Agency to follow the decision of almost 70 nations to ban the compound.
Parkinson’s syndrome is emerging as an important issue with epidemiologic evidence of association with paraquat. The herbicide is currently banned for application on golf courses and recreational areas. Opponents of the compound maintain that if it is unsafe for golfers it certainly is undesirable for farm workers who are exposed to relatively higher levels of exposure.
*Paul, K. et al.(2024). Agricultural paraquat dichloride use and Parkinson’s disease in California’s Central Valley. Journal Int. Epidemiol. doi:10.1093/ije/dyae004.
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RR Donnelley Report on Consumers
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10/14/2024 |
RR Donnelley, a market research and communications company recently released the CPG+ Grocery Consumer Report reflecting the attitudes of consumers during the fourth quarter of 2024. The study included 1,80O0 respondents representing diverse generations and financial demographics and 254 managers affiliated to grocery retailers.
As expected, the report confirmed concern over the cost of food items with 86 percent of respondents registering “frustration” according to Beth Johnson, Director of Client Strategy for the research company who stated, “Rising prices, especially in the grocery sector are putting pressure on consumers across all income levels.” She added, “Price sensitivity is a collective concern presenting both a challenge and an opportunity for brands.”
The perception and actuality of high prices has changed consumer buying patterns. Shoppers are more inclined to take advantage of sales and are responsive to loyalty programs. An important conclusion from the responses was that a third of those surveyed have switched from name brands to private-label equivalents. Loyalty programs are favored and shoppers are making greater use of discount coupons.
The September 15th U.S. Census Bureau release of the advanced estimate of retail and food sales data for August confirmed a 0.1 percent rise from the revised July value and up 2.1 percent over 12 months. Food service prices were unchanged from July and up 2.7 percent over 12 months. Grocery store prices were down 0.6 percent from the revised July value and up 1.5 percent over the past 12-months.
The dissonance between actual price inflation and consumer perceptions is striking. Irrespective of data shoppers believe that post-COVID inflation persists that is not supported by reliable data. But then surge pricing, a tiny bit of opportunistic local price gouging and even the gyrations in retail egg prices do not help to dispel misperceptions
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New Jersey Intends to Offer Free School Meals
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10/14/2024 |
New Jersey Bill A.4680 would introduce free daily meals at schools in the state irrespective of family income. The concentration will be on breakfast servings that help children to learn and function through the school day. New Jersey currently provides school meals to families that meet income criteria. Increasing the proportion of children receiving school meals will be beneficial for farmers and especially egg producers with opportunities for both national and regional suppliers.
“Food shaming” is a concurrent aspect of legislative concern. Senator Tina Smith (D-MN) has re-introduced the No Shame at School Act into Congress. This bill dating back to 2019 would prohibit any form of identification of students receiving free meals and would also ban local school jurisdictions from using debt collectors. Apart from this intended federal action, Minnesota and North Dakota have enacted legislation banning shaming with the policy under consideration in numerous states.
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Passage of Farm Bill Critical During Post-election Session
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10/14/2024 |
The post-election “lame duck” session of the 118th Congress should pass the delayed 2023 Farm Bill. There will have to be compromise on the issues of farm supports and allocation of funding and eligibility for supplemental nutrition assistance programs. This might be possible given the results of the 2024 election with both retiring and reelected representatives and senators voting their conscience rather than adhering to restraints imposed by their respective party platforms.
Although the federal government is functioning under a continuing resolution until December 20th, funding for a number of agricultural programs ceased on October 1st. These include the Specialty Crops Block Grant Program, the National Organic Certification Cost-Share Program and most importantly Market Access and Market Development Trade Promotion programs.
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Egg Exports
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10/13/2024 |
Export of Shell Eggs and Products, January-August 2024.
The volume of exports of shell eggs is conditioned by the domestic needs of importers, price against competitors and regulatory disease and logistic restraints. This is demonstrated by the 182 percent drop in volume of shell egg exports from 2012 (198 million dozen) to 2022 (70 million dozen). Due to depletion of flocks in 2023, export prices increased 113 percent from $1.02 per dozen to $2.16 per dozen reflecting domestic prices. Depressed exports persisted in 2023 with 90 million dozen shell eggs exported at an average price of $1.80 per dozen as losses from HPAI rose in the last quarter with a consequential rise in domestic price. This situation persisted through the first half of 2024 but with prospects for improved volume based on prices stabilizing moderately above seasonal levels through the 4th quarter.
It is probable that lost markets other than in the USMCA and Caribbean nations will be reclaimed over the intermediate term. Sporadic and short-term exports may be made to various nations based on supply disruption caused by HPAI or other factors.
USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing 2024 with 2023:-
PRODUCT
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Jan.-Aug. 2023
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Jan.-Aug. 2024
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Difference
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Shell Eggs
|
|
|
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Volume (m. dozen)
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59.2
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53.2
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-6.0 (-10.1%)
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Value ($ million)
|
111.6
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117.3
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+5.7 ( +5.1%)
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Unit Value ($/dozen)
|
1.89
|
2.21
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+0.32 (+16.9 %)
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Egg Products
|
|
|
|
Volume (metric tons)
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21,242
|
17,730
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-3,512 (-16.5%)
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Value ($ million)
|
90.5
|
78.7
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-11.8 (-13.0%)
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Unit Value ($/metric ton)
|
4,260
|
4,438
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+178 (+4.2%)
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U.S. EXPORTS OF SHELL EGG AND EGG PRODUCTS DURING
JANUARY-AUGUST 2024 COMPARED WITH 2023
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Albertson's Banner Settles Competition Complaint
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10/11/2024 |
Safeway, Albertsons and Von's have settled a complaint in Sonoma County, CA and will pay a $4 million penalty. According to County Attorney Carla Roderiquez, the retailers engaged in charging higher prices than those advertised or posted and in addition, based costs of items on inaccurate weights. An investigation demonstrated that meat, baked goods and some other items had short weight compared to packaged labels. The two companies also failed to disclose exclusions on club card programs.
County Attorney Roderiquez stated, “Trusting companies to sell products to consumers that are accurately weighed and priced, especially in today’s economy, is a priority to my office.” She added, “My Environmental and Consumer Law Division works with the Sonoma County Agricultural Commission, Weighs and Measures Department to make sure businesses in our community charge consumers correctly.” The grocers are now enjoined from engaging in false or misleading advertising and are prohibited from applying 14 unfair practices identified in the investigation.
Given controversy over the proposed merger between Albertsons and Kroger it would be presumed that the companies and their subsidiaries would exercise squeaky clean ethical, marketing and operational procedures, at least until litigation is concluded.
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Drought Affecting Both Production and Transport of Grains in Brazil
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10/11/2024 |
The Madeira River in Brazil has fallen to a level that is impeding transport from crop production areas to port terminals. This situation is reminiscent of the 2022 low water levels on the Mississippi that resulted in escalation of inland freight on barges from the Midwest to New Orleans. The Madeira River and tributaries are responsible for the transport of 34 percent of soybeans and 43 percent of corn produced in northern Brazil.
Notwithstanding the present problems, Anec, a lobby representing grain traders believes that there will be no reduction in exports from the northern region although costs will be higher. This situation will probably serve the interests of U.S. farmers and exporters since the U.S. will be more competitive. This is a desirable situation given the anticipated large 2024 harvest and with prevailing high production costs.
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Washington State Fines Manufacturers and Retailers for Non-compliance with Recycled Plastic Content
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10/11/2024 |
In accordance with environmental regulations in Washington State designating minimum recycled content for plastic packaging, the Department of Ecology has announced fines for 35 companies. The total amounting to $416,000 includes individual penalties ranging from $6,000 to $67,000. Clorox received the highest fine based on low recycled content in packaging. In 2018 the company achieved an 11 percent content of post-consumer recycled plastic with a target of 22 percent by 2030. At the end of 2023 the level was in fact lower at 10 percent. Albertsons a major grocery chain in the state was fined $42,000 for noncompliance with the 2021 law mandating inclusion of recycled plastic in containers.
In contrast the State reported that 93 producers met or exceeded required benchmarks, “Recognizing the value of using recycled content in their products.”
The State of Washington is negotiating with noncompliant companies to suspend fines subject to corrective action plans and demonstrated future compliance.
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Challenge to EPA Regulation of CAFOs Rejected by 9th Circuit Court of Appeals
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10/11/2024 |
A number of environmental activist groups filed suit to require the Environmental Protection Agency to impose stricter controls on emissions from CAFOs, invoking the Clean Water Act.
The U.S. Court of Appeals for the 9th Circuit rejected the lawsuit and let stand the current standards for permitting. The EPA is however currently gathering information that may be used to amend current regulations.
The National Pork Producers Council welcomed the decision of the appeals court noting that if the demands by Food and Water Watch and other organizations were imposed on the EPA, considerable disruption and an escalation in production costs would ensue.
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FDA Response to Complaints
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10/11/2024 |
The FDA has “streamlined” the response of complaints submitted to the Human Foods Program This action follows justified criticism that the Agency failed to respond to a whistleblower complaint regarding irregularities at a major facility producing infant formula.
Communications alleging health or production issues, injuries or allergic reaction arising from defective food quality or safety will now be expeditiously investigated. This response will encompass foods and dietary supplements through a new reporting portal in addition to voluntary reporting forms for cosmetics. Previously complaints were directed to the Consumer Complaint Coordinator in the FDA Office of Regulatory Affairs. Effective October 1st, the Agency will direct complaints relating to food to the newly established Office of Inspection and Investigations for prompt evaluation and action.
The Human Foods Program was established following investigations into the infant formula debacle and a series of crises confirming FDA negligence and an inadequate response.
The FDA statement noted that establishment of the Human Foods Program “will help the FDA deliver on their mission to protect and promote public health through science-based approaches to prevent foodborne illness, reduce diet-related chronic disease and ensure the safety of chemicals in food.”
Subscribers to EGG-NEWS can retrieve articles on the infant formula crisis by entering “infant formula” into the search block.
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2025 USDA Annual Agricultural Outlook Forum
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10/11/2024 |
USDA has scheduled February 27th and 28th 2025 for the 101st Annual Agricultural Outlook Forum. The event will take place at the Crystal Gateway in Arlington, VA. as in previous years.
No theme has yet been released for the program. In 2024 “Cultivating the Future” was the focus, emphasizing a balance in scale of operations between small and large farming enterprises. Consistent with the policy of the current Department of Agriculture, speakers emphasized support of local and regional food systems and creating new sources of revenue through global trade.
Featured speakers at the 2024 forum included Secretary of State Antony Blinken and U.S. Trade Representative Katherine Tai sharing their broad international perspectives.
The 2025 Outlook Forum will be held under a new Administration that will most certainly set the theme and select speakers.
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Aldi Promoting Thanksgiving Meals
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10/10/2024 |
Aldi has announced that it will offer a Thanksgiving meal to feed ten diners for $47. The menu will include a Butterball turkey with spices, gravy, rolls, mac-n-cheese and bean sides, stuffing and accompaniments including cranberry sauce, potatoes, and pumpkin pie.
Jason Hart, CEO of Aldi noted that the company serves close to a quarter of all U.S. households and the Thanksgiving offer will be popular based cost and convenience.
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Administration Orders Ten Million Doses of Human H5 Influenza Vaccine
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10/10/2024 |
David Boucher, Director of Infectious Disease in the Administration for Strategic Preparedness and Response (ASPR) has announced an order for ten million doses of human H5 influenza vaccine.
Although less than twenty cases of zoonotic H5N1v infection with the B3.13 genotype have been recorded, and risks to human populations appears low, the ASPR has placed orders in accordance with their “mission to be ready” in the event of possible mutations in the virus to become contagious among humans.
The order will be filled by three U.S. companies. One will provide a conventional egg-propagated vaccine. The other suppliers are producing vaccine using cell culture. Concurrently the U.S. Public Health Service has funded development of a mRNA platform for human influenza vaccines.
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C&S Wholesale Grocers Executive Vice President Retires
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10/10/2024 |
Michael Papaleo currently Executive Vice President and Chief Procurement Officer is retiring from C&S Wholesale Grocers LLC after a tenure of 27 years. He was responsible for quality service to retail customers, inventory management, trade relations, merchandising and served as a senior executive in the company.
Eric Winn, CEO of C&S Wholesale Grocers state, “Michael have help lead C&S through many market changes and has been a very respected leader both within the Company as in the overall grocery industry.” He will be succeeded by Mark McGowan, Executive Vice President responsible for Retail and the Chief Merchandising Officer. Andrew Connell, Senior Vice President for Procurement will be responsible for demand planning and ensuring aspects of purchasing.
The retirement of Papaleo comes at a difficult time since C&S Wholesale Grocers is the designated acquirer of close to 570 stores that will be divested if the merger between Kroger and Albertsons takes place.
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FDA Approves Self-Administered Combined COVID and Influenza Antigen Test
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10/10/2024 |
The Food and Drug Administration has granted marketing authorization for the Healgen Rapid Check™ immunodiffusion procedure that can simultaneously identify antigens to SARS-CoV-2, the virus responsible for COVID-19 and both influenza A and B viruses from nasal swabs. The test can be self-administered by an adult and from children 2-years and older.
As with all diffusion tests, sensitivity is slightly inferior to molecular (PCR) assays that requires submission of swabs to a laboratory with suitable equipment and trained personnel. Notwithstanding the lower sensitivity attaining 92 percent for COVID and 91 percent for influenza A and B, the test has high specificity and will correctly report 99 percent of negative samples. In the event of a negative test, there is reasonable assurance that the patient is not shedding either SARS-CoV-2 or influenza A or B virus as denoted by the result. Unfortunately, the test will yield a small proportion of false negatives.
The combined test will be useful in differentiating between influenza and COVID allowing correct antiviral therapy especially for individuals with predisposing conditions or at risk based on age.
Dr. Michelle Tarver, Acting Director of the FDA Center for Devices and Radiologic Health noted, “As we enter this year’s annual flu season with respiratory illnesses such as COVID-19 on many of our minds, our ability to detect these pathogens effectively and efficiently can be impactful on our daily lives”. The Rapid Check™ test kit will be valuable to screen workers and supervisors complaining of respiratory signs establishing an early diagnosis to initiate treatment and to implement quarantine especially in individuals that have not received seasonal vaccinations.
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Cal-Maine Foods to Fund Cage-Free Projects
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10/10/2024 |
The Board of Directors of Cal-Maine Foods Inc. has approved $40 million in capital projects to expand cage-free production. Complexes in Florida, Georgia, Utah and Texas will be converted to cage-free housing by replacing obsolete cages.
Contract housing in Missouri will be converted to floor housing for commercial layers along with installation of packing and breaking equipment in the broiler processing plant acquired from Tyson Foods in March 2024. Following remodeling Cal-Maine Foods will add 1.2 million free-range hens by late 2025 with prospects for additional capacity.
In commenting on the capital commitment, Sherman Miller, president and CEO noted, “We are pleased to announce these new expansion projects which support our strategy to increase our free-range production in line with customer demand and expanding state requirements for cage-free eggs.” He added, “We have made considerable progress with the conversion of the Dexter, MO. facilities and look forward to the additional production and distribution capabilities from this location.”
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Japan Reports HPAI H5N1 in Wild Birds
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10/10/2024 |
As a seasonal precursor to outbreaks of HPAI in commercial flocks, many nations including Japan report isolation of H5 avian influenza from both migratory and domestic wild birds based on the intensity of surveillance.
In their quarterly annual report to the World Organization for Animal Health, Japan documented isolation of H5 avian influenza isolates from wild birds from December 2023 through April 30, 2024. Forty individual birds were identified as infected, predominately large-billed crows and a peregrine falcon.
Japan encounters seasonal introduction of HPAI by migratory birds moving either southward in fall or northward in spring migrating to and from Eurasia. Most of these isolates were characterized as a H5N5 highly pathogenic strain. This virus circulated in crows that are ubiquitous and due to their feeding habits are likely to transmit infection to commercial poultry if allowed either direct or indirect contact with flocks.
Raptors become infected through consuming prey carrying H5 avian influenza virus. Mortality in falcons suggests the presence of infection in diverse species representing a high risk to poultry flocks.
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FTC Submission to Federal Court in Oregon Kroger-Albertsons Hearing
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10/08/2024 |
On September 27th, Judge Adrienne Nelson received submissions following the conclusion of testimony in the case filed by the Federal Trade Commission requesting a preliminary injunction to block the proposed merger of the Kroger Company with Albertson’s Corporation.
The FTC supplementary brief expanded on testimony maintaining that the merger would be anti-competitive and would “incentivize Kroger to raise prices in hundreds of communities across the country.” Dr. Nicholas Hill an agricultural economist reviewed the U.S. Department of Justice Horizontal Merger Guidelines to establish that the proposed transaction would impact 1,922 individual markets. The FTC brief also emphasized that Albertson’s represents the first or second major competitor to Kroger in 14 of 17 markets where both companies operate. The analysis conducted by Dr. Hill demonstrated that despite the competition represented by dollar stores and online retailers, the merger would still result in higher prices ultimately in hundreds of markets.
The FTC maintains that consumers shop across multiple store formats and that as an Agency it is not necessary to prove “that there is a subset of customers who only desire one-stop shopping for groceries or who are committed to only one store.”
The FTC rejected the promise to reduce prices since this is unenforceable along with expressed intentions to improve salaries and conditions for workers and not to close stores. The FTC correctly states that “promises can be broken” since the primary responsibility of Kroger management and directors is to its shareholders. In support of this contention, the FTC discovered internal documents in which an Albertson’s executive stated, “We all know prices will not go down” discounting the promise to devote $1 Billion to reducing prices as a “sweetener” to approve the deal.
The plan to divest 579 stores was also questioned since C&S Wholesalers has minimal experience in operating a large number of supermarkets. Haggen’s ghost haunted the courtroom and was cited as a valid reason to oppose the merger as structured. Albertsons divestiture of 146 stores to Haggen in 2015 resulted in sixty percent being closed within a year with the remainder reacquired by Albertsons. If the divested stores were to be purchased by an established retailer such as Ahold-Delhaize or even a deep discounter such as Aldi or Lidl, the transaction might appear more feasible. Opponents of the merger have pointed to the fact that Kroger and Albertsons picked a weak competitor that would not represent competition. Based on this size of C&S Wholesalers, and their history with the Price Chopper acquisition, the FTC regards the C&S Wholesale strategy to support the transaction as “implausible at best”.
Given the evidence presented in the form of witness testimony and the supporting brief it is the opinion of informed observers that Judge Nelson will grant the preliminary injunction, effectively killing the merger unless the ruling is overturned on appeal.
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Medical Facilities in Southeast Impacted by Hurricane Helene
|
10/08/2024 |
Hospitals in major centers in states affected by Hurricane Helene are slowly returning to normal. Metropolitan facilities have power and water available, but staff are hard pressed to serve local communities and those transferred from rural areas functioning without utilities. A recent report in Becker’s Hospital Review confirmed that 22 hospitals in western North Carolina now have power.
In contrast to urban medical facilities, rural outpatient clinics are still closed due to storm damage or inadequate services. Routine scheduled appointments and elective procedures have been cancelled to allow staff to attend to urgent cases.
Many hospital systems have introduced support programs for staff who have lost accommodation or are caring for dependents and relatives displaced by the storm.
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USDA to Fund Scholarships for 1890 Land-Grant Universities
|
10/08/2024 |
On October 4th the U.S. Department of Agriculture announced grants totaling $19.2 million for Land-grant Universities to be used for undergraduate scholarships.
Tom Vilsack, Secretary of Agriculture noted, “The 1890 Land-grant Universities have been critical partners in building the next generation of agricultural leaders including here at USDA. This scholarship program is an important resource for students as they pursue their dreams and set out to make their mark on the world.”
The program is administered by the National Institute of Food and Agriculture and the grants will complement the 1890 National Scholars Program.
The Second Morrill Act of 1890 established Land-grant status to designated historically black colleges and universities and over the past 134 years, USDA has contributed to research extension and teaching at these institutions.
Under the 2018 Farm Bill, the NIFA has donated $92 million to support 3,274 scholarships at 19 colleges and universities.
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Additional Cases of H5N1 in California Dairy Workers
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10/08/2024 |
The California Department of Public Health has confirmed that the U.S. Centers for Disease Control and Prevention has confirmed five human cases of H5N1, presumably genotype B3.13 acquired from cattle. The workers were employed at three different dairy herd operations in the Central Valley. This presumes animal to human transmission. Cases presented with conjunctivitis and mild respiratory signs similar to patients in Texas, Michigan, Colorado and an unrelated event in Missouri.Follow up with family and co-habitant contacts is in progress.
The CDC has characterized the virus, from the first two cases applying whole genome sequencing. This disclosed homogeneity with the isolates of H5N1 from cattle, chicken flocks and free-living mammals.
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Munters Announces Organizational Changes
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10/07/2024 |
Klas Forsstrom, CEO and Group President of Munters, has announced the retirement of Stefan Mahl, Group Vice-President, after a 20-year tenure with the company. In recognizing his contribution, Forsstrom stated, “Stefan has contributed significantly to the growth of Munters and innovative progress. We will miss him as he enters a new phase in life.”
His function will be integrated into Group Finance and Strategy to be led by Katharina Fischer, the CFO and Group Vice-President of Munters. The predetermined change will take effect on January 1st, 2025.
Munters is a global leader in ventilation with a history of service dating back to 1955. Munters Group AB, based in Sweden, employs 5,000 and is present in more than 30 nations worldwide. For further information click on to the company logo on the right side of the Welcome page.
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World Escalation in Food Prices
|
10/07/2024 |
On October 4th the United Nations Food and Agricultural Organization released the Index of Food Commodities for September 2024. A sequential monthly reduction in food prices over a year was reversed by the 3.0 point increase in the Index from August 2024 to the most recent value of 124.4, for the past month.
Components of the Index included:-
- The Meat index was up 0.4 points from August to 119.6 points with higher demand for chicken products exported from Brazil following expiry of embargos after an alleged ‘Newcastle disease’ break. Prices for beef and pork were stable and mutton was down.
- The Cereal Index was up 3.0 points from August to 113.5 points due to higher wheat prices affected by delayed and lower harvests in Canada, the E.U. and the drought-affected Baltic region.
- The Vegetable Oil Index in September was up 6.2 points from August to 142.4 points with higher prices for soy, sunflower and palm oils. This was due to increased world demand and diversion of soybean oil to biodiesel in the U.S. Asian palm oil production was down.
- The Dairy Index was up 5.0 points from August to 136.3 in September and up from 112.0 points in September 2023 on increased demand.
There is concern over projected lower yields for crops in Brazil and Argentina due to drought coincident with transition to a La Nina event. Restoration of Black Sea shipping using the ‘Humanitarian Corridor’ along the eastern seaboard of Ukraine and Bulgaria has increased availability of grains and oilseeds and contributed to a moderation in prices to dependent nations.
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Politicians Concerned over Advances in Agricultural Biotechnology Including Cell Cultured Meat by China
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10/07/2024 |
In a striking example of the right hand not knowing what the left is doing, eleven Republican lawmakers are concerned over advances in agricultural biotechnology by China. In a letter dated September 26th, Andrew Garbarino (R-NY) and Dan Newhouse (R-WA) led nine colleagues to request that the Office of Homeland Security and the Director of National Intelligence conduct an analysis and provide Congress with recommendations.
The issue of concern is that China might secure a dominant position in the global protein supply. They raise the issue of “recent Chinese activity in the innovative protein market most notably by the inclusion of cultivated meat research and development in a 5-year agricultural plan”.
Aren’t these the same legislators who are passing laws banning the sale of cultivated meat in predominantly “beef-producing states”? The same group that torpedoed Department of Defense funding for research on cultivated meat?
It seems that on the one hand cultured meat is taboo and yet these lawmakers are concerned over China, a commercial adversary, (except where Walmart and Target shelves are concerned), developing cultivated meat and “ceding American leadership in the global innovative protein market and forfeiting food security for the United States and its allies”.
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World Egg Day
|
10/07/2024 |
The International Egg Commission (IEC) has declared October 11th as World Egg Day. The IEC intends for World Egg Day to provide a greater awareness of the nutritional value of eggs especially for children. Publicity associated with 2023 events reached 130 million across the globe with benefits to producers.
The 2024 promotional, “tool kit” emphasizes the “United by Eggs” theme and provides key messages, social media graphics and creative suggestions to plan events and press releases.
World Egg Day activities have been arranged in many member nations:-
- In the U.S., Rose Acre Farms, Versova and Center Fresh will serve omelets and IEC material will posted on message boards and social media.
- In Australia, a campaign will feature recipes across print and digital platforms.
- Egg farmers of Canada have arranged the Earthwise Egg Quest: Canadian Egg Farming trivia challenge.
- In France Fans d’ Oeufs will present Egg Shark an online game on Facebook and Instagram. Promotional material has been distributed to schools to emphasize nutritional value.
- The Union Nacional de Avacultores in Mexico will arrange an international egg fair and will attempt to break the Guinness World Record for the largest egg and spoon race.
- In the Netherlands, the Poultry Expertise Center will host a celebration coinciding with Dutch Food Week. Over thirty poultry farmers will open their facilities to the public to acquaint consumers with welfare and hygienic production.
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USDA Continues to Support Dairy Operations of Questionable Viability
|
10/07/2024 |
Tom Vilsack, Secretary of Agriculture, has announced $11 million in grants to support small-scale dairy operations. Speaking at the World Dairy Expo in Madison, WI. Vilsack stated, “USDA is committed to helping America’s dairy industry remain competitive as they work hard to provide necessary, nutritious dairy products to communities nationwide.” He added, “The Dairy Business Innovation Initiative has invested over $64 million in more than 600 projects that are increasing dairy supply chain resiliency and creating new markets.” To date there has not been any report on the evaluation of return on this expenditure of public funds?
Grants will be awarded on a noncompetitive basis to three dairy organizations and a university to be distributed among milk producers: -
- The Pacific Coast Coalition will use $700,000 to allow farmers to establish high-value uses for milk including cheese and organic dairy products.
- The University of Tennessee will distribute $3.5 million to support farmers to introduce sustainability and innovation.
- The Vermont Dairy Business Innovation Center will use $3.5 million to assist farmers to improve energy efficiency.
- The Dairy Business Innovation Alliance in Wisconsin will apply $3.5 million to technical assistance with an emphasis on expanding market opportunities.
The support of dairy farmers is evident given their inability to thrive in a market characterized by declining demand for fluid milk and dairy products and in the face of increasing costs. Again, it is questioned why USDA is using funds to prop up farming entities that lack financial viability and have limited prospects of attaining profitability. The expedient of using intermediaries to distribute funds is also questioned. Given the practices of the USDA under the current Administration, questions relating to accountability and return on the euphemistically termed ‘investments’ should receive scrutiny. Secretary Vilsack apparently ended up with a fat checkbook and is distributing his largesse to a limited range of farmers in one subsector of livestock production. These producers are apparently unable to acquire financing from regular banking institutions based on their inability to demonstrate collateral and capacity despite character in the form of sweat equity.
There has been no support for the egg-production sector over many years despite periods when producers were under water for extended periods. Innovation, product development, market promotion have been funded by check-off remittances to the AEB. Many small-scale producers have ceased production since 2010 because they could not raise capital for conversion to cage free production or ceased supplying packers. Low prices over extended periods depleted working capital and prevented these producers from incorporating depreciation in pricing to fund replacement of obsolete equipment.
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Walmart Upgrading Regional Distribution Centers in Arizona and Arkansas
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10/05/2024 |
As part of an ongoing program of upgrading automation and mechanization, Walmart has announced new installations for their Buckeye, AZ and Searcy, AR locations to be followed ultimately by all 42 regional distribution centers. The combination of robotics and technology will double the throughput of the regional distribution centers that serve local distribution centers of which there are three in Arizona and eight in Arkansas.
Walmart noted, “The addition of robotics, automation and AI-powered software systems represents a significant investment in our associates and our community.” The statement continued, “It will enable us to offer new career opportunities while revolutionizing operation and fundamentally changing the way we distribute products to stores.”
It would appear that Walmart has developed in-house systems to upgrade existing regional distribution centers. It is possible that Walmart has managed to achieve a similar level of efficiency as Kroger that committed vast amounts of capital to their Ocada automated warehouses. The efficiency obtained by Walmart may well prove to be a competitive factor in gaining markets to the disadvantage of Kroger, irrespective of whether the merger with Albertsons occurs and now considered an unlikely prospect.
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Lidl in U.K. Supporting Egg Producers
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10/05/2024 |
Disinclination by many U.K. supermarket chains during 2023 to adequately pay producers of free-range eggs resulted in shortages in this category. U.K. consumers have a preference for eggs produced in their nation and express a preference for free-range product.
Lidl, the 7th largest grocery retailer, has entered into long-term supply agreements with groups of farmers based on production cost, margins and with adjustments for increases in feed, labor and utilities. Approximately, $1.5 billion will be budgeted by Lidl to support sourcing of eggs over a five-year period.
The action by Lidl will be followed by other chains, some of which have developed their own programs to ensure supply. The outgoing Conservative government was instrumental in highlighting the plight of egg producers by establishing a Commission of Inquiry into the relationship between producers and retailers.
Since the debacle of Brexit, U.K. livestock and poultry producers have been at a disadvantage with respect to the E.U. over the cost of ingredients and labor. In recent years, many expatriate agricultural workers have returned to their homelands depriving farmers of available labor. Fallout from Brexit resulted in inflation adversely affecting egg farmers disproportionately to other sectors of agriculture. Retail chains inappropriately attempted to maintain margins while offering low prices by failing to pay a fair price to packers and indirectly, to farmers. There is an obvious learning lesson in the U.K. situation that is applicable to the U.S.
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Walmart Making Inroads into Higher Income Demographic
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10/05/2024 |
Mercatus, a market research company, attributes growth in sales recorded by Walmart and Sam’s Clubs to purchases by customers earning more than $200,000 annually. Although the core demographic includes households with less than $50,000 annually, Walmart has recorded an eight percent growth in households earning in excess of $200,000 based on a “flight to value” motivation. Walmart considers that spending by higher income groups has offset the losses from households at the low end of the earnings spectrum.
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Walmart improving in-store service
Walmart catering to higher-income customers
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International Egg Commission Awards
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10/05/2024 |
During the 2024 Global Leadership Conference, the International Egg Commission recognized achievements by members.
- Peter Dean, previous Chair of Noble Foods, received Honorary Life Membership. He was recognized for his leadership and integrity and long-term contributions to the egg industry.
- The Dennis Wellstead Award for the International Egg Person of the Year was awarded to Thor Stadil of Denmark. He is the cofounder and co-owner of a number of businesses including Sanovo and Ovodan prominent companies manufacturing egg packing and pasteurization equipment.
- The Golden Egg Award for Marketing Excellence was awarded to Noble Foods of the U.K. for the Freshlay Farms Golden Yolkers branding and marketing campaign.
- The Vision 365 Egg Innovation Award was received by Evova Foods of Canada for Egg-Cellent protein puffs using egg white.
- Ready Egg Products, Ltd. of Northern Ireland received the Clive Frampton Egg Products Company of the Year Award for their contributions to egg processing.
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Sodexo Contemplating Acquisition of Aramark
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10/05/2024 |
Sodexo, a multinational food service company based in France, is apparently evaluating the acquisition Aramark their major of U.S. competitor. Although there has been no confirmation of discussions to bring about a deal, synergy would be beneficial to Sodexo.
It is questioned whether the FTC would condone the transaction given the prominent position of both companies in the same field, serving hospitals, educational institutions and sports arenas. If the acquisition were to occur, the buying power exerted by a combination of Sodexo and Aramark could be prejudicial to suppliers of a wide range of products including eggs.
Sodexo has been aggressive in promoting flock and herd welfare by aligning with animal rights organizations and promoting plant-based protein with implications for the intensive livestock industry.
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McDonald’s Adding Chicken Big Mac® to U.S. Menus
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10/05/2024 |
From October 10th, McDonald’s Corp. added the Chicken Big Mac® to U.S. menu offerings. Tempura-battered chicken patties have replaced beef used in the traditional Big Mac.
The innovation is consistent with recent comments at analysts’ meetings concerning the increasing demand for chicken and an escalation in the price of beef.
Concurrently with the U.S. Big Mac® introduction McDonald’s will offer McCrisp® and McSpic® chicken sandwiches in international venues providing a choice between original and spicy flavors.
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Stop & Shop Questioned on Pricing by Senator Elizabeth Warren
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10/05/2024 |
Following an investigation by the Hyde Square Task Force in June 2023, a volunteer youth organization on pricing of food, Senator Elizabeth Warren (D-MA) has seized on the issue of disproportionate shelf pricing. She has addressed a letter to Frans Muller, CEO of holding company Ahold Delhaize requesting specific pricing and policy information relating to The Stop & Shop chain.
The Hyde Square Task Force demonstrated a noteworthy difference in prices on identical items purchased in Jamaica Plan, a working-class neighborhood store and the more affluent suburban Dedham location. Senator Warren requested specific information on pricing algorithms, the used of neighborhood demographics or census tracked information, justification of costs and competitive factors.
In response, Stop & Shop denied setting prices based on socio-economic and neighborhood factors, noting the differences in rent, and operating costs that influence pricing.
The controversy comes at a difficult time for Stop & Shop that claims to have recently lowered prices on many items in stores including the approximately 125 locations in Massachusetts.
The issue of ‘price gouging’ including allegations of ‘surge pricing’ are now on the national pre-election agenda. Unfortunately high prices for eggs have dominated mainstream and social media reports despite more recent declines from unseasonal retail values.
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Marfrig and ADM Establish PlantPlus Foods
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10/05/2024 |
Marfrig a leading beef producer in Brazil and ADM have established a joint venture company PlantPlus Foods to develop a range of plant-based food products for Latin America. Marfrig will own 70 percent of the enterprise and will undertake production and distribution through existing and to be expanded facilities in South America. ADM will provide technical expertise and assist in developing plant-based ingredients from a facility in Campo Grande in Mato Grosso de Sul State.
In commenting on the joint venture, Juan Luciano chairman of ADM noted, “Over the last several years we have invested strategically to build strong leadership positions in fast growing trend areas. Now, by expanding our relationship with Marfrig we are taking the next step in meeting expanding consumer demand for alternative proteins.
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Conagra Brands Releases Q1 FY 2025 Financial Results
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10/03/2024 |
In an October 2nd 2024 release, Conagra Brands (CAG) posted financial results for Q1 FY 2025 ending August 25th 2024. The Company can be regarded as representative of the manufacturing and packaged food sector with competitors including Post Holdings, Campbell Soup Company and Kraft-Heinz, all currently under pressure to reduce prices to the major food service providers and supermarket chains. Despite moderate inflation consumers are turning to less expensive private brands although the trend to eat-at-home may benefit Conagra marketing frozen dinners.
For Q1 FY 2025, net income was $467 million on net sales of $2,795 million with a diluted EPS of $0.97. Comparable figures for Q1 FY 2024 were net income of $320 million on net revenue of $2,904 million with a diluted EPS of $0.67
The release included results for the four operating segments:-
- Foodservice: Operating profit of $35 million down 20.4 percent from FY 2024, on revenue of $267 million down 7.8 percent attributed in part to plant-related problems reducing production of branded hot dogs.
- Refrigerated and Frozen: Operating profit of $176 million, down 11.6 percent, on revenue of $1,100 million down 5.7 percent.
- International: Operating profit of $34 million, up 42.1 percent on revenue of $259 million, down 0.4 percent.
- Groceries and Snacks: Operating profit of $249 million, down 3.7 percent on revenue of $1,200 million, down 1.7 percent.
For Q1 FY 2025 (with the values for corresponding Q1 2023 in parentheses) Conagra achieved a gross margin of 26.4 percent (28.4) and an operating margin of 14.3 percent (16.8). Revenue was down 3.8 percent.
In commenting on Q1 results Sean Connolly, president and CEO stated, "Our team executed well to deliver on key priorities across the business during the first quarter in what continued to be a challenging environment. Our domestic retail volume progressed in-line with expectations, we increased share across the portfolio and advanced our portfolio reshaping initiatives. Overall, we are reaffirming our guidance for fiscal 2025, reflecting confidence in the underlying momentum of our business."
Guidance for FY 2025 included net sales flat to a decline of 1.5 percent; an adjusted increase in operating margin of 15.6 to 15.8 percent and an EPS of $2.60 to $2.65.
Conagra Brands listed assets of $21,248 million, including a disproportionate $13,514 million as goodwill and intangibles, against long-term debt and other obligations of $8,915 million. The Company had an intraday market capitalization of $14,360 million on October 3rd. CAG trades with a forward P/E of 11.5 and has ranged over a 52-week period from $25.16 to $33.24 with a 50-day moving average of $31.25. CAG closed at $32.65 on October 12th pre-release, falling 8.7 percent at the open post-release on October 2nd to close at $29.99. Twelve-month trailing operating and profit margins were 14.0 percent and 4.1 percent respectively. The Company generated a twelve-month trailing return of 5.3 percent on assets and 5.6 percent on equity.
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Appeal on Massachusetts Question #3 Rule
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10/03/2024 |
The Attorney General of Iowa, Brenna Bird was joined by the Attorneys General of 21 other states in appealing the District Court ruling upholding the Massachusetts Question #3 Rule on the production of pork. Question #3 bans sale of pork or transport through the state of product not produced in accordance with housing requirements, specifically banning gestation crates for sows.
Attorney General Bird claims that Massachusetts Question #3 would impose severe costs on Iowa pork producers. This contention is questioned given that there is adequate pork available derived from sows held in group housing. The second claim that prices would escalate is more valid given post Proposition #12 prices for pork products in California.
The appeal will be based on the reality that Massachusetts Question #3 contravenes the Import-Export Clause prohibiting states from restricting interstate transport. The plaintiffs will invoke the Dormant Commerce Clause that vests authority to regulate interstate commerce in the federal government. This claim was rejected by the Supreme Court with respect to Proposition #12. The third component of the appeal will be recognition of the Full Faith and Credit Clause that was upheld by SCOTUS in considering the Proposition #12 appeal.
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Third Kroger Case Commences in Colorado
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10/03/2024 |
The Federal District Court in Denver, Colorado is reviewing the petition by Attorney General Phil Weiser to block the proposed merger of the Kroger Company with Albertson’s Corporation.
The State of Colorado maintains that competition would be adversely impacted by the transaction. They also hold that the divestment of stores to C&S Wholesale will not be a viable strategy. The State predicts that the acquirer will dispose of or will close stores despite the appointment of the Albertsons COO as the CEO of the proposed holding company for the acquired stores and DCs.
Colorado also accuses Kroger and Albertsons of collusion through a “no poach” agreement in 2022. A/G Weiser is requesting the Court to award the state $1 million from each of the defendants for violating state law.
Judge Adrienne Nelson has yet to render a verdict in the first of the three trials in Oregon. Both parties had until September 27th to submit briefs supporting their respective positions.
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STOP PRESS
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10/03/2024 |
East Coast Port Strike Suspended
The East Coast and Gulf port strike has been suspended on the third day following negotiations between the U.S. Maritime Alliance and the International Longshoreman’s Association. The strike idled 36 ports from Maine to Texas but it will take a week at least to unravel congestion and move imported and export cargo. The parties agreed to extend the contract through January 15th 2025 to allow continued negotiations on issues other than wages that have been settled. The suspension of the strike resulted in part from intense overt and behind-the scenes “jawboning” by the Administration that pressured both sides but declined to invoke the Taft-Hartley Act. Disruption of chicken, turkey and egg exports has now been averted.
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Outbreak of H5N1 in the State of Saxony
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10/03/2024 |
Authorities in Germany have reported an outbreak of highly pathogenic avian influenza H5N1 on a farm in eastern Saxony close to the border with the Czech Republic. The case was diagnosed in Muldenhammer affecting a small flock of less than 200 birds, presumably multispecies and free range.
Last week, EGG-NEWS reported on an outbreak of H5N1 in a flock of 20,000 birds in Lubusz Province in Western Poland adjoining the common border with Germany. In addition, a case of H5N1 was diagnosed in Breznice in Central Bohemia in the Czech Republic.
It is apparent that wild birds are now disseminating H5N1 in Europe with implications for both backyard and commercial egg and poultry meat production with free-range flocks susceptible.
Given that vaccination is an acceptable WOAH adjunct to biosecurity as a method of preventing infection, and the intention of the Netherlands to vaccinate laying hens in high risk areas, it is possible that vaccination will be adopted by other nations especially in eastern Europe.
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Impact of Hurricane Helene
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10/02/2024 |
Along with the entire poultry industry EGG-NEWS recognizes the unfortunate disruption of life and the sad loss of at least 160 residents of affected states with the death toll expected to rise as first responders gain access to remote regions of West Virginia and North Carolina. Condolences are extended to the families of those lost in the floods that accompanied the catastrophic event.
The egg industry appears to have been mildly impacted by Hurricane Helene with Cal-Maine Foods the major producer in the southeast reporting minor damage. Large complexes near Gainesville were largely unaffected other than by power failures and inconvenience relating to access.
The Hurricane disrupted the broiler industry in the region mainly through plant closures as a result of disruption of grid power and in a few cases, loss of municipal water required to allow processing. All the major integrators in the region were affected including Pilgrim’s Pride, Wayne-Sanderson, Case Farms, House of Raeford and Amick among others. The Pilgrim’s Pride plant in Douglasville, GA. sustained severe damage that has closed the plant.
Across the industry, individual growers sustained wind damage to buildings and some have reported flooding. Most operations managed to preserve flocks using emergency generators to power ventilation. As with the aftermath of Hurricane Katrina, the major problem related to adequate storage of fuel to power generators. Other than in a few cases, road access permitted refueling until power was restored.
Road in many parts of western North Carolina were severely affected by landslides and subsidence and it will take many months before damaged bridges and roads are repaired. This will require reduced loads and deviations with rerouting for feed delivery and flock transport.
Hurricane Helene and the deluge that followed affected cotton and other row crops, but the affected states are not major producers of corn and soybeans as compared to the top ten states in the Midwest that were unscathed.
Flooding with damage to railroad tracks affected Florida and western North Carolina although critical connections between Tennessee and Georgia were running after temporary repairs including removal of downed trees and repair of power lines lines and track after washaways. Norfolk Southern warned of extensive delays as a result of damage in West Virginia and South Carolina.
The impact from Helene was more attributed to torrential rain and flooding rather than to wind damage. Meteorologists and climate experts attribute the power of the storm and extensive rainfall to the effects of global warming. The rapidity with which Helene gained force while transiting the Gulf of Mexico is directly related to the temperature of surface water, fueling the intensity of the Hurricane. ClimaMeter a consortium of scientists in the E.U. estimated that over a decade, hurricanes have resulted in approximately 25 percent more rainfall and are up to 10 percent more intense in terms of wind speed than in previous years. Although Hurricane Helene is regarded as a rare and unique event, federal agencies and state governments together with the agricultural community can expect more frequent and more devastating storms in the future. This is based on the reality of elevated ocean temperatures, attributed to release of carbon dioxide and other greenhouse gases from burning fossil fuels and emissions from industry over many decades. These conclusions are based on the application of rapid attribution analyses that allows meteorologists to compare data collected during and after storms and to quantify the effect of global warming on intensity and severity of weather events.
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Purdue University Agricultural Economy Index Falls in August
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10/02/2024 |
The October 1st release of the Purdue University-CME Group Economy Barometer Index for row-crop production fell in September by a substantial 12 points to 88 points. The Index of Current Conditions was down 7 points from August to 76. The Future Expectations Index was down 14 points to 94. The Index is derived from the responses of 400 U.S. farmers and was conducted from September 9th to 13th.
Evident conclusions from the survey is that farmers have profound concerns over the prices for their commodities by despite (but due to) bountiful yields in 2024 declining inflation, lower interest rates. The outstanding concerns were:-
- A sharp drop in prices for corn and soybeans reflecting disparity between supply and demand
- Declining prospects for exports with competition from South American producers and declining demand by China
- High prices for seed, fertilizer and other inputs
- The prospect of higher energy costs with turbulence in the Middle East
- The outcome of the 2024 national election creating uncertainty over farm policy and support
- Failure of Congress to pass a Farm Bill
- Decreased demand for biofuels
Many respondents indicated that they would carry higher debt burdens through 2024 and into 2025 mainly due to increased costs of inputs including seed, fuel and fertilizer for the current season.
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Agri Advanced Technologies Receives German Agricultural Society Awards
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10/01/2024 |
Agri Advanced Technologies Gmbh (AAT) has received two awards for innovations from the German Agricultural Society (DLG) before the Eurotier Exhibition in November. The DLG reviewed 250 products from 2,100 exhibitors representing 55 nations. The Innovation Commission announced the medal winners on September 24th.
Vaccybot, an automatic vaccination robot to automate vaccination of pullets received a gold medal. Vaccybot incorporates 3-D stereoscopic cameras and intelligent algorithms and can deliver multiple inactivated vaccines into pectoral muscle at a rate of 2,800 birds per hour.
The Eggytizer disinfection system received a silver medal. The hatchery installation destroys pathogens using low-energy electron radiation, eliminating the use of chemicals including fumigation with formalin.
In commenting on the awards, Jorg Hurlin, Managing Director of AAT, stated, “We are very proud to have been honored by the DLG. This recognizes the team effort and high level of innovation that we put into research and development of our products”. He added “Our goal at AAT is to create practical automation technology that increases animal welfare and health for the poultry industry.”
AAT produces the Cheggy photo-optic system for in ovo gender determination of brown-feathered strains, to be introduced into the U.S. during the fourth quarter.
For additional information, access <agri-AT.com>.
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GRAS Under Academic and Legislative Review
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10/01/2024 |
Representative Rosa DeLauro (D-CT) has introduced the Toxic-Free Food Act. This proposed Legislation would require the Food and Drug Administration to reevaluate the Generally Regarded as Safe (GRAS) classification with respect to chemical food additives. The proposed law would also require post-approval assessment and would obligate applicants to provide scientific evidence to support an application for GRAS status.
Rep. DeLauro stated, “When Americans are shopping at the grocery store they should be confident that the food they are purchasing is safe for consumption and do not contain any harmful chemical additives that could result in illness or death.”
The action by Rep. DeLauro is supported by a recent article authored jointly by a physician and lawyer affiliated with Harvard University. They maintain that GRAS status should be based on scientific evidence. The article proposed an FDA expert advisory committee to conduct a pre-market review and to ensure the safety of GRAS compounds based on risk-assessement.
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Cal-Maine Foods Reports on Q1 FY 2025
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10/01/2024 |
In a release dated October 1st, Cal-Maine Foods Inc. (CALM) announced results for the 1st Quarter FY 2025 ending August 31st 2024. This post summarizes data provided in the Company release and the concurrently filed SEC 10-Q Report.
Cal-Maine Foods exceeded analysts’ estimates on revenue by 11 percent but the Company was apparently short on EPS.
It is noted that market conditions during Q1 2025 were favorable with an average unit revenue of $2.39 per dozen for all eggs, compared with Q1 2023 attaining a corresponding price of $1.59 per dozen.
Cal-Maine represents a bellwether for the shell egg sector as the only public-quoted, pure-play egg company in the industry, supplying close to 20 percent of domestic shell egg consumption. The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)
1st Quarter Ending
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August 31st
2024
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September 2nd
2023
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Difference (%)
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Sales:
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$785,871
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$459,344
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+71.1
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Gross profit:
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$247,218
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$45,433
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+91.9
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Operating income :
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$186,957
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$(6,757)
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+2.8x103
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Pre-tax income
Net income
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$197,953
$149,976
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$733
$926
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+26.8x103
+16.1x103
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Diluted earnings per share:
|
$3.06
|
$0.02
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+152x103
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Gross Margin (%)
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31.5
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9.9
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+218
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Operating Margin (%)
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23.8
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-1.5
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+1.7x103
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Profit Margin (%)
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19.1
|
0.2
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+9.5x103
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Non-current liabilities Aug, 31rd 2024/June 3rd 2023
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$36,854
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$17,109
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+115
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12 Months Trailing:
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|
|
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Return on Assets (%)
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9.5
|
|
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Return on Equity (%)
|
16.2
|
|
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Operating Margin (%)
|
20.9
|
|
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Profit Margin (%)
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11.9
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|
|
Total Assets Aug, 31rd 2024/June 3rd 2023
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$2,390,008
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$2,184,761
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+9.4
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Market Capitalization Oct. 1st 2024/Aug. 31st 2023
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$3,670,000
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$2,340,000
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+56.8
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Notes: $1.2 million ‘other income,’(excluding interest income). Q1 2025 compared to $0.1 million in Q1 FY2024:
$9.8 million interest income, Q1 2025 compared to $7.3 million Q1 2024
$0.4 million loss on non-controlling interest Q1 2025 compared to $0.5 million Q1 FY203.
ISE America acquisition in Q1 2025: for $111.5 million comprised 4.7 million hens, (1.2 million cage-free)
pullets, housing, packing plants and other facilities on 4,000 acres in MD., NJ., DE. and SC. representing
a unit expenditure of $25/hen with established markets
CALM Trailing P/E =13.2
52-Week Range in Share Price: $42.25 to $77.11 50-day Moving average $70.82
Market Close, Tuesday, October 1st $76.84 pre-release.
Post release, after-hours, 20H00 almost unchanged at $76.90.
In reviewing the CALM Q1 2025 report and the SEC 10-Q submission the following values represent key data for the most recent Quarter (Q1 FY 2024 and percentage differences in parentheses):-
- Shell egg sales attained $741,513 million in Q1 2025. Shell eggs comprised 94.3 percent of total shell egg revenue. ($443,961 million, in Q1 2023, based on 96.7 percent of shell egg revenue). (Sales value for shell eggs was up 7.9% reflecting higher average unit value).
- Dozen shell eggs sold (thousands): 309,979 (273,126; +13.5%)
- Average selling price of all shell eggs: $2.39 per dozen; ($1.59 per dozen; +50.3%).
- Average selling price of specialty eggs (excluding co-pack): $2.34 cents per dozen; ($2.28 per dozen; +2.6%).
- Average selling price of generic eggs: $2.42 cents per dozen; ($1.24 cents per dozen; +95.1%).
- Differential between specialty eggs and generic eggs: -$0.08 cents per dozen; (+$1.04 per dozen; -107.7%)
- Specialty eggs as a proportion of volume sold: 35.4%; (33.5%; -5.7%)
- Specialty eggs as a proportion of sales value: 34.2%; (47.7%; -28.3 %)
- Proportion of eggs sold that were produced by Cal-Maine and their contract flocks in Q1 2025: 86.1% (91.7%; -6.1%).
- Egg product sales in Q1 2025 attained $35.2 million or 4.5% of sales value at a unit price of $1.667 per lb. For Q1 2024, sales attained $22.2 million representing 4.8 percent of revenue with a unit price of $1.15 per lb.
- Cal-Maine Foods maintained a flock of 39.9 million hens on average (Capacity 48 million) during FY 2024 with 11.8 million pullets (capacity 12.7 million) plus parent breeders representing under two percent of the total flock.
The following observations relate to the comparison of Q1 2025 with the corresponding Q1 2024:-
- Cal-Maine Foods was not affected by the 2022-2023 HPAI epornitic during FY 2022 or FY 2023. During Late December 2023 (Q3 FY 2024) the Chase, KS. Complex comprising 1.5 million hens and 240,000 pullets, representing 3.3% of the total flock was depopulated as a result of HPAI. On April 1st 2024 (Q4 2024) the Farwell, TX complex was diagnosed with HPAI, requiring depopulation of 1.6 million hens and 0.34 million pullets.
- Q1 2025 represented a more favorable marketing comparison to Q1 2024 based on higher prices for shell eggs, as U.S. flocks were subjected to HPAI depletion, coupled with higher than normal seasonal consumer demand. Average shell egg price obtained by Cal-Maine was 50.3 percent lower than in Q1 2024.
- Comparing Q1 2025 with Q1 2024 gross profit was positively influenced by higher unit revenue for generic eggs but with no benefit from specialty eggs. The 17.3 percent lower feed cost to 49.4 cents per dozen was complemented by a 4.1 percent lower farm production costs attaining 42.0 cents per dozen,
- In a market characterized by high unit prices for generics, the relative contribution of specialty eggs is less important to net earnings in contrast to a down-market for conventional eggs. Normality will be restored in Q2 with generic eggs at a lower unit price and margin compared to specialty eggs as flocks are replaced. This is subject to the non-return of HPAI, anticipated during late fall months
In commenting on Q1 results Sherman Miller, president and CEO of Cal-Maine Foods, stated, “Our financial and operating results for the first quarter mark a strong start to fiscal 2025 for Cal-Maine Foods. These results reflect favorable demand for shell eggs during most of the quarter and significantly higher market prices compared with the first quarter last year. At the same time, the national egg supply has declined due to the recent outbreaks of highly pathogenic avian influenza (“HPAI”). As of September 1, 2024, the total U.S. hen population fell approximately 4.5% below the five-year average to 307.6 million layers. We have worked hard to increase our production and purchase more eggs from outside suppliers, and our team did an outstanding job bringing more eggs to the market despite this low-supply environment. Our higher volumes and sales were supported by the additional production capacity from recent acquisitions as well as consistent organic growth. Our operations ran well as we continued to extend our market reach and supply the demands of our valued customers.
Miller continued “We believe that today’s consumers are looking for affordable and nutritious protein options and that our shell eggs and egg products meet that need. In addition, our ability to offer a diverse product mix has been a distinct competitive advantage for Cal-Maine Foods. We strive to meet evolving consumer demand and provide choices that include conventional, cage-free, organic, brown, free-range, pasture- raised and nutritionally enhanced eggs. We have also expanded our product portfolio to include value- added egg products through our previous investment in Meadowcreek Foods, LLC for hard-cooked eggs and our recent strategic investment in Crepini Foods LLC (“Crepini”), a new venture offering egg products and prepared foods. We have a unique opportunity to leverage the established Crepini brand of quality products, including egg wraps, protein pancakes, crepes and wrap-ups, and extend our market reach to major retailers across the country. We believe there are significant opportunities to use our scale and offer additional choices through value-added egg products to our established customer base.
Miller concluded, “We are proud of our ability to consistently execute our growth strategy in a dynamic environment with favorable results. As the largest producer and distributor of fresh shell eggs in the U.S., we are mindful of our critical role in supporting the nation’s food supply with a differentiated product mix. As such, we continue to expand our capacity, including cage-free and other specialty egg production, through investments in innovative, scale-driven products and facilities. We have also identified opportunities to enhance our product portfolio through strategic acquisitions and joint ventures. We are fortunate to have a strong balance sheet and a disciplined capital allocation strategy that supports our growth objectives. Above all, we are focused on meeting the needs of our valued customers with quality products and outstanding support and service. We look forward to the opportunities ahead for Cal-Maine Foods.”
The 10-Q Report documented approved capital investment of $135.9 million for cage-free conversions, in FY 2025 through FY 2026 Of this total $115.4 million has been committed with $20.5 million to be expended.
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Recall of Raw Pet Food
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10/01/2024 |
The case involving Darwin’s Natural Pet Food was reviewed last week. The company concerned is headed by a scofflaw and serial denier of the consequences of bacterial contamination. Despite a warning letter from the FDA the Company refused to recall adulterated pet food. This week a second company Lysnt, LLC was forced to recall Answers™ brand products. This action was taken after an initial refusal to recall product following evidence of adulteration with Listeria and Salmonella in unopened packages at retail. The FDA investigation followed reports of illness in dogs consuming the food that is sold nationwide in stores and online.
The FDA has warned consumers to thoroughly decontaminate all pet feeding dishes and to destroy any unused raw beef or raw chicken formula produced by both companies.
Contaminated pet food may cause illness and in the case of Salmonella, pets may become chronic carriers and intermittent disseminators of the pathogen. This represents a risk to the household and especially to children.
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CDC Conducting Serologic Survey for Exposure to Bovine Influenza-H5N1
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10/01/2024 |
Epidemiologists affiliated with the U.S. Centers for Disease Control and Prevention (CDC) in cooperation with the Ohio Department of Health have collected serum specimens from veterinarians and technicians attending the annual conference of the American Association of Bovine Practitioners. The study will ascertain the prevalence of antibodies against H5N1 in this specific cohort having direct contact with dairy cattle. The study will also evaluate exposure, use of personal protective equipment, seasonal influenza vaccine or any history of respiratory illness.
A spokesperson for the CDC stated, “Veterinary professionals have a key role in the response to H5 bird flu. The goal of the this sero-survey is to better understand the extent of prior influenza A (H5) infections among people who work closely with cattle and the current risk of infection associated with occupational exposures in the bovine veterinary practitioner community.” It is noted that there have been 242 diagnosed dairy herds in 14 states over the past seven months with incident cases reported each week.
This program should be extended to poultry health professionals, farm managers and those coming into contact with egg-production pullet and layer flocks in anticipation of a fall reoccurrence of HPAI.
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USAPEEC Participates in 2024 America’s Food and Beverage Show
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09/30/2024 |
Twenty-three members of USAPEEC participated in the September 16-18th, America’s Food and Beverage Show held in Miami. Members with booths within the pavilion interacted with trade missions from the Caribbean region and Central America that represent a significant export market for U.S. poultry products.
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Evidence of Gross Negligence Emerging in Boar’s Head Listeria Outbreak
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09/30/2024 |
EGG-NEWS and CHICK-NEWS have documented obvious operational and hygiene problems in the Boar’s Head, Jarratt, VA. plant producing liverwurst and possibly other products that have contributed to a major outbreak of listeriosis claiming ten fatalities and hospitalizing over 60 patients.
The inaction of USDA-FSIS in failing to respond to obvious deficiencies in the structure and operation of the plant over an extended period will be the subject of Congressional investigation. Legislators are questioning as to how many other Jarratts are in operation, overlooked by USDA-FSIS. The Department of Justice will become involved to determine whether criminal indictments are justified. At this time public release of documentation in the possession of Federal agencies has ceased due to ongoing criminal investigations.
Recently, an industry publication reported on the revelations of Terrence Boyce who it is claimed worked at the Boar’s Head Jarratt plant for seven months commencing in January 2023. According to Boyce, the Company fell short of industry standards with respect to cleaning and decontamination, previously and subsequently verified by USDA. Boyce claims that there were apparently no responsible managers with either training or authority to ensure that hygienic standards were maintained and who allegedly knowingly condoned inadequate decontamination procedures. Boyce although not a ‘whistleblower’ in the legal sense maintains that he was terminated for advocating effective procedures that were contrary to the dictates of plant management. Given that Boyce has displayed a somewhat limited history of tenure at previous positions in industry his assertions and complaints should be under oath and verified.
It is evident that investigators will review the testimony of workers and will subpoena managers in the extreme probability of a criminal prosecution. At the very least, Boar’s Head will face a number of civil actions with the process of discovery disclosing the absence or otherwise of acceptable standard operating procedures and deviations from industry sanitation practices.
Of significance will be whether the Company conducted routine microbiological examinations of the plant environment, equipment and products. The results of assays for Listeria, Salmonella, E. coli or other pathogens, if conducted, will be informative and whether there was concealment of positive results. Documentation should also be available detailing action in the event of any isolation of bacteria of human health significance.
Boar’s Head will be facing a formidable plaintiff’s attorney in the form of William Marler and his team. Given that the outcome of the cases involving the Blue Bell Creamery and the Peanut Corporation of America, not only is the survival of the company and its brand in question but also the future liberty of senior management of the family-owned enterprise.
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Observers See Likelihood of Injunction Against Kroger-Albertsons Merger
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09/30/2024 |
It will be some time before U.S. District Judge, Adrienne Nelson, renders a decision on whether the merger will proceed, based on the extent of testimony offered by the Federal Trade Commission (FTC) and rebuttal by attorneys for Kroger.
Knowledgeable observers maintain that the FTC made a strong case that the proposed merger would eliminate competition in many areas. In many markets, especially in western states, the combination of Kroger and Albertson’s would dominate to the potential disadvantage of both suppliers and consumers. The FTC may have convinced the Court that brick-and-mortar chains such as Aldi and the dollar stores and also Amazon as an on-line retailer were not in direct competition in many markets with the large pure-play grocers such as Albertsons and Kroger.
The demise of Haggen in 2015 following acquisition of divested stores from the Albertsons-Safeway merger raised the question of the viability of C&S Wholesalers operating 579 stores and DCs. Failure of the proposed alternative would effectively eliminate competition.
Even with an adverse decision, Kroger has so much invested in the proposed merger that an appeal against the preliminary injunction will be inevitable. Kroger is facing an ongoing legal action in Washington State to be followed by a similar request for an injunction banning the proposed merger in Colorado filed by the Attorneys General of those states.
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Environmental and Welfare Groups Promote Legislation Allowing Transition from Contract Animal Production
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09/30/2024 |
The Industrial Agriculture Conversion Act is proposed as a mechanism for farmers to be compensated for converting from animal production to alternative farming systems. The legislation was sponsored by Representatives Alma Adams (D-NC) and Senator Cory Booker (D-NJ). Supporters of the bill include a broad range of environmental and animal welfare activist organizations.
The proposed legislation would compensate farmers under the Environmental Quality Incentives Program to convert from concentrated animal feeding operations to other forms of agriculture including crop production. The organizations opposing intensive livestock production cite disaffected contractors who claim exploitation by integrators processing hogs and broilers. In reality, contract farmers enjoy a fair return for their labor and their investment in facilities and they function independently of the vagaries of markets and the fluctuation in cost of ingredients with risks borne by integrators who own flocks and herds.
Attempting to restructure the U.S. intensive livestock sector will not contribute to removal of the environmental aspects of animal production but will most certainly raise prices given that efficiencies of scale will be sacrificed. Large integrators are more capable of applying technology to reduce greenhouse gas emission and promote sustainability than numerous individual small-scale producers.
The approach is somewhat reminiscent of the reply offered by then Presidential candidate, the late Governor Michael Dukakis (D-MA) who when asked by an Iowa farmer what he should grow other than low-priced corn suggested after quiet reflection “Belgian endives.” This was an example of a characteristic coastal mindset, ignorant of the realities of food production.
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Human H9N2 Avian Influenza Diagnosis in Ghana
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09/30/2024 |
On August 26th, public health authorities in Ghana reported a single, spontaneous case of H9N2 avian influenza in a 5-year-old child to the World Health Organization. The May 2024 case recovered following supportive and antiviral therapy. Avian influenza H9N2 virus of low pathogenicity is endemic in poultry in the upper-east region of Ghana, although in this case, there was apparently no evident contact with chickens.
The isolated virus was characterized as an avian H9N2 strain by the U.S. Centers for Disease Control and Prevention following examination and subsequent whole genome sequencing by an international reference laboratory in the U.K.
This case and the recent H5N1 event in Missouri indicate the need to follow up on cases yielding non-seasonal influenza A isolates. Both viruses with mutations to increase human susceptibility may be more widespread than currently recognized. Isolation and characterization are necessary to identify potentially epidemic strains to facilitate preemptive measures.
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FDA Center for Veterinary Medicine to be Re-structured
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09/30/2024 |
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The Food and Drug Administration has announced that the Office of New Animal Drug Evaluation within the Center for Veterinary Medicine will reorganize the into two separate groups. These will comprise the Office of New Animal Product Evaluation and the Office of Generic Animal Drugs. The reorganization is intended to expedite review and approval of drugs and is consistent with changes at the Food and Drug Administration to improve efficiency and service.
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