Editorial

 

Omega-3 PUFA Supplementation for Diabetics

Sep 23, 2016

    

Enriched eggs may have an important role in preventing diabetic retinopathy, a degenerative condition invariably encountered by late middle-aged patients with Type-2 diabetes.

Long-chain omega-3 polyunsaturated fatty acids (PUFA) serve as the progenitors of oxylipins which are required to preserve retinal function.

  

In a recent trial conducted in Spain*, approximately 3,500 participants with a mean age of 67 were evaluated for diabetic retinopathy with most of the patients requiring surgical intervention to preserve vision.

The study which was based on the traditional Mediterranean diet involved supplementation with additional olive oil to boost PUFA intake during the period 2003 through 2009. It was determined that an intake of 500 mg per day of long-chain PUFAs reduced the relative risk of retinal degeneration.

There is a growing market demand for a specialty egg directed to seniors enriched with DHA, lutein, vitamins A and E to support ocular function and to maintain the immune system.

It is possible to achieve levels of 400 mg PUFA in the form of DHA and some EPA in a single egg using a dietary algae supplement.  Increasing the omega-3 content of an egg to approximately 250 mg by supplementing diets with flaxseed, flax oil or canola oil will increase the ALA content with approximately 20 percent conversion of dietary ALA to EPA and DHA by the hen.

With appropriate supplementation, quality control, packaging, and directed promotion, the U.S. egg industry could develop a significant market among Seniors for premium-priced nutraceutical eggs following innovations in Japan, New Zealand and the EU.

*Sala-Vila, A. et al.  Dietary Marine Fatty Acids and Incident Sight-Threatening Retinopathy in Middle-Aged and Older Individuals with Type-2 Diabetes: Prospective Investigation from the PREDIMED Trial. JAMA Ophthalmol, August 18, 2016 DOI: 10. 1001/jamaophthalmol. 2016.2906

 

   

Egg Industry News

 

Status of 2016 Corn and Soybean Crops

Sep 28, 2016

      

The USDA Crop Progress Report released Monday 26th September indicated a continued favorable trend in corn and soybean crops in 18 states, expressed in the table below:-

WEEK ENDING

Crop

September 18th

September 25th

5-Year Average

Corn dented

Corn mature

93

53

97

73

96

64

Corn harvested

9

15

19

Soybeans dropping leaves

46

68

64

Soybeans harvested

4

10

13

 

Crop Condition:

Crop

V. Poor

Poor

Fair

Good

Excellent

Corn

2

5

19

54

20 unchanged

Soybeans

2

5

20

54

19 unchanged

 

The prospects for corn and soybean growth and yield depend on adequate soil moisture. USDA reported data for 48 contiguous states which shows only minor changes between the Adequate and Surplus classifications from the previous week, as shown in the table below:-

Moisture Classification (%) for Week Ending September 25th.

 

V. Short

Short

Adequate

Surplus

Topsoil

7

17

63

13

Subsoil

7

18

65

10

 

 

 

 

   
 

Cal-Maine Foods Reports on Q1 of FY 2017

Sep 26, 2016

    

In a press release dated September 2016, Cal-Maine Foods (CALM) announced results for the 1st Quarter of Fiscal 2017, ending August 27th 2016.

At the outset CALM faced an invidious comparison between historically high prices for eggs during the 1stQuarter of Fiscal 2016 compared to unprecedented low values prevailing in the most recent quarter.

  

The following tables summarize the results for the most recent quarter comparing financial values with the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

Q1 Ending  

2017

2016

Difference (%)

Sales

$239,845

$609,895

Neg.

Gross profit

$(9,569)

$263,071

Neg.

Operating income

$(49,825)

$220,657

Neg.

Net Income

$(30,936)

$143,023

Neg.

Earnings per share

$(0.64)

$2.95

Neg.

Gross Margin (%)

-3.9

43.1

Neg.

Operating Margin (%)

-20.8

36.2

Neg.

Profit Margin (%)

-12.9

23.5

Neg.

Long-term Debt

$8,125

         $9,250

          -12.2

12 Months Trailing:

 

 

 

Return on Assets

33.3%

 

 

Return on Equity

45.9%

 

 

Operating Margin

26.8%

 

 

Profit Margin

18.1%

 

 

Market Capitalization

$1.980,000

 

 

Total Assets

$1.075,972

$1,111,765

           -3.2

 

52-Week Range in Share Price:          $ 39.60      to       $63.25
Market 10H00 September 26th            $40.89 (down 3.0%)
Forward PE ratio                                 14.2                             

   
 

USDA Weekly Egg Price and Inventory Report, September 19th 2016

Sep 23, 2016

    

Midwest-wholesale prices for Extra Large and Large sizes decreased by an average of 23 percent this past week, from a previous slow-rising but record low base. Mediums were down 3.0 percent reflecting continued low prices for this size. The pattern of prices during 2016 is depicted in the Figure reflecting three years of data, updated weekly by the USDA.

The Friday September 16th USDA Combined Region value which lags Midwest Weekly values by one week, reflected the previous increase in price for Large commodity eggs delivered to warehouses, with a 5 cent per dozen decline to $0.76 per dozen, compared to the 12-month trailing peak price of $2.77 per dozen in mid-August 2015. 

  

The USDA Combined range for Large, in the Midwest was $0.71 per dozen. In the South Central Region, price attained $0.83 per dozen. The current USDA Combined Price is approximately $0.65 per dozen below the three-year average which is inflated by the rise in prices during 2015, attributed to the post-HPAI shortage of all eggs.

A sharp drop in prevailing price during the second week in September coupled with a build in inventory suggests continued seasonally low to stable prices through early fall. The slight increase in stock level this past week after fluctuation for two successive weeks predicates short-term stability at a low price.

The National productive flock excluding pre-lay pullets and hens in molt, is almost back to levels prior to the advent of HPAI, at approximately 293.4 million, up by 200,000 hens this past week. Older flocks are evidently being depleted following extremely low mid-Summer prices and hens not required to supply contracts and for established customers are being depleted and replaced by pullet flocks, hence the large supply of mediums in past weeks. The market will respond to changes in availability of both shell eggs and breaking stock attributed to re-stocking and projected exports.  

   
 

Chinese Universities and Research Institutions Convene for Alltech’s Annual Alliance Meeting

Sep 23, 2016

On Sept. 3, academics from the Alltech China Research Alliance founded in 2012 by Alltech, gathered to share their research progress and discuss the most pressing issues in the animal feed and nutrition industry. 

    

 “Food safety and the environment are receiving more attention in China’s agricultural sector,” said Dr. Mark Lyons, Global Vice-president and Head of Greater China for Alltech.He added “Our company wants to provide agricultural solutions for China’s future, which will have an impact on the food and feed industry around the world.” In commenting on objectives Lyons stated, “we formed the Alltech China Research Alliance to partner with leading universities and research institutions in the country to deliver stronger solutions faster.”

  

Through the research alliance project, Alltech has built long-term scientific research cooperation with ten prominent universities, research institutes and leading feed and food enterprises. The focus of their research includes mycotoxin management and inspection technology, the assessment of new feed additives, animal nutrition control and environmental issues. 

At the meeting, professors and scholars from the research alliance project discussed:- 

  • Organic trace minerals 
  • Algae
  • Mycotoxins

 By the end of 2016, Alltech will invest $2.5 million in the Alltech China Research Alliance. The model has been proven to be successful because research results have solved practical problems in the agriculture industry.

“China’s traditional agriculture falls far behind the agriculture in Europe and the United States. Alltech takes the environment and food safety into consideration and undoubtedly promotes the development of the whole industry and agriculture,” said Professor Mai Kangsen, academician at the Chinese Academy of Engineering.  

The first Alltech research alliance was launched with the University of Kentucky in Lexington, Kentucky, in 2004. At present, Alltech has formal research alliances with nearly thirty leading universities and institutes worldwide.

 For additional information access www.alltech.com/news

Attendees included Dr. Mark Lyons, global vice president and head of Greater China for Alltech (fifth from right in the front row); Professor Li Defa, academician at the Chinese Academy of Engineering (fourth from right in the front row); Professor Mai Kangsen, academician at the Chinese Academy of Engineering University (fifth from left in the front row); and Jun Luo, professor of animal science and technology at Northwest Agriculture and Forestry University (second from right in the second row).

   
 

USDA-AMS Undertaking Rulemaking for NBFDS

Sep 23, 2016

    

On September 19th, the USDA-Agricultural Marketing Service circulated a memorandum regarding rulemaking with respect to the National Bioengineered Food Disclosure Standard (NBFDS).  Initially the policy of AMS will comprise:-

  • By definition certified organic products will not require disclosure as bioengineered.
  • Rules for bioengineered food disclosure will not require modifications to existing USDA organic regulations.

The purpose of the NBFDS is to create a transparent process for public participation and comment in developing standards.

The policy memorandum is available at www.ams.usda.gov/rules-regulations/gmo

 

   
 

Centurion Poultry Celebrates 25th Anniversary

Sep 23, 2016

    

Centurion Poultry Inc. located in Lexington, GA. will celebrate their 25th year of operation with a cookout party on October 5th. The Company is family-owned by Gijs and Louise Schimmel.

The Company is the national U.S. distributor of H & N “nick chick” laying strains, and a franchisee for the U.S. for the Tetra brand. Centurion operates Pure Line Genetics which is developing dual purpose and specialty meat strains.

  

   
 

Assay to Detect Salmonella Developed

Sep 23, 2016

    

According to a press release by the University of Florida, scientists at the Institute of Food and Agricultural Sciences have developed a sensitive and rapid test to detect Salmonella in food.* 

The technique involves immune-magnetic separation allowing target concentration with tyramide which increases sensitivity through signal amplification.

  

Magnetic bead immunoassay is an accepted technique that obviously has been adapted by the U.F.-IFAS research team. Increasing the sensitivity of assays for Salmonella will not in any way reduce the incidence of infection unless data derived from a superior assay is applied to develop appropriate remedial modalities. 

A test which is as sensitive as the best technology now available but does not sacrifice specificity and can be conducted quicker and at lower cost is obviously beneficial.  It remains to be seen whether the proof of concept as demonstrated by the University of Florida is commercialized and applied in routine quality control assays.

* Herzig, G. et al Magnetic Bead-Based Immunoassay Coupled with Tyramide Signal Amplification for Detection of Salmonella in Foods.  Journal of Safety 36: 383-391(2016) Published online January 12, 2016. DOI: 10.1111/jfs.12255.

   
 

Food Price Deflation Continues

Sep 23, 2016

    

A September 14th article in USA Today confirmed the continuing deflation in food prices which has persisted for eight months.  The Bureau of Labor Statistics Consumer Price Index showed a decline of 1.6 percent in July from the corresponding month in 2015.  Prominent among the products with lower prices are eggs down approximately $1.00 per dozen (compared with shortages caused by HPAI), milk by 40 cents per gallon and ground beef by 50 cents per pound.

  

The continual decline in ex-farm prices is a reflection of the increase supply relative to demand.  Export volumes have fallen in part due to a slow-down in China but also to an increase in the value of the U.S. dollar relative to the currency of competing nations.

The buzz word “food deflation” is appearing in the quarterly reports of grocery stores and supermarket chains where there is extreme competition at the low end with the Dollar chains and Walmart and in banners favored by high-income demographics including Whole Foods Market, Sprouts and their clones.

In August, the USDA announced purchase of 11 million pounds of surplus cheese and about 12 to 15 million dozen eggs which will be distributed to food banks.

Industry observers do not anticipate a change in the trend towards lower prices until the second quarter of 2017.

   
 

Online Grocery Shopping Shows Anemic Growth

Sep 23, 2016

    

According to the TABS Analytics 4th Annual Food and Beverage study, the U.S. online grocery shopping segment increased from 3.9 percent of total sales of food in 2015 to 4.5 percent in 2016 but has yet to break 5 percent over a four-year period.  Target, Dollar General, Costco and Walgreens did however exceed a 5 percent growth rate, mainly driven by their click-and-collect models. 

The TABS Group determined that only one percent of U.S. shoppers use this format regularly for groceries.  Amazon is an exception posting a two percent increase in shopper penetration to 14 percent in 2015 and then 16 percent in 2016.  In contrast Target recorded a two percent decline and Walmart remained flat.

  

TABS attributes the low growth rate to a failure by companies to actively promote online shopping.  The spokesman for the company noted “weaker promotions are directly correlated to weaker sales trends.”  It was suggested that sustained promotional levels of 15 to 20 percent of sales are needed to reverse the trend and achieve increases in revenue.

   
 

State of Illinois Historic Marker Recognizes DeKalb Poultry

Sep 23, 2016

 

    

The DeKalb Area Agriculture Heritage Association inaugurated a state historical marker on Roberts Lane in DeKalb, IL., site of the original DeKalb Poultry research farm established in 1944.  The Heritage Association is a local non-profit established in 2010 to foster awareness of agricultural heritage and innovation.  The marker is the sixth in a series under the auspices of the Illinois State Historical Society.

  

DeKalb was established in 1944 to apply hybrid technology from corn to breeding chickens.  DeKalb was assisted in its early efforts by faculty from Purdue University and the first hybrid DeKalb chick was sold in 1948.

At the present time, DeKalb Poultry is a brand owned by Hendrix Genetics B.V. of the Netherlands, a multinational and multi-species breeding company.

Peter Mumm, managing director of Hendrix-ISA commented “As a past loyal customer of DeKalb Poultry and currently caretaker of the brand in the U.S. we are proud to have attended this event to dedicate the historical marker.”

Dedication Group (L to R: William Furry, Exec Dir, Illinois State Historical Society;
Peter Mumm: Larry Mix, DAAHA Marker Committee; Norm Larson, Board President, DAAHA;
Mrs. JJ Warren; John (Jack Nelson), former President, DeKalb Poultry Research Inc.)

   
 

USDA Amends Grading Regulations

Sep 23, 2016

    

In a September 16th 2016 release the USDA Agricultural Marketing Service announced an amendment to the Regulations Governing the Voluntary Grading of Shell Eggs.  The change was made following the report and recommendations of the USDA Office of the Inspector General following a 2012 audit.

The definition of the term “condition” has been amended to exclude “wholesomeness”.  The official definition of “condition” relates to attributes which can be determined by sensory evaluation.  It is evident that the presence of pathogens including SE cannot be excluded by USDA graders.

  

The Agricultural and Marketing Service now prohibits grading or certifying eggs derived from flocks in which environmental assays have detected the presence of SE unless the successive egg pool assays are negative.  The Final Rule published in the September 16, 2016 edition of the Federal Register is effective immediately.

   
 

Breakfast Bowls Represent New Convenience Item

Sep 23, 2016

To combine balanced nutrition with convenience, food manufacturers are offering microwavable “breakfast bowls” incorporating scrambled eggs, sausage, bacon, vegetables and spices in traditional and ethnic presentations.

The concept is anchored around eggs and will be attractive to mothers wanting to start the school day with adequate protein and for commuters to prepare a meal with no clean-up, either before leaving home or in an office break-room. Products range in price from $1.80 at ALDI to $2.70 at a high-end supermarket.

    

   
 

SE ISOLATED FROM EGGS AT PENNSYLVANIA FARMERS’ MARKETS

Sep 23, 2016

    

A study conducted by scientists at Pennsylvania State College of Agricultural Sciences demonstrated the presence of Salmonella Enteritis (SE) in 2 percent of 240 samples of eggs purchased at either farmers’ markets or farm stores.

It is a common and erroneous perception that eggs from small flocks are “healthier” or “safer” than commercial store-purchased eggs.  The principal researcher who reported on the study at the Annual Meeting of the American Veterinary Medical Association Dr. Subhashinie Kariyawasam was quoted, “The bottom line is if you buy your eggs from small producers you need to worry about Salmonella just as if you brought eggs produced by large flocks”.

  

This is an incorrect and misleading statement. Consumers need not worry about SE from store-purchased eggs! Flocks over 3,000 hens supplying commercial retail channels fall under the FDA Final Rule to Prevent Salmonella requiring biosecurity, refrigeration post-lay and packing, regular testing and mandated requirements for disposal of eggs in the event of environmental flock positives.

The FDA exemption which extends to flocks of less than 3,000-hens is considered to be too high.  A flock of 2,999 hens will produce 68,000 dozen eggs in a year assuming 75 percent average hen-day production.  It is noted that eggs in the Pennsylvania survey were contaminated by the vertical route, implying systemic infection which is largely prevented by immunization, a consistent practice under commercial production. The study also recorded isolation from the surface of eggs following faecal soiling or passage through the cloaca of hens with intestinal tracts colonized by SE. Persistence of infection on the shell surface would not occur with commercial eggs which are subjected to decontamination using a chlorine-based or equivalent sanitizers applied using commercial equipment at the correct temperatures and pH values.

It is a matter of record that there have been no diagnosed cases of SE from eggs derived from commercial flocks complying with the FDA Rule since 2011. In contrast the CDC has identified outbreaks associated with semi-commercial and backyard flocks.

   
 

CME Prices

Sep 21, 2016

    

At the close of trading on September 16th CME rounded quotations for corn, soybeans and soybean meal with values for corresponding months effective September 9th as indicated in parentheses were:-

COMMODITY
Corn (cents per bushel)                       Dec.   336      (340)       March ‘17    346   (   -  )      
Soybeans (cents per bushel)              Nov.   966      (978)       March’17     974  (   -   )   
Soybean meal ($ per ton)                    Oct.    313       (  -  )         Dec.               312  (316)   

For each 10 cent per bushel change in corn :-

  • The cost of egg production would change by 0.45 cent per dozen
  • The cost of broiler production would change by 0.25 cent per pound live weight

For each $10 per ton change in the price of soybean meal:-

  • The cost of egg production would change by 0.40 cent per dozen
  • The cost of broiler production would change by 0.25 cent per pound live weight

See posting on the August USDA-WASDE Report #556 for an update on quantities and price projections for commodities

   
   
 

Status of 2016 Corn and Soybean Crops

Sep 21, 2016

    

The USDA Crop Progress Report released Monday 19th September indicated a continued favorable trend in corn and soybean crops in 18 states, expressed in the table below:-

                                                                            WEEK ENDING

Crop

September 11th

September 18th

5-Year Average

Corn dented

Corn mature

        87

        38

            93

 53

91

           48

Corn harvested

          5

             9

           12

Soybeans dropping leaves

        26

           46

           43

Soybeans harvested

  •                 

4

             5


                    For week ending September 18th data on corn harvesting will be tabulated.

Crop Condition:

Crop

V. Poor

Poor

Fair

Good

Excellent

Corn

2

 5

19

54

20 unchanged

Soybeans

2

5

20

54

19 slightly changed


The prospects for corn and soybean growth and yield depend on adequate soil moisture. USDA reported data for 48 contiguous states which shows only minor changes from the previous week, as shown in the table below:-


Moisture Classification (%) for Week Ending September 18th.  

 

V. Short

Short

Adequate

Surplus

Topsoil

      7

17

64

12

Subsoil

7

18

66

 9

   

 

   

Shane Commentary

 

Is Reality Closing In on Hampton Creek?

Sep 23, 2016

    

A recent investigation by Bloomberg authored by Olivia Zaleski, Peter Waldman and Ellen Huet, suggests less than ethical and even fraudulent practices by Josh Tetrick, founder, CEO and driving force behind Hampton Creek. The Company has apparently deceived investors by inflating sales of their major product, an egg-free ersatz mayonnaise branded as Just Mayo®.

In August it was revealed that the Company employed agents (“Creekers”) to purchase and dispose of product on the shelves of supermarkets including Whole Foods Market and Safeway.

  

Josh Tetrick

Tetrick acknowledged spending $77,000 on the initiative which he claimed was for quality control purposes- an unlikely explanation.

In reality according to disaffected members of his army of “Creekers” the objective was to rapidly and clandestinely move product from shelves to create the impression of consumer demand, especially in advance of meetings with potential investors.

Bloomberg maintains that the buy-backs actually attained $1.4 million over a 5-month period in 2014 when total sales of $1.9 million were recorded. The expenditure was disguised on a P&L statement reviewed by Bloomberg journalists as “Inventory Consumed for Samples and Internal Testing”. It is possible that in July 2014 with sales of $472,000 the Company repurchased product to the value of $510,000.

The initial revelation of the repurchases prompted news of Department of Justice and Securities and Exchange Commission investigations into possible fraud. A previous investor Ali Partovi withdrew from the company after an association of nine days condemning unethical practices including false claims on technology, and unrealistic sales forecasts. He is quoted by Bloomberg as warning Tetrick in an E-mail “It’s only a question of time before the consequences catch up with us” He also apparently stated “If an investor discovers it with due diligence we could lose financing and run out of cash. If they don’t, they’ll realize that they were duped within months and they might have a case for fraud”

Hampton Creek has evolved through two previous iterations and was founded on the principle of displacing the egg production industry by using plant-based substitutes. Naturally the fingerprints of the HSUS are all over the origin of the company with the involvement of Josh Balk and an alleged investment of seed money.

Tetrick through Hampton Creek has continually made unsubstantiated claims for his technology although he has not delivered either a range of products,achieved market penetration or financial return.

His history of outlandish claims include:-

  • A 30 oz. bottle of Just Mayo® saves 80 gallons of water compared to conventional mayonnaise prepared with eggs
  • A Hampton Creek cookie baked without using eggs in the recipe saves 7 gallons of water
  • Hampton Creek has the potential to “liberate” all hens worldwide
  • Computerized databases on leguminous plants represent the future of food production

During his tenure as CEO of Hampton Creek Tetrick has raised and apparently burned through nearly $130 million of investors’ money. These promotors and sources of financing should be looking closely at their venture and relate indifferent progress with the obvious hallmarks of  deception:-

  • Lack of credible scientific support for claims and failure to recruit and retain scientific and financial talent
  • Extravagant and unrealistic projections of sales and profit
  • Failure to produce marketable products to displace eggs despite expenditure on “research” rising to the level of “monkeys on typewriters”
  • Allegations of improper personnel practices and relationships
  • Excessive publicity in fringe, business and social media with copious “name dropping” including a  refuted claim that Bill Gates was an early investor
  • Deliberate contravention of FDA label requirements for mayonnaise and unsubstantiated health claims on websites
  • Embellishment of personal credentials.

Despite the fact that Whole Foods Market was an early supporter of Hampton Creek, Just Mayo is absent from their shelves in the Research Triangle of North Carolina which has an environmentally friendly, welfare and health-conscious demographic. 

I believe that we have seen this movie before- Elizabeth Holmes starred in Theranos which had a similar script and probably will have a similar ending to Hampton Creek but don’t expect a sequel.

   

Visit our Companion Website
www.Chick-Cite.com


Dr. Simon M. Shane
Simon M. Shane
Contact     C. V.

Industry Prices: Wed Sep 28
 Corn3.29 $/bu
 Soybeans9.46 $/bu
 Soybean Meal299.40 $/ton
 Eggs, Producer31  ¢/doz
 Eggs, Warehouse 52-55  ¢/doz