Progress in Bilateral Talks Between the U.S. and China?


The January 30th and 31st meetings between the Chinese delegation led by Vice Premier Liu He and counterparts in the U.S. that also included a meeting with the President are apparently making progress. The President has agreed to meet with President Xi of China before the March 1st deadline although no firm date or location have been set. In a tweet, the President indicated on Thursday 31st that he might be willing to accept a limited agreement by the March 1 st deadline and to extend talks to finalize a comprehensive deal.

The President has previously committed to increasing tariffs on up to $200 billion in imports from China from 10 percent to 25 percent. Backing down on this commitment would be detrimental to support from his base. According to trade specialists increasing tariffs to 25 percent would damage the economies of both China and the U.S. and would have international repercussions.

China has agreed to purchase soybeans and other agricultural commodities partly as a concession, but in reality because they need them. China has also agreed to purchase energy and has indicated that it would welcome American investment in the manufacturing and financial sectors. In contrast there appears to be little progress on resolving the underlying structural issues including theft of intellectual property and coercive business practices that are integral to future growth in GDP in China.

Commodity and financial markets are riled by conflicting messages from the White House. On January 29th, Secretary of the Treasury, Stephen Mnuchin noted that cuts in tariffs are a possibility. He stated "Everything is on the table." This is in contradiction to statements made by U.S. Trade Representative Amb. Robert Lighthizer who has negotiated from a relatively inflexible position supported by avowed sinophobe, Economic Advisor, Dr. Peter Navarro.

It is obvious that the price of soybeans and hence production costs for eggs, turkeys and broilers will depend on the outcome of negotiations and resolution of the current trade disputes. It is expected that if concessions are made, the question of exports of Chinese-origin breast meat to the U.S. will be raised.

At least the parties are talking. The White House issued a communique noting "The two sides showed a helpful willingness to engage on all major issues including the need to remove market barriers and tariffs that limit U.S. sales of manufactured goods, services and agriculture to China." The Xinhua news agency of China reported that talks were "candid, specific and constructive and dealt with trade, structural issues and enforcement".


Egg Industry News



The following quotations for the months as indicated were posted by the CME at close of trading on Friday February 15th together with values for the reference months in parentheses. The market showed a mild decline for soybeans coupled with stagnation in corn compared to previous weeks.



Corn (cents per bushel)

March 375 (374)

May 383 (382)

Soybeans (cents per bushel)

March 908 (916)

May 921 (931)

Soybean meal ($ per ton)

March 306 (307)

May 310 (311)

Changes in the price of corn, soybeans and soybean meal this past week were:-


Corn: March quotation up 1 cent per Bu. (+0.3 percent)

Soybeans: March quotation down 8 cents per Bu (-0.9 percent)

Soybean Meal: March quotation down $1 per ton (-0.3 percent)

  • 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


Soybean prices recently firmed in response to reports of drought in areas of Brazil. Approximately 20 percent of the crop projected to be 117.2 million metric tons is at risk. The market has now factored in decreased production in Brazil and Argentine.

There is fluctuating optimism concerning the outcome of the ongoing negotiations between China and the U.S. initiated at the dinner meeting during the G-20 Summit between the delegations from the U.S. and China led by their respective Presidents. Statements by members of the Administration concerned with the issue on February 8th suggest a likely extension of the March 31st deadline to raise tariffs from ten percent to twenty-five percent on over $200 billion in annual imports from China. In return China has agreed to purchase an unspecified quantity of agricultural commodities in addition to energy and heavy equipment from the U.S. to offset the negative balance of payments. An initial order of 1.5 million tons was placed in December 2018, the first since June. The USDA announced on January 7th that orders have been placed for an additional 3 million tons to be shipped before September 2019. China has hinted at a six-year agreement to purchase soybeans mainly due to concern over drought in Brazil. Negotiations are apparently in progress as denoted by shuttles between Beijing and Washington but without any disclosure of specifics. Markets are buffeted by conflicting reports from the Administration.

According to the February 8th 2018 WASDE Report #585, (the first issued after the December 24th 2018 Federal Shutdown), 81.7 million acres of corn will be harvested in 2019 to produce 14.42 Billion bushels. The soybean crop is projected to attain 4.54 Billion bushels from 88.1 million acres harvested. The levels of production for the two commodities are based on preliminary pre-planting projections of yield and acreage to be planted. Ending stocks were revised based on anticipated domestic use and exports.

See the WASDE posting summarizing the February 8th USDA-WASDE Report #585 under the STATISTICS tab documenting price projections and quantities of commodities to be produced, used and exported from the 2019 harvest.

Unless shipments of corn and soybeans to China resume in volume, as projected, the financial future for row-crop farmers appears bleak despite the release of two tranches amounting to $12 billion as "short-term" compensation for all producers of commodities and livestock. Corn farmers will not be placated by the promise of a year-round E-15 blend since the logistic problems of delivery to consumers and legal challenges will delay any positive price benefit. Oversupply of ethanol with the current 10 percent addition (read BTU dilution) mandate is evident from the February 15th spot price of $1.32 per gallon that has not changed materially in six weeks compared with a 2018 peak in late March of $1.60. Exports have been constrained by the retaliatory tariffs imposed by China on U.S. ethanol. Some refiners are reducing production and mothballing corn-fermentation plants.

The loss inflicted on farmers by the trade war with China is a gain for livestock producers who will benefit from lower feed costs. It must be recognized that the hog and poultry industries have experienced higher costs for a decade as a result of the RFS, a gift that keeps on giving. The mandate is a boon to Midwest politicians, corn growers and ethanol refiners at the expense of anyone in the U.S. who eats or uses any form of transport.


USDA Weekly Egg Price and Inventory Report, February 21st 2019.

  • Hen Numbers in Production Stable at 328.5 million.
  • Shell Inventory up 5.7 Percent from Previous Week.
  • USDA Midwest Benchmark Generic Prices for Extra Large and Large down by 17.7 and 18.0 Percent respectively. Mediums down by 12.3 Percent Compared to Past Week.



According to the USDA Egg Market News Reports posted on February 18th the Midwest wholesale prices for Extra Large and Large were lower by 17.7 and 18.0 percent and Mediums were down 12.3 percent compared to the past week. The progression of prices during 2019 is depicted in the USDA chart reflecting three years of data, updated weekly.

The February 18th USDA Egg Market News Report (Vol. 66: No. 07) documented a USDA Combined Region value rounded to the nearest cent, of $1.16 per dozen delivered to warehouses for the week ending February 13th. This price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $1.06 per dozen. At the high end of the range, price in the Southeast Region attained $1.24 per dozen. The USDA Combined Price last week was 20 cents per dozen below the three-year average and 40 cents per dozen below the corresponding week in 2018 which was exceptional.


Updated USDA Projections for 2018 and 2019 U.S. Egg Production


The USDA Economic Research Service issued an updated forecast of egg production on February 14th, the first since the Federal shutdown. The volume of eggs produced and per capita consumption in 2019 were increased by 1.7 and 0.4 percent respectively compared to revised 2018 data. Consistent with this disparity, the benchmark New York price was reduced by 9.4 percent in unit value Production data reflecting 2016 and 2017 should be compared to 2015, that was impacted by the Spring outbreak of HPAI in the upper-Midwest. The latest data is reflected in the table below.










(actual)2018 (forecast) 2018 Diff % 2018 to 2019



Production (m. dozen)




7,834 7,970 +1.7%

Consumption (eggs per capita)




278.8 279.8 +0.4%

New York price (c/doz.)




138 125 9.4%

Source: Livestock, Dairy and Poultry Outlook -February 14th 2019

*Impacted by Spring 2015 HPAI outbreaks. Consumption in 2014, 267 eggs per capita

Subscribers to EGG-NEWS are referred to the postings depicting weekly prices, volumes and trends and the monthly review of prices and related industry statistics.


Ovotrack Software integrates Weighing


Applying either Ovotrack Receive or Ovotrack Label software, current Ovotrack installations can import weight data and integrate figures with barcode scanning.  Data on weights is stored in a database and can be used for process control, invoicing and payment to suppliers.  The integration of weighs is also used by breakers to weigh incoming product as palletized containers with product including egg whites, yolk or whole egg liquid.


Tommy Bagwell Recipient of Harold E. Ford Lifetime Achievement Award


Tommy Bagwell, former chairman and CEO of American Proteins, received the Harold E. Ford Lifetime Achievement Award during the 2019 International Production and Processing Expo. This prestigious honor was presented to Bagwell by Tom Hensley, president of Fieldale Farms and the outgoing USPOULTRY Chairman.

The Harold E. Ford Lifetime Achievement Award is presented to an individual whose dedication and leadership over the years have far exceeded the ordinary and impacted both the poultry industry and U.S. Poultry and Egg Association in an exemplary manner. The award is presented non-annually and when the Awards and Recognition Committee unanimously recognizes and endorses the need for occasional, unique recognition for exceptional contributions.

A native of North Georgia, Bagwell earned a degree in economics from Clemson University with a minor in Spanish. He also completed graduate studies in industrial management, business administration and economics at Clemson and the University of Georgia.

In 1969, Bagwell began his professional career at North Georgia Rendering Co, now known as American Proteins, Inc. In 1972, upon the death of his father Leland, Bagwell became president. Today, American Proteins services the poultry industry from plants in Georgia and Alabama and supplies feed ingredients throughout the world. American Proteins was sold to Tyson Foods last year.

He serves on the U.S. Poultry & Egg Harold E. Ford Foundation Board of Directors. In 2014, Bagwell received the Philanthropist of the Year Award from the North Georgia Community Foundation.


Whole Foods Raising Prices


After the acquisition of Whole Foods Market by Amazon, prices were apparently lowered to boost traffic and revenue. Research conducted by the Telsey Advisory Group has shown a steady increase in the cost of an index basket of 40 products from a level of 185 in the month of September 2018 to 193 in January 2019. The increase representing an annualized 10.3 percent rise, is attributed to higher prices from producers due to escalation in packaging, ingredient and transportation costs. Products subjected to a rise in price include Haagen-Dazs ice cream, Hain Celestial teas, Dr. Bronner's soaps and branded crackers and cookies among 550 products.

Since acquisition of Whole Foods Market, the chain has eliminated 700 products as contracts expired. Under Amazon ownership, Whole Foods Market has not lost its reputation for high prices despite the promotions extended to customers under the Prime membership program.


Hen Sleeper™ for Euthanasia


During the AAAP Welfare Meeting at the 2019 IPPE, Ryan Moyle described advanced technology applying carbon dioxide for mass euthanasia as an improvement on traditional "kill carts". The installation uses a three-step conveyer system to obviate piling and to induce stress-free unconsciousness and euthanasia over a two-minute period. The module which can operate at 10,000 to 12,000 hens per hour subjects hens to progressively higher levels of carbon dioxide extending from an initial 30 percent to 70 percent concentration.

The Hen Sleeper was scientifically evaluated by Iowa State University in 2018. The system was 99.9 percent effective in inducing insensibility as evaluated using 11,000 hens. It was concluded that the Hen Sleeper is a humane and practical technology to depopulate caged flocks and conforms to the requirements outlined in AVMA guidelines for carbon dioxide euthanasia.

The benefits apart from welfare include lower labor requirements although the capital investment for equipment imposes costs for depreciation, interest, maintenance that may be a deterrent to more extensive adoption unless mandated by regulations imposed by states or customers. In a subsequent posting, EGG-NEWS will develop a projection of actual costs given that each unit costs $50,000 and operates at 2,000 hens per hour. To clear a house of 240,000 hens would require 40 operating hours with a projected total output of 6,000 hens per hour with three machines operating using a crew of three per unit.


Eggs Gain Adherents Among Top Chefs


The gourmet magazine Flavor & The Menu cited eggs as one of the top-ten trends in 2019. In a February 10th article by Katie Ayoub, Quinn Adkins, Director Of Menu Development for Culver's was quoted, "Eggs have always been an incredibly versatile ingredient in savory and sweet menu development." He added, "We have finally put to bed the notion that eggs are bad for you. Chefs are reveling with new enthusiasm around egg play."

Trendy restaurants including the Strip House with locations in New York and Las Vegas, the District Kitchen in Austin TX and Bywater American Bistro in New Orleans are all serving dishes based on eggs.


Raw Milk Associated with Brucella abortus Outbreak


Brucella abortus strain RB51 is implicated in outbreaks of brucellosis in consumers of raw milk in New Jersey, Texas and New York. Brucellosis is a difficult disease to diagnose and patients presenting with recurrent fever are frequently not tested for the infection. Primary care physicians do not generally include brucellosis in a differential diagnosis, the disease having been virtually eliminated in the U.S. as a result of the almost universal application of pasteurization.

Strain RB51 was licensed as a B. abortus vaccine in 1996 and is administered by an accredited veterinarian. The use of this vaccine has declined during the past decade as brucellosis has been almost completely eradicated in commercial herds. Calves receiving the vaccine are identified with a vaccination ear tag and tattoo on the right ear. Since RB51 vaccine is derived from the pathogen, it is possible that by inappropriate administration or persistent infection, the live vaccine strain may contaminate milk. Pasteurization will destroy this vaccine strain rendering milk innocuous. Consumption of raw milk carries the risk of tuberculosis, salmonellosis, listeriosis, STEC, campylobacteriosis and now more recently brucellosis.


Tahini Spread Contaminated with Salmonella


In an investigation of a Salmonella Concord outbreak, samples of Soom Foods Chocolate Sweet Tahini Halva Spread were assayed by the CDC. Samples of the product yielded


Tennessee. The manufacturer of the spread was informed of the presence of the contaminant and it is presumed that a recall will be implemented in accordance with FDA policy.


EPA Calls for WOTUS Comments


Following the Executive Order of February 28th 2017, Restoring the Rule of Law, Federalism and Economic Growth, the Waters of the United States Rule was placed in abeyance with the intent of revision. The Environmental Protection Agency and the Department of the Army are now requesting public comment to define the scope of waters regulated by the Federal government under the Clean Water Act.

It is intended to define the relative jurisdictions of the two agencies with respect to potential and functional water courses taking into account the responsibilities of state authorities.

The Waters of the United States (WOTUS) Rule introduced during the previous Administration was extremely contentious and resulted in extensive litigation. WOTUS was regarded by the agricultural community as an exercise in jurisdictional overreach.


EPA Suppressing Risk Evaluation of Chemicals


The Government Accountability Office (GAO) has reported that the Integrated Risk Information System (IRIS) an operation within the Environmental Protection Agency has been restrained from releasing reports since June 2018 due to presumed lack of support from the Office of the Administrator. Industry groups including the American Chemistry Council and the Competitive Enterprise Institute have criticized IRIS for "creating unwarranted health scares".

At issue is the alleged relationship between formaldehyde and the risk of leukemia. This chemical among a number evaluated by IRIS are significant to the poultry industry. Formaldehyde is an exceptionally effective disinfectant which can be applied as a liquid disinfectant, as a vapor for fumigation or incorporated in a feed additive which will effectively destroy Salmonella and other non-spore forming pathogens with residual action.

The findings of the GAO are disputed by administrators at the EPA who claim that previous regulations and policies developed during the previous Administration required extensive revision.

Acting EPA Administrator Andrew Wheeler has commented in Congressional testimony that selecting specific chemicals for evaluation was the prerogative of Program Offices based on priorities.


IPPE Donates to Atlanta Community Food Bank


As part of the Giving Back to Atlanta campaign, the 2019 International Production and Processing Expo (IPPE) donated $26,000 to the Atlanta Community Food Bank.

Ben Burgess, Food Sourcing Specialist for the Atlanta Community Food Bank stated, "We are thankful for the continued support the IPPE and its attendees and exhibitors have given the Atlanta Community Food Bank. Contribution from these valued partners will help provide more than 70,000 meals to families in metro Atlanta and North Georgia where one in four children face food insecurity each day"


Walmart Reports on Q4 and FY 2019


In a press release dated February 19th Walmart Stores Inc. (WMT) announced results for the 4th Quarter and Fiscal 2019 ending January 31st 2018.

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)

4th Quarter Ending January 31st

FY 2019

FY 2018

Difference (%)





Gross profit:




Operating income:




Pre-tax Income

Net Income*







Diluted earnings per share:




Gross Margin (%)




Operating Margin (%)




Profit Margin (%)




Long-term Debt:




12 Months Trailing:


Return on Assets (%)



Return on Equity (%)



Operating Margin (%)



Profit Margin (%)



Total Assets




Market Capitalization



* includes tax provision of $1.85 billion compared to FY 2018 at $601 million.

For FY 2019 WMT earned $6.67 billion on revenue of $514.41 billion with an EPS of $2.28. For FY 2018 WMT earned $9.86 billion on revenue of $500.34 billion with an EPS of $3.28.

FY 2018 incorporated a loss of $3.14 billion attributed to extinguishing debt. Disposal of stores in Brazil resulted in a charge of $1.54 and a loss equivalent to $0.95 was incurred through JD.com.

52-Week Range in Share Price: $81.78 to $ 106.21

Market Close Feb. 15th $99.53. Post-release noon Feb 19 th $103.62

Forward P/E 22.0 Beta +0.6

For FY 2019 WMT attained a 3.6 percent increase in same-store sales. E-Commerce revenue increased by 40 percent over FY 2018.

For guidance WMT forecast a comparative same-store sales increase in the range of 2.5 to 3.0 percent: An EPS comparable to FY 2019 excluding Flipkart of India:

WMT will open less than 10 new stores in the U.S. in the coming calendar year compared to 300 internationally with a concentration on Mexico and China.


Tetrick Attempting to Raise Investment Capital


According to a recent posting on Bloomberg, Just Inc. the most recent iteration of the sequential string of businesses established by Josh Tetrick, is casting a net beyond the U.S. to raise $200 million. He has yet to explain what the previous capital infusion allegedly by Jerry Yang and Vinod Khosla amounting to a claimed $220 million have produced. All that Tetrick has to show for his investors' money are jars of not very stable ersatz mayonnaise and an egg substitute suitable for scrambling.

Tetrick is long on claims but falls short on implementation. When he established his operation four names ago in the 2000s with seed money from the HSUS he boasted that he could displace the U.S. egg industry with plant-based alternatives. We are still here and growing. Two years ago he claimed that he was on the cusp of launching cell-cultured meat. Given that the FDA and USDA have yet to write regulations which may take years and faced with legitimate competitors this claim is regarded as a money-raising ploy to raise investment capital or to generate publicity which fuels his ego.

Just-"whatever" is not exactly filling supermarket shelves or consumers' pantries nor is it a recognized brand. The history of his companies includes a 2016 scandal involving deceptive marketing, an SEC investigation without any penalty, churn among technical and marketing employees and mass defections from his Board.

It is considered significant that he claims to be negotiating with CLSA Ltd. a subsidiary of Citic Securities of China for funds. Apparently U.S. investors have cooled to his claims to be a disruptor and innovator. Other food-related start-ups involved in alternatives to conventional animal protein have received funding from established companies including Tyson Foods and Maple Leaf. Why does the Tetrick business plan not attract U.S. funding? Perhaps the Silicon Valley and East Coast velociraptors are applying the banker's 3-Cs of Character, Collateral and Capacity, and he is coming up short. Can he spell Theranos?


APHIS and CADFA Impose Quarantines in Riverside and San Bernardino Counties


Faced with an escalating incidence of vvNewcastle disease in the two counties, authorities have imposed quarantines on all backyard exhibition chickens (a consistently applied euphemism for fighting cocks) in the localities of Muscovy, Ontario, Mira Loma and Perris.  In terms of the quarantine owners must hold, and isolate their flocks on the current premises.  Given the nature of the birds concerned and taking into account the attitude of their owners, enforcing the regulation may be less than successful. 


It is noted that an individual outbreak occurred in Utah County, UT., attributed to illegal movement of fighting cocks from Southern California.


As of February 7th, 2019 there have been 363 cases of vvNewcastle disease among three Southern California counties plus one case in Ventura County.  One pullet flock and four commercial laying flocks have been infected with the disease which must now be considered endemic among non-commercial backyard and fighting cock flocks.  This reality should guide appropriate action by the authorities.  Persistence of infection since May 2018 suggests that it is only a matter of time before the infection extends from the three-county locality northward to higher concentrations of commercial poultry.  Implications for enhanced biosecurity are self-evident.



Progress on Talks with China


Following the late January 2019 high-level meetings in Washington, Robert Lighthizer, U.S. Trade Representative and Secretary of the Treasury, Steven Mnuchin traveled to Beijing to continue trade talks. The Administration has indicated that it would consider delaying the imposition of increased tariffs beyond the March 1st deadline providing substantial progress is being made in discussions. China is obviously making some concessions with regard to purchases of capital goods and agricultural products to offset the negative trade balance with the U.S.

Following a meeting with the Commerce Ministry of China, the U.S. negotiating team engaged with Chinese Vice Premier Liu He followed by an audience with President Xi Jingping.

The reluctance of China to change structural considerations that are necessary to expand their economy will be the major obstruction to a comprehensive deal. These issues include support of state-owned enterprises, coercive technology transfer and industrial espionage all integrated into a national development plan plans.

It is hoped that the negotiators can finalize a memorandum of agreement on major issues that will pave the way for a meeting between the two Presidents. It is unlikely that this will take place in China following a scheduled visit to Vietnam by the President. A more likely venue will be the U.S. during March provided that the tariff rate on approximately $200 billion in imports remains at 10 percent.


Sponsored Announcements

Innovative Plastic Container Offers Advantages over Cardboard.


On February 11th Tosca, an Atlanta-based manufacturer of reusable packaging and supply chain applications for perishables, announced today the results of a time and motion study for eggs. Advantage Consulting, a third-party industrial engineering firm, was commissioned by Tosca to conduct the study to evaluate the impact of outer packaging on store labor. The study compared the time required to stock and manage egg displays in a grocery store using traditional one-way corrugated shipping boxes compared to the Tosca's Reusable Plastic Container (RPC). The study was conducted in regional grocery stores in the Midwest during 2018. Over two separate one-week periods an engineer traveled to selected representative stores and recorded the time required to stock and rotate eggs in a display cooler. The first week considered traditional corrugated shipping boxes and the second week reusable plastic containers (RPCs) were used.

The comparison analyzed the multi-step process in the egg section of the dairy department comprising pulling egg cases from the cooler, stocking and rotating cartons, disposing of packaging and removing damaged eggs.

Findings from the study were:-

  • It takes less than half the time to stock an egg display using retail-ready RPCs compared to corrugated cartons. On average, in an 8-foot display case, RPCs stock and rotate product in 10 minutes versus 21 minutes for corrugated packaging.
  • Taking advantage of timesaving RPCs, retailers could achieve a 53 percent reduction in labor to manage the egg category.
  • Using RPCs, each store will save 56 hours of labor annually that can be reallocated to other tasks.

The study found that when using corrugated cartons, transfer to the display case significantly impacts stocking time by 35 percent. Rotation of product may also increase in stocking time by 24 percent.

With Tosca's retail-ready solution, eggs can be displayed directly in a custom designed RPC, eliminating the time-consuming tasks of removing, stacking, and rotating egg cartons. Tosca's unique one-step SmartWall TM design simplifies restocking and saves labor by allowing employees to place the container directly in the case and drop the front wall for display in one easy motion.

"We know that retailers are looking for a better way to identify cost and labor savings, improve supply chain efficiency and protect the product quality of perishables," said Eric Frank, president and CEO of Tosca. "This study helps validate that there is a better way to move eggs safely and efficiently from source to shelf. RPCs not only are easier and faster to stock but also help reduce shrink by offering the best protection available for fragile eggs."

Tosca (www.toscaltd.com) is a leading provider of reusable packaging and supply chain solutions across a diverse range of markets including eggs, case-ready meat, poultry, produce, and cheese. The proven RPC system is a more efficient way to move fresh product safely from plant to shelf, substantially reducing breakage and labor cost, maintaining product quality, and optimizing overall supply chain efficiency for packers and retailers.

For additional information access < www.toscaltd.com>


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Dr. Simon M. Shane
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