Egg Industry News


DOE Releases Biomass Report

03/28/2024

The U.S. Department of Energy (DOE) has released the 2023 Billion-Ton Report.  This document suggests that approximately one billion tons of biomass comprising both corn and wood products could be used to satisfy 2050 demand for aviation fuel. The DOE report suggests that corn would represent 150 million tons of the biomass contribution annually, supplemented by 40 million tons of wood products that could be combusted to produce power and 40 million tons of gas from landfill.

 

The problem with the projection is that there does not appear to be a financially viable process to convert wood and high-fiber products to fuel.  Fermentation technology is currently used to convert approximately one-third of the corn crop to ethanol to dilute gasoline at an average level of ten percent. Conversion of high lignin biomass to a combustible fuel has yet to become an economic reality despite billions invested in developing the technology that has yet to produce a commercial operational plant. 

With respect to power generation, it is evident that nuclear represents the most promising source of electrical power given available technology including renewables. Expansion of nuclear energy generation will require a major overhaul of permitting and above all safe disposal of nuclear waste.

 

The report essentially bundles together existing corn ethanol and the prospect of using wood material from forests and agricultural residues. Tantalizing, but questionable in execution.


 

USDA Weekly Egg Price and Inventory Report, March 27th 2024.

03/27/2024

Market Overview

 

  • The average wholesale unit revenue values for Midwest Extra-large and Large sizes were up by 10.7 percent and Medium size was up 13.5 percent this past week. Wholesale prices for Midwest in cartons were approximately equivalent to the 3-year average of $2.25 per dozen during mid-March. This past week shell egg inventory was down by 10.3 percent, following a fall of 3.2 percent the previous week. Although there has been a weekly increase in pullet flocks transferred to laying houses, hen numbers are diminished by the loss of close to thirteen million hens due to HPAI on twelve complexes holding from 250,000 to 2.6 million hens during the 4th Quarter of 2023. Pullets are in short supply with losses of 2.5 million growing birds mainly in California.
  • This past week, chains widened the spread between delivered cost and shelf price. This could result in a potential increase in generic stock unless compensated by a proportional rise in pre-Easter demand and constant re-ordering to fill the pipeline through mid-month. Discounters are holding prices on generics influencing mainstream retail stores. Eggs are still highly competitive in price against the comparable costs for other protein foods.
  • Total industry inventory was down by 9.0 percent overall this past week to 1.51 million cases with a concurrent 3.3 percent decrease in breaking stock, following a 6.0 percent fall during the preceding processing week. Demand for egg products presumably increased during the two weeks preceding Easter (March 29th Good Friday) with more home baking and entertaining. Egg products are required for the food service and manufacturing sectors although exports are at a moderate to low level attributed to domestic price. USDA Benchmark wholesale price for eggs in cartons was approximately $1.15 per dozen lower than the corresponding week in 2023.
  • It is now apparent that the inventory held by chains and other significant distributors may be more important over the short term in establishing wholesale price 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 small cyclic fluctuation in weekly industry stock, especially into and after a holiday weekend.
  • Cases of HPAI in the commercial poultry industry and backyard (non-commercial WOAH) flocks have tapered, coincident with the end of the Fall migration of waterfowl that was extended in late 2023 by mild weather. The number and extent of future possible outbreaks during the spring and fall months of 2024 cannot be projected but the current phase of the epornitic appears to be over with migratory birds having moved south following colder weather in January. Sporadic cases in backyard poultry in widely diverse states continue. More surveillance information should be released by USDA-APHIS concerning the prevalence rate of carriers among resident domestic free-living birds and a review of molecular and field epidemiology for the 2022 spring and fall waves of HPAI. The USDA has yet to identify specific modes of transmission for the 2022-2023 epornitic including likely airborne spread from wild birds and their excreta over short distances.
  • The current relationship between producers and chain buyers based on a single commercial price discovery system constitutes an impediment to a free market. The benchmark price appears to amplify both downward and upward swings as evidenced over the past two 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.
  • According to the USDA the U.S. flock in production was apparently up by 4.5million hens (1.5 percent) to a new level of 306.6 million for the week ending March 27th This large increase in one week suggests an undercount in previous weeks with apparently low levels of hens entering production. The stated total flock of 312.2 million included about one million molted hens that will resume lay during coming weeks plus 4.5 million pullets scheduled to attain production. Given the latest figures it is estimated that the producing flock is at least 15 to 17 million hens lower than before the onset of HPAI in 2022. It is evident that USDA provided a more realistic figure of flock size in January having adjusted figures to account for depopulation of 13 million hens spread over the last quarter of 2023. There were evident discrepancies between published figures and the theoretical number of hens taking into account known losses and predetermined pullet replacements.
  • The ex-farm price for breaking stock (rounded to one cent) was up 4.3 percent to $1.58 per dozen.Checks delivered to Midwest plants were unchanged at $1.39 per dozen this past week. Prices for breaking stock should follow the wholesale price for shell eggs usually with a lag of about one to two weeks.

 

The Week in Review

 

Prices

 

According to the USDA Egg Market News Reports released on March 25th 2024, the Midwest wholesale price (rounded to one cent) for Extra-large was up 10.6 from last week to $2.41 per dozen. Large was up 10.7 percent to $2.39 cents per dozen. Mediums were up 13.5 percent to $2.28 per dozen delivered to DCs. Prices should be compared to the USDA benchmark average 4-Region blended nest-run cost of 76.0 cents per dozen as determined by the Egg Industry Center based on USDA data for February 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 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 during 2023 and 2024 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

 

The March 25th edition of the USDA Egg Market News Report confirmed that the USDA Combined Region value (rounded to the nearest cent), was up $0.02 per dozen to $2.25 per dozen delivered to warehouses for the week ending March 18th 2024. This average price lags current benchmark Midwest weekly values by one week. 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. The USDA Combined Price last week was approximately equivalent to the 3-year average of $2.25 per dozen. This past week Midwest Large was approximately $1.15 per dozen below the corresponding week in 2023 that was rising on demand to $3.40 per dozen as production recovers from HPAI depletion and with declining to stable market demand.

 

Flock Size 

Previously the loss of approximately 13 million hens due to HPAI during the fourth quarter was not reflected in weekly USDA figures until the beginning of February. Increases in flock size during late February and early March amounted to fractions of a percent. The USDA has now published data to reflect previous losses due to HPAI depopulation and molted flocks reentering production to satisfy pre-Easter demand.

 

Given the importance of weekly flock numbers to pricing, accurate values for producing and total flock are required by producers.

 

According to the USDA the number of producing hens reflecting March 27th 2024 (rounded to 0.1 million) was apparently up a questionable 4.5 million million as an adjustment from last week to 306.6 million. The total U.S. flock includes about one million molted hens due to return to production Approximately 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 13 million hens during the last quarter of 2023. To date some flocks have been replaced. Based on inventory level and prices, the population of hens producing table eggs and breaking stock should now be producing at or below pre-Easter demand by consumers. Industrial and food service off-take although increasing, is approaching pre-COVID levels. Prices will continue to fluctuate but commenced a seasonal albeit late rise in price two weeks ago.

 

According to the USDA the total U.S. egg-flock on March 27th 2024 was stated to be up by 5.8 million hens to 312.2 million including second-cycle birds and those in molt. The weekly difference of 5.6 million hens between flocks in production and total hens is an approximate value with the difference of 1.3 million hens from last week denoting that molted hens are resuming production consistent with current demand. Given the season and the trajectory in benchmark wholesale prices, only a few older flocks were molted or depleted during March. At present it is estimated that there are 15 to 17 million fewer hens in the total flock now reflected in weekly USDA figures. The apparent difference is equivalent to about 4.9 percent of the pre-HPAI 2022 national flock of 326 million hens.

 

INVENTORY LEVELS

Cold storage stock of frozen products in selected centers on March 25th 2024 was 2.334 million pounds (1,061 metric tons), down 3.8 percent from 2.426 million lbs. on March 1st 2024. The monthly USDA Cold Storage Report below quantified an increase in the actual total stock level at the end of December.

 

The most recent monthly USDA Cold Storage Report released on March 25th 2024 documented a total stock of 30.6 million pounds (13,928 metric tons) of frozen egg products on February 29th 2024. This quantity was up 20.0 percent from the February 28th 2024 value of 25.5 million pounds. February 29th 2024 frozen egg inventory was up 4.2 percent from the previous month ending January 31st 2024 attributed to presumably slightly lower domestic or export demand or their combination. Compared to February 28th 2023 inventory of whites was up 2.9 percent to 2,993 million lbs. on February 29th 2024. Compared to February 28th 2023 yolk inventory was down 11.5 percent to 697 million lbs. on February 29th 2024.

A total of 88.0 percent (27.0 million lbs.) of combined inventory comprised the categories of “Whole and Mixed” (40.3 percent) and “Unclassified” (47.7 percent). The lack of specificity in classification requires a more diligent approach to enumerating and reporting inventory by the USDA.

 

Shell Inventory

 

The USDA reported that the national stock of generic shell eggs effective March 25th 2024 was down 9.0 percent over the previous week. Inventory over the past week followed a fall of 3.0 percent the previous week confirming low seasonal consumer demand reflected in the orders placed by buyers of the major chains. Combined with breaking stock, the total inventory of shell eggs in industry cold rooms is now at a rounded level of 1.51 million cases (1.66 million last week; 148,900 cases lower this week). The U.S. population of laying hens at this time is influenced by:-

 

  • Losses following outbreaks of HPAI with the depopulation of over 13.0 million hens during the fourth quarter of 2023.
  • The population unaffected by HPAI.
  • Flocks retained after molting with an anticipated decrease in this category as influenced by prevailing wholesale egg prices, and indirectly responding to fourth Quarter 2013 flock depopulation from HPAI.
  • Started pullets from chick placements during early October 2023. Going forward, younger hens will assume a larger proportion of the national flock as more flocks are placed compensating for the flocks depleted due to HPAI.

 

All six USDA Regions reported lower stock levels this past week. The six regions are listed in descending order of stock: -

 

  • The Midwest Region was down a noteworthy 15.4 percent from the previous week to 399,200 cases.
  • The Southeast Region was down 6.6 percent to 258,700 cases
  • The South Central Region was down 11.1 percent to 221,700 cases
  • The Northeast Region was down 0.1 percent to 165,100 cases
  • The Southwest Region was down 7.1 percent to 115,200 cases.
  • The Northwest Region was down 17.1 percent to 57,200 cases

 

The total USDA six-area stock of commodity eggs comprised 1,512,100 cases (1,661,000 cases last week), down 9.0 percent, of which 80.5 percent were shell eggs (81.6 percent last week). The inventory of breaking stock was down 3.3 percent to 295,000 cases. Shell-egg inventory was down 10.3 percent attaining 1,217,100 cases. These changes are a function of regional shell-egg demand coupled with a response to erratic re-stocking as buyers take advantage the industry benchmark price discovery system. A reduction in the incidence rate of HPAI may influence buyers who are now less concerned over short-term availability.

 

A fall in breaking stock was recorded over the past week despite some diversion to the shell egg market. Subsequent weekly stock levels of shell eggs will indicate the extent of industrial and consumer demand. Breaking is stimulated by conversion to egg powder and liquids for export and by higher seasonal pre-Easter demand for liquids by industry and food service. The average price for Midwest checks and breaking stock combined was 61.8 percent of the average value of Midwest Extra-large and Large shell eggs (67.5 percent for previous week) consistent with a 10.7 percent higher price for shell eggs this past week compared to breaking stock and checks combined that were up on average by 2.1 percent. The differential of 61.8 percent can be compared to 80.0 percent in April 2022 reflecting the initial period of high demand for both shell eggs and products. This demonstrates the respective demands for shell eggs and egg products and the interconnectivity of the packing and breaking segments of the egg industry under circumstances of extreme disturbances in either supply (lower due to HPAI in 2022) or demand (higher during early COVID in 2020). The price for breaking stock and for checks is influenced by the relative demand for generic shell eggs and contract obligations with breakers.

 

On March25th 2023 the inventory of other than generic eggs amounting to 416,500 cases (down 2.0 percent from last week at 424,900 cases) among three categories (with the previous week in parentheses) comprised: -

 

  • Specialty category, down a noteworthy 15.2 percent to 32,100 cases on promotion. (was up 14.6% to 37,900 cases)
  • Certified Organic, up 4.3 percent to 90,800 cases. (was up 1.6 % to 87,100 cases)
  • Cage-Free category, down 5.3 percent to 293,600 cases. (was down 1.3% to 309,900 cases)

 

Demand for cage-free product will not increase materially over the intermediate term while generic eggs from caged flocks and some surplus down-classified cage-free eggs are on the shelf at $2.40 to $2.60 per dozen during normal supply and demand conditions. Currently there is a small differential in shelf price between conventional caged eggs compared to cage-free white but a wider difference between higher priced omega-3 enriched, cage-free, free-range and pasture-housed products. That the higher priced egg categories will experience an erosion in demand as generic prices fall is supported by the findings of a comprehensive review relating to the transition from cages to alternative systems.*

 

Existing and proposed individual state legislation mandating sale of only cage-free eggs will support most of the completed and anticipated transition from cages but significant additional re-housing will not be completed by the beginning of 2025, less than 9 months away and clearly never, as projected by most industry observers. The constitutional status of Proposition #12 was confirmed by SCOTUS in a May 11th 2023 decision with specific reference to the dormant Commerce Clause relating to interstate trade. It is unlikely that a legislative initiative (the EATS Act) will be incorporated into the 2023 Farm Bill (that will be delayed beyond April 2024 due to Committee deadlock), to limit the impact of Proposition #12 on sows housed for pork production. Many retail chains are ‘renEGGing’ on or extending their time commitments to achieve an acceptable transition to cage-free eggs despite coercion by animal welfare groups. The State of Utah is extending the deadline by five years. With the current proportion of non-caged flocks and lower prices for generic cage-derived eggs, cage-free eggs are surplus to demand in some areas. Organic eggs are subject to price pressure in many markets especially those served by club stores. Inventory of this category is holding solidly below 100,000 cases with this quantity representing the approximate production of three days of lay. Long-term demand for cage-free eggs will be influenced by the relative shelf prices of the category in comparison with generic white-shelled eggs from caged flocks. Inventory of this category fell below the 300,000-case benchmark this past week, but effectively is working stock given weekly production of 1.7 million cases per week. At the other end of the price range, consumers will purchase less-expensive brown cage-free product over organic eggs when there is a differential in price greater than about $1.20 per dozen under normal conditions of supply and demand. Similarly, consumers will traditionally purchase white-shelled generic eggs in preference to white or brown-shelled cage-free with a differential of over $1.20 per dozen.

 

A comprehensive structured market research project on cage-free eggs has provided an indication of consumer willingness to pay for this attribute. The industry requires a study on other aspects including shell color, GM status and nutritional enrichment using conjoint analysis. Above all, agricultural economists should evaluate the impact of disruption in supply and demand arising from large-scale depopulation following the 2015 and 2022-2023 HPAI epornitics and the current wave of outbreaks extending through partial restoration of hen numbers but with a disproportionate decline in wholesale prices.

 

*Caputo,V. et al The Transition to Cage-Free Eggs. February 2023

 

RELATIVE PRICES OF SHELL-EGG CATEGORIES

USDA-AMS posted the following national shell egg prices as available, for March 22nd 2024 for the preceding week in the Egg Markets Overview report for dozen cartons with comparable prices in parentheses for the previous week: -

 

Retail Prices

Large, in cartons generic white: $1.58 Down 48.7 percent ($3.08)

Large, in cartons cage-free brown: $2.82 Down 15.3 percent ($3.33)

 

Wholesale

Midwest in cartons $2.17 Up 0.9 percent ($2.26)

Large C-F, California in Cartons: $2.91 Unchanged ($2.91)

National loose, (FOB dock): $2.04 Up 4.6 percent ($1.95)

NYC in cartons to retailer: $2.55 Up 8.5 percent ($2.35)

 

Regional in cartons to warehouse reported March 22nd for previous week.

Midwest $2.16 Up 0.9 percent ($2.14)

Northeast $2.21 Up 0.9 percent ($2.19)

Southeast $2.30 Up 0.9 percent ($2.28)

South Central $2.32 Up 0.9 percent ($2.30)

Combined $2.25 Up 0.9 percent ($2.23)

 

WEEKLY ADVERTISED PRICES OF SHELL-EGG CATEGORIES W/E MARCH 28th.

USDA Certified Organic, Brown, Large: $5.02 ($5.03)

Cage-Free Brown, Large: $3.00 ($3.39)

Omega-3 Enriched Specialty, White, Large: $2.72 ($2.78)

Generic White, Large Grade A $2.04 ($1.99)

 

The advertised price for Large white grade A as featured for the week ending March 25th was $2.04 per dozen, (243 stores) up $0.05 or 2.5 percent above $1.99 per dozen last week. Current supply was probably in balance with retail demand the previous week given the fall in inventory held by the industry as reported by the USDA. Independent producers continue to divert shell eggs from breaking to the higher-priced shell market. Large integrated companies and packers continued to deliver to DCs and this week chains increased orders to stock stores in anticipation of pre-Easter demand

 

The USDA benchmark-advertised retail price for certified organic for the week was $5.02 per dozen, (493 stores), down $0.01 per dozen or 0.2 percent from the USDA price of $5.03 per dozen posted last week. A USDA advertised price of $3.00 per dozen was posted for cage-free brown during the past week (66 stores?), down $0.39 per dozen or 11.5 percent from last week at $3.39 per dozen. The price differential between USDA organic and cage-free brown of $2.03 per dozen will favor cage-free brown at the expense of certified organic eggs. Week-to-week single digit fluctuations expressed as a percentage can be expected in the stock of specialty and organic eggs based on the small base of these categories. There was a moderate upward movement in the inventory of certified organic this past week consistent with decreased demand for this category based on price and promotion of cage free eggs.

 

Cage-free brown at $3.00 per dozen was $0.49 per dozen (19.5 percent) higher than cage-free white at $2.51 per dozen (140 stores).

 

Certified organic was promoted this past week at 16.6 percent of the total, consistent with a slightly higher inventory, (last week 28.3 percent of features). Omega-3 enriched comprised 30.1 percent of features with substantially lower inventory (15.5 percent last week). Cage-free was at 11.2 percent with lower stock (52.6 percent last week). This past week Large size comprised 11.2 percent of features as the only generic down from 4.1 percent collectively last week. This confirms that retailers promote any category if available in excess of demand.

 

USDA Cage-Free Data

 

According to the latest monthly USDA Cage-free Hen Report released on March 1st 2024, the number of certified organic hens in Fee was down 0.5 percent from January 2024 at 18.3 million, (rounded to 0.1 million).

 

The USDA reported that the cage-free (non-organic) flock in February 2024 was up 2.1 percent from January 2024 to 106.5 million, (rounded to 0.1 million).

 

According to the USDA the population of hens producing cage-free and certified organic eggs in February 2024 comprised: -

Total U.S. flock held for USDA Certified Organic production = 18.3 million (18.7 million in Q4 2023).

Total U.S. flock held for cage-free production = 106.5 million (106.4 million in Q4 2023).

Total U.S. non-caged flock =124.8 million (125.1 million in Q4 2023).

 

This total value represents 38.3 percent (January, 37.5 percent) of a nominal 326 million total U.S. flock pre-HPAI in 2022 (but 40.7 percent of the national flock after HPAI mortality to a presumed January complement of 307 million in production). Hens certified under the USDA Organic program have decreased in proportion to cage-free flocks since Q1 of 2021.

 

The accuracy of individual monthly values is questioned given a history of either constant numbers or a sharp change in successive months as documented over the past two years. It is currently not possible to reconcile the USDA values for the number of cage free hens with known HPAI depopulation and projected replacement and assumed routine depletion. USDA adjusted the total and producing flocks in late February to account for depopulation due to HPAI. It is anticipated that the April release will reflect a realistic number of producing hens housed cage-free during the first Quarter of 2024. Precise quarterly reports would be more suitable for the industry in planning expansion and allocation of capital than inaccurate monthly values.

 

Processed Eggs

 

For the processing week ending March 23rd 2024 the quantity of eggs processed under FSIS inspection during the week as reported on March 27th 2024 was down 1.7 percent compared to the previous processing week to a level of 1,411,363 cases, (1,435,735 cases last week). The proportion of eggs broken by in-line complexes was 53.8 percent with less diversion to higher-priced shell markets by uncommitted producers, (53.3 percent in-line for the previous week). The differential in price for shell sales and breaking will determine the movement of uncommitted eggs. This past week 71.1 percent of egg production was directed to the shell market, (70.3 percent for the previous week), responding to the differential in prices paid by breakers and packers. Breaking stock inventory was up 3.3 percent this past week to 295,000 cases. Apparent demand from QSRs and casual dining is at stable to slightly lower levels. There is ongoing demand from baking and eat-at-home despite the weekly fluctuation in the inventory of breaking stock. During the corresponding processing week in 2022 in-line breakers processed 50.9 percent of eggs broken.

 

For the most recent monthly report reflecting February 2024, yield from 5,462,517 cases (7,053,712 cases in January) denoted a decrease in demand for liquid and diversion to shell egg sales over the period February 4th 2024 through March 2nd 2024. Edible yield was 38.9 percent, distributed in the following proportions expressed as percentages: liquid whole, 60.1; white, 24.0; yolk, 12.4; dried, 3.3.

 

All eggs broken during 2023 attained 69.78 million cases, 8.4 percent less than 2022. Eggs broken in 2024 to date amounted to 16.75 million cases, 1.7 percent less than the corresponding period in 2023. This is attributed to moderately increased demand for egg liquids from retail, food service and QSRs and casual dining restaurants. Consumers are constrained by economic uncertainty following the ending of COVID support, moderate inflation, high credit card interest rates and a tendency to purchase only essentials.

 

PRODUCTION AND PRICES

 

Breaking Stock

 

The average rounded price for breaking stock was up 4.3 percent this past week to $1.58 per dozen with a range of $1.51 to $1.65 per dozen delivered to Central States plants on March 25th 2024. Checks were unchanged this past week at an average of $1.39 per dozen over the most frequent range of $1.37 to $1.39 per dozen suggesting that the market for breaking stock follows prices for shell eggs following pronounced up or down swings.

 

Shell Eggs

 

The USDA Egg Market News Report dated March 25th 2024 confirmed that Midwest wholesale prices for Extra-large and Large sizes were up 10.7 percent over the previous week. Mediums were up 13.5 percent to $2.28 per dozen. A lower inventory combined with a fractionally higher price, suggests that the market is operating with stable to slightly increased demand. The following table lists the “most frequent” ranges of values as delivered to warehouses*:-

 

Size/Type

Current Week

Previous Week

Extra Large

239-242 cents per dozen

216-219 up 10.6%

Large

237-240 cents per dozen

214-217 up 10.7%

Medium

226-229 cents per dozen

199-202 up 13.5%

Processing:-

   

Breaking stock

151-165 cents per dozen

150-153 up 4.3%

Checks

137-139 cents per dozen

137-139 unchanged 

*Store Delivery approximately 5 cents per dozen more than warehouse price

 

The March 25th 2024 Midwest Regional (IA, WI, MN.) average FOB producer price, for nest-run, grade-quality white shelled Large size eggs, with prices in rounded cents per dozen was up 9.9 percent from last week, (with the previous week in parentheses): -

  1. $2.27 ($2.06), (estimated by proportion): L. $2.23 ($2.03): M. $2.10 ($1.89)

 

The March 25th 2024 California negotiated price per dozen for cage-free, certified Proposition #12 compliant Large size in cartons delivered to a DC, (with the previous week in parentheses) was up 6.5 percent from last week, despite depopulation of a third of the laying hens in the state but offset by introduction from Midwest and Southwest supplying states.

  1. $3.14 ($2.98); L. $3.10 ($2.91); M. $2.92 ($2.82)

 

Shell-Egg Demand Indicator

 

The USDA-AMS Shell Egg Demand Indicator reported on March 27th 2024 was up 13.2 points from the last weekly report to 9.9 with a 9.0 percent decrease in total inventory and a 10.3 percent lower shell inventory from the past week as determined by the USDA-ERS as follows: -

 

Productive flock

306,547,669 million hens

Average hen week production

82.0%(was 82.3%)

Average egg production

251,478,383 per day

Proportion to shell egg market

71.1% (was 71.4%)

Total for in-shell consumption

496,929 cases per day

USDA Table-egg inventory

1,217,100 cases

26-week rolling average inventory

4.34 days

Actual inventory on hand

3.95 days

Shell Egg Demand Indicator

 +9.9 points (was -3.3 on March 20th 2024)

 

The USDA Monthly Report covering January 2024 production including text, tables, data and prices and the 2nd Quarter results for Cal-Maine Foods can be accessed under the STATISTICS tab.

 

Dried Egg Products

 

The USDA extreme range in prices for dried albumen and yolk products in $ per lb. was released on March 22nd 2024. Data for yolk and whole egg powder over the past week was available from the USDA. Values are depicted for the previous week and in parentheses for the week before that. Values for past months illustrate the trend in prices influenced by HPAI depopulation and subsequent repopulation:-

 

 Whole Egg

$5.00 to $6.70

(unchanged)

 

Average Sept. $ 6.51

Oct. $ 5.75

Nov. $ 5.75

Dec. $ 5.63

Jan. $ 5.40

Feb. $ 5.40

March $ 5.80

Yolk

$4.00 to $5.70

(unchanged)

Average Sept. $ 5.03

Oct. $ 4.75

Nov. $ 4.63

Dec. $ 4.55

Jan. $ 4.49

Feb. $ 4.85

March $ 4.85

Spray-dried white

No quotation, past week

Average Dec ‘22. $14.18

Jan. $14.18

March to Feb. ’24 No release

Blends

No quotation, past week

 

 

Frozen Egg Products

 

The USDA posted the range in prices for frozen egg products for the past week. Prices in cents per lb. based on the extreme range on March 22nd 2024 compared to the previous week showed fluctuation in price:-

 

Whole Egg

$1.34 - $1.401

$1.20 - $1.34

White1

$1.10 - $1.20

$1.08 - $1.13

Average for Yolks

$2.04 - $2.071

$2.01 - $2.08

  1. extreme range

 

Whole egg: Up 7.9%: Whites: Up 4.1%: Yolks: Up 0.5%

 

This indicated a relatively small increase in demand for yolks but higher demand for whole egg and whires from the manufacturing and food service sectors and for export. White was in excess of demand

 

February averages (January): Whole. $1.33, ($1.11); Whites, $1.26, ($1.08); Yolks, $1.91, ($1.87).

 

Liquid Egg Products

 

Values for Whites and Yolks covering non-certified truckload quantities have been released at irregular intervals over past weeks. Whole egg values attained on average 113 cents per lb. last week down 5 cents per lb. February averages (cents per lb.) are compared with January values (in parentheses): -

 

Whole, $1.10, ($1.01); Whites, $1.06 ($0.76); Yolks, $1.74, ($1.72).

 

The USDA has not released a report on dried egg inventory since March 13th 2020 due to inability to obtain data from producers, and will not issue reports for the immediate future.

 

COMMENTS

 

During the 4th quarter of 2023 and extending into January 2024, outbreaks of HPAI required depopulation of close to 13 million egg-producing hens. In contrast to 2022, broiler flocks were affected in 2023 with cases in California and Arkansas during fall of 2023 and subsequently in Nebraska. Incident outbreaks of HPAI have abated among turkey growing flocks with the last cases in NC and MO in January and February respectively. There are still incident cases recorded in backyard flocks and presumably free-living predatory birds and in scavenging carnivorous mammals and now dairy cows in three states. Given the risks and consequences of infection it will be necessary to continue to maintain high levels of structural and operational biosecurity with intensification persisting through the remainder of February. HPAI is now diagnosed seasonally in breeding colonies of marine birds in costal areas of Europe and sporadically in commercial flocks. Outbreaks in commercial flocks appear to be correlated with shedding of AI virus by migratory birds that have now moved southward with sharply colder weather in January. The downward trajectory in incident cases suggests a decline in outbreaks consistent with the pattern at the end of 2022.

 

Approximate losses in commercial flocks confirmed with HPAI and updates during the 2022/4 phases of the ongoing epornitic included:-

  • 6,900,000 broilers on 28 farms in 8 states during 2002 - 2023
  • 330,000 broiler breeders on 11 farms in 6 states.
  • 360,000 upland game birds October through December 2023.
  • 14,100,000 turkeys including breeder flocks in 8 states during 2022 and through 2023 year-to-date. During the past nine weeks losses have approximated 2.9 million growing turkeys with 63 incident cases confirmed in seven states (SD; ND; UT; MN; IA; WI, MI.).
  • 52,300,000 egg-production hens in total with 95 percent on 37 large complexes above 0.5 million in addition to 3,500,000 pullets with a total of 54 locations in 12 states. Pullet mortality does not include “at risk” replacements depleted on affected complexes with contiguous pullet rearing. Since October 2023 more than 13.0 million hens have been depopulated in 13 outbreaks.

 

Losses reported by USDA during the past week ending March 20th comprised three WOAH non-poultry flocks (ME.; TX.; OR.).

Depopulation of hens (rounded to 0.1 million) as a result of HPAI in the states most affected during the fourth Quarter of 2023 comprised: OH., (4.5 m.); CA., (3.2 m); IA., (2.7 m); KS., (1.5 m) and MN. (1.0m).

 

Backyard flocks (non-WOAH) allowed outside access will continue to be at risk of infection in the U.S. These small clusters of birds in both suburban and rural areas are of minimal significance to the epidemiology of avian influenza as it affects the commercial industry. Backyard flocks serve as indicators of the presence of virus among free-living birds as evidenced by ongoing outbreaks in commercial poultry flocks across the U.S. The late 2023-early 2024 epornitic evidently has a long tail. Recent outbreaks in backyard flocks especially in northern tier states suggest shedding by resident, non-migratory free-living birds that may have become reservoirs. This has implications for seasonality

 

The USDA-APHIS published a report on the results of epidemiologic studies* on farms in early 2022 and made available on July 25th. Results for 18 egg-production case farms and 22 control farms suggested higher risk of infection associated with the presence of a farm in a control zone, proximity of wild birds, mowing or bush hogging of vegetation adjacent to the farm, and off-site disposal of routine mortality. These factors suggest possible aerogenous introduction of virus shed by wild birds onto farms over short distances. This presumption is based on anacdotal observations and recent published research from Taiwan demonstrating avian influenza virus in air in proximity to migratory birds. The USDA study predictably suggested that protection was enhanced by effective structural and operational biosecurity. The validity of findings was limited by the confounding inherent to the diversity in size of flocks incorporated into the case-control study and deriving data from a 26 page questionnaire by telephone survey, months after outbreaks, introducing recollection bias and responder fatigue.

 

*Green, A. et al Investigation of risk factors for introduction of highly pathogenic avian influenza H5N1 virus onto table egg farms in the United States, 2022: a case-control study. Frontiers in Veterinary Science. Doi: 10.3389/vets.2023.1229008

 

It is hoped that APHIS recognises the need to provide the industry with science-based recommendations to prevent additional incident HPAI outbreaks. This presumes prompt analysis and reporting of whatever field and molecular epidemiology is collected. The Agency is also presumed to have planned epidemiologic field studies and allocated personnel and other resources in anticipation of a spring 2024 resurgence in HPAI. Given that large complexes in six states were infected during November and December, appropriate guidance from USDA-APHIS is anticipated by the Industry in advance of any spring or fall 2024 reoccurence. A release on the investigation of risk factors associated with outbreaks in dairy herds and a comment on wheter mutations have occurred in viruses isolated from infected animals would be instructive.


 

CoBank Macroeconomic and Spring Update

03/27/2024

In this second quarter update on the economy, grains and farm supply sectors, CoBank Knowledge Exchange experts Rob Fox, Tanner Ehmke and Jacqui Fatka examine key questions, including: 

 

  • The Fed is promising rate cuts, but are they warranted?
  • Is inflation really under control?
  • Did USDA’s Prospective Plantings Report hold any surprises?
  • Have soybean crush margins bottomed out?
  • What do soil moisture levels look like heading into spring?

 

REGISTER NOW

DATE

April 10, 2024

TIME

10 a.m. PT / 11 a.m. MT / 12 p.m. CT / 1 p.m. ET


 

Welcome to the Vencomatic Group

03/26/2024

EGG-NEWS welcomes the Vencomatic Group as a sponsor.  The Company was founded in 1983 by the van de Ven family in their Eersel, location in the Netherlands.  The Group has expanded to include major operating segments comprising Agro Supply, Prinzen, Van Gent and Vencomatic.  Vencosteel is a dedicated supplier of metal components including stainless and specialty steel with an output of 6,500 tons annually.  The Vencomatic Group operates subsidiaries in the U.S. (Adel, IA), in Sao Paulo State (Brazil) and in France, Spain, the U.K., China and Malaysia.

The company posted revenue of $175 million worldwide in 2023 and has 500 employees interacting with 100 suppliers and strategic partners worldwide. The Headquarters Complex in Eersel is uniquely shaped to resemble an egg, recognizing the focus of the company

Vencomatic pullet rearing systems include:-

 

  • The multi-tier Unistart that simplifies vaccination and handling and allows complete visual observation of flocks contributing to uniformity in growth and development.
  •  The Bolegg starter system is designed for compatibility with the Bolegg aviary.  Features of this system include the winchable platforms for water and feed to train flocks. 
  • The Jump-Start system allows chicks to be placed on slats with access to feed and water.  Feeding and drinking levels are raised as pullets grow to encourage development of muscles and balance to allow subsequent use of perches.

Vencomatic aviaries include:-

  • The Bolegg Gallery aviary is a multi-tier system allowing natural behaviors.  The gallery incorporates the Vencomatic laying nest with a tipping floor, Vencobelt egg collection and Vencoslat flooring. 
  • The Bolegg Terrace aviary system permits obstacle-free movement vertically within the system reducing cross transition between rows that uses energy and subjects hens to injury.  The location of perches, drinkers and feeders allows the flock to move along the full length within the system.

Vencomatic developed the ECO heat exchanger to reduce energy requirements and to reduce feed intake under cold conditions.

 

The Meggsius range includes a machine-vision egg sorter that restricts introduction of leakers into the grader. The Meggsius belt control system accurately counts eggs and modulates conveyor speed to ensure optimal operation of graders and reduces rejects occurring during transit from houses to packing plants.


 

Federal Government Funded through October 1st

03/26/2024

With the enactment of the second tier of appropriations, amounting to $1.2 trillion, all federal agencies are fully funded through October 1, 2024.

 

The final bipartisan funding bill was effectively six months late and required four continuing resolutions.  The House passed the measure on Friday 22nd with considerable rancour.  The Senate passed the appropriations in a 74 to 24 vote in the early hours of Saturday morning followed by the signature of the President.

It now falls to the Speaker of the House Rep. Mike Johnson (R-LA) to appease his right flank and hopefully consider and pass necessary bills that have remained in abeyance during the conflict surrounding the appropriations bills.

 

The final agreement in the House represented a compromise that would normally be considered appropriate for a democratic government system.

 


 

USDA to Conduct Trade Mission to South Korea

03/26/2024

The U.S. and South Korea celebrated the 10th anniversary of a free trade agreement in 2022.  In 2023, U.S. agricultural exports to South Korea attained $8 billion.

 

The volume of trade between our nations should be increased by the mission comprising 48 agribusiness and farm organizations and five state Departments of Agriculture that took place from March 25th through 28th. The mission reinforced existing arrangements and established new contacts for a wider range of U.S. products.

The American Egg Board was represented by president and CEO Emily Metz and by Greg Hinton, VP of Sales at Rose Acre Farms.

 

In calendar 2021, South Korea was the third largest importer of U.S. table eggs with 37.8 million dozen valued at $46.7 million.  The high volume was attributed to outbreaks of HPAI in South Korea reducing domestic supply.  Concurrently, South Korea imported 5,140 metric tons of egg products from the U.S. valued at $13.3million, up 203 percent in volume and 131 percent in value from the previous year during which 1,701 metric tons were imported from the U.S.  During calendar 2022, South Korea imported 2,171 metric tons of egg products, down 58 percent in volume and 44 percent in value as domestic production responded to restoration of flocks.  In calendar 2023, South Korea was not among the top seven importers of shell eggs but imported 1,141 metric tons of egg products valued at $5.3 million, 45 percent lower in volume and 25 percent in value compared to 2022.

 

Experience and data confirm that South Korea, among other nations, import eggs and egg products only as required. Landed price and availability are the major determinants of the purchase decision. Shell eggs and egg products are essentially commodities with negligible product differentiation.

 

The statement that “The AEB is working to drive demand for egg products and build the industry’s trade capacity to facilitate the export of egg products” is subject to question given the motivation to purchase by importers.

 

While trade missions provide an opportunity to create new markets for existing products, and to establish contacts with the new importers, South Korea is well aware of the availability of table eggs and egg products from the U.S. with price as the major consideration in the purchase decision.  There is obvious recognition of the potential for export of egg products but in this market, the U.S. will compete with India, a low-cost supplier with more favorable transport costs to importers in Asia.  A potential point of product differentiation could be the reality that U.S. egg products are devoid of antibiotic residues in comparison with imports from India.

 

The value of the previous American Egg Board trade mission to South Korea and Japan and the recently concluded program will be confirmed by actual export data.  Aspiration is commendable but results are definitive.


 

Move to Ban U.S. Mink Production

03/26/2024

The Minks Superspreaders Act (MINKS) introduced into the 117th Congress in 2021 will once again be promoted with bipartisan support in the House.  Sponsored by Rep. Nancy Mace (R-SC) and Rosa DeLauro (D-MA) and with support from House members from Texas, Pennsylvania, New York and New Jersey, the proposed MINKS are Superspreaders Act would prohibit the possession, transport and sale of captive farm-raised mink for fur production.  In 2023 mink production will decline below one million animals from 50 farms.  According to USDA, in 1966 there were 6,000 mink farms producing 6.2 million pelts annually. Almost all mink pelts produced in the U.S. are sold to China.

 

Concern over mink as a source of zoonotic viruses emerged with evidence that captive mink were susceptible to SARS-CoV-2 with animal-to-animal transmission and the emergence in Scandinavia of strains with mutations pathogenic to humans.  Additional evidence of mink as a potential generator of zoonotic viruses was evidenced by H5N1 avian influenza on a mink farm in Spain in 2023. 

The potential for an emerging epidemic from farmed mink is realistic and the persistence of this anachronistic segment of livestock production imposes a risk that is disproportionate to the potential benefits to the U.S. agricultural economy.

 

Despite the legislative burden faced by the 118th Congress it is hoped that the MINKS Superspreaders Act will be considered as a bipartisan non-contentious bill with expedited passage through both the House and Senate without narrow parochial considerations and lobbying obstructing enactment.


 

Emergence of HPAI in Dairy Herds- Questions and Implications:

03/26/2024

The USDA-APHIS has now confirmed H5N1 avian influenza virus in oropharyngeal swabs and in milk from dairy cows demonstrating clinical depression and reduced milk production. This is the second series of reported cases of H5N1 avian influenza in a ruminant following the goat herd in Minnesota reported last week.

 

Dairy herds have been affected in Texas, New Mexico and Kansas.  The condition emerged approximately three weeks ago but was not diagnosed until March 25th. Based on the presence of dead birds in the vicinity of the Texas farm, it is presumed that shedding by either migratory or resident birds introduced the infection.

State and federal authorities have been quick to note that there was no danger to the public.  This assurance was based on the fact that milk from affected animals did not enter the market and that pasteurization would in any event destroy the virus. Perhaps the calming statements by USDA and state veterinarians are at this time appropriate but obvious concerns exist.

 

The brief report released by USDA-APHIS raises a number of questions: -

  • What species of birds were found dead in the vicinity of implicated farms and has H5N1 virus been isolated from carcasses?
  • Can H5N1 virus be isolated from clinically normal contact cows in the affected herds? Is animal-to-animal transmission taking place? Since as stated, ten percent of cows within the affected herds apparently demonstrated clinical signs, factors contributing to intra-herd transmission should be determined.
  • Studies in progress should demonstrate the duration of viremia, infectivity and the presence of virus in milk.
  • Is milk from clinically unaffected animals in the affected herds being withheld? The report indicated disposal of milk from affected animals.  Obviously, clinical signs and milk production will indicate morbidity in individual animals. In the interest of safety and to preserve the wholesome image of milk, is it intended to withhold products from entire affected herds rather than individual animals and presumably until isolation from udder milk ceases?
  • Will case control studies be conducted on affected and unaffected control herds to establish risk factors for the introduction of infection in a specific location?
  • What changes in the H5N1 virus occurred to allow infection of ruminants? The USDA release noted, “Initial testing by the National Veterinary Service Laboratories has not found changes to the virus that would make it more transmissible to humans.”  The report also stated that viral genome sequencing is in progress.  Accordingly, is the comment regarding risk to human health valid?  Isolates from dead farmed mink in Spain and marine mammals along the coast of Chile demonstrated mutations associated with infection of mammals.
  • Is there evidence of H5N1 influenza virus in evaporative cooling systems, drains, manure handling, feed or other areas of the environment of the affected herd?
  • Are hogs next to be affected by H5N1? This species is susceptible to both avian and mammalian strains of influenza virus and herds could serve as ‘mixing vessels” for recombinant strains of influenza virus with enhanced pathogenicity for livestock or humans.

 

It is hoped that appropriate resources can be applied to obtain a rapid understanding of the epidemiology of H5N1 infection in dairy cattle. This should include extensive surveillance in the three states concerned but also in other areas where outbreaks of H5N1 have been diagnosed in backyard flocks that serve as natural sentinels.

The track record of USDA-APHIS with regard to investigating the field epidemiology of HPAI in commercial egg-production and turkey flocks since the 2015 epornitic has been abysmal. Failure by APHIS to report on the molecular biology of H5N1 virus isolates of 2023 contrasts unfavorably with the prompt investigations and reports from health professionals in South America under the auspices of the Pan American Health Organization.

 

Currently there are too many questions and understandably at present insufficient answers.  We trust that the CCC “slush fund” will be used by Secretary Vilsack to establish a task force to investigate the emergence of H5N1 in dairy herds and poultry flocks in order to provide valid and productive recommendations based on established scientific facts. In the interim there are millions of waterfowl about to begin their northward spring migration with 320 million egg production hens, 70 million pullets, 50 million growing turkeys, all susceptible to H5N1 and with a high proportion located in areas at risk for exposure. Preemptive strategic vaccination would appear prudent to create an immune commercial poultry population. If the 2023 and 2024 H5N1 virus can kill farmed mink and free-living marine mammals and some migratory bird species in their thousands and now to infect ruminants how long will it be before it could become a zoonotic pathogen? This is a concern expressed by the World Health Organization since 2020 designating avian influenza as a potential pandemic infection and should be heeded by all involved in the “OneHealth” principle.


 

Soybean Production Faces Challenges

03/26/2024

During calendar 2023, 49.0 million metric tons (1,800 million bushels) of soybeans were exported by the U.S. valued at close to $30 billion.  China was the leading importer receiving 50.6 percent of shipments.  For the 2023-2024 marketing year to date, exports are 18.3 percent lower compared to the previous market year mainly due to lower orders from China.  This is attributed to reduced production of pork, preferential purchases from Brazil and a concerted attempt by the Government of China to reduce inclusion rates of soybean meal in livestock feeds. 

For consecutive calendar years 2017 through 2019 the U.S. supplied 34 percent of soybean requirements for China amounting to 95.5 million metric tons (3,508 million bushels).  There was a sharp decline in exports thereafter during the years of trade instability and reciprocal raising of tariffs. Finalization of the Phase-1 Trade Agreement promised restoration to 95.0 million metric tons for the 2020-2021 market year but shipments only attained 60.3 million metric tons (2,215 million bushels).

 

In a recent CoBank Report authored by Brian Earnest and colleagues, crush margins will be under pressure over the long term based on increased capacity relative to static domestic offtake of soybean meal and concurrent importation of vegetable oils including canola and palm oil.

 

The demand for biodiesel will be the only saving grace for soybean producers and crushers over 2024. Approximately 41 percent of soybeans will be consigned to biodiesel production. Projected demand for soy oil and soybean meal will have to be considered by farmers in their 2024 planting decision.

 

The CoBank Report concluded that a 23 percent overcapacity in the U.S. soybean crushing sector by 2027 will be detrimental to crush margins and indirectly to the price of soybeans.


 

Livestock and Poultry Producers Could Benefit from the Proposed 2025 Budget

03/24/2024

The National Pork Producers Council has applauded provisions in the proposed 2025 Budget that would allocate $29 billion in discretionary funding to the USDA.  The pork industry will benefit directly from approximately $5 billion for a Swine Health Improvement Plan paralleling the National Poultry Improvement Plan.  The National Veterinary Stockpile would benefit from additional vaccines and therapeutics required to respond to a disease outbreak.  The 2025  USDA budget also includes $3.8 billion for research education and extension.

 

To date there have been no similar comments from organizations representing the poultry industry.  Given that highly pathogenic avian influenza, that now appears to be endemic, has resulted in severe economic losses for the turkey and egg production sectors, specific allocations will be required to promote health of U.S. flocks. 

 

It is hoped that the $29 billion in discretionary funding allocated to the USDA will be assigned in an equitable manner and not used mainly to pursue the current programs of restructuring the meat and poultry industries, environmental remediation and to address the needs of “underserved and minority” farmers.


 

Campbell Soup Company Served with a Lawsuit over Alleged Lake Erie Contamination

03/24/2024

The Department of Justice (DOJ) has filed a lawsuit against Campbell Soup Company alleging violative release of phosphorus and pathogens apparently arising from their Napoleon, OH. plant into the Maumee River feeding Lake Erie, The release of phosphorus into waterways contributes to eutrophication resulting in undesirable “algae blooms”.

 

The DOJ lawsuit followed separate legal action by nonprofits, Environment America and the Lake Erie Waterkeepers in the U.S. District Court the Northern District of Ohio.

 

To their credit, Campbell Soup recognizes the seriousness of the allegations and has worked with nonprofit environmental activist organizations to rectify deficiencies in wastewater treatment.

 

A spokesperson for the National Environmental Law Center noted, “We commend Campbell for its willingness to work cooperatively with us and the federal government to forthrightly address its longstanding compliance problems rather than spend its time litigating.”  He added, “Filing our lawsuit today will enable us to move forward quickly should negotiations breakdown.”

 

It is evident that the current Administration is active in addressing noncompliance over wastewater treatment and appears to make common cause with nonprofit activists’ organizations.  This has implications for all agricultural operations that generate waste.


 

Sugar Producers Subject to Class-Action Lawsuit Alleging Price Fixing

03/24/2024

KPH Healthcare Services a subsidiary of Kinney Drugstores has filed a class-action lawsuit against ASR Group International and other major sugar producers in the U.S. District Court for the Southern District of New York.  Co-defendants include Domino Foods Inc., United Sugar Producers and Refiners Cooperative and Commodity Information, a benchmarking service. The plaintiffs allege, “that defendants and co-conspirators artificially inflated the price of granulated sugar from the distributors.”

 

The case follows unsuccessfully attempts by the Department of Justice to block the acquisition of Imperial Sugar Company by U.S. Sugar Corp. in 2022. Despite courts ruling against the DOJ, it is apparent that current litigation may intensify action against amalgamation especially if it can be proven that consolidation would result in increased prices.  This has implications for any segment of the food industry that is moving towards oligopoly.

The DOJ and the FTC are apparently insensitive to the intrinsic benefits of economies of scale.  It is justifiable for intervention if collusion in determining price can be proven. Opposing mergers intended to restructure segments of production to improve efficiency should be regarded as unacceptable in a free-market economy.


 

AVIX Laser Bird Repellent System Offers Protection from HPAI

03/23/2024

It is now an established reality that migratory waterfowl carry and disseminate highly pathogenic avian influenza virus. In addition there is circumstantial evidence that domestic non-migratory bird species may have become involved in the persistence and spread of the infection.  This is based on the incident outbreaks in backyard farms that serve as sentinels. Weekly reports confirm the presence of H5N1 avian influenza virus during early spring in diverse states ranging from Oregon to Massachusetts and from the Dakotas to Texas and before waterfowl have commenced their northward migration.

 

Preliminary epidemiologic studies by APHIS have identified proximity of wild birds as a significant risk factor in cases of avian influenza in commercial egg and turkey farms.  Anecdotal and preliminary field evidence suggest that avian influenza virus can be transmitted over distances of up to a mile if entrained on dust with high winds.  Aerogenous transmission of Newcastle disease virus was confirmed during the 1972 outbreaks in Essex in the U.K. and there is no reason to reject a parallel for avian influenza.  If this is in fact valid, even the strictest biosecurity measures cannot absolutely eliminate the risk of introduction of avian influenza, especially for large egg complexes with houses operated with exhaust ventilation at displacement rates exceeding 1.5 million cfm.

It would seem appropriate therefore to prevent contact between wild birds and enclosed poultry.  Air filters are impractical, cannons have proven to be inconsistently effective, installation of screens over lagoons is expensive and so a more efficient alternative is required to supplement intense structural and operational biosecurity.

 

Bird Control Group in the Netherlands has developed the AVIX Autonomic Laser Bird System that deters a wide range of bird species from congregating and roosting in favored areas providing feed and sanctuary.  Developed originally for protection of fruit and crops, AVIX is now used as a bird deterrent for livestock and poultry facilities in addition to feed mills, barns and lagoons.  The system emits a green laser beam that is perceived by birds as an aerial predator.  The natural reaction of a flock is to take to the air as soon as the first bird recognizes the sweep of the beam.

 

The effectiveness of the system in deterring wild birds was demonstrated in controlled studies conducted by scientists at Wagenigen University in the Netherlands. Currently five units are being evaluated on turkey farms in Minnesota under the state Department of Agriculture under a ‘Livestock Protect’ grant. Some U.S. egg producers at locality risk are installing AVIX laser units on towers on their farms.

 

The system if correctly installed will reduce the gathering of birds within the range of the AVIX laser emitter by 80 to 95 percent.  The system is effective, providing it is continually operational.  The studies conducted in Holland by Dr. Armin Elbers, senior epidemiologist at Wageningen University and Research reported to the International Egg Commission that protection is provided over a range of 600 yards.  Field trials demonstrated the absence of wild birds, principally migratory waterfowl, during the period of operation despite the presence of waterways in the vicinity of farms.  Deactivating the laser invariably resulted in return of waterfowl.

 

From information provided by the U.S. Representative of the Bird Control Group, an installation costs approximately $15,000.  The beam circulates through 180º and can be pre-programmed for optimal coverage depending on topography.

 

Based on the results of U.S. evaluation, a subsequent feasibility study will be prepared taking into account the risks and consequences of exposure to HPAI and the potential financial benefit from installation of the system.

It is emphasized that there is no single protective modality that is absolutely effective against introduction of HPAI into commercial flocks.  The AVIX Autonomic Laser Bird Repellent System addresses a specific and highly significant risk factor.  It is emphasized that both structural and operational biosecurity is required to prevent infection by obvious routes including personnel, vehicles, flock transfer and other fomites.  The AVIX Autonomic System offers producers with a high level of biosecurity an additional means of protecting flocks against aerogenous infection.

 

Ultimately protection from endemic HPAI will require a combination of measures including repelling migratory waterfowl and domestic birds, high levels of structural and operational biosecurity and eventually effective immunization.

 

For further information on AVIX access the Bird Control Group website www.birdcontrolgroup.com or contact Craig Duhr (469) 345-9711 at <c.duhr@birdcontrolgroup.com>.


 

Ongoing Outbreaks of Salmonella Mbandaka in Europe

03/23/2024

An ongoing outbreak of Salmonella Mbandaka infection commencing in 2021 has resulted in 300 diagnosed and confirmed cases through March 2024.  Outbreaks have been recorded in the U.K., Finland, France, Germany and the Netherlands.  Extensive, epidemiologic investigations including whole genome sequencing have identified the source as steam-cooked chicken breast  and other products from Ukraine.

 

According to the European Commission, corrective measures have been implemented in the implicated plant with enhanced surveillance and upgrading of food safety.

 

The persistence of one strain for over four years suggests vertical transmission that should be evaluated.  It would be interesting to learn whether producers in Ukraine and specifically the single largest integrator and exporter have implemented preventive vaccination at either or both the breeder and grow-out levels.


 

Sodexo Promoting Plant-Based University Meals

03/23/2024

Sodexo, a multinational food service company specializing in institutional and educational catering, is a force in promoting plant-based protein. The Company has established a goal of serving half of all meals as plant-based by 2025. 

 

 Their latest initiative is to install two separate serving stations in dining halls.  One termed DefaultVeg will serve only plant-based items.  A second station will serve both plant-based and animal-derived meals. The DefaultVeg program was established in cooperation with the Better Food Foundation and the Food for Climate League.

The implications of promoting plant-based meals to university students are self-evident.  Successive generations of students will be attuned to plant-based servings irrespective of cost and quality compared to animal-derived products.  The promotion of plant-based meals will be accompanied by appropriate publicity emphasizing welfare and sustainability benefits that may or may not be valid.


 

FTC to Ban Universities Retaining Unused Meal Plan Payments

03/22/2024

The White House has instructed the Federal Trade Commission to prevent universities retaining unused meal plan payments.  The initiative is a component of a campaign against “junk fees” and other forms of exploitation of university students (and their parents) including charging for books as a component of tuition fees.  A White House statement noted, “Students incur billions in fees or additional unseen costs for unused meal account funds, using a college-sponsored credit card or banking account, paying for textbooks or taking out a loan.”  The statement also criticized the lack of transparency displayed by Universities in withholding information that would allow students to opt out of certain fees.

 

The intention to limit “junk fees” also extends to restaurants and hotels that in some jurisdictions are required to clearly state service fees and to restrict imposition of charges without a specific explanation and express agreement by the patron.

 


 

Tyson Foods Facing Backlash over Hiring Legal Asylum Seekers

03/22/2024

In 2022 Tyson Foods committed to hiring up to 2,500 legal refugees over a three-year period.  Tyson Foods is a participant in the Tent Partnership that will collectively hire up to 180,000 migrants.

 

Following criticism in social media and comments by Senator J.D. Vance (R-OH) Tyson issued a statement to clarify misinformation.  The Company stated, “Tyson Foods is strongly opposed to illegal immigration, and we led the way in participating in the two major government programs to help employers combat unlawful employment, the E-Verify and the Mutual Agreement between Governments and Employers Program”.  The statement added, “Tyson Foods employs 120,000 team members in the U.S., all of whom are required to be legally authorized to work in this country.”

 

Concern over the Tyson intent to employ legal asylum seekers is viewed against the closure of the Perry, IA. pork plant that will displace 1,200 workers.

Senator Vance has gone on record as stating, “Assuming Tyson is operating legally – which we don’t even know if they are, we don’t know the details of their intent but we do know that are firing American workers and hiring illegal aliens to replace them.”  This statement lacks substantiation and to some measure demonstrates a prevailing xenophobia that appeals to a large segment of Senator Vance’s constituency.

 

With respect to making rational decisions on facility utilization that benefits stock owners and stakeholders, Tyson appears to be between a rock and a hard place over staffing and altruism.


 

Sprouts to Introduce Loyalty Program

03/22/2024

Sprouts Farmers Markets will introduce a comprehensive loyalty program according to CEO Jack Sinclair.  He stated, “We need more people signing up to be part of the loyalty program and we are investing in what needs to happen for the future so that we increase the number of people who are providing first-party information”.  Currently the company only has data on ten percent of its customers compared to an industry aspirational value in excess of 75 percent.  The lack of information on the Sprout’s customer base is impeding promotional efforts expressed by Sinclair as “At the moment we are trying to sale grass-fed beef to vegetarians which is not a smart move.”

Sprouts will have to design their loyalty program to appeal to health-conscious consumers and those concerned with organic and specialty foods including protein and produce.  The new loyalty program tailored to the needs of company is currently under review in two markets with additional test planned.


 

McDonald's Anti-Poaching Policy to be Litigated

03/22/2024

ollowing an August ruling by the 7th U.S. Circuit Court of Appeals that revived the 2017 “no- poaching” lawsuit, an appeal to the Supreme Court of the United States was denied certiorari letting stand the lower court ruling that the case could proceed. The decision of the 7th Circuit apparently took into consideration the amicus brief submitted jointly by the U.S. Department of Justice and the Federal Trade Commission.

Since the original 2017 class action lawsuit, McDonald’s Corporation has ceased requiring franchisees to agree to no-poach agreements consistent with federal and some state laws and now adopted as a universal practice by QSRs.  The class alleged that the activities of McDonald’s in 2017 restricted competition for employees and was in violation of the Sherman Antitrust Act and Illinois laws.

The case arises from an employee who worked in a McDonald’s franchise in Florida from 2009 through 2015 and was denied employment by a competing franchisee on the basis of an agreed no-poaching policy.

 

If the lawsuit is successful, damages could exceed $2 billion given that the class comprises workers nationwide.


 

Commodity Report

03/21/2024

WEEKLY ECONOMY, ENERGY AND COMMODITY REPORT: MARCH 21st 2024.

 

OVERVIEW

 

Prices for corn and soybean meal were relatively unchanged compared to last week. Prices were influenced by short covering arising from geopolitical concerns and revised projections for crop sizes in Brazil. Secondary factors included disruption in shipping in the Red Sea and Panama Canal, carryover from the 2023 U.S. crop, export orders and predicted ending stocks of corn and soybeans for the 2024 crop. There was minimal response to the March WASDE that retained projections for production and ending stocks from the February report prior to release of planting intentions.

 

At 12H00 on March 21st the CME price for corn was down 0.7 percent compared to the previous week to 434 cents per bushel for May delivery. Corn price was influenced by higher ethanol demand and the proportionally high ending stock of corn from the 2023 crop. Export orders for the current market year have increased in response to lower prices. Volumes and prices are indirectly influenced by events in the Black and Red Seas. Orders by China resumed at the end of the 2022-2023 market-year and have extended through to March with a stable Dollar Index and low FOB prices but with higher ocean freight. Total exports for the current market year are 30.0 percent higher than for the corresponding week during the 2022-2023 year.

 

Soybeans traded at 1,206 cents per bushel for May 2024 delivery. Gain was attributed to short covering and projections for the 2024 Brazil and Argentine harvests. Total exports for the current market year are 18.3 percent lower than for the corresponding week in the 2022-2023 year.

 

Soybean meal traded at $343 per ton for May delivery compared to $335 per ton for March delivery last week. Price was influenced by demand coupled with high crush volumes for consecutive months from December onwards but with volume restored in February after the impact of cold weather in January. Price will fluctuate to reflect the CME price for soybeans and the demand for biodiesel despite the adverse financial situation in this sector. The market previously responded to the increased 2023 crop and higher stocks together with projections for 2024 unchanged from February in the March WASDE Report.

 

WTI was 2.2 percent higher from last week to $81.44 at 16H00 EDT on March 21st with static world demand in relation to supply. The rise in price reflects disruption of shipping in the Red Sea, turbulence in the Middle East but is countered by U.S. production of 13.3 million barrels per day in February with ample reserves. The upward trajectory in price may continue if production cuts by OPEC amounting to 2 million barrels per day and extended through June actually materialize. There was little inter-day fluctuation in price during the week ($79.30 to $82.16 range) with a uniform upward trend. Crude oil inventory in the U.S., other than the Strategic Reserve, was down 0.8 percent to 31.4 million barrels last week following the seasonal trend. The U.S. production is constraining domestic and international prices

 

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

  • Weather conditions in areas of the World growing corn and oilseeds especially in Brazil and also Argentine with favorable rain recently under the influence of a strong La Nina The 2023 U.S. harvest was completed ahead of the corresponding weeks in 2022 with higher carryover (downward pressure).
  • Geopolitical considerations continue to move markets, especially in the Mideast. Cancellation of the BSGI in July and ongoing attacks on Ukraine port facilities impacted prices of wheat, corn, oilseeds and vegetable oils. Loaded bulk vessels are sailing from Black Sea and Danube River ports using the ‘Humanitarian Corridor” to various destinations. This route is operational despite threats by the Russian Federation to mine the entrance to ports and deploy airborne missiles. Exports from Ukraine are approaching 1.5 million metric tons per week with a total of 26 million metric tons market year through February, down 11 percent from the equivalent period for 2022-2023 year. Grain production in Ukraine during the current year will be lower than 2022/2023 (Downward pressure on corn and wheat and an indirect effect on soybeans)
  • Macroeconomic U.S. factors:-
  • Most economists in academia and the private sector are confident of a “soft landing” for the economy following the release of revised Q4 2023 GDP and recent releases of economic parameters including the CPI and anticipated PPI and a decline in bond rates. Annual inflation as measured by CPI declined from 8.9 percent in June 2022 to 3.2 percent in February 2024. This is in part a response to a series of 11 FOMC rate raises that curbed inflation and cooled the labor market but without precipitating unemployment. There is evident stability in the bank sectors in both the U.S. and Europe. Large U.S. banks passed stringent mid-year “stress tests”. There is now concern over regional banks with exposure to commercial real estate.
  • The Federal Reserve held the benchmark interest rate steady at the monthly FOMC meeting on March 20th 2024, the fifth sequential pause. The Federal Reserve commentary indicated that the rate would be held at 5.25 percent until a pivot with possibly three reductions of 25 basis points each in 2024, after the June meeting at the earliest. Chairman Powell in Congressional testimony and documented in FOMC minutes has indicated that decisions would be based on data and demonstrable progress in reducing inflation to achieve an annual 2.0 percent target by mid-2025. Market optimism with projections of five reductions during 2024 was premature.
  • The February 28th Bureau of Economic Affairs announcement of the advanced estimate of Q4 GDP confirmed a value of 3.2 percent, slightly below the consensus estimate of 3.3 percent. The rise was attributed to increased consumer and government sector spending and investment in inventory.
  • The February 22nd 2024 S&P Manufacturing Purchasing Managers’ Index Report (PMI) rose to a 21-month high of 52.5 in February from 52.2 in January 2024. The PMI is 4.5 percent higher over 12 months. The recent upward trend suggests recovery after five pauses in increases in the Federal Reserve benchmark interest rate.
  • On February 29th the Bureau of Economic Analysis released the January Personal Consumption and Expenditure Price Index (excluding food and energy) that was up 0.1 percent from the previous month. This was in line with estimates. Food prices increased 0.5 percent but energy was down 1.4 percent. The Index was up 2.4 percent year-over-year also corresponding to estimates. Food prices were up 1.4 percent and energy down 4.9 percent year-over-year. The PCPI is closely followed by the Federal Reserve and confirms declining inflation.
  • The March 12th Bureau of Labor Statistics release of the February 2024 CPI confirmed a 0.4 percent increase from January, and 0.1 percent above forecast. The annual increase of 3.2 percent was up from 3.1 percent in January and higher than the anticipated value. The increase in the core value (excluding food and energy) was 0.4 percent from January and 3.8 percent for the 12-month period, in line with estimates. Food at home was unchanged from the previous month. Food away from home was up 0.1 percent from January. On an annual basis all food was up 2.2 percent with food at home up 1.0 percent and food away from home up 4.5 percent. Energy was up 2.3 percent in February and down 1.9 percent over 12-months, mainly due to a decline in gasoline (-3.4 percent) and fuel oils (-5.4 percent). The shelter category was up 0.4 percent for the month and 5.7 percent over the past year. The macro trend is clearly towards reduced inflation due to a fall in energy prices but this category is moving up, detracting from deflation. The CPI heavily influences FOMC rate decisions.
  • The February Producer Price Index for Final Demand (PPI) released on March 14th was up by 0.6 percent from January compared to an expectation of 0.3 percent. The PPI was up 1.6 percent over the past 12-months. This is compared to a 6.4 percent increase in 2022. The increase in February was due to a 4.4 percent rise in energy and 1.2 percent for finished goods. The core PPI value excluding volatile fuel and food, was up 0.4 percent for February and up 2.8 percent for the 12-month period. Food was up 1.0 percent compared to a 0.3 percent decrease in January.
  • Retail sales in February were up 0.6 percent over January compared to an estimate of 0.8 percent and compared to a decline of 1.1 percent for the revised January value compared to December 2023.
  • A Federal Reserve release on March 15th confirmed that industrial production rose 0.1 percent in February. Production was adversely affected by inclement weather during January with plant closures. Capacity utilization was unchanged at 78.3 percent, 1.3 percent below the 1972-2020 average.
  • The February 26th report on Durable Goods Ordered for January 2024 was unexpectedly lower by 6.1 percent against a consensus estimate of a 4.5 fall. Transportation and specifically aircraft orders were down 16.2 percent. Excluding the Transportation component, new orders decreased by 0.3 percent in January impacted by inclement weather. Shipments of durable goods decreased 0.9 percent following a fall of 0.6 percent in December 2023.
  • The March14th release of retail sales data showed a monthly rise of 0.6 percent in February. This value is compared to the revised 0.4 percent rise in December 2023. Retail sales in January were affected by harsh winter storms and a change in the basis of calculation. The Federal Reserve FOMC closely monitors this index as a measure of the trend in inflation.
  • The March 1st ISM® Manufacturing Index for February attained 47.8 down from 49,1 in January.
  • The Conference Board Consumer Confidence Index released on February 27th for January/February, declined to 106.7 points. This reading was down from a revised 110.9 for the preceding four-week period.
  • The March 1st University of Michigan Index of Consumer Sentiment fell to 76.9 for February down from a revised 79.0 in January. The Index was up 14.9 percent from February 2023. Both the Current Economic Index (79.4 slightly down from 81.9 in January) and the Index of Consumer Expectations (75.2 down from 77.1 in January) denote a cautious increase in consumer sentiment influenced by lower interest rates and moderating inflation despite geopolitical concerns.
  • Non-farm payrolls added by 275,000 for February, as documented by the Bureau of Labor Statistics on March 9th. This was more than the anticipated 200,000, and compares to the revised January value. The increase is attributed to workers in the business, health care and government sectors. The unemployment rate rose to 3.9 percent with 15 million unemployed. Real average weekly earnings for January showed a 0.1 percent increase over January. Average hourly earnings rose 0.1 percent to $34.57 in February up 4.3 percent over 12 months. Wage rates are closely followed by the Federal Reserve.
  • The Bureau of Labor Statistics Job Openings and Labor Survey report released on March 6th estimated 8.9 million job openings at the end of January, down 100,000 (-0.1 percent) from December 2023 and consistent with estimates. The January job openings number was the lowest value in 33 months and compares with the March 2022 value of 12.2 million during COVID.
  • The seasonally adjusted initial jobless claims figure of 210,000 released on March 21st was down 2,000 from the revised seasonally adjusted 212,000 for the week ending March 14th but lower than the Reuter’s estimate of 215,000. The four-week moving average rose 2,500 to 211,250 The Bureau of Labor Statistics estimated 1.807 million continuing claims for the week ending March 8. There is evidence from data over the past three months that the labor market is cooling despite sporadic weekly reduction in new claims.
  • The February 1st Bureau of Labor Statistics report recorded a 3.2 percent increase in non-Farm Productivity for Q4; Unit Labor Cost was up by 0.4 percent on a normalized basis and Hours Worked was up by 0.4 percent in Q4
  • The ADP® reported on March 6th that private payrolls increased by 140,000 in February, up 29,000 from the revised 111,000 in January and compared to the Reuters estimate of 150,000 jobs. The increase in employment was mostly in the construction, transport and trade sectors. Annual pay was up 5.1 percent year-over-year compared to 5.3 recorded for January. The increase will not directly influence the probability of short-term future changes in interest rate since the ADP® is regarded by the FOMC as an unreliable statistic

 

FACTORS INFLUENCING COMMODITY PRICES

  • The 2023 harvests of corn and soybeans were completed by late November 2023. The March 8th WASDE provided a projection for acreage to be planted, yields, crop size and ending stocks for the 2024 crop.
  • It is evident that both polarization in the closely divided chambers of Congress and intra-party conflict between and among both sides of the aisle in the House will delay adoption of appropriations bills. Passage of the 2023 Farm Bill will be contentious and is subject to a 12-month extension as a stop-gap measure. Progress on the 2023 Farm Bill has been impeded by contention over SNAP eligibility and other entitlements that collectively represent 75 percent of total expenditure. The August 2nd downgrade of U.S. debt from AAA to AA+ by Fitch Ratings recognizes Congressional dysfunction. On November 10th 2023 Moody’s downgraded U.S. credibility from ‘stable’ to ‘negative’ based on an inability to pass required fiscal legislation. After four Continuing Resolutions the House and Senate passed six appropriations bills including the FDA and USDA, avoiding a March 8th partial shutdown of the Federal Government. Agreements have yet to be concluded on the remaining appropriations bills before March 22nd
  • The delayed 2023 Farm Bill is mired in conflict in both the House and Senate. There is no consensus on major issues comprising the magnitude of SNAP payments and eligibility and requested price supports for crops. The Chair of the Senate Agriculture Committee Sen. Debbie Stabenow (D-MI) is standing firm on maintaining both SNAP-WIC benefits and climate remediation funding even if the Farm Bill is delayed through to the 119th Congress
  • The March 8th WASDE #646 Projected both corn and soybean production parameters with a potential record corn harvest for the 2024 crop. There will be ample world availability of ingredients although inequitable distribution will result in shortages in some nations. Soybean exports will comprise 39 percent of the 2024 U.S. crop with a 12.5 percent increase in ending stock.
  • There is a projection by CONAB (the Soy production association in Brazil) that at the midpoint of the harvest the 2024 soybean crop in Brazil will attain 147 million metric tons (5,401 million bushels) down from a previous estimate of 155 million metric tons (5,695 million bushels). Exports of 100 million metric tons (3,674 million bushels) are anticipated and Brazil will crush 56 million metric tons (2,057 million bushels). The harvest will be 7 million metric tons (269 million bushels) lower than the 2023 record crop. Brazil exported 7.0 million metric tons (257 million bushels) of soybeans to China over the first two months of 2024, double the quantity shipped to China over the corresponding two months in 2023.
  • Corn production in Brazil for the 2023-2024 market year will attain 124 million metric tons (4,801 million bushels) from all three sequential harvests. But down seven percent from the previous year. Brazil is projected to export of 54 million metric tons (2,125 million bushels). Argentine will produce 56 million metric tons of corn (2,204 million bushels) up 56 percent from the previous year impacted by drought. (Lower prices in the future subject to favorable reports on crop progress and actual harvests)
  • The Dollar Index (DXY) was 103.4 on March 20th, up 0.1 point from last week but under a three-month high. Fluctuation is attributed to uncertainty over future interest rates. There is concern over a delay in the anticipated pivot by the Federal Reserve FOCM expected in June. The DXY has ranged from 99.0 to 107.0 over the past 52 weeks. The dollar index influences timing and volume of export orders and indirectly the price of WTI crude.


 


China Reports H9N2 Avian Influenza

03/21/2024

In a March 19th posting on ProMED, the Center for Health Protection for Hong Kong reported on three cases of H9N2 avian influenza diagnosed on the Mainland.  The patients were all children ranging in age from 3 to 11 years residing in Guangdong and Guangxi Provinces.

 

Most H9N2 cases involve contact with live poultry either on small farms or at wet markets.

 

Cases of H9N2 or other zoonotic strains of avian influenza usually result in temporary closure of wet markets if demonstrated to be the source of infection. Local social and economic pressures result in re-opening within a short duration of time restoring exposure to of infection. It is probable that mild cases of zoonotic avian influenza are not diagnosed especially in rural areas. Authorities in China are reticent to release information on disease and it is considered interesting that the report was released by the Autonomous Region of Hong Kong and not by either the Central or Provincial health agencies.


 

Trader Joe’s Product Recall – Again?

03/21/2024

Trader Joe’s is recalling their house brand cashew nuts based on potential contamination with Salmonella.  Routine testing by the FDA showed the presence of the pathogen packed by Wenders LLC. of Dublin, CA.  The cashew nuts were imported from India and Vietnam and contamination was detected on routine import surveillance by the FDA.

 

This is yet another in a series of recalls associated with bacterial or foreign matter contamination.  This suggests that Trader Joe’s is exercising inadequate oversight of quality control among its suppliers. This will ultimately be to the detriment of the image of the company and its goodwill and may even result in tort litigation in the event of injury.


 

Formaldehyde Under Review by EPA

03/21/2024

A draft risk evaluation for formaldehyde has been published by the Environmental Protection Agency in accordance with the Toxic Substances Control Act. The document maintains that formaldehyde “poses an unreasonable risk to human health”. Formaldehyde is used in construction materials representing the reality of low-level continuous home contact.

 

In the poultry industry, formaldehyde is used as a fumigant in hatcheries to suppress bacterial and fungal contamination and as a surface disinfectant.  Formalin-containing feed additives are extremely effective at suppressing Salmonella and other susceptible bacterial pathogens in feed.  Accordingly, the American Feed Industry Association has expressed concern over bans and will oppose anticipated regulation by the EPA.

 

The Agency will accept comments on the Draft Risk Assessment that will be reviewed by the Science Advisory Committee on Chemicals that will also review comments at a virtual public meeting in late May.

 

It is inevitable that restrictions will be placed on the use of formalin but it is hoped that industry concerns will be heeded and that a blanket ban will not be imposed.  Formalin can be used safely both as a fumigant and as a spray application providing appropriate precautions are taken to reduce human contact either through inhalation or direct skin contact.


 

Chris Kempczinski Appointed Chairman of McDonald’s Board

03/21/2024

Following the retirement of Board Chairman Enrique Hernandez after a 28-year tenure as a Board member, Chris Kempczinski will assume the position of Chairman in addition to his major responsibility as CEO.

 

Kempczinski will implement a program of expansion leading to 10,000 new restaurants globally over the next three years.  It is intended to increase sales through a loyalty program and to raise the number of customers to 250 million.

 

Expectations of increased sales are currently dampened by events in the Middle East and in the U.S. by competition and frugality shown by customers with smaller purchases per visit.



 

Farmers in Poland Protest E.U. Environmental Regulations

03/21/2024

Following protests in the Netherlands and France, farmers in Poland have blocked border crossings with Germany to publicize their concern over E.U. policy on the environment.  In addition to blocking border crossings, Polish farmers staged mass demonstrations in major cities including provincial capitals.  At issue is the E.U. Green Deal that will place restrictions on disposal of waste and mandate land usage.

 

A secondary consideration is the concessions extended to Ukraine following the invasion of that nation by the Russian Federation.  Grains from Ukraine shipped by train and road have impacted the prices of commodities produced in neighboring countries and especially Poland and Romania, representing unfair competition.

 

It is understood that the European Commission is offering some concessions relating to farming practices but this will not satisfy producers who are intent on continuing their traditional ways irrespective of the possible detrimental effects on the environment.


 

Transmission of HPAI to Goats

03/21/2024

In a March 18th report to the World Organization of Animal Health, the USDA confirmed H5N1 HPAI in a herd of goats diagnosed in late February. Five of ten neonatal affected animals died out of 165 in the herd. Goats and poultry were in biological contact and shared a common water source.

 

The implicated multi-species farm in Stevens County, in western Minnesota recorded a February 27th outbreak of H5N1 among diverse poultry species including 23 chickens, with the infection presumed to have been introduced by wild bird reservoirs.

 

It is a matter of record that numerous mammalian species are susceptible to H5N1 including marine mammals and farmed mink where evident animal-to-animal contact was responsible for transmission of infection.  In addition, terrestrial mammals, mostly scavenging carnivores, have been infected in the Americas and Europe possibly due to consuming dead birds.

 

It will be important for the USDA National Veterinary Services Laboratory to determine the type of mutations that have occurred in isolates from the farm that increased susceptibility of goats and possibly other mammals to H5N1. The antibody status of the herd should also be investigated given the low attack rate but a high case fatality rate.

 

This incident emphasizes the need for all people coming into contact with live poultry to receive the current multivalent seasonal influenza vaccine to prevent a possible recombinant event between avian and human viruses that could result in a zoonotic strain of avian influenza.


 

Dollar Tree Posts Q4 and FY 2023 Results

03/20/2024

In a March 13th release, Dollar Tree, Inc. (DLTR) announced Q4 and FY 2023 results for the period ending February 3rd 2024.  The holding company operates Dollar Tree and Family Dollar banners. Dollar Tree Inc. posted a net loss of $(1,710) million on total revenue of $8,640 million with a negative diluted EPS of $(7.85).  During Q4 the Company recorded a $950 million impairment of goodwill and a $594 million charge for stores following a review of the portfolio.  Comparable values for Q4 FY 2022 ending January 28th were net income of $452 million on revenue of $7,740 million with a diluted EPS of $2.04.

 

Comparing the respectivequarters, revenue was up 11.9 percent in Q4 2023. During the most recent quarter, Dollar Tree attained a gross margin of 32.2 percent (31.0 percent in Q4 FY 2022) and an operating margin of negative 21.9 percent, compared to 8.0 percent in Q4 2022.

 

 

For FY 2023 Dollar Tree Inc. posted a net loss of $(998) million on total revenue of $30,582 million with a negative diluted EPS of $(4.55). Comparable values for FY 2022 were net income of $721 million on revenue of $28,318 million with a diluted EPS of $7.21.

 

For Q4, consolidated comparable store sales, increased by 3.0 percent, with Dollar Tree achieving 6.3 percent and Family Dollar, 1.2 percent decline.

 

In commenting on results, Rick Dreiling, Chairman and CEO stated, “We finished the year strong, with fourth quarter results reflecting positive traffic trends, market share gains, and adjusted margin improvement across both segments,” Jeff Davis, CFO added, “As an organization, we continue to execute at a high level. Our core operating performance was strong in the fourth quarter, despite some unanticipated developments related to general liability claims.”

 

Guidance for FY 2024 included consolidated sales of $31,000 million to $32,000 million; a mid-single-digit percent increase in comparable store sales and an EPS ranging from $6.70 to $7.30.

 

Effective February 3rd 2024, Dollar Tree posted total assets of $22,023 million including $3,063 as goodwill and intangibles and carried long-term debt and lease obligations of $8,874 million.  DLTR had a market capitalization of $2,793 million on March 20th. The share has traded over the past 52 weeks from $102.77 to $161.10 with a 50-day moving average of $138.91. DLTR closed at $149.88 on March 12th, pre-release, closing March 13th at $127.10, down 15.2 percent. Dollar Tree trades with a forward P/E of 19.0.  For the trailing-12 months the company posted an operating margin of negative 9.9 percent and a profit margin of negative 3.3 percent.  The company returned negative 0.5 percent on assets and negative 12.4 percent on equity over the past twelve months.

 

Effective February 3rd the company operated 16,622 stores (Dollar Tree, 8,272; Family Dollar 8,350). During Q4 the company continued renovations and added a a net 147 stores. The Company intends to close 600 stores in FY 2024. Responding to complaints from civic organizations Dollar Tree added frozen and fresh foods to additional stores during the previous quarter in areas deemed “food deserts”  

 

In the investors’ call the company commented on theft as a headwind and announced preventive measures.


 

Dollar General Cutting Back on Self-Checkout

03/20/2024

Dollar General (DG) will immediately remove self-checkout stations in 300 of its stores that have recorded a high level of shoplifting and “shrinkage”. In 9,000 other stores self-checkout will be phased to conventional cashier-operated lines. In the interim use of self-checkout will be restricted to five items.

 

Self-checkout was introduced to reduce even further the staffing level of stores that are operated at a bare minimum to conserve cost.

 

 

Tom Vasos, CEO of Dollar General noted in an investor call that the company used AI (artificial intelligence) to analyze purchases and determine that a critical number of stores were mostly affected by either deliberate theft, by inadvertent failure to scan items or errors in scanning.  Perhaps just NI (natural intelligence) should have been applied to predict that installing self-checkout to reduce store personnel would not necessarily benefit the bottom line.  Perhaps that is why Tom Vasos was brought back from retirement as CEO to restructure and rejuvenate the company.


 

Dollar General Posts Q4 and FY 2023 Results

03/20/2024

n a March 14th release, Dollar General, Inc. (DG) announced Q4 and FY 2023 results for the period ending February 2nd. The Company beat on both the top line and on earnings compared to concensus estimates.

 

For Q4 Dollar General Inc. posted net income of $402 million on total revenue of $9,858 million with a diluted EPS of $1.85.  Comparable values for Q4  FY 2022 ending February 3rd were net income of $659 million on revenue of $10,203 million with a diluted EPS $2.96.

 

Revenue was down 3.4 percent in Q4 2023 compared to Q4 2022. During the most recent quarter, Dollar General attained a gross margin of 29.4 percent (30.9  percent in Q4 2022) and an operating margin of 5.9 percent, down from 9.1 percent in Q4 2022.

 

For FY 2023 Dollar General Inc. posted net income of $1,661 million on total revenue of $38,692 million with a diluted EPS of $7.55.  Comparable values for FY 2022  were net income of $2,416 million on revenue of $37,845 million with a diluted EPS $10.68.

 

The classification of revenue by category in FY 2023 comprised:-

  • Consumables  including food,   81.0%
  • Seasonal items,                          10.6%
  • Home requirements,                    5.6%
  • Apparel,                                       2.8%

 

For Q4 2023, consolidated comparable store sales, increased by 0.7 percent despite lower average transaction values partly offset by increased traffic.

 

In commenting on results, Todd Vasos, the recently re-instated CEO stated, “We were pleased to deliver fourth quarter top and bottom-line results at the upper end of our internal expectations. ”He added, “With customer traffic growth and market share gains during the quarter, we believe our actions are resonating with customers as they turn to Dollar General for our unique combination of value and convenience.” He concluded, “We have made solid progress executing on our Back to Basics strategy, which we believe supported our improved operational performance during the quarter. While we are pleased with the operational improvement we have seen, we believe that significant opportunity remains, as we continue to focus on enhancing the way we support our teams and serve our customers.”

 

Guidance for FY 2023 included net sales growth of 6.0 to 7.0 percent; same-store sales growth of 2.0 to 2.7 percent; and diluted EPS ranging from $6.80 to $7.35.

 

During FY 2023 Dollar General opened a net 882 new stores, remodled 2,007 and relocated 129 units. As of February 2nd the Company operated a total of 19,986 stores representing 151,095 square feet, a 5.7 percent growth over the year.

 

Effective February 2nd 2024, Dollar General posted total assets of $30,706 million including $5,539 as goodwill and intangibles. The Company carried long-term debt and lease obligations of $16,118 million.  DG had a market capitalization of $33,810 million on March 20th 2024. The share has traded over the past 52 weeks from $101.09 to $222,99 with a 50-day moving average of $151,095. DG closed at $148.24 on March 14th, pre-release, closing at $155.76 on March 15th Dollar General trades with a forward P/E of 21.5.  For the trailing 12-months the company posted an operating margin of 5.9 percent and a profit margin of 4.3 percent, returning 5.1 percent on assets and 27.0 percent on equity.


 

New York State Price Gouging Suit

03/20/2024

Following the supply disruptions caused by COVID, the price of food products soared across the U.S. responding to the universal law of supply and demand. During the post-Covid period, New York Attorney GeneOral, Letitia James initiated lawsuits against both egg and meat producers alleging price gouging.

 

 

Tyson Foods as a major supplier of beef, pork and chicken received a subpoena demanding records of products sold, extending from December 2019 through April 2022, including prices and production costs.

 

After providing preliminary information, Tyson has yet to comply in full, maintaining that the applicable New York State law does not apply to product introduced into the state in interstate commerce.



 

California Considering Expanding Ban on Food Additives

03/19/2024

Jesse Gabriel, the State Assembly member representing Encino, has introduced Bill 2316 that would ban titanium dioxide and six dyes from food served to school children in California.

 

The bill is co-sponsored by the Environmental Working Group and Consumer Reports.  FDA has previously reviewed the six dyes having previously reaffirmed their use during the 1980s.

 

The Environmental Working Group maintains that the dyes are toxic without presenting specific scientific justification.

 

If California extends the previous ban on Red Dye to other coloring agents problems would be created for food manufacturers and candy and confectionary will become very drab in appearance.

 


 

ADM Posts Q4 and FY 2023 Financial Results

03/19/2024

In a March 12th release, Archer-Daniels-Midland Corp. (ADM) posted financial results for the 4th quarter and FY 2023. The Company can be regarded as a bellwether for ‘Mega-Ag’ and the commodities trading and processing sector. Along with competitors Bunge, Cargill, Cofco and Dreyfus, all are subject to the risks of currency fluctuation, geopolitical events, climatic extremes, and increased cost of ingredients, labor and transport in a competitive world environment influenced by inflation, conflict and disparity in the quality of life between industrialized and developing nations.

 

For the 4th Quarter of FY 2023 ending December 31st, net income was $565 million on total revenue of $22,978 million. Comparable figures for the 4th quarter of fiscal 2022 ending December 31st 2022 were net income of $1,019 million on total revenue of $25,939 million. Diluted EPS fell from $1.84 for the 4th quarter of fiscal 2022 to $1.06 for the most recent quarter.

 

Comparing the 4th quarters Revenue was down 11.4 percent in FY 2023. Gross margin was up from 6.8 percent in Q4 2022 to 7.6 percent for Q4 2023 and operating margin up from 3.3 percent to 3.6 percent.

 

For the FY 2023 net income was $3,483 million on total revenue of $93,935 million with a diluted EPS of $6.43. Comparable figures for the 4th quarter of fiscal 2022 were net income of $4,340 million on total revenue of $101,556 million with a diluted EPS of $7.74.

 

Segment operating profits combined totaled $1,399 million with respective contributions:-

 

  • Ag Services and oilseeds           $954 million. (Crushing, $389m; Ag. Services, $214m)
  • Carbohydrate solutions              $309 million.
  • Nutrition                                    $ (10) million. (Human, $(25m); Animal, $15m)
  • Other businesses                        $146 million

 

Juan Luciano Board Chair and CEO commented, “ADM’s results speak to the resiliency of our business. Supported by our unparalleled global footprint and capabilities, we delivered another solid year of execution. Our team continues to focus on delivering high-quality products and services for our customers and is driving our productivity and innovation agenda, while generating strong cash flows that allow us to accelerate the return of cash to our shareholders.”

 

The Company release included a comment on the Nutrition Segment: “Operating profit was negative $10 million during the fourth quarter of 2023, down 110 percent compared to the prior year period. The Human Nutrition segment operating profit was negative $25 million, approximately $112 million lower versus the prior year period, as operational challenges led to lower volumes and increased manufacturing costs. The quarter also included negative impacts of $64 million related to deconsolidation and write-down of a joint venture, and an investment valuation loss. Unplanned downtime at Decatur East was also a negative impact. Animal Nutrition operating profit of $15 million was 17 percent lower versus the prior year, driven largely by lower amino acid margins and lower sub-segment volumes overall”.

 

“For the full year, Nutrition segment operating profit was $427 million, 36 percent lower versus the prior year. Human Nutrition results of $417 million were 25 percent lower than the prior year, as higher pricing was more than offset by weaker volumes and increased costs. The full year also included negative impacts of $64 million related to deconsolidation and write-down of a joint venture, and an investment valuation loss. Unplanned downtime at Decatur East was also a negative impact. Animal Nutrition results of $10 million were 91 percent lower compared to the prior year primarily driven by the normalization of amino acid margins and lower volumes”.

 

Guidance for FY 2024 included an adjusted EPS of $5.25 to $6.25

 

ADM, has apparently “identified and corrected” recording of sales between the Ag. Services and Oil Seeds Segment and the Nutrition Segment.  The adjustments will have no ultimate effect on the balance sheet and statements of earnings reflecting the period January 2018 through September 2023.

 

ADM noted “material weakness” in internal controls over financial reporting and accounting practices relating to intersegment sales.

 

Juan Luciano, Chairman and CEO, stated, “We have developed a remediation plan with respect to the identified material weaknesses to enhance reliability of our financial statements with respect to the pricing and reporting of sales.”  He added, “We remain committed to strong internal controls and we look to continue our focus on execution.”

 

ADM experienced a 24 percent drop in share price from $68.02 following the Friday January 19th disclosure that Vikram Luthar, the CFO, had been placed under administrative leave.

 

On December 31st 2023, ADM posted assets of $36,075 million of which $6,341 million comprised goodwill and intangibles, against long-term debt of $8,260 million. The Company had an intraday market capitalization of $30,800 million on March 19th. ADM trades with a forward P/E of 11.3 and has ranged over a 52-week period from $50.72 to $87.30 with a 50-day moving average of $57.32.  Twelve-month trailing operating margin was 3.3 percent and profit margin 3.7 percent.  Return on assets over the past twelve months was 4.3 percent and the return on equity 14.1 percent.


 

Hardee’s Franchisee in NC. Invests in Upgrades

03/19/2024

Boddie-Noell, a family-owned franchisee of Hardee’s has announced an investment of over $20 million in new restaurants and upgrades for their 72 restaurants in the North Carolina, Greater Triangle region.

 

Concurrently, the company will be offering the Hardee’s new menu selections featuring chicken tenders.

 

 

Mike Boddie, president of the Company noted, “this is our home market, and it includes the most restaurants of any region where we operate.  We are showing our commitment by introducing the new Hand-Breaded Chicken Tenders™ Platters and fries.  Over a 62-year association with Hardee’s, Boddie-Noell has innovated Made from Scratch ™ Breakfast Biscuits, Fresh Fried Chicken and Hand-Breaded Chicken Tenders.

 


 

Argentine Increases Production of Oil Seeds

03/19/2024

According to USDA-FAS GAIN report AR2024-03 released March 14th, Argentine will almost double production of oil seeds during the 2023-2024 market year compared to the previous year impacted by drought.

 

The revised projection is for a soybean crop of 49.5 million metric tons (1,819 million bushels) up to 141 percent from the previous market year.  Soybean crush will increase by 47 percent to 39.0 million metric tons representing 67 percent of available supply amounting to 57.91 million metric tons including the 2024 harvest and imports.

 

A bountiful harvest coupled with an improvement in the economy under the new Administration will benefit both domestic producers and through increased supply will indirectly constrain prices for soybean meal in the U.S.


 

McDonald’s Experiences International Computer Outage

03/18/2024

On Friday March 15th McDonald’s Corp. operations experienced a widespread loss of function affecting their mobile app., kiosks and digital menus. Systems failures were experienced in  Europe, Australia and Asian nations including the major markets of Japan, Taiwan and China that were impacted. The problem was self-inflicted, attributed to a “third party provider introducing a change in configuration” and was nor the result of a cyber-attack.

 

McDonald’s reported the outage in a release to the SEC. Previously the Company stated “We are increasingly reliant upon technology systems. Any failure or interruption of these systems could significantly impact our or our franchisees’ operations, or our customers’ experiences and perceptions.” In the precautionary statement the Company advised, "The artificial intelligence tools we are incorporating into certain aspects of our restaurant operations may not generate the intended efficiencies and may impact our business results."

 

 

In December 2023 McDonald’s Corp. entered into an agreement with Google to host computer systems involving global data storage and retrieval allowing the deployment of a generative AI system to promote service and facilitate market research.

 

Obviously, an investigation is in process and hopefully will yield results that will be applied to avert similar occurrences both for corporate McDonald’s and its franchisees.


 

Litigation over Kroger Albertson’s Merger Scheduled

03/15/2024

A hearing on the Federal Trade Commission (FTC) Injunction to block the planned merger between The Kroger Company and Albertson’s Corporation will commence on August 26, 2024.  The FTC will be joined in the action by the Attorneys General of eight states.


The hearing will take place before an Administrative Law Judge in Washington, DC.  There will be numerous lawsuits relating to the proposed merger including a private anti-trust lawsuit filed on behalf of consumers.  This case may be delayed until after the results of the FTC case.

 

It is possible that delays may scuttle the merger, although both parties would benefit through maintaining their commitment to a satisfactory conclusion even if this requires an extension into the next Administration.


 

Transition to La Nina Anticipated

03/15/2024

The U.S. National Ocean and Atmospheric Administration (NOAA) is predicting a transition from an El Nino to a La Nina event by mid-2024.  The effect of this change will be drier and hotter weather in the Midwest affected crop yields.  The situation will become more clear in coming weeks and may be reflected in yield estimates in the May WASDE.

 

A description of the Southern Oscillation events may be retrieved by entering El Nino into  SEARCH


 

Egg Projection

03/15/2024

Updated March 2024 USDA Projection for U.S. Egg Production and Consumption. 

 

On March 14th 2024 the USDA Economic Research Service issued updated values for egg production during 2022 with a projection for 2023 and a forecast for 2024. Production, consumption and prices were only slightly revised from the previous February 14th 2024 report.

 

Projected egg production for 2023 was reduced by 23 million dozen from the February 2024 Report to 7,864 million dozen This will be 0.5 percent higher than in 2022 due to progressive replacement of the 44 million hens depleted due to HPAI over the period extending from early spring through mid-December 2022. The per capita consumption of shell eggs and liquids combined for 2023 will be 0.6 percent lower than in the February report to 279.3 eggs but up two eggs (0.7 percent) from 2022. The projected average 2023 benchmark New York bulk unit price was unchanged from the February report at 192 cents per dozen. This was 31.9 percent lower than in 2022 attributed to a comparison with unseasonal high prices from the end of March through the 2nd Quarter of 2023.

 

Subsequent USDA projections will provide greater clarity on the recovery in consumption in an economy that is undergoing deflation. The 2023 Midwest in-carton 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. Price was restored in February 2024 but settled to $2.34 on March 8th 2024. This was above the USDA/EIC projection of the combined nest-run February 2023 cost of 76.0 cents per dozen for caged white Large, plus a provision for processing, packaging and transport of 60 cents per dozen amounting to $1.36 cents per dozen delivered to a distribution center.

 

Restoration in flock size after HPAI flock depletions in 2022 progressed at a rate of approximately 0.5 million per week but was limited by the availability of pullet chicks for replacement 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 325 million hens, mainly on complexes averaging over one million hens. The cost of ingredients will influence margins and may result in cessation of production by some small-scale producers that run out of working capital since financial losses were incurred through summer up to mid-fall. Unpredictable factors affecting price will include the extent of losses during the spring of 2024 due to a predicted reemergence of avian influenza; the supply and cost of ingredients as influenced by world and national availability and the intensity and persistence of domestic consumer demand. Exports of eggs and products at approximately two percent of total production will not materially affect the domestic price.

 

The forecast for 2024 includes production of 7,990 million dozen, up 1.6 percent from 2023. Consumption will attain 283.3 per capita, up an optimistic four eggs or 1.4 percent above the projection for 2023. This will naturally depress prices with the NY-Large price dropping by 12 cents per dozen or 6.3 percent from the average for 2023.

 

In 2023 egg exports as shell and products combined attained 5,161 million dozen shell-equivalents, or 2.2 percent of production. During 2022 egg imports as a result of HPAI depopulation, some in shell form but predominantly products, attained 25.9 million dozen shell-equivalents, up 42.8 percent from 14.9 million dozen and 26.4 percent from 2021.

 

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.

 

March 2024 USDA data is shown in the table below:-

Parameter

2020

(actual)

2021

(actual)

2022

(actual)

HPAI

2023

(projection)

2024

(forecast)

% Difference

2023-2024

Production (million dozen)

8,070

8,031

7,825

7,864

7,990

+1.6

Consumption (eggs per capita)

279.0

282.5

280.5

279.3

283.3

+1.4

New York price c/doz.)

112

119

282

192

180

-6.3

Source: Livestock, Dairy and Poultry Outlook released March 14th 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.


 

Florida Passes Legislation Restricting Heat Protection Measures

03/14/2024

Florida has enacted House Bill 433 that prevents counties or local regulatory agencies from imposing protective measures for outdoor agricultural workers.  With increasingly higher temperatures workers are susceptible to heat prostration that can be prevented by available water, shade and rest breaks.

 

The law expresses a cynical indifference to the safety and welfare of workers and will ultimately be to the determent of productivity and the availability of H-2B workers who are in any event subject to exploitation.

 

The onus for protection of workers rests with the Department of Labor, Occupational Safety and Health Administration (OSHA).  In 2021 the Administration ordered the Agency to develop workplace standards that have yet to be published.

 

A State Representative opposed to the bill noted, “We have generations of folks who are experiencing heat stress because they are outside and also suffer kidney damage because there are no bathroom breaks.  Preempting safety requirements in a state as hot as Florida does not make sense.”

 

The action by the Florida Legislature was initiated by lobbying from industry groups concerned over local ordinances mandating protective measures. In 2023, Texas enacted a similar law preempting city and county governments from passing workplace safety mandates. Texas HB-2127 is now in effect but has been ruled unconstitutional.

 

 Irrespective of any mandated legal protection afforded agricultural field and plant workers, it is hoped that a sense of decency and compassion will encourage employers to implement measures against heat stress and fatigue.

 


 

Aldi to Continue Expansion

03/14/2024

In a recent announcement, Aldi will expand by 800 stores nationwide by the end of 2028.  This projection includes the acquisition of Winn-Dixie and Harvey’s supermarkets some of which will be converted to the Aldi banner.

 

Jason Hart, CEO of Aldi stated, “With this commitment to add 800 stores in the next five years means we’ll be where our shoppers need us while positively impacting the communities we serve.”  He added, “Our growth is fueled by our customers, and they are asking for more Aldi stores in their neighborhoods nationwide.”

 

 Approximately 300 stores will be added in the Northeast and Midwest and the Company will also expand in Southern California, Arizonia and Nevada.

 

The program will involve an investment of $9 billion representing an expression of confidence in the U.S. grocery market despite competition from larger retailers including Walmart, Kroger and Amazon.  Aldi has established a significant niche market through low-cost private label brands of superior and consistent quality engendering customer loyalty, despite the limited range and occasional non-availability.

 


 

PAHO Regional Health Conference on Epidemiology of HPAI

03/14/2024

PAHO Conference on HPAI

The emergence of H5N1 strain avian influenza in Latin America during 2022 resulted in the extensive loss of migratory birds, commercial poultry and marine mammals. Accordingly the Pan American Health Organization (PAHO) organized a regional health conference in Rio de Janeiro on March 16th to review transmissibility among mammals and to assess risk of human susceptibility.  Thirty-five nations participated in the Conference attended by world experts on the molecular biology and epidemiology of avian influenza.

 

During the ongoing panornitic, a large number of diverse migratory and domestic bird species died of the infection.  A more serious concern was the extensive mortality among seals and sea lions in which direct animal-to-animal transmission must have occurred to attain the magnitude of losses recorded along the coasts of Chile and Peru and recently extending into Antarctica.

 


HPAI Marine mammals

Molecular virologists are concerned over mutations that have occurred as confirmed by sequencing of isolates. Dr. Ralph Vanstreels of the University of California, Davis noted “We are seeing the virus doing little evolutionary steps that are on the long-term movement towards potential human infection.”  Nine mutations have been identified in South American strains of H5N1 compared to those circulating in North America.  Despite the fact that the World Health Organization regards the risk to humans from the current circulating strains of H5N1 as being ‘low’ pharmaceutical companies are developing avian influenza vaccine that can be administered to humans.

 

The Conference considered enhanced surveillance, whole genome sequencing of isolates from birds and mammals and protocols to respond to outbreaks including establishing databases and standardized laboratory procedures.  To date only two cases of confirmed avian influenza have been diagnosed in humans, both recording a history of contact with wild birds. The patients survived with appropriate supportive and antiviral therapy but the mortality rate among the low number of elderly patients in Asia infected with H7N9 strain exceeds 60 percent.

 


Dead Seals as a result of HPAI

It is self-evident that maintaining large commercial flocks exceeding one million hens represents the potential for point mutations and recombinant events to occur.  An obvious preventive measure would be vaccination of at-risk flocks in areas with a history of exposure to migratory birds disseminating avian influenza virus.

 


 

 

Egg Month

03/14/2024

REVIEW OF FEBRUARY 2024 EGG PRODUCTION COSTS AND STATISTICS

 

Commencing in 2024 the EIC has justifiably separated the production costs and unit revenue values for eggs derived from caged and cage-free flocks. Accordingly EGG-NEWS will continue to summarize data but will consolidate production and export statistics for the U.S. egg industry and compare financial data for the two shell-egg categories.

FEBRUARY HIGHLIGHTS

 

  • February 2024 USDA ex-farm blended USDA nest-run, benchmark price for conventional eggs from caged hens was 251 cents per dozen, up 45.9 percent from the January 2024 value of 172 cents per dozen. For comparison, average monthly USDA benchmark price over 2023 was 146.0 cents per dozen with a range of 323 cents per dozen in January down to a low of 57 cents in May. Stock levels and prices prior to the onset of flock depletions due to HPAI indicated a relative seasonal balance between supply and demand. Future nest-run and wholesale prices will be largely dependent on consumer demand for eggs and liquid and the rate of replacement of pullets and hens depleted due to HPAI. Other considerations include diversion to shell sales from the egg-breaking sector in an interconnected industry.
  • Fluctuation in wholesale price is attributed in part to the amplification of upward and downward swings associated with the commercial benchmark price discovery system in use. Restoration of seasonal prices commenced midway through the fourth quarter of 2023 with a plateau after Christmas followed by a seasonal decline through January 2024. A substantial rise in price occurred during early through late February but with a sharp decline thereafter to mid-March. An unknown factor in future pricing will be the incidence rate and severity of highly pathogenic avian influenza in spring months with northward migration of waterfowl. Close to 13 million hens and 2.5 million pullets were depopulated during the fourth quarter of 2023 among five states with heavy losses in California.
  • February 2024 USDA average nest-run production cost for generic eggs from caged flocks over four regions (excluding SW and West), applying updated inputs was down 1.6 cents per dozen to 76.0 cents per dozen compared to the January 2024 value of 77.6 cents per dozen, mainly attributable to a 4 percent lower average feed cost per dozen.  Approximately 60 cents per dozen should be added to the USDA benchmark nest-run cost to cover processing, packing material and transport to establish a realistic price as delivered to warehouses.
  • February 2024 USDA benchmark nest-run margin attained a positive value of 175.0 cents per dozen for generic eggs from caged flocks compared to a positive margin of 94.4 cents per dozen for January 2024. Average nest-run monthly margin over 2023 was 64.2 cents per dozen compared to 155 cents per dozen in 2022. This differential was mainly due to higher prices following HPAI-depletion of flocks. It is emphasized that the U.S. benchmark price reflects nest-run conventional eggs.
  • The February 2024 national flock in production (over 30,000 hens per farm) was stated by the USDA to be up 0.1 million hens (rounded) to 300.0 compared to the revised January 2024 value of 299.7 million. This figure apparently takes into account depletion of 4.2 million hens during December 2023 that were not recorded in the month. Approximately 3.0 million hens returned to production from molt in February together with projected maturation of 22.0 million pullets, with this number offset by depletion of spent flocks. During the fourth quarter of 2023 approximately 13 million hens and 2.5 million pullets were depopulated due to HPAI in five states.
  • January 2024 pullet chick hatch of 26.1 million was up 8.6 percent or 2.1 million chicks from December 2023.
  • January 2024 exports of shell eggs and products combined was down 34.8 percent from December 2023 to 394,000 case equivalents representing the theoretical production of 5.2 million hens. The decrease was attributed to depressed demand for shell eggs by importing countries.

 

TABLES SHOWING KEY PARAMETERS FOR FEBRUARY 2024.

Summary tables for the latest USDA February 2024 flock statistics, costs and unit prices made available by the EIC on March 13th 2024 are arranged, summarized, tabulated and compared with values from the previous February 16th 2024 posting reflecting January 2024 costs and production data as applicable. Monthly comparisons of production data and costs are based on revised USDA values.

 

VOLUMES OF PRODUCTION REFECTING THE ENTIRE INDUSTRY

                                                                   

PARAMETER

        January 2024

     February 2024

Table-strain eggs in incubators

49.1* million      (Jan.)

 59.1 million     (Feb.)

Pullet chicks hatched

24.2 million        (Dec.)

 26.1 million     (Jan.)

Pullets to be housed 5 months after hatch

21.8 million        (May.)

 22.8 million     (June)

EIC 2023 December 1st Flock Projection (estimate)

328.9                   (Jan.)

328.0 million    (Feb.)

National Flock in farms over 30,000 

299.7million       (Dec.)

300.0 million    (Jan.)

National egg-producing flock 

315.7* million    (Dec.)

310.4 million    (Jan.)

Cage-free flock excluding organic

103.9*  million     (Jan.)

106.5 million    (Feb.)

Proportion of flocks in molt or post-molt

     11.5%             (Jan.)

   11.2%             (Feb.)

Total of hens in National flock, 1st cycle (estimate)

 279.4 million     (Dec.)

 275.6 million   (Jan.)

 

Total U.S. Eggs produced (billion)

    8.143* December 2023

  7.98   January 2024

Total Cage-Free hens in production

  122.3 million   (Jan.)

   15.0*% Organic

124.8 million   (Feb.)

14.7% Organic

“Top-5” States hen population (USDA)1

   147.9 million  (Dec.)

  148.5 million (Jan.)

 * Revised USDA/EIC

Notes 1. Texas excluded to maintain confidentiality            

 

PROPORTION OF U.S. TOTAL HENS BY STATE, 2023/20241                                                                   

Based on a nominal denominator of 300 million hens in flocks over 30,000 covering 94.6 percent of the U.S complement.

USDA has amended inclusion of specific states in regions and eliminated Texas data to protect confidentiality of Company flock

Sizes

STATE

DECEMBER *

    2023

    JANUARY*

       2023

 

 Iowa

    14.3%

      13.8%

 

Indiana

    11.8%

      11.6%

 

Ohio

    12.6%

      12.9%

 

Pennsylvania

      8.0%

        8.3%

             

Texas (estimate)

      7.5% ?

        7.5%?

                   

California

      3.0%

        3.0%?

 

  1. Values rounded to 0.1% 

*USDA data is questioned based on known values for hen depopulation and pullet placements with discrepancies in stated values during the 4th quarter of 2023

 

Rate of Lay, weighted hen-week (USDA)          83.3% January 2024.    82.6% February 2024

 

Revised per capita       egg consumption 2020:-             285.6 (down  7.8 eggs from 2019)*

Revised per capita       egg consumption 2021:-             282.5 (down  3.1 eggs from 2020)*

Revised per capita       egg consumption 2022:-             279.0 (down  3.5 eggs from 2021 due to HPAI)                          Projected per capita   egg consumption 2023:-             280.9 (up        1.9 eggs from 2022)                                                Forecast per capita     egg consumption 2024                283.7 (up        2.8 eggs from 2023 accepting HPAI losses)

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook February 14th 2023 taking into account demand from the food service sector and presumably including the effect of HPAI depopulation.

 

Egg Inventories at beginning of February 2024:

 

     Shell Eggs:        1.51 million cases down 17.5 percent from January 2024.

     Frozen Egg Products: 757,238 case equivalents down 15.7 percent from January 2024

     Dried Egg Products:  Not disclosed since March 2020 following market disruption due to

          COVID. Moderate level of inventory are assumed

Eggs broken under FSIS inspection (million cases)

 

 January 2024,  6.37       DECEMBER 2023,  6.31                   

Cumulative eggs broken under FSIS inspection 2023 (million cases)  78.7         JAN. to DEC.      

Cumulative 2023: number of cases produced (million)                       262.9         JAN. to DEC.

Cumulative 2023: proportion of total eggs broken                               29.9%        (30.8%  2022)

 

Cumulative eggs broken under FSIS inspection 2024 (million cases)   6.37         JAN.

Cumulative 2024: number of cases produced (million)                        22.17         JAN.          

Cumulative 2024: proportion of total eggs                                             28.8           JAN.

 


 


Commodity Report

03/14/2024

WEEKLY ECONOMY, ENERGY AND COMMODITY REPORT: March 14th 2024.

 

 OVERVIEW

 

Prices for corn and soybean meal were relatively unchanged compared to last week. Prices were influenced by short covering arising from geopolitical concerns and revised projections for crop sizes in Brazil. Secondary factors included disruption in shipping in the Red Sea and Panama Canal, carryover from the 2023 U.S. crop, export orders and predicted ending stocks of corn and soybeans for the 2024 crop.  There was minimal response to the March WASDE that retained projections for production and ending stocks from the February report,

 

At 12H00 on March 14th the CME price for corn was down 0.7 percent compared to the previous week to 423 cents per bushel for March delivery. Corn price was influenced by lower ethanol demand and the proportionally high ending stock of corn from the 2023 crop. Export orders for the current market year have increased in response to lower prices.  Volumes and prices are indirectly influenced by events in the Black and Red Seas. Orders by China resumed at the end of the 2022-2023 market-year and have extended through to March with a lower Dollar Index assisted by low FOB prices but with higher ocean freight. Total exports for the current market year are 31.5 percent higher than for the corresponding week during the 2022-2023 year.

Soybeans were up 3.4 percent from last week to 1,192 cents per bushel for March 2024 delivery. Gain was attributed to short covering and lower projections for the 2024 Brazil harvest. Total exports for the current market year are 18.9 percent lower than for the corresponding week in the 2022-2023 year.

 

 

Soybean meal was down 0.9 percent to $335 per ton for March delivery compared to $338 per ton last week. Price was influenced by demand coupled with high crush volumes for three consecutive months through December but with volume presumably restored after the impact of cold weather in January. Price will fluctuate to reflect the CME price for soybeans and the demand for biodiesel despite the adverse financial situation in this sector. The market previously responded to the increased 2023 crop and higher stocks together with projections for 2024 unchanged from February in the March WASDE Report.

 

 WTI was 0.3 percent higher from last week to $79.62 at 16H00 EDT on March 13th with low world demand in relation to supply. The rise in price is inconsequential in the face of disruption of shipping in the Red Sea, turbulence in the Middle East and is countered by U.S. production of 13.3 million barrels per day with ample reserves. The small upward trajectory in price may continue if production cuts by OPEC amounting to 2 million barrels per day and extended through June actually materialize. There was little inter-day fluctuation in price during the week ($76.95 to $79.92 range) with a small upward trend. Crude oil inventory in the U.S., other than the Strategic Reserve, was down 0.7 percent to 31.5 million barrels last week following the seasonal trend.  The U.S. production is constraining domestic and international prices

 

Factors influencing commodity prices in either direction over the past four

 weeks included:-

 

  • Weather conditions in areas of the World growing corn and oilseeds especially in Brazil and also Argentine with favorable rain recently under the influence of a strong El Nino event. The 2023 U.S. harvest was completed ahead of the corresponding weeks in 2022 with higher carryover (downward pressure).

 

  • Geopolitical considerations continue to move markets, especially in the Mideast. Cancellation of the BSGI in July and ongoing attacks on Ukraine port facilities impacted prices of wheat, corn, oilseeds and vegetable oils. Loaded bulk vessels are sailing from Black Sea and Danube River ports using the ‘Humanitarian Corridor” to various destinations. This route is operational despite threats by the Russian Federation to mine the entrance to ports and deploy airborne missiles.  Exports from Ukraine are approaching 1.5 million metric tons per week with a total of 26 million metric tons market year to date, down 11 percent from the equivalent period for 2022-2023 year. Grain production in Ukraine during the current year will be lower than 2022/2023 (Downward pressure on corn and wheat and an indirect effect on soybeans)

 

  • Macroeconomic U.S. factors:-
  • Most economists in academia and the private sector are confident of a “soft landing” for the economy following the release of revised Q4 2023 GDP and recent releases of economic parameters including the CPI and anticipated PPI and a decline in bond rates. Annual inflation as measured by CPI declined from 8.9 percent in June 2022 to 3.2 percent in February 2024. This is in part a response to a series of 11 FOMC rate raises that curbed inflation and cooled the labor market but without precipitating unemployment. There is evident stability in the bank sectors in both the U.S. and Europe. Large U.S. banks passed stringent mid-year “stress tests”. There is now concern over regional banks with exposure to commercial real estate.
  • The Federal Reserve held the benchmark interest rate steady at the monthly FOMC meeting on January 31st 2024, the fourth sequential pause.  The Federal Reserve commentary indicated that the rate would be held at 5.25 percent until a pivot with possibly two to three reductions of 25 basis points each in 2024, after the June meeting at the earliest. Chairman Powell in Congressional testimony and documented in FOMC minutes has indicated that decisions would be based on data and demonstrable progress in reducing inflation to achieve an annual 2.0 percent target by mid-2025. Market optimism with projections of five reductions during 2024 is  now unrealistically optimistic, with no reduction expected before July.
  • The February 28th Bureau of Economic Affairs announcement of the advanced estimate of Q4 GDP confirmed a value of 3.2 percent, slightly below the consensus estimate of 3.3 percent. The rise was attributed to increased consumer and government sector spending and investment in inventory.
  • The February 8th 2024 S&P Manufacturing Purchasing Managers’ Index Report (PMI) rose to 51.8 in January from 51.0 in December 2023. The PMI is approximately three percent below the 10-year average preceding the COVID years. The recent upward trend suggests recovery from the effects of successive raises in the Federal Reserve benchmark interest rate.
  • On February 29th the Bureau of Economic Analysis released the January Personal Consumption and Expenditure Price Index  (excluding food and energy) that was up 0.4 percent from the previous month. This was in line with estimates. Food prices increased 0.5 percent but energy was down 1.4 percent. The Index was up 2.4 percent year-over-year also corresponding to estimates. Food prices were up 1.4 percent and energy down 4.9 percent year-over-year. The PCPI is closely followed by the Federal Reserve and confirms declining inflation.
  • The March 12th Bureau of Labor Statistics release of the February 2024 CPI confirmed a 0.4 percent increase from January, and 0.1 percent above forecast. The annual increase of 3.2 percent was up from 3.1 percent in January and higher than the anticipated value. The increase in the core value (excluding food and energy) was 0.4 percent from January and 3.8 percent for the 12-month period, in line with estimates.  Food at home was unchanged from the previous month. Food away from home was up 0.1 percent from January.  On an annual basis all food was up 2.2 percent with food at home up 1.0 percent and food away from home up 4.5 percent. Energy was up 2.3 percent in February and down 1.9 percent over 12-months, mainly due to a decline in gasoline (-3.4 percent) and fuel oils (-5.4 percent). The shelter category was up 0.4 percent for the month and 5.7 percent over the past year. The macro trend is clearly towards reduced inflation due to a fall in energy prices but this category is moving up, detracting from deflation. The CPI heavily influences FOMC rate decisions.
  • The February Producer Price Index for Final Demand (PPI) released on March 14th was up by 0.6 percent from January compared to an expectation of 0.3 percent. The PPI was up 1.6 percent over the past 12-months. This is compared to a 6.4 percent increase in 2022. The increase in February was due to a 4.4 percent rise in energy and 1.2 percent for finished goods. The core PPI value excluding volatile fuel and food, was up 0.4 percent for February and up 2.8 percent for the 12-month period. Food was up 1.0 percent compared to a 0.3 percent decrease in January.
  • Retail sales in February were up 0.6 percent over January compared to an estimate of 0.8 percent and compared to a decline of 1.1 percent for the revised January value compared to December 2023.
  • A Federal Reserve release on February 15th confirmed that industrial production fell 0.5 percent in January against a projection of a 0.1 percent rise in December. Production was adversely affected by inclement weather during January 2024 with plant closures. Capacity utilization was down 0.2 percent to 78.5 percent, 1.1 percent below the 1972-2020 average.
  • The February 26th report on Durable Goods Ordered for January 2024 was unexpectedly lower by 6.1 percent against a consensus estimate of a 4.5 fall. Transportation and specifically aircraft orders were down 16.2 percent. Excluding the Transportation component, new orders decreased by 0.3 percent in January impacted by inclement weather. Shipments of durable goods decreased 0.9 percent following a fall of 0.6 percent in December 2023.
  • The February 15th release of retail sales data showed a monthly fall of 0.8 percent in January against an expected 0.1 percent decline. This value is compared to the revised 0.4 percent rise in December 2023. Core retail sales increased 0.6 percent in January. Retail sales in January were affected by harsh winter storms and a change in the basis of calculation. The Federal Reserve FOMC closely monitors this index as a measure of the trend in inflation.
  • The February 1st ISM® Manufacturing Index for January rose to 49.1 from 47.4 in December.
  • The Conference Board Consumer Confidence Index released on February 27th for January/February, declined to 106.7 points. This reading was down from a revised 110.9 for the preceding four-week period.
  • The March 1st University of Michigan Index of Consumer Sentiment fell to 76.9 for February down from a revised 79.0 in January.  The Index was up 14.9 percent from February 2023. Both the Current Economic Index (79.4 slightly down from 81.9 in January) and the Index of Consumer Expectations (75.2 down from 77.1 in January) denote a cautious increase in consumer sentiment influenced by lower interest rates and moderating inflation despite geopolitical concerns.
  • Non-farm payrolls added by 275,000 for February, as documented by the Bureau of Labor Statistics on March 9th. This was more than the anticipated 200,000, and compares to the revised January value. The increase is attributed to workers in the business, health care and government sectors. The unemployment rate rose to 3.9 percent with 15 million unemployed. Real average weekly earnings for January showed a 0.1 percent increase over January.  Average hourly earnings rose 0.1 percent to $34.57 in February up 4.3 percent over 12 months. Wage rates are closely followed by the Federal Reserve.
  • The Bureau of Labor Statistics Job Openings and Labor Survey report released on March 6th estimated 8.9 million job openings at the end of January, down 100,000 (-0.1 percent) from December 2023 and consistent with estimates. The January job openings number was the lowest value in 33 months and compares with the March 2022 value of 12.2 million during COVID.
  • The seasonally adjusted initial jobless claims figure of 209,000 released on March 14th was down 1,000 from the revised seasonally adjusted 210,000 for the week ending March 7th but lower than the Reuters  estimate of 218,000. The four-week moving average fell 500 to 208,000 The Bureau of Labor Statistics estimated 1.81 million continuing claims for the week ending March 1st.. There is evidence from data over the past three months that the labor market is cooling despite sporadic weekly reduction in new claims.
  • The February 1st Bureau of Labor Statistics report recorded a 3.2 percent increase in non-Farm Productivity for Q4; Unit Labor Cost was up by 0.4 percent on a normalized basis and Hours Worked was up by 0.4 percent in Q4
  • The ADP® reported on March 6th that private payrolls increased by 140,000 in February, up 29,000 from the revised 111,000 in January and compared to the Reuters estimate of 150,000 jobs. The increase in employment was mostly in the construction, transport and trade sectors. Annual pay was up 5.1 percent year-over-year compared to 5.3 recorded for January. The increase will not directly influence the probability of short-term future changes in interest rate since the ADP® is regarded by the FOMC as an unreliable statistic

 

FACTORS INFLUENCING COMMODITY PRICES

 

  • The 2023 harvests of corn and soybeans were completed by late November 2023. The March 8th WASDE provided a projection for acreage to be planted, yields, crop size and ending stocks for the 2024 crop.
  • It is evident that both polarization in the closely divided chambers of Congress and intra-party conflict between and among both sides of the aisle in the House will delay adoption of appropriations bills. Passage of the 2023 Farm Bill will be contentious and is subject to a 12-month extension as a stop-gap measure. Progress on the 2023 Farm Bill has been impeded by contention over SNAP eligibility and other entitlements that collectively represent 75 percent of total expenditure. The August 2nd downgrade of U.S. debt from AAA to AA+ by Fitch Ratings recognizes Congressional dysfunction. On November 10th 2023 Moody’s downgraded U.S. credibility from ‘stable’ to ‘negative’ based on an inability to pass required fiscal legislation. After four Continuing Resolutions the House and Senate passed six appropriations bills including the FDA and USDA, avoiding a March 8th partial shutdown of the Federal Government. Agreements have yet to be concluded on the remaining appropriations bills before March 22nd
  • The delayed 2023 Farm Bill is mired in conflict in both the House and Senate. There is no consensus on major issues comprising the magnitude of SNAP payments and eligibility and requested price supports for crops. The Chair of the Senate Agriculture Committee Sen. Debbie Stabenow (D-MI) is standing firm on maintaining both SNAP-WIC benefits and climate remediation funding even if the Farm Bill is delayed through to the 119th Congress  
  • The March 8th WASDE #646 Projected both corn and soybean production parameters with a potential record corn harvest for the 2024 crop. There will be ample world availability of ingredients although inequitable distribution will result in shortages in some nations. Soybean exports will comprise 39 percent of the 2024 U.S. crop with a 12.5 percent increase in ending stock.
  • There is a projection by CONAB (the Soy production association in Brazil)  that at the midpoint of the harvest the 2024 soybean crop in Brazil will attain 147 million metric tons  (5,401 million bushels) down from a previous estimate of 155 million metric tons (5,695 million bushels). Exports of 100 million metric tons (3,674 million bushels) are anticipated and Brazil will crush 56 million metric tons (2,057 million bushels). The harvest will be 7 million metric tons (269 million bushels) lower than the 2023 record crop.
  • Corn production in Brazil for the 2023-2024 market year will attain 124 million metric tons (4,801 million bushels) from all three sequential harvests. But down seven percent from the previous year. Brazil is projected to export of 54 million metric tons (2,125 million bushels). Argentine will produce 56 million metric tons of corn (2,204 million bushels) up 56 percent from the previous year impacted by drought. (Lower prices in the future subject to favorable reports on crop progress and actual harvests)
  • The Dollar Index (DXY) was 103.3 on March 6th, down 0.5 point from last week but under a three-month high with fluctuation following uncertainty over future interest rates and prospects of a prolonged delay in the anticipated pivot by the Federal Reserve FOCM. The DXY has ranged from 99.0 to 107.0 over the past 52 weeks. The dollar index influences timing and volume of export orders and indirectly the price of WTI crude.


 


Cal-Maine Foods, Inc. Completes Acquisition of Dexter Complex

03/14/2024

Dexter MO Plant to be re-puposed by Cal-Maine Foods

On March 14th Cal-Maine Foods, Inc. announced completion of the previously announced acquisition of a complex comprising a broiler processing plant, hatchery and feed mill in Dexter, MO, closed by Tyson Foods, Inc. in 2023. The Company plans to repurpose the facilities to produce and pack shell eggs and egg products.

 

Sherman Miller, president and CEO stated, “We are pleased to join the Dexter community and are excited about the opportunities to expand our operations”. He added “We intend to partner with the existing strong network of local contract growers who can support our shell egg production”.

 

In commenting on the benefits of the transaction Miller stated “Dexter, MO. has a central geographic location and the strong work force will enhance our supply and distribution capacity for customers in Missouri and surrounding markets. Importantly, we will also benefit from closer proximity to sources for our primary feed ingredients.

He concluded “We look forward to the new production opportunities, including the potential for additional free-range capacity, in this new community and market for Cal-Maine Foods.”

 

Cal-Maine Foods, Inc. is the largest producer and distributor of fresh shell eggs in the United States and marketing in states across the southwestern, southeastern, mid-western and mid-Atlantic regions of the United States.


 

Wind Assisted Propulsion Evaluated

03/14/2024

Pyxis Ocean underway

During mid-2023, Cargill initiated a test of the Pyxis Ocean a bulk carrier converted to wind assisted propulsion by WindWings®.  The vessel owned by MC Shipping has made a number of voyages since August 2023 sailing the Indian, Pacific and Atlantic Oceans. The initiative is in response to the International Maritime Organization target of a five to ten percent reduction in carbon energy sources.

 


Pyxis Ocean with aerofoils extended

It was determined that over the test period, the vessel saved three metric tons of bunker fuel daily  representing a value of $2,100. Over a 30-day voyage a Panamax dry bulk vessel carrying 57,000 metric tons of soybeans would save shippers $1.10 per ton. Based on the results, the area of wind capture will be increased to achieve a potential fuel savings of up to ten tons per day with favorable winds providing proportionally higher savings.

 

The question arises as to the return on investment and long-term financial benefits given the capital cost of an installation and the operational components including maintenance.


 

Walmart Plans Third Milk Plant for Texas

03/13/2024

Walmart Inc. has announced a milk processing plant in Robinson, TX scheduled to open in 2026.  This plant will follow the 2018 facility in Fort Wayne, IN and will reflect the design of the previously announced plant to be located in Valdosta, GA.  Both the planned plants will cost approximately $350 million.

 

Bruce Heckman, Vice-president of manufacturing at Walmart stated, “This new facility continues our commitment to building a more resilient and transparent supply chain and ensuring that our customer’s needs are met for this everyday staple.  Products to be processed in the Texas facility will be distributed to approximately 750 Walmart stores in Texas, Oklahoma, Louisiana, Arkansas and Mississippi.  Milk will be marketed under the Walmart Great Value brand and for Sam’s Club under the Member’s Mark brand.

 


Proposed Walmart Milk Plant

 The fact Walmart has invested close to $1 billion in milk processing to stabilize their supply chain suggest that the Company might be interested in integrating backwards into egg production either through a joint venture or acquisition of an existing large producer. Establishing a series of egg complexes by Walmart is considered unlikely despite the investment by Costco in Lincoln Premium Poultry for rotisserie broiler production.


 

Vital Farms Posts Q4 and FY 2023 Financial Results

03/13/2024

In a March 7th release, Vital Farms Inc. (VITL), a Certified B Corporation posted financial results for the 4th quarter and FY 2023. This specialty egg producer competes directly with Eggland’s Best and other producers and distributors of USDA Certified Organic and pasture-raised products including Pete and Gerry’s, Hidden Valley and Egg Innovations. The Company experiences the same pressures of feed cost, contractor remuneration, labor and transport as competitors in a competitive and fluctuating market environment still restrained inflation.

 

For the 4th Quarter of FY 2023 ending December 31st 2021, net income was $7.2 million on revenue of $135.8 million with a diluted EPS of $0.17. 

 

Comparable figures for the 4th quarter of FY 2022 ending December 25th were net income of $1.9 million on revenue of $110.0 million with a diluted EPS of $0.04.

 

Sales increased 23.3 percent over the 4th quarter of FY 2023. Gross margin was 33.2 percent for the most recent quarter (30.3 percent Q4 FY 2022). Operating margin was 6.7 percent compared to 3.1 percent in Q2 2022.  

For the FY 2023, net income was $25.6 million on revenue of $471.9 million with a diluted EPS of $0.59.  Comparable figures for FY 2022 were net income of $1.2 million on revenue of $362.1 million with a diluted EPS of $0.03.

 

The Company increased guidance for FY 2024 projecting revenue of $552 million, an adjusted EBITDA of $57 million and capital expenditure of $35 to $45 million.

 

On December 31st 2023, VITL posted assets of $275.2 million, of which $3.9 million comprised intangibles against long-term debt and lease obligations of $17.3 million. The Company had an intraday market capitalization of $877.0 million on March 13th. VITL trades with a forward P/E of 208 and has ranged over a 52-week period from $10.23 to $21.42 with a 50-day moving average of $16.16.  Twelve-month trailing operating margin was 8.3 percent and profit margin 5.4 percent.  Return on assets over the past twelve months was 9.1 percent with 14.6 percent on equity. At close of trading on March 7th pre-release, VITL was priced at $19.87. Post-release on  March 8th VITL opened at at $21.18.

 

Approximately 36 percent of VITL equity is held by insiders with 61 percent owned by institutions. As of February 29th 6.1 percent of the float was short.


 

COVID Wrongful Death Lawsuit Dismissed

03/12/2024

A lawsuit alleging wrongful death was filed with a U.S. District Court for the Eastern District of Texas in April 2021 by the Estate of an employee that died from COVID while working in the Mt. Pleasant, TX plant operated by Pilgrim’s Pride Corp. The Plaintiffs claimed that the company acted “with fraudulent misrepresentations, gross negligence and incorrigible willful and wanton disregard for worker safety.” 

 

During May 2020, COVID was prevalent in all meat and poultry processing plants with workers in close proximity and operating under conditions of low ambient temperature and high humidity that encouraged persistence of the airborne virus.  At this time, little was known of the epidemiology of COVID and the routes of infection.  Based on recommendations by the Centers for Disease Control and Prevention based on influenza, separation of workers using partitions, masking and decontamination were introduced by the industry.  According to evidence submitted, the decedent was not provided with a mask or facial shield until late May 2020 prior to his death in mid-June 2020 from COVID as confirmed by the Titus County Medical Examiner.

 

The court dismissed the case without prejudice, allowing the Plaintiffs 21-days to amend their complaint with specific reference to alleged negligence on the part of the employer.


 

Revamp of H-2A Visa Program

03/12/2024

A bipartisan working group of the House Committee on Agriculture recently concluded a major review of the H-2A Visa program.  Recommendations include:

 

  • Expanding the program from seasonal to year-round eligibility to meet the needs of specific sectors of agriculture including dairy, hogs and poultry
  • Establishing standard wage rates based on duration of daily labor
  • Expediting procedural improvements in the face of an urgent need to legally employ additional workers

It is now up to both the House and the Senate to modify existing laws and for Federal and State agencies involved to cooperate to provide for a legal pathway to employ eligible workers.


 

South Dakota to Facilitate Summit Pipeline

03/12/2024

Following a denial by the Public Utilities Commission for Summit to proceed with a carbon dioxide pipeline, the South Dakota Legislature has passed bills that provide protection for landowners but will allow easements to facilitate the project.  Pipeline operators will have to pay for access to survey land and counties could collect a surcharge.  Pipeline companies would be responsible for damage and easements would be restricted to 99 years.  The final version of the legislation allows the Public Utilities Commission to overrule setbacks determined by individual counties.

Summit has proposed the $8 billion pipeline project that would collect carbon dioxide from 57 ethanol plants in South Dakota and neighboring states to be transported to North Dakota for underground sequestration.

 

Some funding will be provided by the federal government in form of tax credits to incentivize reduction of carbon dioxide release.  Tax credits were first introduced in 2008 and were expanded under the previous Administration.

 

The South Dakota Farmers Union was unhappy with the package of bills passed by the State House and Senate.  The Association commented on the domination of the legislature by “large special interest groups to the detriment of family farmers”.  It is significant that South Dakota Ethanol Producers Association supported the bill promoting the first Landowner Bill of Rights claiming that all parties would benefit.

 

 An obvious question is in the absence of a pipeline and sequestration, how is the ethanol industry currently disposing of carbon dioxide produced during the fermentation of corn?  It is understood that only a small proportion is disposed of by capture and sale or on-site subsoil injection.  If one-third of the corn crop is converted to ethanol then one-ninth of the mass of corn produced each year is vented. This contradicts the claim of ethanol being environmentally beneficial when added to gasoline at ten percent.


 

Kroger and UFCW Local 400 Reach Agreement

03/12/2024

A potential strike has been averted following agreement between the Kroger Company and UFCW Local 400 representing workers in West Virginia, Kentucky and Ohio.  The contract will include a starting wage of $13 per hour for new employees, provide raises for department leaders and cap health and welfare costs for the duration of the contract. Union members will be protected from any reduction in hours worked as a result of the Company using vendors and temporary workers.  Approximately 3,000 employees represented by the Union will now vote to approve the agreement. 


 

FDA Recommending Voluntary Recall of Cinnamon Products

03/12/2024

Based on elevated levels of lead in the region of 200 ppm, the FDA is recommending a voluntary recall of ground cinnamon products.  Six products have been identified that were distributed among retail outlets in California, Missouri, Illinois, Virginia, Florida and Maryland.

 

The levels of lead contamination assayed are lower than the 2,000 to 5,000 ppm in cinnamon associated with the recent recall of pouches of apple puree.

 

The Deputy Commissioner for Human Foods at the FDA, Jim Jones stated, “Today’s actions serve as a signal to industry that more needs to be done to prevent elevated levels of contaminants from entering our food supply.”  He added, “Food growers, manufacturers, importers and retailers share a responsibility for ensuring the safety of the foods that reach store shelves.”

The FDA is cooperating with the Centers for Disease Control and Prevention to evaluate elevated lead and chromium levels in children exposed to contaminated apple cinnamon puree. 

 

There is a world of difference between a recommended, voluntary recall and a mandated recall.  It is questioned why the FDA has not acted more forcefully.  Is this due to lack of authority or a structural and cultural inability to make decisions and to take action?


 

Product of the USA Label Rule

03/12/2024

In a March 11th release, USDA announced finalization of the Rule relating to labeling meat, poultry, and eggs as “Product of the USA”.  The label claim can only be applied to foods that were derived from flocks or herds hatched or born, raised, processed and packed in the U.S. 

 

The Rule is intended to prevent deceptive labeling and to assure consumers of the domestic U.S. origin of products.  The label incorporating the “Product of the USA” will be applied on a voluntary basis.  Although no specific pre-approval is required from USDA, processors must maintain documentation to establish the veracity of the “Product of the USA” claim.\ that will be subject to audit.


 

Kentucky to Ease Restraints on Child Labor

03/12/2024

Following the example of Arkansas, the Kentucky House of Representatives voted to approve House Bill 255.  This legislation will allow minors to work up to six hours per school day and up to eight hours on non-school days with a limit of 30 hours a week during the school term.  Federal rules are more restrictive for the 16-and-17-year age group. It is possible that Kentucky legislature is enacting a law legitimizing ongoing irregularities. 

Education officials are critical of HB255 that creates the potential for children to be exposed to hazardous occupations.  The duration of work would detract from schooling and there is a potential for exploitation of children from low-income families.  The move towards more extensive employment of minors is in response to availability of workers especially in agriculture and under the prevailing economic situation. 

 

Education presents a pathway for upward mobility.  Depriving children of scholastic opportunities will contribute to perpetuation of a class dependent on federal support programs and may even result in elevated crime rates.


 

Dispute with Mexico over GM Corn

03/12/2024

Mexico has submitted a response to the USMCA Dispute Settlement Panel regarding their ban on importation of GM corn for human consumption. The situation arose following a Presidential Decree banning GM corn for human consumption and the use of glyphosate herbicide. Mexico is claiming a deleterious effect from both glyphosate and GM corn but without substantiation.

 

The U.S. justifiably maintains that GM corn is innocuous given consumption over four decades. The Mexican position is that the U.S. must provide scientific evidence that genetic modification is not harmful. In contradistinction, it should be up to Mexico to demonstrate the actual harm resulting from consumption of GM corn.  The U.S. maintains that in accordance with USMCA rules, decisions to restrict products must be based on sound science.

Mexico imports yellow GM corn that is to be used in animal feed although the Presidential Decree initially called for a phase-out of GM product that would place both U.S. and Mexico at a disadvantage.  The action by the Government of Mexico has placed the U.S. in the invidious position of having to prove that GM corn is not inherently harmful. This is a far more difficult alternative than actually demonstrating a deleterious effect from consumption of a food especially if the Precautionary Principle is applied.

 

Outgoing President Andres Manuel Lopez Obrador (“AMLO”) is ill advised. It is hoped that his most likely successor, Dr. Claudia Sheinbaum, an environmental scientist, will quietly squelch the issue for the benefit of consumers in Mexico and the Nation’s economy.


 

Vulto Creamery Enters into Plea Agreement over Listeriosis

03/12/2024

Vulto Creamery, located in upstate New York, has a history of producing cheese contaminated with Listeria. In March 2017, the facility was linked to an outbreak resulting in eight hospitalizations and two fatalities. An investigation by the FDA led to an indictment alleging “introducing adulterated food into interstate commerce”. Swabs taken by FDA have yielded Listeria monocytogenes and other Listeria spp. over the period July 2014 through February 2017. The owner of Vulto Creamery faces a $100,000 fine and a one-year suspended sentence.  The company faces a fine of $250,000 with appropriate court supervision.

 

U.S. Attorney Carla V. Freedman of the Northern District of New York, stated “This investigation and prosecution holds accountable the defendant who does business who through unsafe practices caused illness and death to consumers in an entirely preventable tragedy.”  She added, “The law enforcement and regulatory partners involved in this case will continue to work together to bring to justice those who endanger the public through unsafe and unsanitary products and facilities.”

 

During the past five years, FDA, the CDC and the Department of Justice have cooperated in prosecuting cases of foodborne infection that can be attributed to negligence or willful distribution of known contaminated products. This evidenced evidenced by the DeCoster, Peanut Corporation of America and Blue Bell Creamery cases.

 

Although the prevalence of SE is negligible in the commercial egg production industry, management should be aware of their responsibilities with respect to public health and should conform to the FDA Final Rule on Salmonella prevention.


 

ICE Breaks Smuggling Ring from China

03/11/2024

Six members of a smuggling ring were arraigned in a New York court on March 5th.  The Government alleges illegal importation of raw poultry from China destined for ethnic restaurants.  Huang Chen and partners organized a network to import, distribute and sell prohibited items from chickens, ducks and geese.  The ring has operated since August 2022 importing shipments incorrectly described on manifests as ‘frozen seafood’.  In raids, accompanying the arrests, the USDA and agents of the Office of the Inspector General confiscated product valued in excess of $150,000.

Illegal importation of raw ethnic delicacies from China represents both livestock and human health hazards. The extensive foot-and-mouth disease outbreak in England during 2001 was introduced through illegal importation of pork from China


 

SEC Amends Greenhouse Gas Disclosure Requirements

03/11/2024

The Securities and Exchange Commission (SEC) has amended proposed regulations requiring public traded companies to disclose greenhouse gas emissions.  Scope 1 emissions that are directly produced and Scope 2 comprising indirect emissions associated with the use of energy in operations will have to be disclosed.  Scope 3 requirements that arise from suppliers to the company concerned were removed from the Rule. 


This would mean that a public traded company producing a packaged food product would be required to disclose Scope 1 and Scope 2 emissions of greenhouse gases arising from manufacture of products including direct use of energy. They would not have to take into account greenhouse gas emissions from agricultural operations supplying ingredients used in the manufacture and packaging of food products.

There is considerable opposition to the SEC disclosure rules that have yet been finalized.


 

State Politicians Become Involved in Missouri Prime Beef Plant Closure

03/10/2024

As a result of environmental contamination with inadequately treated wastewater, the Missouri Department of Natural Resources withdrew the relevant permit for Missouri Prime Beef effectively closing the plant.

Representative Jim Kalberloh is cooperating with Representative Mike Stephens on a resolution to the problem to allow over 300 workers to return to the facility.  Kalberloh stated “I understand the impact of fresh water and clean water, so it’s a kind of thin line to try to walk. We are just trying to work out a deal where both can coincide and to live and come to a peaceful conclusion” The solution to the problem would be for the new owners of the plant to make the necessary investment in an effluent treatment plant to conform to state and industry standards.

If legislators strong-arm environmental regulators, over an issue of obvious contamination, the entire process of control will be eroded, with adverse consequences to the residents of the area. It is understood that a petition with 1,000 signatures was presented to the State protesting the release of incompletely treated effluent into the Pomme de Terre River adjacent to the plant. That should grab the Legislators’ attention!

 


 

Almond Boom Has Fizzled

03/10/2024

The price of almonds has halved in ten years to $2 per pound.  This has impacted individual farmers and cooperatives that took on debt to establish orchards.

A major California consortium of growers, Trinitas Farming has filed for Chapter 11 bankruptcy based on illiquidity.

 

A number of egg producers established almond orchards on their properties to add to revenue. This is now is in question.


 

USDA-WASDE REPORT #646, March 8th 2024

03/08/2024

OVERVIEW

 

The USDA provided preliminary values for the production of corn and soybeans in the March 8th World Agriculture Supply and Demand Estimates (WASDE) #646, reflecting the anticipated 2024 crop. These values were understandably unchanged from the February edition given the month and are based on projections of acreage, yield, carry-forward levels from 2023, and with realistic assumptions of domestic use and exports giving rise to ending stocks.

 

The March 8th WASDE report predicted that corn would be harvested from 86.5 million acres, unchanged from February. The soybean crop will be harvested from 82.4 million acres also unchanged.

 

The most recent report retained the yield value for the 2024 corn crop at 177.3 bushels per acre. By comparison yield was 174.9 bushels per acre in 2023. The soybean yield was held at 50.6 bushels per acre compared to 49.9 bushels per acre in 2023.

 

The March 2024 USDA projections for the ending stocks of corn were 2,172 million bushels, up 0.5 percent from 2,162 million bushels respectively.

 

The March 2024 WASDE lowered the ex-farm price of corn by 5 cents to 475 cents per bushel. The projected price for soybeans was unchanged from the February WASDE at 1,265 cents per bushel. Soybean Meal was unchanged at $380 per ton.

 

Projections for world production included in the March 2024 WASDE report reflect the most recent estimates for commodities in the Southern Hemisphere with an emphasis on Argentine and Brazil. Economists also evaluated the likely impacts from hostilities in Ukraine with occupation of ten percent of the Nation’s land area by the Russian Federation and following extensive destruction of agricultural infrastructure. It is evident that production and hence exports of wheat, corn and sunflower from Ukraine will be reduced compared to pre-war averages. Exports from Ukraine have been restored following the collapse of the Black Sea Grain Initiative and destruction of Black Sea and Danube Delta port installations. These adversities have been partly overcome by aggressive naval action allowing the “Humanitarian Corridor” that traverses the national waters of friendly countries along the western Black Sea coast.

 

It is accepted that USDA projections for export are also based on the perceived intentions and needs of China. This Nation has sharply curtailed purchases of commodities and especially U.S. soybeans during the current market year despite drought and taking into effect relaxation of COVID restrictions on consumers with higher demand.

 

Reports on volumes of commodities exported are included in weekly editions of EGG-NEWS, derived from published USDA-FAS sales data.

 

CORN

Based on increased yield and acreage projections for the 2024 corn harvest, January through March WASDE Reports predict a crop of 15,342 million bushels compared to 15,234 million bushels in 2023. The U.S. 2023 harvest was a record, 2.0 percent above the previous record harvest of 15,148 million bushels in 2016. The “Feed and Residual” category was unchanged from February at 5,675 million bushels. The Feed and Seed category was retained at 1,405 million bushels. The “Ethanol and Byproducts” Category was held at 5,375 million bushels consistent with estimated demand for E-10 and higher blends. Gasoline consumption is restrained despite lower prices, easing of inflation and changes in commuting patterns persisting from COVID restrictions. Projected corn exports were unchanged at 2,100 million bushels, based on recent orders, the volume of projected shipments to China and taking into account the anticipated lower availability of coarse grains from Eastern Europe and World weather patterns under an El Nino event. Ending stocks of corn in the March WASDE report were unchanged at 2,172 million bushels.

 

The forecast USDA farm price for corn in the March WASDE report covering the 2024 crop was reduced 5 cents to 475 cents per bushel. At 16H00 on March 8th after the noon release of the WASDE the CME spot price for corn was 440 cents per bushel, up 1.6 percent from the quotation on February 8th and down 7.4 percent from the March USDA projection.

 

MARCH 2024 WASDE #646 Projections For The 2024 Corn Harvest:

Harvest Area

86.5 m acres (0.7% lower than Dec. 2023)

(94.6 m. acres planted), harvest corresponding to 91.4% of acres planted)

Yield

177.3 bushels per acre

(Updated from 174.9 bushels per acre in the December WASDE.)

Beginning Stocks

1,360 m. bushels

 

Production

15,342 m. bushels

 

Imports

25 m. bushels

 

Total Supply

16,727 m. bushels

Proportion of Supply

Feed & Residual

5,675 m. bushels

33.9%

Food & Seed

1,405 m bushels

 8.4%

Ethanol & Byproducts

5,375 m. bushels

32.1%

Domestic Use

12,455 m. bushels

74.4%

Exports

2,100 m. bushels

12.6%

Ending Stocks

2,172 m. bushels

13.0 %

Up 0.5 from 2,162 m bushels in the January WASDE

1 metric ton = 39.368 bushels

 

Average Farm Price: 475 cents per bushel. (Down 5 cents per bushel from from the February WASDE Report reflecting the 2024 projected crop)

 

SOYBEANS

 

Based on a prediction of acreage to be planted the USDA March WASDE projected the 2024 soybean crop at 4,165 million bushels with an estimated yield of 50.6 bushels per acre from 82.4 million acres harvested. Crush volume was unchanged from the February WASDE report at 2,300 million bushels. Projected exports were held at 1,720 million bushels despite China indicating lower pork production and reduced imports. Ending stocks were anticipated to be 315 million bushels, unchanged from the February WASDE report.

 

There is uncertainty over orders from China for the current 2023-2024 market year. This is attributed to competition from Brazil and an assumption of lower requirements for animal feed despite relaxation of previous strict COVID restrictions. In reality traders in China are obligated to order on a stable or declining market unless faced with shortages. Prior to 2018, China, the largest trading partner for U.S. agricultural commodities, imported the equivalent of 25 percent of U.S. soybeans harvested.

 

The USDA February 2024 projection for the ex-farm price for soybeans for the 2024 harvest was unchanged from the February WASDE report at 1,265 cents per bushel. At 16H00 on March 8th following release of the WASDE, the CME spot price was 1,185 cents per bushel, down 0.8 percent compared to the February 8th quotation and 6.3 percent below the March USDA projection.

 

MARCH 2024 WASDE #647 PROJECTION FOR THE 2024 SOYBEAN HARVEST:-

Harvest Area

82.4 m acres (Down 0.5% from Dec. 2023 WASDE)

83.6 m. acres planted. Harvest corresponding to 99.6% of planted acreage)

Yield

50.6 bushels per acre

(Updated from 49.9 bushels per acre in the Dec. WASDE)

Beginning Stocks

264 m. bushels

(Down 1.5%from the Dec. WASDE for the 2024 crop)

Production

4,165 m. bushels

 

Imports

30 m. bushels

 

Total Supply

4,459 m. bushels

Proportion of Supply

Crushings

2,300 m. bushels

51.5%

Exports

1,720 m. bushels

38.6%

Seed

102 m. bushels

 2.3%

Residual

22 m. bushels

 0.5%

Total Use

4,144 m. bushels

92.9%

Ending Stocks

315 m. bushels

7.1%

(up 12.5% from January WASDE )

1 metric ton = 36.74 bushels

Average Farm Price: 1,265 cents per bushel (Unchanged from the February 2024 WASDE Report)

 

SOYBEAN MEAL

 

The projected production of soybean meal from the 2024 soybean crop will be 54.25 million tons. This was up 0.1 million tons from the February WASDE but inconsistent with an unchanged crush of 2,300 million bushels of soybeans. This figure is questioned based on increased demand for biodiesel with a proportional increase in U.S. crushing capacity. Production is driven both by exports and domestic consumption for livestock feed and for soy oil supplying the food and biodiesel segments. The projection of domestic use was reduced 1.0 percent to 39.03million tons. Exports were raised 0.5 million tons to 15.8 million tons. The USDA retained the ex plant price of soybean meal at $380 per ton as an average for the 2023-2024 season based on supply and demand considerations as reflected in an unchanged ending stock of 400,000 tons representing 0.7 percent of supply.

 

At 16H00 on March 8th the CME spot price for soybean meal was $342 per ton, down 1.4 percent compared to the February 8th CME quotation and $38 per ton or 10.0 percent lower than the March WASDE projection of $380 per ton.

 

MARCH 2024 WASDE #646 PROJECTION OF SOYBEAN MEAL PRODUCTION AND USE

Beginning Stocks

371

Production

54,254

Imports

600

Total Supply

55,225

Domestic Use

39,025

Exports

15,800

Total Use

54,825

Ending Stocks

400

(Quantities in thousand short tons)

 

Average Price ex plant:$380 per ton (Unchanged from the February WASDE Report)

 

IMPLICATIONS FOR PRODUCTION COST

 

The price projections based on CME quotations for corn and soybeans suggest stable feed production costs for broilers and eggs. Going forward, prices of commodities will be determined by World supply and demand and U.S. domestic yield, use and exports.

 

For each 10 cents 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 live pound

 

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

  • The cost of egg production would change by 0.35 cent per doze
  • The cost of broiler production would change by 0.30 cent per live pound.

 

WORLD SITUATION

 

With respect to world coarse grains and oilseeds the February 2024 WASDE Report included the following appraisals by USDA:-

 

COARSE GRAINS:

 

“Global coarse grain production for 2023/24 is forecast 2.7 million tons lower to 1,507.4 million. This month’s foreign coarse grain outlook is for reduced production, larger trade, and smaller ending stocks relative to last month. Foreign corn production is forecast lower with declines for South Africa, Ukraine, Mexico, Venezuela, and Russia that are partly offset by increases for Argentina and Syria. South Africa is down reflecting lower yield prospects. Mexico is cut based on expectations of lower winter corn area. Ukraine and Russia are reduced based on reported harvest results to date. Argentina is raised based on higher expected area. Foreign barley production is down, with reductions for Iraq and Syria that are partly offset by an increase for Australia”.

 

“Major global trade changes include higher corn exports for Ukraine and Argentina but reductions for South Africa and India. Corn imports are lowered for the EU, Saudi Arabia, Israel, and South Korea but raised for Mexico, Venezuela, and Indonesia. Barley exports are raised for Australia. Foreign corn ending stocks are lower, mostly reflecting a decline for Ukraine that is partly offset by an increase for Brazil. Global corn ending stocks, at 319.6 million tons, are down 2.4 million”.

 

OILSEEDS:

 

“Global 2023/24 oilseed production is reduced 0.7 million tons to 658.7 million, on lower soybean and sunflower seed production partly offset by higher rapeseed. Sunflower seed production is reduced on lower output for South Africa. Rapeseed production is increased on higher output for India, Russia, and Ukraine. Global soybean production is reduced 1.4 million tons on lower production for Brazil and South Africa”.

 

“Global 2023/24 soybean supply and demand forecasts include lower beginning stocks, lower production, lower crush, higher exports, and lower ending stocks compared to last month. Beginning stocks are lowered 1.4 million tons mainly on historical crush and import revisions for China. Soybean crush for China is raised for 2020/21 to 2022/23 based on a review of in-country estimates and supplies. Soybean imports for China for 2022/23 are also raised to reflect shipping data by major exporters”.

 

“Global soybean production for 2023/24 is reduced on lower production for Brazil and South Africa. Soybean production for Brazil is lowered 1.0 million tons to 155 million on harvest results in Parana and poor weather conditions in Sa~o Paulo offset by favorable conditions in the north and Rio Grande do Sul. South African soybean production is lowered 0.4 million to 2.1 million on lower yield prospects. Global crush is reduced for Brazil and South Africa on lower supplies, and lower for Ukraine on higher soybean exports. Global soybean exports are raised 3.0 million tons on higher shipments to date from Brazil and Ukraine. Soybean imports are raised on higher imports for China, which are now 0.5 million tons higher than the prior marketing year’s revised estimate. Global soybean ending stocks are lowered 1.8 million tons to 114.3 million on lower stocks for Brazil that are partly offset by higher Chinese stocks”.

 

Factor: Million m. tons

Coarse Grains

Oilseeds

Output

1,507*

659

Supply

1,839

779

World Trade

243

200

Use

1,492

541

Ending Stocks

346

131

*Values rounded to billion metric ton

(1 metric ton corn= 39.37 bushels) (“ton” represents 2,000 pounds)


 

World Decline in Food Prices

03/08/2024

On March 8th the United Nations Food and Agricultural Organization released the Index of Food Commodities for February 2024.  A sequential 12-month reduction in food prices is evidenced by the 10.3 percent decrease in the Index from 131.1 in February 2023 to  the most recent value of 117.3.

 

Component indices included:-

  • The Cereal Index was down 6.1 percent from January to 113.8 points due to lower corn and wheat prices but offset by a raise in rice.
  • The Vegetable Oil Index was down 1.2 percent from January to 120.9 points with lower soy and sunflower oils but higher palm oil on increased demand.
  • The Dairy Index was up 1.3 percent from January to 120.0 points
  • The Meat index was up 2.0 percent from January tp 112.4 points with higher poultry and beef  prices but lower prices for pork products with decreased demand from China

Boutiful crops in Brazil and Argentina with restoration of Black Sea shipping using the ‘Humanitarian Corridor’ along the eastern seaaboard have collectively reduced concern over availability of grains and oilseeds and contributed to a moderation in prices for agronomic commodities.


 

TekniPlex to Introduce New Technology for Fiber Cartons

03/08/2024

TekniPlex Consumer Products has developed a proprietary two-stage dried-in-mold process that compresses fibers during fabrication creating a stronger and denser carton that inhibits condensation on the shell surface.  The new manufacturing process results in a smooth finish that assists in de-nesting of cartons during packing even with high throughput. Cartons have improved shelf-appeal with either direct printing or labels. The dried-in-mold process offers strength equivalent to foam that is required for 18 and 24-count cartons. Deflection of cartons does not occur even under conditions of high humidity, minimizing shell damage during transport and handling by consumers, minimizing wastage

 

Fiber egg cartons are inherently more sustainable than plastic alternatives but the new process produces cartons that contribute to customer sustainability goals without sacrificing protection of eggs or detracting from shelf-appeal.

 

TekniPlex will commence production of the new packs at their Van Wert, OH. plant to satisfy anticipated demand by the indust


 

Oklahoma Rescinds Sales Tax on Groceries

03/07/2024

Following the initiative of Illinois that imposed a one percent tax on groceries, Oklahoma will eliminate their existing 4.5 percent tax.

In a signing ceremony, Governor Kevin Stitt regarded the rescission as the largest single-year tax cut in Oklahoma history. Grocery taxes are extremely regressive and place a disproportionate burden on lower-income demographics.

 

Grocery taxes in other states include Mississippi at 7 percent, Kansas, 6.5 percent, Idaho, 6 percent, South Dakota at 4.5 percent and seven additional states ranging from 1.5 percent to 4 percent.

The Oklahoma sales tax made it worthwhile for border residents to purchase their groceries in adjacent Texas despite the added inconvenience and cost of travel.  It is estimated that eliminating the sales tax would save an average family $700 annually.

 


 

Whole Foods Market Introduces Daily Shop Format

03/07/2024

in an ongoing search for alternative store formats, Amazon has established Whole Foods Market Daily Shops.  Stores will range between 7,000 and 12,000 square feet and will be located in urban areas to provide fast and convenient service. Offerings will emphasize prepared meals, snacks and fresh produce.

 

Christina Minardi, Executive Vice President for Growth and Development for Whole Foods Market and Amazon stated, “We are excited to introduce a new way for our customers to quickly pick up their Whole Foods Market favorites making the early morning or after-work grocery trips more efficient and enjoyable”.

 


 

Kroger Company Posts Q4 and FY 2023 Results

03/07/2024

On March 7th The Kroger Company (KR) posted results for Q4 and FY 2023 ending February 3rd 2024. Kroger beat substantially on earnings compared to consensus estimates but provided anemic FY 2024 same-store sales and EPS projections.

 

 Kroger is the second largest retailer of groceries in the U.S. and is a pure supermarket play subject to the pressures of escalation in food costs, logistics and labor and the impact of inflation in common with all national and regional competitors. Kroger has announced the intention of acquiring competitor Albertsons Cos. This would create a merged enterprise with 5,000 stores. In late February the FTC filed to block the transaction that is opposed by the Attorneys General of seven states and both major national unions representing workers. To comply with anticipated regulatory pressure Kroger and Albertsons have proposed selling 413 stores in 18 states to C&S Wholesale Grocers for $1,900 million. This strategy is in question given the history of the bankruptcy of Hagen that divested stores to facilitate the acquisition of Safeway by Albertsons. It is possible that other bidders such as Ahold-Delhaize N.V. will emerge as potential purchasers of some, all or a greater number of stores as negotiated and subsequently approved by the FTC.

 

 For the 4th quarter, Kroger reported earnings of $736 million on sales of $37,064 million with a diluted EPS of $1.01. For the corresponding Q4 of FY 2022, Kroger earned $451 million on sales of $34,823 million with a diluted EPS of $0.62.  Comparing Q4 of 2023 with the corresponding quarter of FY2022, revenue was 6.4 percent higher; Gross margin increased from 21.7 percent to 22.7 percent for Q4 2023. Operating margin increased from 2.4 percent to 3.2 percent for the most recent quarter.

 

For FY 2023, Kroger reported earnings of $2,164 million on sales of $150,039 million with a diluted EPS of $2.96 For FY 2022, Kroger earned $2,244 million on sales of $145,258 million with a diluted EPS of $3.06. 

 

In commenting on 4th quarter and FY 2023 results, Rodney McMullen CEO stated, “Kroger achieved strong 2023 results, in line with our long-term growth model and built upon three consecutive years of historic growth. As customers manage macroeconomic pressures, we are lowering prices and offering even more ways to save with personalized promotions and rewards. Our unique seamless shopping experience provides customers the products they want, when and how they want them, with zero compromise on quality, convenience and selection”. 

He added, “We respect and appreciate our associates who are delivering a full, fresh and friendly customer experience. Over the last five years, we've made historic investments in associate wages, benefits and career development opportunities, including significant investments to help stabilize associates' future pension benefits”.    

 

McMullin concluded, “We are increasing customer visits and growing loyal households through the strength of our retail business, which positions Kroger for more ways to drive sustainable future growth. We expect to continue our momentum in 2024 by delivering value for customers, investing in associates and generating attractive and sustainable shareholder returns."  

 

The Company released adjusted FY 2023 Guidance:- 

  • Identical Store Sales growth of 0.25 to 1.75 percent excluding fuel,
  • Adjusted EPS of $4.30 to $4.50,
  • Adjusted FIFO Operating Profit of $4.6 billion to $4.8 billion,
  • Capital expenditure of $3,400 to $3,600 million,
  • Adjusted free cash flow of $2,500 to $2,700 million,

 

Comparable same-store sales for Q4 decreased by 0.8 percent (excluding fuel) compared to Q4 FY 2022; digital sales were up by 10.0 percent;

 

On February 3rd 2024 Kroger posted total assets of $50,523 million of which $3,815 million comprised goodwill and intangibles. Long-term debt and lease obligations amounted to $20,882 million.  

 

The Kroger Company had an intraday market capitalization of $36,320 million on March 7th 2024.  The Company has traded over the past fifty-two weeks in a range of $42.10 to $55.53 with a 50-day moving average of $46.64. KR trades with a forward P/E of 11.7. On March 6th 2024 KR closed at $50.53 pre-release but opened on March 7th post-release at $53.33

 

Twelve-month trailing operating margin was 2.0 percent and profit margin 1.3 percent.  The Company generated a return on assets of 5.8 percent and 17.8 percent on equity

 

At the end of FY 2022 The Kroger Company operated 2,726 stores with 2,252 pharmacies and 1,613 fuel centers, under 25 banners in 35 states and D.C. Kroger operates 34 food plants and 45 distribution centers with five Ocado fully automated fulfillment centers with as many as twenty planned


 

USDA Program to Fund Biosecurity

03/07/2024

The USDA APHIS will present an informational webinar on Tuesday, March 12th at 15h30 EDT.  The webinar will incorporate a presentation from the Farm Service Agency on loading programs to assist producers with funding biosecurity.  For information on joining the zoom webinar, contact <katrina.e.redyj@usda.gov>.

 


 

Costco Corporation Posts Q2 FY 2024 Results

03/07/2024

On March 7th Costco Wholesale Corporation (COST) posted results for Q2 FY 2024 ending February 18th 2024. The Company exceeded the consensus estimate for earnings by 8.2 percent but was light on sales by 0.1 percent. COSTCO as the leading club chain serves as a bellwether for omni-channel warehouse in-store and on-line buying. The Company is a barometer of consumer confidence, offering groceries, clothing, household necessities in bulk in addition to discretionary appliances, recreational, luxury and electronic items.

 

For the most recent quarter, the Company earned $1,743 million on revenue (including fuel and membership fees) of $58,442 million with a diluted EPS of $3.92. For the corresponding Q2 of FY 2023 ending February 12th, Costco earned $1,466 million on equivalent revenue of $55,266 million with a diluted EPS of $3.30.  Revenue was 5.8 percent higher than in Q2 FY 2023 and net earnings were up by 18.9 percent. Gross margin for Q2 FY 2024 was 10.7 percent, unchanged from the corresponding quarter in FY 2023. Operating income attained 3.4 percent also unchanged from Q2 FY 2023, despite increased freight, transport, wages and utilities.

Comparable global same-store sales for Q2 2024 (excluding fuel and foreign exchange) rose to 5.8 percent. U.S. same store sales were up 4.8 percent; Canada by 9.0 percent and the Other International category, 8.2 percent. E-Commerce was up by 18.2 percent.

 

Costco did not raise membership fees as expected but in the Q4 2023 investors’ call, the Company commented this is a situation of “when and not if”. There are currently 33.9 million Executive Level memberships at $120 annually representing 46 percent of the total but accounting for 73 percent of sales.

 

 


Richard Galanti Retiring CFO

presided at the Q2 Investors' Call

On February 18th Costco posted total assets of $66,323 million. Long-term debt and lease obligations attained $10,875 million. Costco had an intraday market capitalization of $343,200 million on March 7th. COST trades with a forward P/E of 49.2 and has ranged over the past fifty-two weeks from $460.80 to $787.08 with a 50-day moving average of $700.41. Costco closed pre-release at $785.59 on March 7th but fell in after-hours trading, post-release by 3.5 percent to $756.64. Twelve-month trailing operating margin was 3.4 percent and profit margin 2.7 percent.  The Company generated a return on assets of 7.8 percent and 27.4 percent on equity.

 

At the end of the recent completed quarter, Costco operated 875 warehouses. There are 603 in the U.S; 109 in Canada; 40 in Mexico; 33 in Japan; 29 in the U.K. and 61others in seven other nations among the E.U., Asia and Australia. This was a net increase of ten warehouses during Q1 with nine added in the U.S.


 

Josh Tetrick Shutters Singapore Operation

03/07/2024

Shuttered Tetrick facility in Singapore

According to the Straits Times the cell-cultured meat project established by Josh Tetrick in Singapore has apparently ceased operation.  The facility in Bedok Food City extending over 30,000 square feet was heralded as an advance in sustainability and the future independence for the City-State from meat imports in a ceremony during late February. 

 

It is understood that the facility involved an investment of $60 million.  A second facility established as a subsidiary of Tetrick’s holding company to produce liquid egg products has apparently also closed.  In March 2022, Eat Just announced a plant in the Pioneer industrial district but this project will evidently not proceed.

 

Tetrick’s companies are mired in legal claims from suppliers of equipment including an action for $100 million from a manufacturer of bioreactors ordered to produce cell-cultured meat.

 

Aspirant producers of cell-cultured meat have encountered numerous problems relating to transition from laboratory-scale production using plastic roller bottles to commercial volumes using bioreactors. Substrate required to culture cells is expensive and the process is inherently energy and water intensive.

 


Tetrick (center) in better days

There are now questions as to the consumer acceptability of cell-cultured meat even if available at prices equivalent to the real product. The entire cell-cultured meat segment has disappointed investors in both an inability to produce saleable quantities due to technical restraints and the vast amount of money required for research and development.  Venture capital companies are also reviewing the potential sales figures for plant-based meat alternatives and their high production costs relative to the products they intend to displace. To add to problems faced by start-ups livestock-producing states in the U.S. and individual E.U. nations are enacting restrictive legislation on the sale and labeling of cell-cultured chicken and beef even before any product becomes commercially available.

 


Promise unfulfilled

Authorities in Singapore approved the sale of cell-cultured meat products in December 2020.  Despite investment and unsubstantiated hype, Tetrick’s companies have only produced token quantities of cell-cultured chicken sold at a gourmet restaurant principally as a curiosity.  The USDA and FDA approved the U.S. sale of cell-cultured meat from Good Meat, a Tetrick company, and Upside Foods in June 2023.  Neither company has produced commercial quantities of faux beef or chicken. 

 

There has always been a taint of Theranos associated with the cell-cultured meat segment that has been reinforced by allegations of deception and failure to deliver on promises and projections.


 

G6 Strain Responsible for ILT Outbreaks

03/07/2024

Dr. Maricarmen Garcia

In a recent webinar under the auspices of the American Association of Avian Pathologists, Dr. Maricarmen Garcia of the University of Georgia reviewed changes in the epidemiology of infectious laryngotracheitis (ILT).  Since the disease is caused by a herpesvirus, infected flocks remain shedders of the virus with persistence in the environment of houses after an affected flock has been depleted.

 

In past decades, most clinical outbreaks were attributed to the use of chick embryo origin (CEO) ILT vaccine that reverts to virulence.  More recently, the G6 field strain has emerged demonstrating increasing virulence.  According to Dr. Garcia, infection of SPF leghorn pullets with a G6 strain isolated in 2014 resulted in 30 percent mortality.  In chicken receiving G6 virus isolated in 2022, none of the infected birds survived.

 

EGG-NEWS previously raised the question of a possible co-pathogen involved in outbreaks of coryza characterized by high mortality.  There is evidence that the prevalent strain of coryza associated with outbreaks in the Midwest and California in recent years is similar to decades old isolates when subjected to whole genome sequencing.  It was previously suggested in CHICK-NEWS that emerging avian metapneumovirus may have been a co-factor exacerbating clinical signs including a precipitous drop in production and high mortality, not characteristic of conventional coryza.  ILT should now be considered as a possible co-factor and accordingly attempts at isolation and identification of G6 from flocks at an early stage of a coryza outbreak should be considered to determine if other than a vaccine strain of ILT was present.

 


Classic gasping with ILT

HVT-vectored ILT and IBD vaccines are now used extensively to immunize replace pullet flocks.  Experience has shown that clinical signs of ILT occur in flocks vaccinated either in ovo or at day-old.  Accordingly, producers are administering either a tissue culture origin or a chick embryo origin ILT vaccine at 7 to 10 weeks by the intraocular route when birds are handled for administration of epidemic tremor, pox and pasteurellosis vaccines. 

 


Periocular swelling with conjunctivitis and

lachrymation has a broad differential diagnosis

Biosecurity and vaccination are the only modalities available to producers to suppress ILT.  With multi-aged complexes, solid immunity against ILT is a necessity due to the carrier state.  Implicit in the prevention of viral disease is the unsettling realization that if small contract and organic farms cannot exclude ILT they will also not be able to prevent introduction of HPAI.


 

Appropriations Bill Considers Foreign Ownership of U.S. Agricultural Land

03/07/2024

Legislators in predominantly agricultural states have expressed concern over the potential for foreign ownership of land by adversarial nations including China, Russia and Iran.  The USDA will now participate in the Committee on Foreign Investment in the United States that has the power to block transactions with foreign entities. 

 

It is estimated that 43 million acres or 3.5 percent of U.S. agricultural land is leased or owned by foreign companies with the vast majority comprising Canada with forest holdings and western E.U. nations operating cropland. 

 

 

National security is a significant consideration in the context of foreign purchases of U.S. land.  China has demonstrated an affinity for purchasing tracts of land or enterprises in close proximity to military installations with evident implications.


 

Campbell Soup Releases Q2 FY 2024 Financial Results

03/07/2024

In a March 6th 2023 release, Campbell Soup Company (CPB) released predictable financial results for the second quarter of Fiscal 2024 ending January 28th 2023. The Company can be regarded as representative of the manufacturing and packaged food sector with competitors including Post Holdings, Conagra Brands, Treehouse Foods and Kraft-Heinz, all currently under pressure to reduce prices to the major retail and supermarket chains. In an inflationary environment consumers are turning to less expensive private brands although the trend to eat-at-home may benefit Campbell Soup and competitors.

 

For the second quarter of FY 2024, net income was $203 million on net revenue of $2,456 million with a diluted EPS of $0.68.  Comparable figures for the second quarter of FY 2023 ending January 29th 2023 were net income of $232 million on net revenue of $2,485 million with a diluted EPS of $0.78

The release included results for the two operating segments:-

 

  • Meals and Beverages: Operating profit of $247 million down one percent from Q2 2023, on revenue of $1,382 million, down two percent from Q2 2023
  • Snacks: Operating profit of $161 million, up seven percent, on revenue of $1,074 million, unchanged from Q2 2023

 

For the second quarter of FY 2024 (with the values for the corresponding quarter of FY 2023 in parentheses) Campbell Soup achieved a gross margin of 31.6 percent (30.5) and an operating margin of 13.0 percent (14.5). Revenue was down 1.1 percent.

 

In commenting on Q2 results Mark Clouse CEO stated,  “We once again delivered on our commitments, with a sequential improvement in volume trends and year-over-year operating margin expansion in both our Meals & Beverages and Snacks divisions,” He added, “We are excited about the anticipated completion of the acquisition of Sovos Brands which will bring incremental growth to our Meals & Beverages division and continue the transformation of our highly advantaged portfolio."

 

Guidance for FY 2024 was amended indicating a trend towards the lower end of forecasts. Values included net sales growth ranging from -0.5 to 1.5 percent; an adjusted increase in EBIT of 3 to 5 percent and an adjusted EPS of between $3.09 and $3.15.  

 

Campbell Soup listed assets of $12,106 million, including a disproportionate  $7,071 million as goodwill and intangibles. Long-term debt and other obligations amounted to $6,119 million, up 9.3 percent from Q2 2023.

 

The Company had an intraday market capitalization of $12,800 million on March 6th. CPB trades with a forward P/E of 14.0 and has ranged over a 52-week period from $37.94 to $56.04 with a 50-day moving average of $43.28. Insiders held 35.7 percent of equity with 7.0 percent of the float short on February 15th.

 

Twelve-month trailing operating and profit margins were 15.6 percent and 8.6 percent respectively. The Company generated a twelve-month trailing return of 7.0 percent on assets and 22.0 percent on equity.


 

Target Corporation Posts Q4 and FY2024 Results

03/05/2024

On March 5th Target Corporation (TGT) the Nation’s 6th-ranked retailer, posted results for Q4 and FY2023 ending February 3rd, beating estimates for the top and bottom lines.  For the quarter, the Company earned $1,382 million on revenue of $31,919 million with a diluted EPS of $2.98.  For the corresponding Q4 FY2022, Target earned $876 million on sales of $31,395 million with a diluted EPS of $1.89. Revenue was higher by 1.6 percent and net earnings increased by 57.7 percent. Gross margin increased from 23.2 percent in Q4 FY2022 to 26.7 percent for the most recent quarter. Operating margin rose from 3.7 percent to 5.8 percent.

For FY2023 the Company earned $4,138 million on revenue of $107,402 million with a diluted EPS of $8.94.  For the corresponding FY2022, Target earned $2,750 million on sales of $109,120 million with a diluted EPS of $5.98. Inventory was down 11.9 percent from the end of FY2022 reducing markdowns.

 

For the fourth quarter, comparable same-store sales declined by 5.4 percent. FY2023 comparable sales were down by 3.7 percent due to a reduction of 2.4 percent in transactions offset by a 1.4 percent increase in the average value of each transaction. Digital sales were down 0.7 percent during Q4 compared to a decline of 3.6 percent recorded for Q4 2022. Store-originated sales attained 81.7 percent of total in FY2023 with digital accounting for the remaining 20.3 percent.

 

Effective April 1st The Company will introduce Target Circle 360, a paid membership benefits program.

In commenting on results Brian Cornell Chairman and CEO stated, Our team’s efforts changed the momentum of our business, further improving our sales and traffic trends in the fourth quarter while driving profitability well ahead of expectations,” said Brian Cornell, chairman and chief executive officer of Target Corporation”. He added "Throughout the season, guests responded to newness, value, and the inspiration and ease of our in-store and digital shopping experience. Looking ahead, we’ll continue to invest in the strengths and differentiators that have delivered strong financial performance over time. We’ll also roll out fresh innovations, including our new Target Circle membership program, as part of our roadmap for growth aimed at meeting consumers where they are, reigniting sales, traffic and market share gains, and positioning Target for profitable growth in 2024 and beyond.”

 

The Company maintained guidance for fiscal 2024. Target expects a flat to two percent increase in same-store sales growth and an adjusted EPS ranging from $8.60 to $9.60.

 

At the end of FY2023, Target Corporation operated 1,956 stores with a total retail area of 245,939 square feet excluding offices and DCs. The company invested $4,806 million in property and equipment during FY2023.

On February 3rd Target posted total assets of $55,356 million, up 3.8 percent from the end of FY2022. Long-term debt and lease obligations attained $20,140 million. Target Corporation had an intraday market capitalization of $69,480 million on March 5th. The Company has traded over the past fifty-two weeks in a range of $102.93 to $171.24 with a 50-day moving average of $144.17.  TGT trades with a forward P/E of 17.0. On March 4th,pre-release the share closed at $150.79 but after the morning release opened on March 5th at $169.12.

 

Twelve-month trailing operating margin was 5.5 percent and profit margin 3.4 percent.  The Company generated a return on assets of 5.8 percent and 30.9 percent on equity.


 

Devenish Nutrition Acquired by Easy Bio

03/05/2024

Easy Bio a major nutrition company based in South Korea has announced the acquisition of Devenish Holdings Ltd. based in Northern Ireland, with subsidiary Devenish Nutrition LLC in the U.S. 

 

Devenish Nutrition has operated in the U.S. since 1998 producing premixes and feed additives distributed in the U.S. and Mexico.  Easy Bio has secured markets for its products directed to antibiotic-free production systems in the E.U. and Asia with representation in 50 nations.

 

Stevenson Hwang CEO of Easy Bio stated, “Devenish Nutrition is already a leading company in the North American market with its solid technology and various solutions and many talented people in the company including management.”

Cory Penn CEO of Devenish Nutrition stated, “With the help and support of the Easy Bio Group we will continue to expand our footprint across North America with investment in people, research and manufacturing facilities.”

 

It is intended that Devenish Nutrition will continue to operate with current management but with additional financial resources and access to an innovative product portfolio.

 


 

Panera Backtracks on Menu Changes

03/05/2024

Before registration for an anticipated IPO, Panera Bread has reverted to a previous concentration on breakfast and lunch mealtimes reversing the move towards the dinner period.  New menu items will be introduced in early April.  New menu items will include various sandwiches and salads and some items will be upgraded. Flatbreads will be dropped.

 

Panera is also emphasizing cost with numerous items under $10 in the “transformed menu”.

 

The Company announcement of menu changes “confirms that Panera is close to its customers and recognizes the need for changes to accommodate the needs and budgets of its clientele”.


 

Individual State Bans on Additives will Create Problems for National Brands

03/05/2024

FDA Asleep at the Switch?

California has introduced legislation banning Additives including Red dye number 3, brominated vegetable oils and potassium bromate from human food.  Similar action is contemplated by Indiana, Illinois and by both Washington and New York states.

 

A  patchwork approach to banning specific additives for human food although based on valid scientific criteria and potentially benefiting consumers in those states will create problems for food manufacturers in their formulation and labeling.  It would be preferable for the implicated ingredients to be designated as unacceptable by the federal government through FDA action creating a level playing field.  The FDA has been tardy in assembling data and making decisions that would be beneficial to consumers and convenient for manufacturers.  In some respects, state agencies including those in California and New York are more influenced by the European Union that employs the precautionary principle than the FDA.

 

The difference between approaches to food safety in Europe and the U.S. is a function of the pressure exerted by industry lobby groups by both industry and consumer advocacy organizations on U.S. federal agencies.  In many instances U.S. manufacturers have voluntarily ceased using additives and compounds that are regarded as potentially or overtly harmful without regulatory intervention.  Brominated vegetable oil has not been used in citrus-flavored beverages for many years in the U.S. despite the state restrictions.

 


 

Orthorexia Emerging as a Marketing Consideration

03/05/2024

In 1997, an eating disorder termed orthorexia was described.  The term includes the Greek for ortho or right and orexis or appetite.  The condition that has yet to be included in the Diagnostic, Statistical Manual Of Mental Disorders (DSM) comprises an obsessional preoccupation with “pure” food and nutrition.  Orthorexia is frequently associated with other disabilities including anxiety and obsessive-compulsive disorder.  Mild forms can be characterized by excluding all but certified organic foods from the diet, avoiding gluten without evidence of intolerance or an obsession with “clean” labels.  More severe forms include a frequently progressive disinclination to exclude certain foods from the diet that ultimately progresses to malnutrition.

 

 

Orthorexia should be differentiated from both anorexia nervosa and bulimia, both of which involve the volume of food consumed.  Those suffering from orthorexia are more concerned with the type and source of the food in their diets. With extreme manifestations of the condition, volume will be reduced. Behavioral abnormalities expressed by individuals including eating disorders may be intensified by intemperate use of social media that may exacerbate the intensity of their conditions. 

 

 

 

 

A further complication of orthorexia is the desire to extend personal choices in eating to others.  It is possible that some of the zealous vegans who oppose all forms of livestock production are not concerned with the welfare of herds and flocks. They may be responding to a compulsion to inflict their dietary proclivities on others by promoting a vegan agenda. This is evident among aggressive and proselytizing vegans who influence decisions on school and institutional meals and as elected officials and even members of Congress oppose animal agriculture.


 

Publix Releases Q4 and FY 2023 Results

03/05/2024

Publix, a privately held, employee-owned corporation, released limited Q4 and FY 2023 financial data on March 1st for the period ending December 30th 2023.  Sales for Q4 2023 attained $14,700 million, down 3.9 percent from Q4 2022 at $15,300.  Net earnings were $1,178 million compared to $1,278 million in Q4 of 2022, down 7.8 percent. Earnings per share attained $0.39 compared to $0.32 in Q4 2022. Comparable same store sales were up 0.4 percent compared to Q4 2022.

 

Sales for FY2023 attained $57,100 million, up 4.8 percent from 2022 at $54,500.  Net earnings were $4,439 million an increase of 48.2 percent compared to $2,918 million in 2022. Earnings per share attained $1.23 compared to $1.20 in FY2022.

 

According to the Publix SEC Q-10 submission, total assets on December 30th 2023 were $34,348 million with long-term debt and lease obligations of $3,404 million.

 

Share price was adjusted upward from $15.12 to $15.20 on March 1st.

 

In commenting on results CEO Kevin Murphy stated, “I’m proud of our friendly, knowledgeable associates who help our customers create memorable meals with their families and friends. I’m so thankful to serve with them in providing Publix’s premier service in our communities.”


 

Genus Commercializing Pigs Resistant to PRRS-Implications for Poultry?

03/05/2024

Genus plc. a biotechnology company in the U.K. has successfully removed the CD163 gene applying CRISPR technology to produce pigs resistant to porcine reproductive and respiratory syndrome (PRRS).  This infection is estimated to cost the hog industry $3 billion annually.  Four commercial lines of pigs have been modified and are now available to breeders.

 

Genus plc. has applied to the USFDA for approval of gene-deleted pigs.  Under current FDA procedures, gene deletion applying CRISPR is regarded as a “investigational new drug” that will impose both expense and time before approval.  CRISPR does not involve any introduction of genetic material but is simply the removal of a gene.  Approval of genetically modified salmon by the FDA required decades for a decision although the Aqua Bounty product required the introduction of genes from other species.

It is hoped that the GENUS application to the FDA will be expedited since this will make possible the approval of CRISPR gene deletion that may in the future create strains of poultry that will be resistant to specific diseases including avian influenza.  It is also possible at the present time to create egg production strains that allow simple and effective gender sorting obviating the current bridge technology assaying hormones in allantoic fluid.

 

The outstanding question is whether consumers will accept gene deletion or even genetic modification of poultry and livestock.  Perhaps the restraint is the disinclination of breeders to adopt CRISPR and gene modification based on their perception of consumer demand.  The opposition to applying a patented and proven technology for gender determination may well be moot if China in its determination to become a world-class breeder of broiler and egg producing strains applies advanced technology. Their domestic market is large enough to support breeding programs with and without CRISPR technology and GMO. With successful implementation China will enter export markets competing with traditional breeders in the E.U. and the U.S.


 

JBS Faces NY State Lawsuit over Greenwashing

03/05/2024

 


NY A/G Letitia James

Attorney General of New York State, Letitia James has filed a lawsuit against JBS USA Food Co. relating to unsupported claims relating to greenhouse gas emissions.

 

Ms. James stated, “As families continue to face the daily impacts of the climate crisis, they are willing to spend more of their hard-earned money on products from brands that are better for the environment.”  James bases her lawsuit on alleged false advertising expressing a commitment to sustainability that misleads consumers.

 

Last year JBS USA was criticized by the Better Business Bureau, National Advertising Division, Review Board.  The company was advised to discontinue claiming that the it is committed to be net zero by 2040 and claiming that animal products can be produced with net zero emissions.

 

In 2021 JBS Group the parent company of U.S. JBS subsidiaries reported 71 tons of global greenhouse gas emissions.

 

The New York lawsuit is intended to enjoin JBS from its Net-zero by 2040 advertising campaign and to subject the Company to fines for violations on misinformation.

JBS USA responded by noting disagreement with the lawsuit.  The company stated, “We take our commitment to a more sustainable future for agriculture very seriously.  JBS will continue to partner with farmers, ranchers and our food system partners around the world to help feed a growing population.”  Their statement did not directly address expressed claims or their substantiation.


 

1994 to 2024 National Egg Quality School – 30th Anniversary

03/04/2024

https://neqs.org/

The National Egg Quality 30th Anniversary School will be held May 20 to 23, 2024 in Park City, UT and will continue the tradition of a curriculum that is designed for the serious-minded student who is willing to learn as much as possible about egg quality and safety in a concentrated, comprehensive four days.

 

The course provides a combination of lectures, individualized instruction, and hands-on laboratory experience with a written and practical exam on the fourth day. The school has proven to be successful in preparing students to be a more knowledgeable egg emissary. Do not miss the opportunity to enhance your egg quality and safety knowledge.

 

Back in the 1930's, quality standards were developed to establish a common language for buying and selling eggs. There was a need for both industry and government to uniformly apply the quality standards. Egg Schools began to develop on a regional basis to meet that need as well as educate industry on maintaining egg quality and safety, understanding the nutritional benefits of eggs, the latest processing information, and other topical issues. Later, as the industry consolidated, these regional Egg Schools began to consolidate and in 1993 work began to establish a National Egg Quality School. Since 1994 the National Egg Quality School has trained more than 1860 students. Today, the staff leading the school come from Industry, State & Federal agencies, and Land Grant Universities. With a National School mandate, we have crisscrossed the United States for 30 years conducting this training in more than 16 states!

 

The school will have Anniversary memorabilia for attendees, so don’t hesitate to secure your spot in the 2024 National Egg Quality 30th Anniversary School by registering today; Register - The National Egg Quality School (neqs.org) (Early enrollment deadline: April 1, 2024).

Paul H. Patterson, Director, National Egg Quality School


 

UFCW Strike Against Kroger Imminent

03/04/2024

Members of the United Food and Commercial Workers (UFCW) Local 400 voted with a majority of 87 percent to reject a contract proposal offered by the Kroger Company, and authorized a strike by the same margin.  Approximately 3,000 UFCW workers are employed at 38 supermarkets spread among West Virginia, Kentucky, and Ohio.  The strike vote is intended to wring concessions from Kroger after negotiations collapsed.  Following intercession by Senator Joe Manchin (D-WV) and the Federal Mediation and Conciliation Service of the Department of Labor, contract negotiations were reconvened.


 

Illinois Considering Cage Ban for Laying Hens

03/04/2024

State Senator Linda Holmes, Chairperson of the Illinois Senate Committee on Agriculture and Economic Development, has introduced Bill S.3655 that would eliminate cages and mandate housing consistent with the UEP Animal Husbandry Guidelines.  The Bill would also restrict the sale of eggs derived from hens held in other than conforming housing.

If the Bill is enacted, a target date of January 1st, 2026, is intended. This is clearly too soon to allow replacement of existing cages.  In the course of subsequent debate on the bill, the compliance date will most probably be extended following the lead of Utah that has delayed complete transition to 2030.


 

Kent State University Promoting Alternatives to Meat

03/04/2024

Kent State University has established a goal of 30 percent of meals to be plant-based by 2026.  Currently, this category comprises 15 percent of servings in residential dining halls.  Kent State University is cooperating with the Humane Society of the United States through the Forward Food program.  Sarah Korcan, RD., the Assistant Director of the University Culinary Service, stated, “With over a third of our student body embracing diverse dietary preferences, including vegan, vegetarian and flexitarian lifestyles, it is imperative to cater to their needs by offering a wide selection of meat-free alternatives”.


 

PFAS Compounds No Longer Used in U.S. Packaging

03/04/2024

According to the Food and Drug Administration, coatings for food packaging no longer contain per polyfluoroalkyl (PFAS) compounds.  This includes wrappers for QSR servings, microwave popcorn bags and paper-board containers.

 

In recent years, the potential toxicity of PFAS compounds has been documented. PFAS compounds have been extensively used as a coating for cookware, food packaging and food processing installations has been recognized.

The FDA announcement is a tribute to the voluntary commitment by manufacturers to eliminate PFAS as a grease-proofing coating on food packaging.


 

Private Label Sales Higher in 2023

03/04/2024

According to a February 29th release by the Private Label Manufacturers Association (PMLA), products in their category rose 4.7 percent in dollar value to $236 billion in 2023 compared to the previous year.  The increase can be compared to a 3.4 percent rise for national brands.

 

Peggy Davies, president of the PLMA, stated, “One of every five food or non-food grocery products sold in the U.S. carries a retailer’s name or own brand.”  She added, “Most of all the store brands, continue to be well positioned providing offerings are “value-right” and with strong perceived value for money and quality in categories where shoppers are targeting cutbacks.”

Unit sales for private brands dropped 0.1 percent to $58.1 billion in 2023 compared to unit sales for national brands that fell by three percent to $222.9 billion.


 

Retail Analysts Comment on Kroger-Albertsons Merger

03/03/2024

Following the announcement that the FTC will oppose the intended merger of the Kroger Company and Albertsons Corporation, analysts have reviewed the impact of both the present situation with a merger of the companies.

 

Under the present Administration, there is doubt that the transaction will be completed.  It is possible that further restrictions could be placed on the parties in the form of additional divestment of stores above the 413 offered. The FTC may designate an alternative to C&S Wholesale Grocers as the purchaser of divested stores.  This is based on the experience with Haggen filing for bankruptcy in 2015 shortly after acquiring stores from the Albertsons, Safeway transaction. 

 

Should the merger not take place, Walmart would be the major beneficiary maintaining a 24 percent share of the grocery market in the U.S. through a chain of 4,700 stores.  The buying power of Walmart contributes to their ability to maintain low shelf prices for packaged food from manufacturers. Campbell Soup and ConAgra Brands are heavily committed to Walmart in an asymmetric relationship.  The fact that ten chains control 60 percent of the retail grocery market  suggests that smaller producers of dairy, eggs and produce are at a disadvantage in dealing with large retailers, especially with buyers of eggs able to take advantage of the industry benchmark price-discovery system.

 

From recent quarterly reports released by the major chains, it would appear that Kroger, despite its size, is impacted by the deep discounters and major large competitor.  Kroger posted a 0.6 percent drop in comparable same store sales in 2023 compared to a four percent rise attained by Walmart.

 

On balance, a merger between Albertsons and Kroger would be to the disadvantage of both large and small suppliers and would disfavor competitors Walmart, Ahold-Delhaize and Target in addition to the three wholesale clubs.  If the merger is not concluded, both competitors of the two companies and suppliers would benefit.

 


 

Swamp Shootout Claims 15,000 Pigeons

03/01/2024

According to press reports, a pigeon massacre was organized at the Quail Creek Sporting Ranch in Okeechobee, FL.  Pigeons were transported to the facility and were released from boxes using an ejection device to be shot. Not very sporting despite the name of the venue.

 

Apart from the wanton slaughter of birds that were not gathered for food, many of the abandoned carcasses containing lead shot will be consumed by scavenging raptors and mammals resulting in lead toxicity. Moving large numbers of pigeons from numerous states to a central location also adds to the risk of disseminating avian influenza.

 

According to reports of the swamp shootout event, there did not appear to be any hunting skill required and the activity could easily have been replaced with clay targets that are usually offered.

 

Appropriate complaints have been filed with the Florida Fishing and Wildlife Conservation Commission and the State Attorney General.


 

Avian Influenza Confirmed on Mainland of Antarctica

03/01/2024

Argentine scientists on their Antarctic base, Primavera, have collected samples from dead Arctic skuas (Stercorarius parasiticus) that yielded H5N1 virus. This species breeds in Scandinavia and Scotland and migrates the longest distance of all marine birds to the Antarctic. Mortality among breeding colonies due to H5N1 was extensive in 2023.

 

If the disease spreads as expected, colonies of marine birds including penguins will be impacted, resulting in severe mortality as has occurred in many species of marine birds in both the northern and southern hemispheres over the past two years.



 

Dollar General Opens 20,000th U.S. Stores

03/01/2024

On February 24th, Dollar General opened their 20,000th store in Alice, TX.  In commemoration of the event, Dollar General donated $20,000 to support educational and tutoring programs divided between the Alicia Salians Public Library and the Boys and Girls Club of Alice.

Steve Deckard, Executive Vice President of Store Operations and Development for Dollar General stated, “we believe each store provides a positive impact on our hometowns through convenient access to affordable essentials, providing career growth opportunities for employees and benefits for local non-profits through the Dollar General Literacy Foundation”.


 

Alltech Appoint Chief Regulatory Officer

03/01/2024

Alltech has announced the appointment of Dr. Colm Moran as Chief Regulatory Officer.  Dr. Moran is a twenty-year veteran of Alltech and most recently served as Director of European Regulatory Affairs and chairman of the Alltech Crisis Management Team. 

 

Dr. Moran has twenty-three years of experience in the feed industry.  He earned his Bachelor’s degree in Biotechnology from the University of Wales and subsequently three master’s degrees in Food Biotechnology, Food Regulatory Affairs and in Brewing from universities in Scotland Ireland and England.  His Doctoral degree in Fermentation Microbiology was awarded by the University of Plymouth.  Dr. Moran serves on the board of directors of the International Feed Industry Federation. 

 

In commenting on the appointment, Dr. Mark Lyons, president and CEO of Alltech stated, “Our regulatory strategy is moving into new strength under Colm’s leadership.  This positions Alltech firmly at the leading edge in delivering innovation to our customers.”


 

STOP PRESS

03/01/2024

Egg-NewsFederal Shutdown Averted?

With the imminent passage of the third in a series of continuing resolutions today it is apparent that a Federal shutdown on Saturday midnight will be averted.  There is a tentative agreement between the House and Senate to pass the required series of appropriations bills to maintain government services. 


 


 

Pirbright Institute Develops Novel Approach to IB Vaccines

03/01/2024

A research team at the U.K. Pirbright Institute has demonstrated a novel approach to a vaccine against avian infectious bronchitis (AIB).  Applying reverse genetics, it was possible to incorporate a heterologous spike gene from a non-pathogenic Beaudette strain of infectious bronchitis virus into a field strain (M41) prevalent in the E.U.  The recombinant designated M41K-BEAU(S) is naturally attenuated but can replicate in Vero cells.  This approach makes it possible to manufacture an AIB vaccine at a lower cost and in greater quantity than using conventional chick embryo propagation required for current commercially available vaccines.

Dr. Erica Bickerton leader of the coronavirus research team at the Pirbright Institute stated, “This research opens opportunities to create novel, innovative vaccines that could be effective against many strains of AIB and potentially reveal ways to create vaccines for other viruses in the coronavirus family.”


 

 

Congress Averting Government Shutdown

03/01/2024

Congress has agreed to a continuing resolution to fund the Departments of Veterans Affairs, Transportation, Agriculture, Energy and other agencies and will vote today to avert a Saturday March 2nd shutdown of Federal Agencies.

 

Opinion within Congress varied from the urgent need to pass appropriations bills to favoring a shutdown over narrow issues. The text of appropriations bills must be in the hands of members of Congress 72 hours in advance of a vote hence the need for a continuing resolution.

 

A significant point of contention has been the funding of the USDA SNAP-WIC program for which $6.3 billion was included in the Senate bill.  The minority party in the House had requested $7 billion but the leadership placed a cap of $6 billion on the program.  A second obstacle was the requirement that the Veteran’s Administration report the names of patients who require assistance with management of their benefits to a background check system used to screen potential purchasers of weapons.

 

 The Speaker of the House, Rep. Mike Johnson (R-LA) presided over a contentious conference call on Friday February 23rd while Congress was in recess.  If a government shutdown does occur, it is apparent that both parties will be blamed for the inconvenience and damage to the national economy. This prospect will hopefully engender compromise that would normally be expected. 

 

The continuing resolution is essentially kicking the can down the road for the third time after two previous iterations. The final passage of the series of appropriations bills will be based on mutual political expediency and not the wellbeing of the Nation and our citizens. This is no way to run a democracy. We deserve maturity and wisdom in our elected representatives that rises above middle-school intransigence and adherence to narrow and parochial considerations.

 


 

Family Dollars Stores Fined Over Substandard Storage

03/01/2024

In 2022 EGG-NEWS reported on unsanitary conditions at a Little Rock, AR distribution center operated by Family Dollar a subsidiary of Dollar Tree Inc.  Inspection by state and FDA officers confirmed rodent infestation and contamination of FDA-regulated products including cosmetics, food, drugs and medical devices.  Family Dollar recently entered into a plea agreement with the Department of Justice accepting a fine amounting to $41.7 million.  The plea agreement also mandates that the holding company and its subsidiaries should meet robust corporate compliance and reporting requirements for a three-year period.

 

Acting Associate Attorney General Benjamin C. Micer stated, “When consumers go to a store they have the right to expect that food and drugs on the shelves have been kept in clean uncontaminated conditions.”  He added, “When companies violate their trust in the laws designed to keep consumers safe the public should rest assure that the Justice Department will hold companies accountable.”

 

The company admitted that the Little rock, AR. distribution center that shipped to more than 400 stores in six southern states, was aware of a rodent problem in 2020 and that by the beginning of 2021 products were held under unsanitary conditions. Notwithstanding the extent of the situation the Company continued to ship products until January 2022 when the facility was closed by the FDA.  Corrective action included fumigation of the distribution center and a recall of all products shipped after January 1st, 2021 to 404 stores.

 

News reports indicated that 1,200 rat and mouse remains were collected after fumigation of the closed facility. The fine works out to approximately $35,000 per rodent!

 


 

USPOULTRY Donates to Atlanta Community Food Bank

02/29/2024

The organizers of the 2024 International Production and Processing Expo raised $33,314 for the Atlanta Community Food Bank.  Approximately half was donated by the IPPE and the rest from individual company and personal contributions.

 

The organizers of the IPPE stated, “we have been raising funds through the Giving Back To Atlanta campaign since 2016.  With the help of exhibitors and attendees who give to the campaign every year, more than $213,000 has been donated to date to the Atlanta Community Food Bank.

 

It is estimated that 750,000 residents of Metro-Atlanta relay on food pantries and meal service programs to feed their families each year.



 

Elanco Animal Health Posts Q4 and FY 2023 Results

02/29/2024

In a press release dated February 26th, Elanco Animal Health (ELAN) reported on Q4 and FY 2023 ending December 31st.  For the period, the company posted a loss of $141 million on revenue of $1,035 million with a diluted EPS of $(0.29). Although ELAN beat on the top line against Zack’s estimate of $999.7 million, EPS was far below the $0.10 anticipated.  For the corresponding Q4 FY2022, ELAN lost $55 million on sales of $985 million with a diluted EPS of $(0.1).  Comparing Q4 2023 with Q4 2022:

 

  • Revenue increased by 5.1 percent
  • Gross margin declined from 54.5 to 50.1 percent
  • Operating margin declined from 13.6 to 11.0 percent

 

For FY 2023 the Company lost $(1,195 million) on sales of $4,417 million with a diluted EPS of $(2.50). During FY 2023 the Company incurred a charge of $1,042 million for goodwill impairment. Comparable figures for FY 2022 were a loss of $(78) million on sales of $4,411 million with a diluted EPS of $(0.16).

 

During FY 2023 sales to the livestock sector attained $2,271 million, representing 51.4 percent of total company sales. Sales to the poultry sector amounted to $$765 million. Sales of companion animal products attained $2,104 million or 47.6 percent of the Company total.

 

The Company recently announced the divestment of their aquaculture business to Merck Animal Health for $1,300 million in cash.

 

Guidance for FY 20234 included revenue of $4,450 to $4,540 million but with a net loss of $(62) to $(17) million.  EPS will range from $(0.12) to $(0.03).

 

In commenting on results, Jeff Simmons, CEO stated, Elanco ended 2023 with momentum, returning to constant currency revenue growth for the full year and delivering 5% growth in the fourth quarter, primarily driven by our farm animal business, innovation revenue and price growth," Simmons continued, "As we look at 2024, we expect our existing portfolio to deliver constant currency revenue growth of 1% to 3%, with both pet health and farm animal expected to contribute to growth. We remain encouraged by our three late-stage pipeline products under regulatory review that have a path toward approval in the first half of 2024 and would be additive to our topline expectations in the second half of the year. Continuing our efforts to improve efficiency, today we announced a strategic restructuring to continue the shift of our investments into more significant value creation areas. We are investing to enhance our launch efforts, prioritizing cash flow improvements and meaningfully reducing leverage, from both our improving free cash flow and the expected sale of our aqua business. We believe that the investments we are making in 2024 will provide the foundation to enable sustained revenue growth over the medium and long term."

 

This self-adulatory statement is at variance with the reality of continued losses and shareholder disaffection.

 

Ancora an investment group with three percent of the equity has proposed a slate of independent candidates to the 12-person Board to replace four retiring members. Ancora has characterized the current Board and CEO as “barriers to success”.

 

On December 31st ELAN posted total assets of $14,362 million including goodwill and intangibles of $$9,588 million with long-term debt of $6,147 million. On February 29th the market capitalization attained $7,850 million The Company has traded over the past 52-weeks in a range of $7.88 to $16.20 with a 50-day moving average of $15.42.

 

On a twelve-month trailing basis, operating margin was 1.6 percent and profit margin -27.9 percent.  The company achieved a return on assets of 1.4 percent and -18.2 percent on equity.

 

After meeting with Ancora following release of FY 2023 earnings, Elanco announced a program to enhance shareholder value. This will include a shift from livestock to higher-margin companion animal products, cancellation of 420 positions with layoffs and changes in representation and distribution to reduce costs.  


 




























































































































































































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