Editorial

Slow Pace of COVID Vaccine Rollout Concerning Health Professionals

Despite Emergency Use Authorization for the Pfizer and Moderna vaccines in mid and late December, only approximately 18 million doses had been distributed by January 7th but only five million were injected. The Administration delegated all responsibility for the critical “last mile” to states without either an overall plan or funding. There has been no uniformity in following CDC guidelines for priority groups and obvious problems have arisen relating to scheduling, availability of vaccines and establishing locations where large numbers of recipients can receive their doses.

 

It is noted that the initial two weeks of vaccination involved front line healthcare professionals, hospital staff and medical first-responders. It would be expected that these groups would be the easiest to access but some eligible recipients have yet to receive their first dose while others are now due for their booster vaccines.

 

It remains to be seen whether the retail outlets including free-standing pharmacies and locations in supermarkets will able to collectively maintain a rate of administration of one million doses per day on a national basis even if vaccine delivery is coordinated.

 

Noting the unacceptable delays for administration in Florida where the elderly were obliged to camp out overnight to compete on a first-come-first serve basis, Governors in northeastern densely-populated states are arranging for vaccination in public buildings including convention centers, arenas and libraries. The poultry industry will have to arrange for in-plant administration by coordinating with state and county health authorities. Accordingly appropriate planning should commence as soon as possible.

 

It is axiomatic that without suppression of COVID-19 there will not be a restoration of the economy and a return to life as we knew it.  Rapid deployment of the two scheduled vaccine doses will be critical to attaining a level of immunity that reduces the rate of spread, especially with the emergence of more infectious variants.  The availability and administration of vaccines, off to a slow start, will accelerate with ingenuity and flexibility.

 

Unfortunately vaccines will not be a panacea freeing us from the risks and consequences of COVID-19.  Reducing spread by masking, social distancing and avoiding unnecessary travel and crowds will be critical through mid-summer when we anticipate that at least 75 percent of our population will be immune through either vaccination or less likely exposure.

 

Poultry Industry News

Turkey Week

Weekly Turkey Production and Prices January 8th 2020

 

Poult Production and Placement:

The December 16th edition of the USDA Turkey Hatchery Report, issued monthly, documented 26.9 million eggs in incubators on December 1st 2020 (26.7 million eggs on November 1st 2020) and up 1.7 percent (0.5 million eggs) from December 1st 2019.

 

A total of 22.2 million poults were hatched during November 2020 (23.3 million in October 2020), representing a decrease of 0.6 percent (0.1 million poults) from November 2019.

 

A total of 20.0 million poults were placed on farms in the U.S. in November 2020, (20.1 million in October 2020), 0.9 percent less than in November 2019. This suggests disposal of 1.1 million poults during the month (3.2 million in October 2020). Assuming all tom poults were placed, up to 9.9 percent of November-hatched hen poults or 5.0 percent of all November-hatched poults may not have been reared. This is an unsubstantiated estimate in a fluctuating demand for processed toms and hens in a COVID-affected year and with the approach of Christmas. See relative numbers of hen and tom poults processed under Production Data below.

 

For the twelve-month period December 2019 through November 2020 inclusive, 275.4 million poults were hatched and 251.7 million were placed. This suggests disposal of 23.7 million poults. Assuming all tom poults were placed, (representing a broad assumption as above), 17.2 percent of hen poults or 8.6 percent of all poults hatched during the period were not placed.

 

To be updated in the mid-January 2021 edition following release of monthly data

 

Turkey Production:

The January 8th 2021 edition of the USDA Turkey Market News Report (Vol. 68: No. 01) released January 8th confirmed the following provisional data for turkeys slaughtered under Federal inspection:-

 


 

Broiler Week

Weekly Broiler Production and Prices, January 8th 2020.

 

Chick Placements.

The Broiler Hatchery Report released on January 6th 2021 confirmed that a total of 236.3 million eggs were set during the week ending January 2nd 2021, almost the same as the corresponding week of the previous year and 0.4 percent (1.0 million eggs) more than the previous week.

 

A total of 178.6 million day-old chicks were placed among the 19 major broiler-producing states during the week ending January 2nd 2021. Total chick placements for the U.S. amounted to 188.2 million, one percent less than in the corresponding week in 2020 and 2.8 percent (5.1 million chicks) more than the previous week. Claimed average hatchability was 81.5 percent for eggs set three weeks earlier, (81.7 percent for the previous week). Cumulative placements for the period January 4th 2020 through January 2nd 2021 amounted to 9.79 billion chicks, one percent lower than the corresponding period in 2020.

 

Broiler Production

According to the January 8th 2021 USDA Broiler Market News Report (Vol. 68: No. 01 released January 8th 2021) for the processing week ending January 2nd 2021, 137.8 million broilers were processed during the past week (previous short week 123.0 million) at an average live weight of 6.40 lbs. (6.19 lbs. last week) and a nominal yield of 76 percent. The number of broilers processed was 5.9 percent less than the corresponding processing week in 2020. Processed (RTC) broiler production for the week was 670.5 million lbs. (304,754 metric tons), (578.6 million lbs. last week), 5.3 percent less than the corresponding processing week in 2019. In 2020 Processed (RTC) production attained 40,811 million lbs. (18,550,251 metric tons), 0.5 percent more than YTD 2019.

 

Broiler Prices

The USDA National Composite Weighted Wholesale price on January 8th 2021 was up 1.3 cent per lb. from the previous week to 81.8 cents per lb., compared to 91.5 cents per lb. during the corresponding week of 2020; 82.5 cents per lb. for December 2020 and 90.0 cents per lb. for the three-year average. The industry still is impacted by the retraction in the food service segment following imposition of COVID-19 restrictions.

 

The USDA Southern States (SS) benchmark prices in cents per lb. (rounded to nearest cent) as documented in the Broiler Market News Reports January 8th 2021 are tabulated with a comparison with the previous week:-

 


 

Weekly Commodity Report

WEEKLY COMMODITY REPORT: JANUARY 8th 2020.

 

  • The financial and economic uncertainties of transition to a Biden-Harris Administration are diminishing but the impact of the escalating COVID-19 pandemic continues to escalate. The commodity market this past week was influenced by exports.

 

  • The direction of agricultural and trade policy to be implemented in 2021 will emerge following the confirmation of Tom Vilsack as USDA Secretary and Michael Regan as the Administrator of the EPA together with other Cabinet appointments and their subordinates relevant to agriculture.  Following the result of the January 5th Georgia runoff elections for the Senate, the nominees by President-elect Biden will likely be approved.

 

  • U.S producers are now receiving and conversely livestock producers are paying close to $5.00 per bushel for corn and $13.80 per bushel for soybeans plus transport and basis.

 

  • Corn and soybeans were respectively 10.4 percent and 4.9 percent above the previous week representing the highest levels in three years. Soybean meal rose by 2.5 percent, reflecting the rise in the price of soybeans. Factors influencing prices this past week included export orders, projected ending stocks, and anticipation of the January 12th WASDE Report.

 

  • According to the USDA FAS Export Report for the week ending December 31st 2020 export orders for corn amounted to 748,900 metric tons (29.7 million bushels) with 1.03 million metric tons (40.5 million bushels) actually shipped. Over the past week export orders for soybeans attained 37,000 metric tons (1.4 million bushels) with 1.86 metric tons (68.2 million bushels) actually shipped.

 

The following quotations for delivery in the months as indicated were posted by the CME at 14H30 on January 8th 2021 compared with values posted at close of trading on December 31st 2020  (in parentheses) reflecting specified months in 2021 for delivery.

 

 

COMMODITY

 

Corn (cents per bushel)

 March 497      (450)      

May    498

Soybeans (cents per bushel)

 Jan.   1,378  (1,314)

March  1,377  (1310)

Soybean meal ($ per ton)

 Jan.     445       (434)

March     440     (429)

 

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

 

COMMODITY    CHANGE FROM PAST WEEK

Corn:  March quotation up 47 cents per bushel (+10.4%)

Soybeans: Jan.  quotation up 64 cents per bushel  (+4.9%

Soybean Meal: Jan. quotation up $11 per ton (+2.5%)

 

  • For each 10 cent per bushel change in corn:-

The cost of egg production would change by 0.45 cent per dozen

 

The cost of broiler production would change by 0.25 cent per pound live weight

 

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

The cost of egg production would change by 0.44 cent per dozen

The cost of broiler production would change by 0.25 cent per pound live weight

 

This week the changes in the prices of corn and soybean meal would raise nest-run production cost for eggs by 2.6 cents per dozen and for broilers 1.5 cents per live pound. Over the past two weeks escalation in the price of major ingredient have added 4.9 cents per dozen and 2.8 cents per liveweight lb.

 

According to the December 10th WASDE, corn harvested in calendar 2020 will attain 14,507 million bushels with ending stocks projected at 1,702 million bushels. Final values will be modified by export volume and domestic use and the January 12th WASDE. Compared with December 31st., at 14H30 the CME quotation for corn on January 8th was up 47 cents per bushel for March delivery to 497 cents.

 

The social restrictions imposed in the U.S. as a result of COVID-19 will reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2020 requirement accepting a nominal ten percent addition to gasoline. A significant proportion of the U.S. ethanol fermentation capacity is off-line or operating at lower than capacity at present and the outlook for increased demand is questionable. According to the U.S. Energy Information Agency the industry produced on average 935,000 barrels per day for the week ending December 31st. Ethanol stocks stood at 23.3 million barrels on January 1st 2021. Ethanol was priced at $1.34 per gallon on January 8th unchanged from December 31st and compared with a five-year low of $0.92 per gallon on March 26th. Concurrently gasoline at $1.50 per gallon (quoted, New York Harbor) is 8 cents per gallon higher than ethanol but has a 63 percent higher BTU rating.  

 

With more plants producing ethanol in the 4th quarter, DDGS is now available but at a higher price than in the third quarter. Eastern Corn-belt product was priced at $208 per ton on January 6th 2021,  $4 per ton higher than the previous week and $53 per ton more expensive than January 7th 2019.

 

 Soybeans are the beneficiary of demand by China with price rising to 1,378 cents per bushel on January 8th for current month delivery. The USDA documented a 2020 crop of 4,170 million bushels. Ending stocks according to the December 10th WASDE projection will attain 175 million bushels, down from the November projection of 190 million bushels.

 

On January 6th 2021 Meat and Bone meal quoted Central U.S. attained $365 per ton, up $15 per ton from the previous week and up $145 per ton from January 7th 2020.

 

On January 8th the BRL exchange with the CNY was 0.83, (down CNY 0.04 from the previous week). The conversion of the US$ to the CNY was set at 6.48 on January 8th, up CNY 0.05            from the previous week.

 

For consecutive calendar years 2017 through 2019 the U.S. supplied 34.4 percent of soybean requirements for China amounting to 95.5 million metric tons. This was followed by a decline to 16.9 percent of 88.5 million metric tons in 2018 and 16.6 percent of 88.0 million metric tons in 2019. The USDA anticipates that soybean imports by China will amount to 95 million metric tons during the 2020-2021 market year.

 

For the 2019/2020 market year China imported 2.1 million metric tons of corn from the U.S., 4.8 percent of total exports of 43.3 million tons, but 12 percent less than in the 2018/2019 market year. The U.S. Grains Council documented sales of U.S. corn to China through December 31st 2020 in the 2020/2021 year amounting to 11.7 million metric tons (460 million bushels) with 65 percent yet to be shipped.

 

For the 2019/2020 market year China imported 16.3 million metric tons of soybeans from the U.S., 36.2 percent of total exports of 44.9 million metric tons, but 3.9 percent less than in the 2018/2019 market year.

 

 

COMMENTS

 

Subscribers are referred to the December 10th WASDE #607 under the STATISTICS TAB. The January WASDE will be reviewed in the next Edition

 

Approximately $16 billion was disbursed under the Coronavirus Food Assistance Program (CFAP) in early 2020. An additional $14 Billion relief package was announced by the Administration on September 18th with all of the allotment having been distributed.


 

U.S. Meat Exports

U.S. Broiler and Turkey Exports for January-November 2020.

 

Total exports of broiler parts in January-November 2020 attained 3,279,259 metric tons, 5.0 percent more than in January-November 2019 (3,121,870 metric tons). Total value of exports increased by 2.8 percent to $3,263 million ($3,173 million Jan.-November 2019).

 

Unit price is constrained by the fact that leg quarters comprise over 96 percent of exports except feet. Leg quarters represent a relatively low-value commodity lacking in pricing power. Exporters of commodities are subjected to competition from domestic production in importing nations. Generic products such as leg quarters are vulnerable to trade disputes and embargos based on real or contrived disease restrictions.

 

The extensive outbreak of African swine fever has boosted U.S. exports to Asia over the intermediate-term. All animal protein will rise in price as pork supply is restricted or reversed as supply is restored. The effect of increased demand from Viet Nam is apparent but disruption in ports and transport infrastructure due to the COVID-19 outbreak impacted exports to China during January and February.

 

During January-November 2020 the National Chicken Council (NCC), citing USDA-FAS data, documented exports of 3,323,194 metric tons of chicken parts and other forms (whole and prepared) valued at $3,344 million with a weighted average unit value of $1,006 per metric ton, 2.5 percent lower in unit value than in January-November 2019 ($1,032 per metric ton).

 

The NCC breakdown of chicken exports during January-November 2020 by proportion and unit price for each broiler category compared with January-November 2019 (with the unit price in parentheses) comprised:-

  • Chicken parts 6%; Unit value $959 per metric ton ($972)
  • Prepared chicken 1%; Unit value $3,525 per metric ton ($3,592)
  • Whole chicken 3%; Unit value $1,008 per metric ton ($1,044) 

 

Direct comparisons between 2019 and 2020 are confounded by the USDA combining export quantities of feet with chicken meat from April onwards.

 

The following table prepared from USDA data circulated by the USAPEEC, compares values for poultry meat exports for January-November 2019 with the corresponding months in 2020:-


 

USDA Grain Stocks Report

The USDA quarterly Grain Stocks Report released on January 12th documents storage of commodities produced in the U.S. classified according to on-site and remote facilities including elevators and commercial installations. Quantities of corn and soybeans, the two major crops relevant to poultry production were:-

 

“Corn stored in all positions on December 1st 2020 totaled 11.3 billion bushels, down slightly from December 1st 2019. Of the total stocks, 7.05 billion bushels are stored on farms, down 1 percent from a year earlier. Off-farm stocks, at 4.28 billion bushels, are up 1 percent from a year ago. Indicated disappearance for September through November 2020 is 4.78 billion bushels, compared with 4.51 billion bushels during the same period last year”.

 

“Soybeans stored in all positions on December 1st 2020 totaled 2.93 billion bushels, down 10 percent from December 1st 2019. Soybean stocks stored on farms totaled 1.31 billion bushels, down 14 percent from a year ago. Off-farm stocks, at 1.62 billion bushels, are down 6 percent from last December. Indicated disappearance for September through November 2020 totaled 1.73 billion bushels, up 43 percent from the same period a year earlier.


 

USDA-WASDE FORECAST

USDA-WASDE FORECAST #608 January 12th 2021

 

OVERVIEW

The January 12th 2021 USDA WASDE Report was updated from the December 2020 edition to reflect the 2021 season. There was no change in either corn or soybean harvest areas from the December 10th WASDE report but this may be altered by world prices and weather considerations. The corn acreage to be harvested is currently estimated at 82.5 million acres and soybeans will be harvested from 82.3 million acres.

 

The January 2021 WASDE estimate of corn yield was lowered 3.8 percent to 172.0 bushels per acre, (175.8 bushels per acre in 2020). The estimate of soybean yield was reduced 1.0 percent to 50.2 bushels per acre. (50.7 bushels per acre in 2020)

 

The January 2021 USDA projection for the ending stock of corn was reduced by 8.5 percent to 1,552 million bushels. Due to exports the ending stock for soybeans was reduced by 20.0 percent to 140 million bushels.

 

Projections for ending stocks of both corn and soybeans have influenced recent CME price quotations concurrently with increased exports to comply with the Phase-One trade agreement with China. The January 2021 WASDE projected the corn price to be $4.20 per bushel and soybeans at 1,115 cents per bushel.

 

It is accepted that projections are based on the assumption that China will not completely honor commitments that were disrupted during the first quarter of 2020 by COVID-19. China booked substantial orders for corn and soybeans to be delivered through August for the 2019-2020 market year in addition to large quantities booked from September onwards for the 2020-2021 market year. Reports on volumes of commodities exports to China will be included in upcoming editions of CHICK-NEWS and in subsequent mailings as data becomes available.

 

CORN

The corn harvest for 2021 documented in the January 2021 WASDE Report #608 is 14,183 million bushels consistent with actual data. The projected 2021 harvest can be compared to 14,507 million bushels in 2020 and is 6.4 percent lower than the previous 2016 record harvest of 15,148 million bushels. The “Feed and Residual” category was lowered 1.0 percent to 5,650 million bushels. The “Ethanol and Byproducts” category was lowered 1.9 percent to 4,950 million bushels based on reduced domestic demand for E-10 due to COVID-19 restrictions and competition in the export markets. Corn exports were reduced 3.8 percent to 2,550 million bushels in the face of intense competition from Brazil and Argentine and high world domestic coarse grain production relative to demand. Ending stocks were reduced 8.8 percent 1,552 million bushels.


 

Pilgrim’s Pride Corp and Tyson Foods Reach Settlement over Collusion Lawsuit

Following the plea deal with the Federal Department of Justice (DOJ) in a criminal case alleging collusion, Pilgrim’s Pride agreed to a $110 million penalty.  Given the reality of the DOJ case, a negotiated settlement was entered into between Pilgrim’s Pride Corp. and the Plaintiffs in the civil lawsuit alleging collusion in the case referred to as Broiler Chicken Antitrust Litigation N.D. Illinois Case No. 1:16-cv-08637.

 

The revelation concerning Pilgrim’s Pride was contained in a January 11th Form 8K filing with the SEC detailing the $75 million settlement accompanied by the statement, “While Pilgrim’s does not admit any liability for the claims alleged in the “broiler antitrust litigation” it believes the settlement was in the best interest of the company and its shareholders.” This settlement is distinct from a parallel civil lawsuit alleging collusion by indirect purchasers including restaurant and QSR chains.


Pilgrim's Pride indicted ex-CEO

 

Concurrently media reports indicate that Tyson Foods has settled with the direct-claim Plaintiffs for an undisclosed figure. In June 2019 the Company entered into a leniency agreement with the DOJ when it discovered that two employees had apparently participated in anti-competitive activities leading to subsequent criminal indictments.

 

Pilgrim’s Pride Corp. did not admit any liability for the claims alleged in the broiler antitrust civil litigation. It is obvious that the co-colluding party in the criminal case, Claxton Poultry Farms will be obliged to settle and not risk trial.

 

In September 2018 Fieldale Farms Corporation settled without admitting wrongdoing and the Company agreed to settle for  $2.3 million and to cooperate with Direct Purchaser Plaintiffs in ongoing litigation against the non-settling Defendants

 

An important aspect of the case is that all of the Defendants had access to cost data circulated by  AgriStats® Inc a major U.S. benchmarking system which was at the time owned and operated by Elanco Animal Health a subsidiary of Eli Lilly, a major pharmaceutical company.  Plaintiffs allege that by becoming aware of their competitors’ production costs, it would have been possible for Defendants to make decisions concerning volumes of production and pricing.  Although this contention will be examined at trial, the cost of defending such an action is immense as experienced previously by the egg industry that faced civil antitrust lawsuits. 

 

The situation relating to other Defendants in the civil case will depend on documentation confirming whether collusion did or did not take place. It would have been injudicious for Pilgrim’s Pride to have defended a civil case given the DOJ settlement and the criminal charges against their CEO and his successor that would have placed he company in jeopardy for punitive damages. Tyson Foods was in a similar predicament given their admissions to the DOJ, a negotiated leniency agreement and also to have had ex-employees under indictment for alleged anti-competitive crimes committed.

 

The Agreements are subject to court approval.


 

China Suspends Imports from Pork Plant in Brazil

The Agriculture Ministry of Brazil confirmed that on December 28th, the General Administration for Customs suspended imports of pork from Aurora Alimentos plant as a result of alleged outbreaks of COVID-19.

 

In recent weeks, China has imposed bans on beef and pork plants in the U.S. and Brazil and has claimed that the infection can be transmitted on both product and packaging, a contention considered as “unlikely” by the World Health Organization.


 

Albertsons Encountering COVID-Related Employee Protests in DCs.

Protests were staged at distribution centers operated by Albertsons in Tolleson, AZ and Roanoke, TX.  At issue is the complaint that drivers and warehouse workers are not adequately protected against COVID-19.  Workers at both centers are members of the International Brotherhood of Teamsters (IBT).

 

Management of Albertsons claim that they are following CDC guidelines and have pledged to "bargain in good faith with the goal of working towards a resolution that benefits our associates and our company".  Albertsons has introduced measures to prevent infection in stores including provision of PPE, cleaning and sanitation and extending sick leave benefits.  Albertsons has worked with the United Food and Commercial Workers International Union (UFCW) to classify grocery workers as emergency responders. 

 

It appears that drivers and warehouse workers are concerned that same degree of protection has not been extended. Alternatively the IBT, a more militant union than UFCW is bargaining for an extension of benefits.


 

Publix to Initiate COVID Vaccination

Pharmacies within Publix Supermarkets in collaboration with the Florida Department of Health have commenced administering COVID-19 vaccines in twenty-two stores in three counties in Florida.  Publix will expand the Pilot Program to six other states subject to a successful rollout.

 

Current information indicated that as of January 7th, 17 million doses of COVID-19 vaccine had been distributed but only five million had actually been administered.

 

 

The pilot program motivated by Governor Ron DeSantis commenced during the second week of January 2021 and appears to be a desperation move based on lack of planning. The State of Florida is offering COVID -19 vaccines to all residents over 65 years of age. Currently Seniors are camping out overnight in their cars and on sidewalks to receive their first dose of vaccine since there are insufficient central locations to process recipients at a rate commensurate with the urgency required.   Unless at least 70 percent of the U.S. population can be immunized, by early- summer restoration of our economy and way of life will not be achieved. 

 

Photo ops are no substitute for protection.


 

Mountaire Farms Plant Employees Reject Union Membership

Approximately 1,000 Mountaire Farms employees, located at the Selbyville, DE. plant, have advised the company that they no longer wish to be represented by Local 355 of the Teamsters Union.  Accordingly, the Company has advised the Union that they have withdrawn recognition and will stop collecting union dues from paychecks.

 

During 2020 a ballot to decertify the United Food and Commercial Union Local 27 was deferred following a ruling by the National Labor Relations Board.  The issue arose mid-year when the NLRB directed that ballots cast by workers should be sealed until the Board reviewed legal precedents protecting unions from being ousted while collective bargaining was in progress.  The petitioner for the UFCW case was assisted by the National Right to Work Foundation that represents workers in decertification cases.

 

Mountaire inherited union representation at the Selbyville plant following acquisition of the facility in 1977.  Conflict between the union and Mountaire Farms intensified at the beginning of the 2020 COVID-19 outbreak.

 

 

 


 

Aleph Farms Establishes MoU with Mitsubishi Corporation of Japan

According to a Memorandum of Understanding (MoU), Aleph Farms of Rehovot, Israel will establish a strategic alliance with the Food Group of Mitsubishi Corporation of Japan to provide technology leading to cultivation of whole-muscle product. 

 

Didier Toubia, Co-Founder and CEO of Aleph Farms, stated “The MoU with Mitsubishi Corporation marks an important milestone for us as we methodically build the foundations of our global go-to-market activities with selective partners.”

 

Aleph Farms has established relationships with Cargill and the Migros Supermarket Group in Switzerland and is part of the “BioFarm Two Fork Strategy”.

 

Aleph Farms and Mitsubishi Corporation are members of the Cellular Agricultural Study Group functioning under the Japanese Center for Rural-Making Strategy.  The intent with the consortium is to promote products and technologies to enhance competitiveness of Japan and conform to government goals of carbon neutrality and reducing greenhouse gas emissions.


 

Farmers Received $23.5 Billion Under CFAP

In a recent press release, the USDA quantified payments to farmers under the Coronavirus Food Assistance Program (CFAP) initiated in May 2020.  Approximately $10.5 billion was assigned under CFAP 1 and $13.0 billion under CFAP 2.  Approximately 1.4 million applications were approved under the two consecutive CFAP disbursements.

 

Under the 2020 Coronavirus Relief Bill, an additional $13 billion will be made available to assist agriculture with $5 billion to row-crop farmers and additional amounts to livestock producers.

 

In addition to CFAP, farmers received $23 million over 2018 and 2019 to compensate for losses sustained as a result of market disruption stemming from the trade war with China.


 

Impossible Foods Cuts Prices to Food Service Segment

Impossible Foods announced a 15 percent cut in price to food service distributors in the U.S.  This is the second reduction in twelve months and represents an attempt to gain market share from competitor Beyond Meat and to compete directly with ground beef.  Notwithstanding the reduction, Impossible Foods will still be selling product at a price higher than the real food item it intends to replace

 

Impossible Foods has increased production and presumably the new scale of operation has reduced cost allowing the company to gaining market share.


 

Strikes at Argentine Port and Soybean Crushing Plants Settled--For now.

On December 29th 2020 an agreement was reached between workers at soybean crushing plants and grain inspectors at the port of Rosario.  The 20-day strike was estimated to cost $100 million per day and was an added blow to the faltering Argentine economy.  Workers demanded increased wages to offset the effect of inflation resulting from the injudicious management by the socialist government of the Argentine. 

 

The strike was partly responsible for the surge in prices of soybeans and soybean meal by affecting the balance between supply and demand.  It is hoped that the resolution of the strike will lead to a reduction in the price of soybean meal that has diminished margins of turkey and broiler producers in the U.S.

 

USDA has reduced the projection of soybean production by Argentine for the 2020-2021 market year by 50 million metric tons due to drought.  Subsoil moisture has declined sharply and projected yields will depend on timely rainfall.  According to USDA-FAS Gain Report AR2021-001 dated December 30th farmers are holding back supplies of soybeans based on peso dominated financing and reduced export tax levels.  In an inflationary economy, it pays farmers to sit tight and hold on to an asset of escalating value rather than convert their crops to domestic currency.  For the local market year beginning April 2020, USDA projects a total supply of 70.09 million metric tons of which 10 percent will be exported and 58 percent will be crushed.  USDA anticipates a yield of 43.3 bushels per acre from the current crop c ompared to ann average of 50.7 for the U.S.


 

Chore-Time Appoints Engineering Manager

Michael Orgill has been promoted to the position of Engineering Manager for Chore-Time.  Previously he was the Chore-Time Product Engineer with specific responsibility for poultry watering products.  Michael earned a baccalaureate degree in mechanical engineering from Brigham Young University ID. and a master’s degree from Purdue University, IN.


 

USPOULTRY Recognizes Meyhen

The daily U.S. Poultry Wire on January 8th recognized Meyhen International, distributors for Duram rubber defeathering fingers.  Meyhen colored fingers incorporate a new compound used to fabricate fingers of specified hardness.

 

Meyhen distributes a range of fingers designed for efficiency and durability:-

 

  • The Gina finger is compatible with Stork and Meyn pickers featuring a head that provides for a stable hold in disks. 
  • The Gaia finger is designed for heavy broilers and light turkeys. 
  • The Betti flat finger is suitable for Patrini pickers and turkey hock-pickers. 
  • The Janet picking finger was recently introduced and fits Stork and Meyn pickers. 

Meyhen International supplies a pneumatic finger puller to replace used fingers.

For additional information access the company website <www.meyhenfingers.com>.


 

KFC Upgrades Chicken Sandwich

Belatedly following the example of McDonald's Corporation, Kentucky Fried Chicken has announced a "KFC Chicken Sandwich".  The product will comprise a crispy chicken filet placed on a brioche bun with a pickle and a choice of spicy or classic mayonnaise (again sounding familiar).  The sandwich was rolled out in nine U.S. cities and will be available in as many as 4,000 stores nationwide by March.  The sandwich will cost $3.99 or $6.99 as a combo meal. The new KFC chicken sandwich will replace the ho-hum Crispy Colonel that could not compete with products offered by Chick-fil-A® and upstart Popeye's Louisiana Kitchen.

 

 

An increase in demand for chicken sandwiches will benefit the industry, but with increasing demand, prices of raw product will rise, and margins will be shaved.

 

The illustrations of the new sandwich released by KFC may engender consumer disappointment or even lawsuits since the quantity of chicken depicted will obviously not be reflected in the product as served.

 

A gentle hint to the QSR industry would be to start working on a sandwich incorporating dark meat.  This will require ingenuity but would provide more beneficial margins and a fillip to the industry.  Since the QSRs appear to be reticent to innovate, perhaps a major integrator could fill the gap and devise a suitable product.


 

CHICK-NEWS Welcomes QC Supply as Sponsor

QC Supply headquartered in Schuyler, NE. has emerged as a single-source for the poultry industry west of the Rockies.  The company was founded in 1982 by Lonnie Kitt, operating out of a garage in his hometown.  QC Supply has now grown to a network of 27 locations in 14 states.

 

Serving as a single source solution QC Supply connects customers with the equipment they need to maintain efficient production.  The Company mission to “ensure the sustainability and livelihood of the American Family Farmer” keeps the Company focused on the markets they serve. Over 40 years of operation, QC Supply has earned the goodwill and confidence of the farming community through honesty, accountability, teamwork and service.  QC Supply represents the Nation’s most important manufacturers including nine sponsors of this newsletter.

 

A seamless-solutions approach is applied in the QC business model linking farmers, integrators and manufacturers. Equipment categories supplied and installed by QC Supply include feeding and extending from bin to beak; watering installations, heating and ventilation components including fans, louvers, control systems; biosecurity supplies and building components including lighting, plumbing, and curtains.  QC Supply stocks a range of items to promote health of flocks including rodent control, medicators, and syringes. The Company owns CASCO Products, that manufactures several efficacious cleaning and disinfecting products for livestock and poultry.

 

In response to expansion in the poultry industry, QC Supply developed a turnkey solution capable of addressing projects ranging in size from $50,000 to more than $300 million with general contracting services in 14 states. QC Supply offers planning and design, construction and schedule management. The Company participates in project startup and offers services and support to achieve benefits from advanced installations. QC Supply served as the general contractor for the Tyson expansion at the Union City broiler complex.

 

For additional information on the range of products and services, access the QC Supply website on the right side of the welcome page or phone

1-(800) 433 6340.


 

NPC International Assets Acquired by Flynn Group and Wendy’s

Following mediation, the Flynn Restaurant Group LLC and Wendy’s International LLC have agreed on the disposition of the assets of NPC International Inc. that filed for bankruptcy protection.  Flynn will acquire 925 Pizza Hut restaurants and approximately 200 Wendy’s locations for $553 million. Wendy’s International will purchase the remaining eponymous locations for $248 million.

 

The demise of NPC has been attributed to injudicious acquisition of debt approaching $1 billion resulting in a Chapter 11 bankruptcy petition in July. 

 

The sale of NPC assets was delayed as Wendy’s opposed the takeover of their restaurants by Flynn’s since there was a conflict with their ownership of Arby’s, Taco Bell, and Panera Bread franchises in 33 states.


 

CHS Inc Reports Decreased Sales and Income

CHS Inc, the largest U.S. agribusiness cooperative, reported a 60.8 percent decline in net earnings for the first quarter of FY 2021 ending November 30th 2020.  For the period, revenue declined 12.6 percent to $8.7 billion and net income attained $69.7 million. 

 

The CHS Energy Segment experienced low crack-spreads in refineries and lower propane demand.  The CHS Agricultural Segment benefited from increased trade in commodities and favorable weather conditions during the fall harvest.

 

Jay Debertin, president and CEO of CHS Inc, noted “A good growing season led to a good harvest and we saw commodity price rallies from spring and summer extend into fall.”  He added, “Improved trade opportunities with China helped drive improvements in the global grain business and our animal nutrition volume saw growth.”


 

Iraq Bans Chicken Imports

According to a Monday January 11th release by USAPEEC, the Ministry of Agriculture for Iraq has placed a ban on all chicken imports.  The previously mooted action is a blatant protectionist measure since the Nation is not self-sufficient in requirements. USAPEEC has requested the U.S. Embassy in Iraq and the U.S. Department of State to extend the grace period for product that has been shipped. 

 

Over the period January through November 2020 Iraq purchased 57,233 tons of chicken parts, presumably leg quarters and low-value product, amounting to $37.4 million.  Volume and value were respectively eight percent and 20 percent lower than the corresponding period in 2019.  Iraq was ranked 15th among importers over the first eleven months of 2020 representing 1.7 percent of volume and 1.2 percent of value with an average unit price of $653 per metric ton, compared to the average of $995 per metric ton.


 

Ahold Delhaize to Test UV-Disinfecting Robots

Ahold Delhaize will trial Ava Robotics units to disinfect surfaces and air applying UV technology. The robots are under evaluation at two stores located in North Carolina and New York respectively before a decision is made for more general deployment.

 

Chris Lewis, Executive Vice President of Supply Chain for Ahold Delhaize USA, quoted in Supermarket News stated, "in addition to other robust health and safety measures the robots have enabled us to further enhance disinfection procedures.  We were pleased to be the first in the industry to support the testing of this technology". 

 

Ahold-Delhaize constantly testing robots for store operation


 

Global Chicken Production

According to the USDA Livestock and Poultry Report issued January 12th 2021 chicken production worldwide will decline by approximately 1 percent. The Executive Summary states:-

  • “Global chicken meat production for 2021 is revised 1 percent lower to 101.8 million tons driven by sharp declines in the EU and China. The EU is battling widespread highly pathogenic avian influenza (HPAI) outbreaks across several Member States, weaker domestic demand, and higher grain prices. China chicken meat demand continues to grow but at a slower rate as the swine herd recovers and pork production rebounds”.
  • “Global chicken meat exports for 2021 are down nearly 1 percent to 12.1 million tons as lower EU, Thailand, and Brazil exports are offset by gains in the United States. The outlook for China imports remains unchanged”.

 

CHICK-NEWS will post the USDA projection for U.S. 2020 production and consumption of poultry meat and the 2021 forecast mid-month when data is released.


 

Shane Commentary

USDA to Finalize Line-Speed Rule Despite Unsubstantiated Opposition

After many years of implementation, surveillance and evaluation in 54 plants, the USDA intends to finalize the rule that would allow line speeds in suitably equipped and managed plants to increase from 140 to 175 birds per minute. Studies have shown that increased line speed has not resulted in any deterioration in food safety or quality. In a January 4th article in the Washington Post, opposed the more extensive application of increased line speed based on a number of canards and misrepresentations.

 

The latest justification to oppose the 175 birds per minute rate is the prevalence of COVID-19 in "meat plants".  The Washington Post article cited a Food, Environmental Reporting Network (FERN) report as the basis for their concern. The FERN report documented results from 1,262 plants of which 565 were classified as "meat packing" recording 51,688 cases of COVID-19 with 263 fatalities.

 

A review of the source document notes that there was no distinction between poultry-processing plants and meat-packing plants affected by COVID.  In an attempt to differentiate between the red meat and poultry facilities, data on two major integrators, totally committed to chicken processing were extracted from the globular data in the FERN report.  The first company in the top-five identified six cases in their Texas chicken plant and 94 in their North Carolina chicken plant.  A second top-five company recorded 98 cases in a North Carolina plant, 256 in Minnesota and 283 in Arkansas.

 

Raw data is misleading since comparisons can only be based on rates.  Without knowing the total compliment of workers, supervisors, and managers in each plant, it is impossible to differentiate among companies, type of plant, location or size of operation.

 

Tom Super, VP of Communications for the National Chicken Council noted that the line speed rule has been under consideration for three decades and over four administrations and has been the subject of considerable scientific study and litigation.  Increasing line speed is consistent with higher levels of automation and mechanization as developed in the EU and applied on four continents.  Increased mechanization reduces the need for workers and increased line speed justifies a capital investment in improved technology.  Innovations including increased line speed in conjunction with HIMP will be necessary for the U.S. chicken industry to be competitive in world markets and to continue delivering wholesome chicken to domestic consumers.  Conflating chicken plants with red meat plants without clear differentiation is essentially sophistry. To misapply data to oppose a progressive development is disingenuous.

 

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