Editorial

Administration COVID Vaccine Mandates Questioned

Faced with increasing cases of the COVID Delta variant among the non-vaccinated segment of our population, the Administration has introduced vaccine mandates for large-scale employers, government workers and the military. The announcement borne of frustration is intended to protect workers from infection disseminated by the unvaccinated.  This step has predictably entrenched opposition to the government mandate and has further politicized vaccination and control of COVID. Under different circumstances the pandemic could have been regarded simply as a public health issue caused by influenza, measles or smallpox.  The mandate was issued against a backdrop of confirmed epidemiologic and laboratory studies that clearly indicate the benefit of vaccination especially when coupled with masking and other common-sense precautions. 

 

  • For those denying the existence of COVID, one has to recognize 660,000 U.S. fatalities over 18 months. Cynically one is reminded of Stalin’s comment on mortality as a result of starvation in Russia as "one death is a tragedy, 1,000 deaths are a statistic". 
  • For those doubting the effectiveness of an approved vaccine, over 90 percent of those currently hospitalized with COVID were not vaccinated.  Those who were vaccinated and require treatment invariably have one or more predisposing conditions including advanced age, diabetes, heart disease or immunosuppression.  The Moderna RNA vaccine administered under emergency use authorization has a 95 percent protection rate against hospitalization.  The approved Pfizer-BioNTech vaccine provides upwards of 80 percent protection against hospitalization among vaccinates who are infected. 
  • For those doubting the severity of the Delta variant of COVID, mortality for the three days preceding the 9/11 memorial day approximated the number of people murdered in the terrorist event.  Daily mortality now ranges from 700 to 1,000 with 90 percent of the total completely unnecessary.  On Saturday, September 11th 57,000 new cases were diagnosed with 700 dead on that day.
  • For those doubting the benefit of a high level of population immunity, there is a direct correlation between vaccination rates that are as low as 40 percent in some southern states and the incidence rate and number of ICU beds occupied. Idaho with a 40 percent vaccination rate is recording a 25 percent positive rate on testing and has 550 hospitalized of whom 97 percent are unvaccinated. The state is recording 1,200 new cases daily in a population of 1.9 million, corresponding to a rate of 632 per 100,000.  Vermont with a 69 percent vaccination rate is recording 160 new cases per day or a rate of  24 per 100,000 daily over the past week.

CDC COVID Tracker

 

At the current time 73 percent of the U.S. population over the age of 12 have received one vaccination and 54 percent are fully vaccinated.  Some northeastern states including Massachusetts, Connecticut and Vermont have fully vaccinated close to 70 percent of their populations. In contrast Mississippi, Louisiana, Arkansas and Alabama range from 40 percent to 44 percent

The attempt by the Administration to increase the vaccinated proportion of the U.S population by mandate is well intentioned but misguided.  Those who are opposed to vaccine over safety concerns or the misplaced notion of ‘freedom of choice’ will certainly not be induced to receive a vaccine under circumstances regarded as coercion. 

 

The mandate may provide cover for employers to require administration of the fully approved vaccine or as an alternative, regular but expensive testing that may in reality be ineffective to prevent dissemination of COVID virus in the workplace.  There should be far more emphasis on the "carrot" than the "stick".  Justified exemptions should be allowed for sincere religious reasons or for justifiable health concerns.  All other non-vaccinated people should be encouraged by scientific fact and logic to receive a vaccine not only for themselves but also for their families and the community at large.  The actions by some state leaders in opposing masks and vaccine mandates may have a political appeal to hard-core deniers of COVID and those who dismiss the value of vaccines. Over the intermediate term, persistence of COVID will delay recovery of the economy and will be to the detriment of the citizens of states with high and prolonged incidence rates.

 

COVID is not "just a little flu" as claimed by Jair Bolsonaro, the President of Brazil who presides over a Nation where the disease is now out of control in many states.  COVID kills and is no respecter of age, state or political affiliation.  In addition to the acute clinical problems, it is now evident that chronic changes may affect as many as 30 percent of those who are infected, even individuals with mild symptoms.  We may in 10 to 20 years time be experiencing an elevation in premature death and disability from heart, renal, pulmonary and brain dysfunction. 

 

The only effective approaches to suppress COVID and to prevent the emergence of potentially more virulent and infectious variants will be to encourage vaccination by making it available, using positive incentives and attempting to counter the malicious, mischievous and misplaced misinformation on websites and fringe media.  It is ironic that two ultraconservative talk show hosts who deprecated COVID vaccination have succumbed to the infection.  Many among their bereaved families have commented publicly on the harm that the decedents caused.  We need positive role models in sport, politics, business, entertainment and religion to recognize their specific responsibility to encourage vaccination.  Mandates may achieve an incremental uptake of vaccine but will incur a cost in delaying attainment of herd immunity with unnecessary hospitalizations and inevitable fatalities.

 

Poultry Industry News

COMMODITY REPORT

WEEKLY COMMODITY REPORT: SEPTEMBER 10TH 2021.

  • Commodity prices were mostly down this past week with corn ending substantially lower continuing the trend of the previous week. Factors influencing prices in either direction included:-
  • Hurricane Ida disrupting exports for at least a month and damaging terminals in Louisiana (marked downward pressure)
  • Release of the September 10th WASDE (limited downward pressure);
  • Results of the ProFarmer crop review (downward pressure)
  • Lower than anticipated export sales especially to China (downward pressure);
  • Moderation of drought in many counties in the corn belt and especially in Iowa (moderate downward pressure);
  • Drought in Brazil causing a low Safrinha (second) crop (upward pressure);
  • Restoration of shipments from Argentina albeit at lower than normal volume (moderate downward pressure);
  • Central government of China attempting to stabilize prices of pork and corn (downward pressure).

 

Projected harvests and ending stocks in the U.S. were updated in the September 10th WASDE especially since there is greater clarity on acreage and the effects of weather and trade to date on ending stocks. Annual field assessment of crop conditions by ProFarmer scouts was released two weeks ago. The USDA commenced evaluation of crop condition this past week.

 

  • US producers are now receiving and conversely livestock producers in the Midwest will pay above $5.00 per bushel for corn and crushers will pay $12.80 per bushel for soybeans plus transport and basis in September. Corn was down 2.5 percent this past week and soybeans were down <0.1 percent for September delivery. Soybean meal was up 1.2 percent for September delivery compared to last week reflecting the decline in the price of soybeans and suspension of exports from lower Mississippi terminals following Hurricane Ida.
  • The FAS Export Report released on September 10th for the week ending September 2nd reflecting market year 2021-2022, confirmed that outstanding export orders for corn for the new market year amounted to 24.15 million metric tons (95.2 million bushels) with 0.17 million metric tons (6.7 million bushels) actually shipped. During the past week orders for the 2021-2022 market year amounted to 0.33 million metric tons (11.8 million bushels).
  • The FAS Export Report released on September 10th for the week ending September 2nd reflecting market year 2021-2022 recorded outstanding export orders for soybeans amounting to 21.0 million metric tons (771 million bushels) with 0.01 million metric tons (0.3 million bushels) actually shipped. Weekly soybean orders attained 0.07 million metric tons (2.6 million bushels)
  • During the week ending September 2nd 60,700 metric tons of soybean meal and cake were ordered for the market year 2021-2022. The quantity shipped amounted to 44,300 metric tons.

 

The following quotations for delivery in the months as indicated were posted by the CME at close of trading on September 10th 2021, compared with values posted at close of trading on September 2nd 2021 (in parentheses):-

COMMODITY

 

Corn (cents per bushel)

Sept. 503 (516)

Dec. 516 (525)

Soybeans (cents per bushel)

Sept. 1,280 (1,279)

Nov. 1,288 (1,282)

Soybean meal ($ per ton)

Sept. 342 (338)

Dec. 343 (340)

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

COMMODITY CHANGE FROM PAST WEEK FOR MONTH OF DELIVERY AS INDICATED

Corn: Sept. quotation down 13 cent per bushel (-2.5 percent)

Soybeans: Sept. quotation up 1 cents per bushel (+<0.1 percent)

Soybean Meal: Sept. quotation up $4 per ton (+1.2 percent )

 

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

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

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

 

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

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

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

 

The changes in the prices of corn and soybean meal for September 10th compared with September 2nd quotations for September delivery would decrease nest-run production cost for eggs by 0.5* cents per dozen and for broilers 0.2* cents per live pound extending the decrease from the previous week .

 

Year-to-date, escalation in the prices of major ingredients has added 3.1 cents per dozen eggs and 1.8 cents per live-weight lb. to broiler production cost

*(rounded to 0.1cent)

 

The USDA weekly wholesale feedstuffs prices expressed per short ton posted on August 31st (with previous week in parentheses) were:-

  • Corn: $175 ($192), Chicago
  • Soybean Meal: $341 ($351), Central Illinois
  • Meat and Bone Meal: $390 ($400), Central Midwest
  • DDGS: $198 ($203), Eastern corn belt

 

According to the September 10th WASDE, corn harvested in calendar 2021 will attain 14,996 million bushels with ending stocks projected at 1,408 million bushels, up 13.4 percent from the 1,242 million bushels in the August 2021 WASDE Report. Values will be updated reflecting production, ongoing export volumes and domestic use in the September WASDE report, approaching harvest. Total corn stocks as at June 1st amounted to 4.11 billion bushels down 18 percent from June 1st 2020. Compared with the September 2nd value, the CME quotation for corn at close of trading on September 10th for current month delivery was down 13 cents per bushel to 503 cents.

 

The social restrictions imposed in the U.S. as a result of COVID-19, that are now being lifted, reduced ethanol demand by 1.5 billion gallons or 10 percent of projected 2020-2021 requirement, accepting a nominal ten percent addition to gasoline. This past week 73.8 percent of the U.S. ethanol fermentation volume was operational, based on January U.S. Energy Information Administration (U.S. EIA) capacity data. The outlook for increased production will depend on higher domestic demand in addition to increasing approximately 25 percent of production that is exported. The industry received an adverse ruling from SCOTUS in late June invalidating year-round sales of E-15 approved previously by the EPA. According to the U.S. EIA, for the week ending September 3rd the industry produced on average 923,000 barrels per day, up 2.0 percent above the week ending August 27th 2021, reversing the eight consecutive week of declines but the eighth under 1 million gallons per day since June. On September 3rd ethanol stock was 3.4 percent below the previous week at 20.4 million barrels, representing an approximately 20-day reserve and confirming higher demand.

 

Ethanol was priced at $2.22 per gallon on September 10th unchanged over the previous 13 weeks and compared with a five-year low of $0.92 per gallon on March 26th 2020 during COVID restrictions. Concurrently RBOB gasoline at $2.14 per gallon (quoted, New York Harbor) was up 2 cents per gallon (0.9 percent) from the previous week, despite a decreased WTI crude price to $69.16 per barrel. The effect of suspension of offshore Gulf operations and refining in Louisiana has yet to be quantified. Gasoline is 8 cents per gallon less expensive than ethanol but with a 63 percent higher BTU rating.

 

With most plants among the 201 that were operational on January 1st 2021 now functioning, DDGS is freely available but commanded a higher price than in the first and second quarters of 2021. Eastern Corn-belt DDGS was priced at $198 per ton on September 7th 2021, $5 per ton higher than the previous week and $43 per ton more expensive than on September 1st 2020. Generally DDGS is currently incorporated at low inclusion levels, if at all, in egg-production formulas based on high price relative to the nutrient contribution of corn and other ingredients. This will change as corn and hence DDGS fluctuates in price

 

Soybeans continue to be the beneficiary of export demand by China and other nations in addition to domestic livestock production. The CME price for September delivery at close of trading on September 10th was higher by 1 cent per bushel to 1,280 cents compared to 1,279 cents per bushel on September 2nd for September delivery. The USDA projected a 2021 crop of 4,374 million bushels. Ending stocks according to the September 10th 2021 WASDE projection will be 185 million bushels, up 19.4 percent from the August WASDE Report. Total soybean stock as at June 1st amounted to 767 million bushels down 44 percent from June 1st 2020 indicating the extent of exports.

 

According to a release on August 16th by the National Oilseed Processors Association, 145 million bushels of soybeans were crushed in July compared to a pre-release estimate of 143 million bushels. The June crush value was 138 million bushels attributed to extended maintenance in anticipation of the fall harvest. On September 7th 2021 soybean meal quoted central Illinois was priced at $341 per ton, $10 per ton lower than the previous week and compared to $303 per ton on September 1st 2020.

 

On August 31st 2021 Meat and Bone meal quoted Central U.S. was $390 per ton, down $10 per ton from the previous week but compared to $218 per ton on September 1st 2020.

 

On August 24th the conversion of CNY 1 to the BRL was 0.82 BRL, down CNY 0.02 from the previous week. The conversion of US$1 to the CNY was set at CNY 6.67, down CNY 0.21 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 anticipated that soybean imports by China would have attained 95 million metric tons during the 2020-2021 market year but in reality only 60.3 million tons was shipped through August 2021.

 

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 USDA-FAS documented sales of U.S. corn to China through late August 2021 during the 2020/2021 year amounting to 73 million metric tons (2,876 million bushels) with 93 percent 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 August 12th 2021 WASDE #615 and the Crop Progress, Grain Stocks and Planned Acreage reports under the STATISTICS Tab.


 

Turkey Week

Weekly Turkey Production and Prices September 10th 2021

Poult Production and Placement:

The August 13th 2021 edition of the USDA Turkey Hatchery Report, issued monthly, documented 26.8 million eggs in incubators on August 1st 2021 (26.4 million eggs on July 1st 2021) and down 1.2 percent (0.3 million eggs) from August 1st 2020.

 

A total of 22.6 million poults were hatched during July 2021 (21.7 million in June 2021), representing a decrease of 5.0 percent (1.2 million poults) from July 2020.

 

A total of 22.3 million poults were placed on farms in the U.S. in July 2021, (20.9 million in June 2021), 3.0 percent (0.7 million poults) less than July 2020. This suggests disposal of 270,000 poults during the month (0.8 million in June 2021). Placements of hen and tom poults were relatively even for the month.

 

For the twelve-month period August 2020 through July 2021 inclusive, 266.1 million poults were hatched and 246.0 million were placed. This suggests disposal of 20.1 million poults. Assuming the proportion of placements corresponded to the respective numbers of toms and hens reared year to date (55:45), for the 12-month period, 7.8 percent of all poults or 6.6 percent of tom poults (8.8 million) and 9.0 percent of hen poults (12.0 million) were not reared. This is an unsubstantiated estimate with a fluctuating demand for processed toms and hens in a post-COVID affected market. (See relative numbers of hen and tom poults processed under Production Data below).

 

To be updated in mid-September 2021 following release of monthly USDA data

 

Turkey Production:

 

The September 10th 2021 edition of the USDA Turkey Market News Report (Vol. 68: No.36) confirmed the following provisional data for turkeys slaughtered under Federal inspection:-


 

Broiler Week

Weekly Broiler Production and Prices, September 10th 2021.

Chick Placements.

The Broiler Hatchery Report released on September 8th 2021 confirmed that a total of 235.5 million eggs were set during the week ending September 4th 2021, up two percent from the corresponding week of the previous year and 0.2 percent (0.5 million eggs) lower than the previous week in 2021.

 

A total of 175.5 million day-old chicks were placed among the 19 major broiler-producing states during the week ending September 4th 2021. Total chick placements for the U.S. amounted to 185.2 million, down one percent from the corresponding week in 2020 and 18,000 chicks less than the previous week. Claimed average hatchability was 79.5 percent for eggs set three weeks earlier, (79.5 percent for the previous week). Each 1.0 percent change in hatchability represents 2.4 million chicks placed per week with current settings.

 

Cumulative placements for the period January 9th 2021 through September 4th 2021 amounted to 6.54 billion chicks, up less than one percent from the corresponding period in 2020.

During the period July 31st through September 4th 2021 weekly placements were on average 0.2 percent lower compared with the corresponding six weeks in 2020. This represents on average, placement of 0.3 million fewer chicks per week. This is due to setting a proportion of hatching eggs with depressed fertility from high-yield breed combinations maintained by some integrators. Additional breeder flocks have been placed to compensate for reduced fertility and hence hatch but their contribution has yet to be completely attained based on age. The approximately four percent increase in eggs set during the past six weeks should be reflected in higher placements during mid-September and broilers harvested during the first half of October onwards.

 

Broiler Production

According to the September 10th USDA Broiler Market News (Vol. 68, No. 36) for the processing week ending September 4th 2021, 161.3 million broilers were processed during the past week (previous week 167.8 million) at an average live weight of 6.35 lbs. (6.27 lbs. last week) and a nominal yield of 76 percent. The number of broilers processed was 7.2 percent less than the corresponding processing week in 2020. Processed (RTC) broiler production for the week was 778.6 million lbs. (353,928 metric tons), (799.5 million lbs. last week), 7.6 percent less than the corresponding processing week in 2020. In 2021 Processed (RTC) production attained 28.2 million lbs. (12,804,398 metric tons), 0.4 percent less than YTD 2020.

 

Broiler Prices

The USDA National Composite Weighted Wholesale price on September 10th 2021 was up 0.5 cent per lb. from the previous week to 105.8 cents per lb., compared to 64.0 cents per lb. during the corresponding week of 2020; 104.8 cents per lb. for August 2021 and 75.0 cents per lb. for the three-year average. The industry still is impacted by the contraction in the food service segment following imposition of COVID-19 restrictions, although QSRs are using increasing quantities of breast meat for sandwiches, strips and nuggets.


 

Crop Progress

Status of 2021 Corn and Soybean Crops

 

The USDA Crop Progress Report released on September 13th documented corn and soybean crop conditions to September 12th compared to 5-year averages. This past week 87 percent of corn was at the dent stage with 37 percent mature. For soybeans 38 percent was dropping leaves consistent with the 5-year averages.

 

Surface moisture levels were relatively lower on average during the past week over the corn-belt attaining an average of 33.0 percent for areas classified in the two lowest categories of “Short” and “Very short”. The severe drought in Western states and the Dakotas continues with extensive wildfires in the Northwest. Topsoil moisture in Iowa was stable this past week at 35 percent compared to 34 percent last week in the two lowest moisture categories. Despite the variable levels of topsoil moisture among states, 58 percent of the corn crop was classified under the “Good” and “Excellent” categories by the USDA, down one percent from last week. The corresponding figure for soybeans was 57 percent, unchanged from last week.

 

The ProFarmer Crop Tour completed three weeks ago, estimated corn yield to range from 175.2 to 178.8 bushels per acre with a mean value of 177.0 bushels per acre compared to the September WASDE value of 176.3 bushels per acre. This corresponded to a projected range for the 2021 corn harvest of 14.965 to 15.265 billion bushels with a mean value of 15.116 billion bushels compared to the September WASDE value of 14.996 billion bushels.

 

The ProFarmer Crop Tour estimated the soybean yield to range from 50.2 to 52.2 bushels per acre with a mean value of 51.2 bushels per acre compared to the September WASDE value of 50.6 bushels per acre. This corresponded to a projected range in the 2021 soybean harvest of 4.347 to 4.525 billion bushels with a mean value of 4.525 billion bushels compared to the September WASDE value of 4.374 billion bushels.

 

CHICK-NEWS and EGG-NEWS will report on the progress of the two major crops as monitored by the USDA through the end of the 2021 harvest in November.

 

Reference is made to the September 10th WASDE Report #616 and the Acreage Report retrievable under the STATS tab for projected 2021 acreage and yields. This data will be updated when WASDE #617 is released on Friday October 8th with a firmer projection of yields and ending stocks.

 

 

WEEK ENDING

 

Crop

September 5th

September 12th

5-Year Average

Corn Dough (%)

Corn Dented (%)

Corn Mature (%)

Corn Harvested (%)

100

74

21

-

100

87

37

4

100

81

31

5

Soybeans setting pods (%)

Soybeans dropping leaves (%)

100

18

100

38

100

29

Crop Condition

18 States

V. Poor

 Poor

Fair

Good

Excellent

Corn 2021 (%)

Corn 2020 (%) 1

1. Late planting

5

5

10

10

27

25

44

46

14

14

Soybeans 2021 (%)

Soybeans 2020 (%)1

1. Late planting

4

3

10

8

29

26

46

50

11

13

Parameter 48 States

V. Short

Short

Adequate

Surplus

Topsoil moisture %: Past Week*

18

31

48

3

Past Year

13

25

56

6

Subsoil moisture %: Past Week

20

31

47

2

Past Year

14

26

55

5

 

For topsoil moisture the major corn and soybean-producing states had an average of 33.0 percent in the “Very Short” and “Short” categories (last week 34 percent) with a range of 4 percent for PA to 47 percent for IN.

  • Iowa 35% (was 34%)
  • Illinois 33% (was 25%)
  • Indiana 47% (was 36%)
  • Kansas 45% (was 40%)
  • Kentucky 22% (was 16%)
  • Michigan 38% (was 53%)
  • Missouri 33% (was 28%)
  • Ohio 40% (was 24%)
  • Pennsylvania 4% (was 16%)

 

USDA-WASDE FORECAST #616 SEPTEMBER 10th 2021

OVERVIEW

The September WASDE documented the 2021growing season with incremental changes in harvest acreage of corn and soybeans. The USDA ERS revised the projected ending stocks of corn, soybeans and meal based on crop conditions, weather, export trends and harvests in Brazil and in the Southern hemisphere. The corn acreage to be harvested is currently estimated at 85.1 million acres (84.5 million acres in August WASDE) Soybeans will be harvested from 86.4 million acres, (86.7 in August).

 

The September 2021 WASDE estimate of corn yield was raised 1.0 percent to 176.3 bushels per acre, (175.8 bushels per acre in 2020). The estimate of soybean yield was raised 1.2 percent to 50.6 bushels per acre. (50.7 bushels per acre in 2020). Final yield values will be adjusted subsequently based on weather conditions and crop health.

 

The September 2021 USDA projection for the ending stock of corn was raised by 13.4 percent to 1,408 million bushels based on a larger harvest. Greater supply and lower domestic crush partly offset by higher exports, resulted in a projection of ending stock for soybeans being raised 20 percent to 185 million bushels.

 

Projections for ending stocks of both corn and soybeans have influenced recent CME price quotations concurrently with fluctuation in exports. China has placed orders in accordance with their needs and central government policy rather than compliance with the Phase-One trade agreement of January 2020. The September WASDE projection lowered the price of corn by 30 cents per bushel to $5.45 per bushel. Soybeans were reduced 80 cents per bushel to 1290 cents per bushel.

 

It is accepted that projections are based on the reality that China sharply increased purchases of commodities during the recently concluded market year partly to cover low stock caused by COVID-related disruptions in imports during the first quarter of 2020. China booked substantial orders for corn and soybeans from September 2020 onwards for the 2020-2021market year and is placing orders now for the subsequent market year. Reports on volumes of commodities exported to China and other nations are included in weekly editions of CHICK-NEWS and EGG-NEWS as USDA data is released.

 

CORN

The corn harvest for 2021 projected in the August 2021 WASDE Report #616 is 14,996 million bushels up 1.6 percent from the August report consistent with a 1.0 percent higher yield. The projected 2021 harvest can be compared to 14,507 million bushels in 2020 and is projected to be 1.0 percent lower than the previous 2016 record harvest of 15,148 million bushels. The “Feed and Residual” category was raised 1.3 percent from the July report to 5,700 million bushels. The “Ethanol and Byproducts” category was held at 5,200 million bushels despite higher domestic demand for E-10 and other blends following relaxation of COVID-19 restrictions. Projected corn exports were increased 3.1 percent or 75 million bushels to 2,475 million bushels. Ending stocks were raised by 13.4 percent to 1,408 million bushels.


 

STOP PRESS

Fire at JBS Grand Isle, NE. Beef Plant

Grand Isle Fire Department responded to a fire located in the rendering section of the JBS plant late on Sunday night, September 12th.  As of 11h00 the following morning new firefighting teams replaced the first responders who had difficulty extinguishing the blaze in insulation situated within the roof and wall structures of the affected area. No injuries were reported among either first responders or workers.

 

Both shifts on Monday, September 13th were cancelled but operations resumed on Tuesday. Since the fire was confined to the rendering area, slaughter and fabrication could proceed.   The plant has a nominal capacity of 5,500 to 6,000 head per day, representing approximately five percent of U.S. slaughter. 

 

A prolonged interruption in processing would have disrupted the supply chain as occurred following the fire in the Tyson Foods, Holcomb, KS plant on August 9th 2019, that affected a more critical area of operation. 


 

U.S. Meat Exports

U.S. Broiler and Turkey Exports, January-July 2021

 

Total exports of bone-in broiler parts and feet in January-July 2021 attained 2,150,960 metric tons, 6.4 percent more than for the first seven months of 2020 (2,021,169 metric tons). Total value of exports increased by 23.4 percent to $2,523 million ($2.044 million 2020).

 

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 still uncontrolled outbreak of African swine fever in China and Southeast Asia from early 2019 onwards coupled with disruptions in chicken production during January and February 2020 associated with COVID-19, increased demand for protein with international repercussions on trade in chicken and pork. This trend is reversing as hog production is restored in China and overproduction is evident in the white-feathered broiler sector with implications for exports during the remainder of 2021 and for 2022.

 

During the first seven months of 2021 the National Chicken Council (NCC), citing USDA-FAS data, documented exports of 2,084,611 metric tons of chicken parts and other forms (whole and prepared) valued at $2,352 million with a weighted average unit value of $1,186 per metric ton, 15.9 percent higher in unit value than for the corresponding seven months of 2020 ($1,023 per metric ton).

 

The NCC breakdown of chicken exports during January-July of 2021 by proportion and unit price for each broiler category compared with the corresponding period of 2020 (with the unit price in parentheses) comprised:-


 

Decline of the Venezuelan Chicken Industry

According to USDA-FAS GAIN Report VE2021-0008 released on August 30th, chicken production in Venezuela increased from 2019 by 34 percen  to a level of 0.36 million metric tons in 2020.  Imports were negligible at 4,000 metric tons.  Although there was a year-over-year increase, the volume of domestic production is far below the 2014 production of 1.16 million metric tons supplemented by imports amounting to 240,000 metric tons.  The contraction from 2015 onwards followed the decline in the economy caused by gross mismanagement by a extreme socialist government.  The FAS estimates that 30 private companies continue to produce chicken and eggs, but are limited in their volume and productivity by inflation, lack of foreign exchange to import, pharmaceuticals, biologics, and additives and deterioration in infrastructure coupled with Government corruption and control over all aspects of operations.

 

Chicken consumption declined from a high of 99 lbs. per capita in 2014 to a low of 16 lbs. in 2018, albeit with some recovery to 29 lbs. in 2020.  Whole chicken at $0.97 per lb. represents the cheapest animal protein available and can be compared to pork legs at $1.70 per lb., ground beef at $1.40 per lb. and high-quality beef cuts at $2.02 per lb. mostly out of reach of average consumers.


 

U.S. CBP Interdict Smuggled Meat from Mexico

U.S. Customs and Border Protection (CBP) seized 320 pounds of pork bologna and 30 pounds of turkey ham from Mexico last week at the Paso del Norte border crossing.

 

A suspicious CBP officer referred the vehicle driven by a U.S. citizen to secondary inspection and agricultural specialists determined that the driver was attempting to smuggle meat products into the U.S.

 

 

Border inspection is now even more essential given the outbreak of African swine fever in the Dominican Republic. Avian influenza is endemic in various states in Mexico  The U.S. Department of Agriculture and the Department of Homeland Security are committed to prevent entry of meat and plant products that could potentially introduce pathogens and pests.

 

Unfortunately as with drugs, publicity is extended to cases with apprehension. Given the volume of traffic on our borders the reality of undetected consignment is self-evident.  Although expensive to train, dogs are highly effective in detecting meat products and greater use should be made of their unique sense of smell to screen suspicious vehicles, the luggage of passengers and cartoned consignments.


 

USDA Anticipates Exports of 165,000 Metric Tons of Chicken to Canada in 2021

According to the USDA-FAS GAIN Report CA2021-0048 on Canada released on August 31st, the U.S. will supply 165,000 metric tons of chicken to our northern neighbor in 2021.  This will represent 84.1 percent of Canadian imports of chicken RTC in 2021, with Brazil supplying 8.0 percent, Thailand 3.4 percent. Producers in E.U. nations and Argentina will collectively supply 4.6 percent of broiler imports some of which may be re-exported to the U.S., the Philippines, Cuba and Jamaica.  Total chicken meat exports by Canada, derived from both domestic production and imports will amount to 70,967 metric tons in 2021.

 

In 2021, Canada will produce 1.360 million metric tons of RTC chicken, increasing by 2.9 percent to 1.4 million metric tons in 2022.  Imports will represent 12.1 percent of total supply of 1.66 million metric tons in 2022.  Total exports including re-export will comprise 10 percent of production in 2022.  Assuming a 38 million population of Canada, 2022 consumption will be 84.5 pounds per capita.

 

Production of chicken in Canada is subject to a supply management system designed to prevent fluctuation in farm income.  In terms of the Farm Products Agencies Act of 1979, Chicken Farmers of Canada, a statutory body decides on quotas for the ten producing Provinces with volumes allocated at eight-week intervals.  Factors influencing quota decisions include feed cost, projections of consumption, inventory, demand from the major consumer sectors including retail, QSRs, restaurants and hotels, world production and domestic economic trends.

 

Independent chicken producers purchase feed, chicks and other inputs and are paid by processors according to a production formula. Live broilers are currently transferred to processors at U.S. $0.58 per pound live.  Retail prices range from $1.60 per pound for leg quarters through $2.40 per pound for whole birds and $4.50 per pound for skinless boneless breast.

 

In 2022 the total tariff rate quota will be 110,380 metric tons of which the USMCA proportion will be 51,000 metric tons followed by the WTO TRQ at 39,800 metric tons and the Comprehensive And Progressive Agreement for Trans-Pacific Partnership, 19,580 metric tons.


 

Broiler Industry in Turkey Impacted by High Ingredient Costs

According to USDA-FAS GAIN Report, TU2021-032 released on August 31st, elevated feed prices are a restraint to profitability for the chicken industry of Turkey.

 

FAS estimates that production in 2022 will increase by 2 percent over 2021 to 2.23 million metric tons.  Domestic Consumption based on a population estimate of 85 million will be 43.8 pounds per capita in 2022. Domestic demand was suppressed in 2020 and during the current year due to COVID restrictions.

 

Exports will attain 539,000 metric tons, ten percent higher than 2021 and representing 24 percent of domestic production. Major exports markets include Iran, Libya and the ‘Stans.  Of the 442,000 metric tons exported in 2020, unit value was $1,092 per metric ton similar to U.S. leg quarters.

 

Forty percent of corn and 97 percent of soybean meal used to produce broilers is imported.  Romania, Russia and Ukraine are major the suppliers of corn.  Soybeans and soybean meal are sourced from Brazil and Ukraine. Feed comprises in excess of 75 percent of the total live bird production cost. 


 

Chicken Production in Japan Affected by HPAI in Early 2021

According to USDA-FAS GAIN Report JA2021-0122 released August 31st, the chicken industry in Japan was impacted by highly pathogenic avian influenza during the fourth quarter of 2020 extending into the first quarter of 2021with approximately 10 million birds depleted representing slightly less than one percent of annual broiler production.

 

FAS project that domestic production will increase by 0.8 percent in 2022 to 1.78 million metric tons of RTC compared to 1.765 million metric tons in 2021.  Of total availability, 63 percent will be from domestic production and 37 percent from imports.  Per capita consumption is estimated at 49 pounds.

 

There are approximately 2,180 broiler production units in Japan in 2021 ranging in annual output from less than 50,000 birds to 500,000 broilers per year.  The median annual farm output ranges from 100,000 to 200,000 and the mean is 326,000 birds annually.

 

Producers benefit from a Ministry of Agriculture Food and Fisheries Stabilization Program that is worth approximately $90 per metric ton to compensate for increases in ingredient cost.

 

Out of available chicken, 53 percent is directed to food service, 40 percent to retail, 40 percent consumed by households and 7 percent for further processing.  Consumption in 2021 was depressed by COVID restrictions that affected dine-in restaurants.

 

Annual average wholesale prices for domestic chicken in 2021 will range from  $1.19 per lb. for breasts to $2.57 per lb. for boneless legs.

 

During 2021, imports of special further-processed cuts from Thailand were constrained by labor shortages caused by COVID infection among plant workers.  During January through June 2021, Brazil supplied 200,000 metric tons of frozen product, China 75,000 metric tons, and Thailand 250,000 metric tons, of which 70 percent was classified as “prepared” to conform to the requirements of the market in Japan.


 

OSHA Investigating Alleged Chemical Exposure in Mountaire Farms Plant

At the instigation of the North Carolina Justice Center, the Occupational Safety and Health Administration (OSHA) will investigate reports that workers at the Lumber Bridge, NC. plant were exposed to acrid fumes in the vicinity of deboning lines on an unspecified date.  The activist organization maintains that workers complained of sore throats, coughs and other non-specific ailments.

 

Mountaire in a company statement averred that there were no changes in chemicals or procedures used in the facility and that ‘no formal complaints’ were received from employees. The Company "welcomed the OSHA visit" and will respond appropriately to the report to be produced by the Agency.


 

ALDF Lawsuit Against Hormel to Proceed

The U.S. Court of Appeals for the DC Circuit has reversed a ruling by the Washington DC Superior Court allowing a lawsuit by the Animal Legal Defense Fund (ALDF) to proceed.  At issue is the advertising claim by Hormel Foods Corp that hogs used to produce the Natural Choice™ brand of bacon and lunch meat products are treated humanely.  This contention was questioned following an undercover investigation into mishandling of herds operated by The Maschhoffs, a supplier to Hormel.

 

The ALDF claimed in their appeal that the Consumer Protection Procedures Act entitled the organization to bring suit on behalf of consumers.  The court accepted this argument and also dismissed the Hormel assertion that advertising claims were protected by USDA label laws.  The Appeals Court clearly distinguished between label and advertising claims.

 

The decision by the DC Circuit Appeals Court creates opportunities for animal activist organizations to sue food producers making claims regarding humane treatment.  These organizations will apparently have standing under the Consumer Protection Procedures Act.


 

Brazil to Increase Broiler Output in 2022

According to USDA-FAS GAIN report BR2021-0033 released on September 2nd, Brazil will increase broiler output in 2022 by 2.6 percent to attain 14.72 million metric tons.  Of this total, 28.4 percent, comprising 4.18 million metric tons will be exported.  Exports will increase by 3.0 percent in 2022 over the current year.  Based on a population of 215 million, per capita consumption in Brazil will attain 108 lbs. Chicken is the most popular domestic animal protein representing 51 percent of consumption, followed by beef at 34 percent and pork at 15 percent. 

 

Gross domestic product in Brazil contracted 4.1 percent in 2020 but will show 5.3 percent growth in 2021 although COVID has not been controlled. Consumer demand has been buttressed by support payments ("corona voucher") initiated in April 2020 but scheduled to be cancelled in October 2021.  Inflation that exceeded 7.0 percent in 2021 is forecast to decline to 3.9 percent in 2022 although official unemployment is close to 15 percent.

 

Exports by Brazil in 2021 increased by five percent over 2020 but the rate will decline in 2022 to three percent but still maintaining dominance of Brazil as the largest chicken exporter followed in descending order by the U.S. and the E.U., Thailand and Turkey.  Exports are favored by the relatively favorable exchange rate of the Brazilian Real to the U.S. dollar.  At the end of 2019, the exchange rate was R$4.0 compared to the current value of R$5.4.  Freedom from avian influenza has been a major advantage for producers in Brazil.

 

China is the largest importer of chicken products from Brazil with 15 percent of volume.  The second largest importer is Saudi Arabia with 10 percent of exports followed by Japan, 9.5 percent; South Africa, 7.3 percent and the UAE, 7.3 percent. 

 

Exports to Saudi Arabia are in question given the decertification of eleven processing plants in Brazil during early May, an apparently erratic decision based on halal certification.  During the same month, the Saudi government requested the World Trade Organization to impose an expiration deadline on frozen chicken of three months, down from the accepted one-year duration.  This decision was blatantly protectionist and was justifiably reversed on appeal.  Brazil intends to develop new markets predominantly in nations that demand strict halal certification including Indonesia and Malaysia. 

 

Export activities are supported by the Brazilian Agency for Promotion of Exports and Investments with support provided by agricultural and commercial counselors in embassies.  It is considered significant that Mexico has been targeted for exports with 71,000 tons shipped during the first half of 2021, a nine-fold increase over the corresponding six months of 2020. The June 2021 announcement of the 30,000-ton chicken import quota will obviously benefit Brazil.

 

The broiler industry in Brazil is currently operating with increased costs due to an escalation in feed related to drought. Other variable cost components include chicks, labor, utilities and transport. The FAS Post estimated live-bird production to be 45.4 cents per pound with 76 percent of this cost represented by feed, 13 percent day-old chicks, 3.8 percent labor, 3.6 percent fixed costs and 1.3 percent utilities.  In July, soybean meal was $411 per short ton and corn $279 per short ton, corresponding to $7.80 per bushel.  Retail prices for chicken products in Parana State ranged from 77 cents per pound for frozen whole birds to $1.05 for bone-in thighs and drumsticks but with breast slightly lower.


 

August Chicken Exports from Brazil

The Brazilian Animal Protein Association announced that exports of chicken meat attained 362,500 metric tons in August, 4.8 percent higher than the corresponding month in 2020.  Value increased by 36 percent to $677 million reflecting an average unit price of $1,867 per metric ton.  The three largest importers were China with 15 percent, the UAE, 10.7 percent and Japan 9.7 percent.


 

National Pork Producers Council Urging More H-2A Visas

Consistent with the National Pork Producers Council (NPPC) campaign of "year-round pork needs year-round workers", the organization has called on Congress to expand the existing H-2A visa allocation for year-round agricultural workers.

 

Jen Sorenson, NPPC President stated, "the U.S. pork industry is highly dependent on foreign-born workers, but current visa programs do not provide access to enough workers to meet our labor needs on farms and in packing plants". Sorenson warned that if adequate labor was not available, pork production would be adversely affected and that consumers would pay higher prices at the checkout counter and exports would be placed at risk.

 

It is evident that the U.S. pork industry is confronted with a shortage of available workers exacerbated by the COVID outbreak necessitating availability of additional foreign workers eligible to work year-round.


 

RCL Foods of South Africa Posts Improved Earnings

RCL Foods, a South African conglomerate that controls Rainbow Chicken, with additional interests in sugar, baking, grocery, and feed milling, posted results for Fiscal 2021 ending June 30th.  Revenue attained $2,201 million compared to $1,931 million in Fiscal 2020.  Net earnings attained $69.2 million compared to a loss of $66.6 million in Fiscal 2020.  EPS was 7.7 cents compared to a loss of 7.1 cents for the previous fiscal year. The report did not break down operating units, but it is understood that the EBITDA of Rainbow Chicken declined by 50 percent attributed to higher feed costs.

 

RCL Foods intends to spin off the chicken and sugar segments to concentrate on baking and groceries.


 

Kraft Heinz Settles with U.S. SEC

According to Kathy Kringer, Global Chief Communications Officer for the Kraft Heinz Company, a settlement was reached with the U.S. Securities and Exchange Commission with  payment of a $62 million penalty.

 

The case arises from the actions of a number of rogue employees who manipulated supplier agreements prior to 2019 to achieve bonus-tied performance targets.  The company adjusted earnings in the second quarter of 2021 to account for the 59 transactions that did not materially affect earnings.

 

Appropriate changes have been made to internal auditing and controls.

This incident illustrates the danger of linking bonuses to performance targets without appropriate oversight and verification.  It is evident that some broiler companies that base bonuses and promotion on data published by a major benchmarking service create risks of distortions since there are incentives to “game the system”.  At the very least, basing remuneration on narrow targets creates a silo mentality that may detract from total company bottom line performance.


 

USDA School Lunch Purchases

On September 10th, the USDA announced the purchase of 175 tons of IQF boneless chicken breasts to be delivered during the fourth quarter.  Price ranged from $2.66 to $2.76 per pound.


 

Impossible Foods Launches Plant Based Nuggets

Impossible Foods will distribute their plant-based nugget, simulating chicken, through food service distributors to restaurants.  The servers will include David Chang’s, Fuku, Red Rooster and Joyland.  It is significant that none of the major QSRs will be serving the product.

 

Impossible Foods will base their promotion on nutritional content compared to conventional chicken nuggets emphasizing lower saturated fat and sodium.  The company will also emphasize sustainability with claims of lower requirements for water and land and lower greenhouse gas emissions compared to conventional nuggets.  Retailers including Walmart, Albertsons, Kroger, Safeway and Giant will stock Impossible Nuggets priced at $7.99 for 20 pieces.


 

Texas Broiler Farm Nuisance Verdict Upheld on Appeal

In 2015, three family members established a broiler grow-out farm in the Malakoff area of Henderson County, TX.  A total of sixteen barns were erected housing 445,000 broilers.  All barns were operational by November 2016.  Within months of commencing operation, neighbors complained to the Texas Commission on Environmental Quality (TCEQ) alleging odors and diminution of property value.  On investigation citations were issued noting violations of relevant statutes.

 

Failure to rectify the nuisance, led plaintiffs to file suit claiming monetary damages and a permanent injunction to prevent operation of the chicken farm on the property.  At trial, the jury found for the plaintiffs awarding damages consistent with a claimed decrease in the market value of the affected homes.  Following a post-trial motion, the judge ordered that the plaintiffs should not be awarded monetary damages but upheld the permanent injunction on operation of the farm.  

 

The defendants appealed to a higher court that affirmed the lower court decision.  Problems relating to the farm included over-stocking and operation of a composter for dead birds that was a source of odors.  Based on evidence including citations issued by the TCEQ, the appeals court upheld the finding of nuisance. The injunction was affirmed based on the fact that a representative of Sanderson Farms, the integrator concerned, attested that the farm was operated in consistency with Company standards and that the nuisance would in all probability have continued if the farm raised broilers.

 

The case illustrates the need for chicken operations to function with minimal dissemination of odors or creating any other nuisance.  It is important to site broiler grow-out farms away from established homes and determine that the planned number of houses and their stocking density will be consistent with acceptable environmental considerations.  The rulings by both the trial court and the appeals court were independent of the prevailing Texas Right To Farm laws.


 

Shane Commentary

North American Meat Institute Reacts to Administration Criticism

Following statements relating to oligopoly in the red meat and poultry industries, the North American Meat Institute has responded publicly defending the current structure of the meat industry.

 

Mark Dopp, COO of the NAMI stated, "as with almost every industry meat and poultry packers and processors of all sizes have been and continued to be effected by the global pandemic and the inflationary trends that challenge the U.S. economy".

 

He continued, "American consumers of most goods and services are seeing higher costs largely due to a persistent and widespread labor shortage".  The NAMI stresses that poultry and meat markets are competitive and dynamic that this ultimately benefits consumers.  It is a general impression in the meat industries that certain members of the Administration do not understand the supply and demand factors and how they affect markets.

 

It is apparent that the Administration is intent on altering the current concentration in red meat packing. Whether this is justified or achievable is questionable. The important question is the possible outcome of injudicious regulations or creating subsidized competition on food security and ultimately availability and the price to consumers.

 

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