Poultry Industry News

STOP PRESS

09/14/2021

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. 


 

Texas Broiler Farm Nuisance Verdict Upheld on Appeal

09/14/2021

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.


 

Crop Progress

09/13/2021

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%)

 

Impossible Foods Launches Plant Based Nuggets

09/12/2021

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.


 

USDA School Lunch Purchases

09/12/2021

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.


 

Kraft Heinz Settles with U.S. SEC

09/12/2021

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.


 

RCL Foods of South Africa Posts Improved Earnings

09/12/2021

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.


 

National Pork Producers Council Urging More H-2A Visas

09/12/2021

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.


 

August Chicken Exports from Brazil

09/12/2021

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.


 

Broiler Week

09/10/2021

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.


 

Turkey Week

09/10/2021

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:-


 

COMMODITY REPORT

09/10/2021

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.


 

USDA-WASDE FORECAST #616 SEPTEMBER 10th 2021

09/10/2021

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.


 

Brazil to Increase Broiler Output in 2022

09/09/2021

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.


 

ALDF Lawsuit Against Hormel to Proceed

09/09/2021

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.


 

OSHA Investigating Alleged Chemical Exposure in Mountaire Farms Plant

09/09/2021

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.


 

Chicken Production in Japan Affected by HPAI in Early 2021

09/08/2021

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.


 

Broiler Industry in Turkey Impacted by High Ingredient Costs

09/08/2021

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. 


 

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

09/08/2021

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.


 

U.S. CBP Interdict Smuggled Meat from Mexico

09/08/2021

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.


 

Decline of the Venezuelan Chicken Industry

09/08/2021

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.


 

Hong Kong Diagnoses ASF in Wild Boar

09/07/2021

During the past two weeks, six dead wild boars have been found in the Cape Collinson Nature Reserve according to the South China Morning Post. The most recent carcass examined yielded African swine fever virus.  Hong Kong has approximately 3,000 wild boars that obviously now represent a reservoir of infection. 

 

There are approximately forty hog farms in Hong Kong holding 75,000 head.  All are at risk without adequate biosecurity since there is no vaccine to protect herds. ASF can be regarded as endemic in neighboring Guangdong Province on the Mainland of China.


 

STOP PRESS

09/07/2021

Authorities in Brazil have announced two diagnoses of bovine spongiform encephalopathy (BSE) in each of Mato Grosso and Minas Gerais states.  According to initial reports, both cases are regarded as sporadic as they were diagnosed in cows over the age of 10 years. The cases in breeding herds were sampled at slaughter in accordance with the Brazilian BSE Surveillance System and confirmed by a reference laboratory in Lethbridge, Canada in September.

 

China has suspended beef imports from Brazil in accordance with a bilateral protocol. A specific date for implementation will be announced.

 

Sporadic BSE is a rare diagnosis caused by Prion H, invariably in a bovine over 10 years of age. The sporadic form of the condition should be differentiated from bovine spongiform encephalopathy in animals under 5 years of age resulting from consumption feed contaminated with the bovine prion responsible for neurodegenerative changes. A major outbreak of BSE occurred in the U.K. during the late 1990's accompanied by cases of the human analog, Creutzfeldt-Jakob Disease.

 

Authorities in Brazil should disclose the circumstances by which two cases of the sporadic form of BSE were diagnosed apparently within one week in June in two separate states and why a disclosure was delayed until September.


 

North Carolina Program to Capture and Distribute Biogas Challenged

09/06/2021

The North Carolina Legislature passed the Farm Act of 2021 to facilitate joint ventures between producer organizations and energy utilities to capture biogas from waste lagoons to be distributed as a source of energy.  This technology involves placing a flexible covering over hog-waste lagoons. The traditional system of waste disposal involves release to lagoons resulting in release of methane, a potent greenhouse gas. The proposal to convert lagoons to anaerobic digesters would allow biogas to be collected and used subject to installations and required infrastructure. Residue in the lagoons would still be sprayed on pasture. The traditional lagoon and spray installations on large hog farms resulted in a series of lawsuits in 2020, with rulings against Smithfield Foods favoring neighbors of large contract hog operations. 

 

At issue is a $500 million biogas project to be developed as a joint venture between Smithfield Foods and Align Renewable Natural Gas, a subsidiary of Dominion Energy.  The utility proposes to install 30 miles of pipeline within major hog producing counties in Eastern North Carolina to collect biogas from 19 farms that will participate in the program.  Align Renewable Natural Gas will construct a central processing facility to allow biogas to be used for power generation or to heat homes.  Currently only 24 of 2,083 permitted hog facilities have ay form of biodigester system installed

 

The 2021 Act requires the state Department of Environmental Quality (DEQ) to fast-track approvals for existing hog farms. The NC DEQ must either approve or reject an application within 90 days of submission.  Opposition from the Environmental Justice and Equity Advisory Board representing 16 member organizations has requested the DEQ to ensure that minority communities would not be adversely affected by granting of permits. The concern of the Southern Environmental Law Center is that the 90-day period to approve applications may deprive landowners and neighbors of farms to express concerns with an application.


 

10th Annual Young Leaders Under 30 Program

09/06/2021

USPOULTRY has announced that the 10th year of the IPPE Young Leaders under 30 Program will take place during the 2022 International Poultry and Processing Expo.  The objective of the program is to select young managers within participating companies to attend the IPPE and to further their careers in poultry production, feed milling or meat technology.

 

 

 

 

Applicants have until October 1st to apply providing they are employees of a company belonging to one of the IPPE sponsor organizations. These comprise the American Feed Industry Association, the North American Meat Institute or USPOULTRY.  A panel of industry professionals will review the applications and award recipients will be notified of the panel decision by October 11th.

 

In addition to receiving free access to the Expo, selected recipients will receive complimentary hotel accommodations for two nights and free admittance to all IPPE education programs.

 


 

Tyson Foods Encouraging Vaccination

09/06/2021

In a September 3rd release, Tyson Foods announced that benefits would be strengthened for vaccinated U.S. workers. Effective January 1st, 2022, fully-vaccinated team members will earn 20-hours of paid sick leave per year and new hires will receive one week of vacation after six months of employment.  During recent weeks, Tyson Foods announced that the base pay for workers would be raised to $22 per hour and the Company is also evaluating flexible work schedules. In addition Tyson Foods provides medical, vision and dental benefits and seven large complexes now have health clinics.

 

Tyson offers free on-site COVID-19 vaccination in most plants and facilities and a comprehensive program of testing.  The company will award $200 to fully vaccinated employees and will initiate a $6 million sweepstakes competition to encourage vaccination, reinforcing an outreach campaign complementing the August announcement of a vaccination mandate.

 

The results of active promotion of vaccination are evidenced by the fact that 90,000 team members have received at least one dose of vaccine, representing 75 percent of employees.  Since early August, 30,000 vaccines have been administered.

 

 

The Tyson initiatives are supported by the United Food and Commercial Workers Union that represents most of Tyson Foods 31,000 unionized employees. Marc Perrone, President of UFCW International stated, "as the largest union for Tyson Food workers across the country our first priority is to keep essential workers safe on the job as the COVID-19 Delta surge continues and we recognize the need to do more".  He added, "UFCW and Tyson Foods agree these policies would ensure workers have the paid leave they need as they continue to keep our food supply chain secure".  Perrone called on companies across the protein industry to follow Tyson's lead with similar programs that encourage vaccination to protect workers.


 

Department of Transport Extends Hours of Service for Livestock

09/06/2021

The Department of Transportation has extended the exemption for hours-of-service requirements for livestock haulers including chickens, through the end of November.  The exemption has been in effect since March 2020 following the emergence of COVID.

 

Current rules allow for 11 hours of driving within 14 hours of on-duty time, followed by 10 consecutive hours of rest.


 

Tyson Foods Coordinating Aid to Louisiana Communities Following Hurricane Ida

09/06/2021

Tyson Foods will deliver many truckloads of ice and 500,000 meals as disaster relief following the impact of Hurricane Ida.  The company will coordinate with Convoy of Hope, Feed the Children, the Salvation Army and Southeastern Grocers to provide relief.  Products will be donated from distribution centers in Rochelle, IL., Dallas-Fort Worth, TX. and Russellville, AR.

 

Debra Vernon, Senior Director for Corporate Social Responsibility at Tyson Foods stated, "the impact of this historic storm is immense and we are deploying resources where we can to make the most impact for the safety and well-being of our team members and Tyson communities.


 

JBS USA and UFCW Agree on Four-Year Contract for Greeley, CO. Plant

09/06/2021

According to the Greeley Tribune, the United Food and Commercial Workers, Local 7 and JBS USA have signed a four-year contract following extended discussions and bargaining.  The new agreement incorporates wages ranging from $21.75 to $28.25 per hour, disability pay from $250 to $425 per week and an improved health insurance program.

 

During the COVID outbreak, workers at the Greeley, CO. plant were infected at a high level and complaints over alleged lack of concern by management and preventive measures resulted in walkouts. 

 

It is evident that JBS has attained labor stability for the Greeley plant, but obviously the UFCW Local 7 has set a standard for collective bargaining that will be applied to other red meat plants, ultimately to be reflected in the cost of product.


 

Ukraine Chicken Production Impacted by High Feed Cost

09/06/2021

Challenges facing the chicken industry in the Ukraine were detailed in the USDA-FAS GAIN report UP2021-0031 released in early September.  According to the FAS, production in 2021 will attain 1.36 million metric tons of which 31 percent (430,000 metric tons) will be exported.  The country will import 135,000 metric tons representing nine percent of domestic production.  Consumption will attain 1.065 million metric tons equivalent to a per capita consumption of 105 lbs., three percent less than in 2020.

 

Of total chicken consumption, 86 percent is represented by commercial broilers with 11 percent from subsistence and backyard chicken.  The remainder is supplied from depleted breeders and spent hens.

 

The largest domestic producer is MHP SE with over 70 percent of the market.  This domination follows the bankruptcy of Agromars, the second largest producer complex.  Five mid-sized companies with market share ranging from 1 to 6 percent each represent current competition to MHP SE.  Integration in the Ukraine extends into crop production comprising an important stabilizing factor in the cost of production.

 

In 2020, exports to the E.U. were restrained by tariff rate quotas and also sporadic outbreaks of highly pathogenic avian influenza that prevented shipments in January and March, 2021.  COVID lockdowns restricted the sale of chicken in open markets, seriously impacting Agromars and the smaller chicken producers.


 

Argentine Government Extends Restrictions on Beef Export

09/05/2021

Facing declining purchasing power due to uncontrolled inflation now running above 50 percent per annum, the socialist government of the Argentine is extending export restrictions on beef through the end of October.  The move is to reduce citizen discontent and unpopularity of the Fernandez Administration prior to November elections. 

 

The Government previously limited exports of some beef cuts through the end of 2021 and placed a 50 percent cap on exports until the end of August based on volumes shipped during 2020. 

 

 

In announcing the decree, the Government stated “In the short term the tool of limiting sales abroad is essential to guarantee Argentine access to beef in the face of the sharp increase in price to consumers.”

 

As previously reported, a ban on exports resulted in abattoirs closing with resulting unemployment, a sharp decline in wholesale prices and farmers holding their animals on pasture.  In normal times, Argentina is the world’s fifth-largest beef exporter and a major supplier to China. Competing exporters including the U.S. and Brazil will benefit from the Argentine decision.

 


 

Ghost Kitchen Brands Partners with Walmart for Meal Pickup and Delivery

09/05/2021

Extending a mutually beneficial relationship established in Canada, Ghost Kitchen Brands will open its first U.S. location at a Walmart Rochester, NY. store. Currently Ghost Kitchens offers Costa Coffee, Kraft Mac’n Cheese, Dickie’s Barbecue Pit, and Shaquille O’Neal’s Big Chicken as menu items.  Shoppers can order from a Ghost Kitchen menu on entering a Walmart store and collect the meal in-store after shopping or alternatively arrange for home delivery.  Ghost Kitchens now includes menu offerings from 25 brands. The Company intends to expand the program in cooperation with Walmart to Texas, California, Illinois, and Georgia.

 

George Kottas, Founder and CEO of Ghost Kitchen, stated “We are proud to work with Walmart to create best-in-class, technology-driven customer experiences and make top-tier products more accessible across both Canadian and U.S. markets.  Darryl Spinks, Senior Director, Retail Services for Walmart U.S., stated “We are excited to expand our relationship with Ghost Kitchens to continue to bring new and exciting food options to customers all while providing the convenience needed.”


 

Vietnam to Reduce Tariffs on U.S. Agricultural Products

09/05/2021

Following representations to the U.S. Trade Representative, Amb. Katherine Tai by 70 members of Congress and a visit to Vietnam by Vice President Harris, the Nation has agreed to reduce tariffs on U.S. agricultural products including pork.  Exports of this commodity to Vietnam in 2020 amounted to 25,000 metric tons valued at $54 million.  In 2020 Vietnam imported 147,839 metric tons of broiler products valued at $124 million. For the first seven months of 2021 the Nation received 63,626 metric tons of broiler products valued at $62 million.

 

 

To date the U.S. has been at a disadvantage compared to other exporters based on tariffs.  The U.S. would not have been in a noncompetitive position had our Nation remained in the Trans-Pacific partnership from which the U.S. unilaterally withdrew in 2017.


 

U.S. Meat Exports

09/04/2021

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:-


 

Monogram Foods Receives Infusion of Capital

09/03/2021

The Pritzker Group, Private Capital has announced purchase of "a significant equity share” in Monogram Foods.  It is presumed that the capital will be used to expand production through ten existing manufacturing plants.  Monogram Foods manufactures meat snacks, corn dogs, hot dog sausages, pre-cooked bacon and assembled sandwiches for catering and retail sale.  Distribution facilities are operated in six states.

 

The company founded in 2004 has 3,000 employees and evolved through a merger of previous Sara Lee Corporation assets (Circle B meat brands) and King Cotton.  In 2017, Monogram Foods was named the processor of the year by the National Provisioner. Monogram Foods has grown successfully through acquisition of competitors including Hinsdale Farms of Bristol, IN, Golden County Foods of Plover, WI, Progressive Gourmet in Wilmington, MA. and Quality Food Processors in Denison, IA.


 

Target Corporation Named Retailer of the Year

09/03/2021

Supermarket News has named Target Corporation the 2021 ‘Retailer of the Year”.  The award is based on innovation and recognizes omnichannel development by the recipient as demonstrated in sales growth both within stores, in front of stores and through E-commerce.

 

CEO Brian Cornell has developed a strategy in which Target stores serve as hubs with retail locations as showrooms and service centers in addition to operating digital fulfillment sites.  Target is promoting drive up curb-side pickup and is using Shipt for on-demand delivery.  Target has commited $4 billion annually to store improvements and small-format locations in harmony with surrounding communities.

 

Rick Goez, Executive Vice-president and Chief Food and Beverage Officer of Target stated, "we do not see our businesses as either all brick-and-mortar or all E-commerce.  We think of Target as an omnichannel retailer and our stores play a critical role in that strategy".


 

Concern over Vague Glyphosate and GMO Decree by Mexico

09/02/2021

Previously CHICK-NEWS has reported on a Presidential order issued by Andres Manuel Lopez Obrador, apparently banning the use of glyphosate and placing restrictions on importation of GM-origin corn.  Agricultural organizations in Mexico have opposed measures promoted by the President claiming that he lacks authority and scientific justification for the restrictions. The potential consequences of restricting glyphosate and the importation of yellow corn used to feed livestock was noted in the August 30th edition of the USAPEEC MondayLine. Juan Cortina Gallardo, the president of the Agricultural Council of Mexico, considers the Presidential decree to be ambiguous and will detract from efficient crop production and sustainability.


 

USDA Guideline on Unreasonable Preferences and Advantages

09/01/2021

On August 27th the USDA-AMS issued new guidance relating to ‘unreasonable preferences and advantages’ as defined under the Packers and Stockyards Act.  The proposed final rule introduced on December 11th 2020 will take effect on January 11th 2021.  New regulations define to the criteria used by the Secretary of Agriculture to determine whether any undue or unreasonable preference or advantage has occurred that would represent a violation of the Packers and Stockyards Act. 

 

The action to be taken by the Secretary will be in conformity with the Conservation and Energy Act of 2008 (2008 Farm Bill).  The Act is intended to promote fair trade, financial integrity and competitive marketing for livestock, meat and poultry.  Additional information relating to the August 27th release will be provided in a subsequent edition of CHICK-NEWS.


 

Seafood Processor Defies FDA over Listeria

09/01/2021

Following detection of Listeria monocytogenes during a July 19th inspection of the premises of Felix Custom Smoking, a seafood supplier in Monroe, Washington, the FDA, advised management of the results. The FDA inspection yielded 19 positive L. monocytogenes isolates from 104 samples including five from food contact surfaces. Management has enigmatically declined to recall implicated products and continues to process seafood in the facility.

 

FDA has advised consumers to destroy any products emanating from Felix Custom Smoking including ready-to-eat salmon, squid jerky and smoked hot and cold seafood under Felix brands.  A customer of Felix, Loki Fish Company recalled product on August 23rd as a result of the FDA warning.

 

 

The management of Felix Custom Smoking is now officially aware of a high level of Listeria contamination in their plant.  Refusal to recall product and rectify deficiencies in equipment and procedures will place the company in both criminal and civil jeopardy.  The management of the company is well advised to review the circumstances of the Blue Bell Creamery following a trace-back investigation following a limited outbreak with a fatality. Demonstration of contamination in ice cream and plants resulted in recall of all ice cream products, closure of three production facilities and ultimately the takeover of the multigenerational enterprise.  The CEO of the company who was aware of Listeria contamination is now facing criminal charges with the potential of a prison sentence followed by civil litigation.


 

New Technology Offered by Micro-Tracers™

09/01/2021

Micro-Tracers, Inc. announces the release of new spot-counting APPs for Android and I-Phones. These APPs count red and blue tracer spots automatically and also permit transfer of the counts to a report on mixer- performance. Together, these functions can save the time required to analyze and report individual Micro-Tracer counts that confirm inclusion of an additive in a feed mix.

 

Micro-Tracers has developed a new Web Portal- portal.microtracers.com. This allows test counts from mixer evaluations to be entered into a database to generate new reports on mixer performance. The Micro-Tracer portal will allow entry and archiving of tracking data obtained from the assay of either truckload, farm silo or retained feed samples. The electronic storage of data is an important component of a quality control system to confirm that specific feed additives including anticoccidials and premixes coded with Micro-Tracers were or were not added to a diet.

 

In the near future additional functions will be added to allow statistical interpretation of Micro-Tracer data confirming addition of specific coded additives in addition to consistency of mixing.

 

Micro-Tracers can now receive and process feed samples in an in-house laboratory as a paid-for service for manufacturers who require analyses to be performed by a third party.

 

For further information, please access www.microtracers.com  or contact Micro-Tracers, Inc. at (415) 822-1100 ex. 1511. (Pacific Time)


 

STOP PRESS

08/31/2021

Hurricane Ida Spares Poultry Industry

 

Despite the wind and accompanying deluge from a force 4 event, impact on poultry companies operating in southern Louisiana and central Mississippi were restricted to power outages and temporary cessation of operations. In an August 31st release, Sanderson Farms reported no injuries. The McComb hatchery and feed mill and the Hammond, LA. complex are without grid power. Most facilities and live-bird units are operating on emergency power. With the exception of Hammond and McComb complexes, normal operations were scheduled to resume today.

 

It is understood that Cal-Maine Foods did not experience any injuries among personnel or damage to facilities.

 

Appropriate planning for extreme weather events, preventive measures and operational procedures mitigated potential damage by both companies


 

Congress Evaluating Legislation to Ban Laws Impeding Interstate Commerce in Agricultural Products

08/30/2021

The Exposing Agricultural Trade Suppression Act has been introduced into the Senate as S.2619. Sponsors are Senators Roger Marshall (R-KS), Charles Grassley (R-IA), Joni Ernst (R-IA), John Cornyn (R-TX) and Cindy Hyde-Smith (R-MS).

 

Companion legislation, H.R. 4999 was introduced into the House by Representative Ashley Hinson (R-IA), co-sponsored by Representatives Dr. Mariannette Miller-Meeks (R-IA) and Randy Feenstra (R-IA).

 

The intended federal legislation would prevent state and local governments from imposing any standard relating to the production or manufacture of an agriculture product or of livestock on production in another state. The intended legislation is aimed at California Proposition 12 and similar state laws that require producers intending to ship to states with specific laws relating to welfare or food safety.

 

Proposition 12 has been challenged in federal courts claiming interference in interstate commerce although to date, the California law, enacted by ballot, has been ruled constitutional.

 

The U.S. egg industry has adapted to the requirements of Proposition 12 and has made investments in cage-free housing. Compliant suppliers are able to provide adequate quantities of shell eggs and products.  The principal problem relates to hog producers that use gestation crates that are non-compliant.  This proportion of the hog industry has not transitioned to group housing of sows and have continually engaged in litigation to oppose California Proposition 12 and similar State laws. Now with the imminence of implementation, hog producers are requesting more time to convert, predicting a sharp escalation in the price of pork and bacon as leverage.

 

Turkeys may well benefit from the anticipated impasse if the industry has adequate capacity to produce substitute turkey hams and bacon for California.


 

USDA to Activate the Coronavirus Food Assistance Program

08/30/2021

Eligible livestock and poultry contract producers and specialty crop farmers will receive compensation under the Pandemic Assistance for Producers Initiative.  The program colloquially termed “CFAP 2” has an October 12th deadline for applications.

 

In commenting on the USDA initiative Zach Ducheneaux, administrator of the FSA stated, “We listened to feedback and concerns from producers and stakeholders about the gaps in pandemic assistance and these adjustments to CFAP 2 help address unique circumstances, provide flexibility and make the program more equitable.”

 

The Consolidated Appropriations Act of 2021 provided $1 billion for payment to contract producers of eligible livestock and poultry for revenue losses attributed to COVID mainly when plant capacity was limited and some broiler flocks and many herds were euthanized.


 

Meishan Terminal at Port of Ningbo Resumes Operation

08/30/2021

A critical area of the Ningbo Port has resumed operation after a two-week unjustified shutdown as a result of a case of COVID in a port worker.  Testing of residents in the Meishan community showed negative COVID assays although control measures will continue including testing of international crews who are required to remain onboard during unloading and loading of their vessels.

Meishan Community and Port

 

On Friday August 20th, 68 container vessels were awaiting a berth but the backlog is being reduced with the hope of attaining less than 20 vessels as in 2019, pre-COVID.  The Meishan terminal is an important port of entry for U.S. chicken products.  Port delays result in additional freight costs and demurrage, reducing margins for importers.

 


 

JBS USA Subsidiary Settles Discrimination and Retaliation Lawsuit

08/29/2021

Food Ventures North America, a subsidiary of JBS USA controlled by a holding company JBS S.A. in Brazil, has settled a lawsuit with the U.S. Equal Employment Opportunity Commission for $130,000.  The lawsuit alleged a violation of the Civil Rights Act of 1964 that prohibits discrimination based on an employee's national origin and also for retaliation leading to dismissal following the filing of the complaint. 

 

According to the U.S. EEOC release an employee in the Miami corporate office of Food Ventures was apparently subjected to a hostile work environment based on her Hispanic origin and was subjected to retaliation for complaining.  Food Ventures North American will be required to provide updates on any future complaints and action taken to address any future issues as a requirement of the settlement.


 

Preemptive Action on African Swine Fever

08/29/2021

The USDA-APHIS is negotiating with the World Organization for Animal Health (OIE) to designate Puerto Rico and the Virgin Islands as separate regions from the U.S. mainland based on spatial epidemiology.  This action is in anticipation of possible extension of African swine fever (ASF) from the Dominican Republic (and inevitably Haiti), to other nations in the Caribbean that may include the U.S. territories of Puerto Rico and the Virgin Isles.  If a distinction is made on the basis of regionalization, the U.S. mainland would maintain an OIE status of freedom from ASF.  The infection is currently prevalent in Eastern Europe, Baltic nations and Germany in addition to sub-Saharan Africa and many Asian countries including China. The disease once introduced to an area cannot be controlled without an effective vaccine especially in the presence of feral hogs. Biosecurity may prevent introduction into suitably constructed and operated hog integrations but backyard, subsistence and small operations relying on traders will remain vulnerable to infection.

 

The USDA stated, "in the event of a detection, we would quickly work with trading partners to regionalize Puerto Rico from the U.S. mainland and to show mitigations that are in place to prevent disease spread from Puerto Rico to the U.S. mainland".


 

Taco Bell Enters Chicken Sandwich Wars

08/29/2021

Taco Bell will introduce the Crispy Chicken Taco on September 2nd in limited markets nationwide.  Following pilot testing in Nashville, TN. and Charlotte, NC., the product will be introduced to compete with chicken sandwiches offered by major QSRs.

 

The Crispy Chicken Sandwich Taco incorporates all-white crispy chicken marinated in jalapeno buttermilk seasoning with Mexican spices and served in a soft flatbread shaped as a taco.  Initially the sandwich will be priced at $2.49 and will be promoted with special offers and events.


 

Tyson Foods to Establish Cooked Product Plant in Virginia

08/28/2021

Tyson Foods has announced that it will erect a plant to produce fully cooked products including snacks and nuggets.  The plant will extend over 325,000 square feet and will require a capital investment of $300 million.  The plant will be located in an industrial park in Danville, VA. and will require 60 million pounds of RTC annually and will employ 375.  Noelle O'Mara, President of Tyson prepared foods stated, "as consumers actively look to add more protein to their diets, Tyson is uniquely positioned as a category leader to meet that growing demand".

Tyson to erect Plant in Danville, VA

 

Tyson will receive state support in a form of $3.0 million grant from the Commonwealth Opportunity Fund and a $3.0 million achievement-based grant from the Virginia Investment Performance Grant Program.  The Governors Agricultural and Forestry Industry Develop and Fund will also contribute $500,000.  The Commonwealth of Virgina will assist indirectly through the Virgina Talent Accelerated Program that operates in cooperation with the Virginia Community College system to provide instruction for qualified workers.


 

Sanderson Farms Reports on Q3

08/28/2021

In a press release dated August 26th Sanderson Farms Inc. (SAFM) announced results for the 3rd Quarter of FY 2021 ending July 31 st.

 

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)

 

 

 

 

 

3rd Quarter Ending July 31st

2021

2020

Difference (%)

Sales:

$1,352,756

$956,455

+41.4

Gross profit:

$302,942

$90,458

+234.9

Operating income:

$215,224

$39,868

+439.8

Pre-tax Income

Net Income

$214,604

$164,763

$38,815

$32,810

+452.9

+402.2

Diluted earnings per share:

$7.38

$1.48

398.6

Gross Margin (%)

22.3

9.5

+134.7

Operating Margin (%)

15.9

4.2

+278.6

Profit Margin (%)

12.2

3.4

+258.8

Long-term Debt and Lease Obligations:

$18,235

$51,804

-64.8

12 Months Trailing:

     

Return on Assets (%)

13.4

   

Return on Equity (%)

19.5

   

Operating Margin (%)

10.0

   

Profit Margin (%)

6.9

   

Total Assets

$2,156,220

$1,849,031

+16.6

Market Capitalization

$4,328,000

   

52-Week Range in Share Price: $112.73 to $197.25 50-day Moving average $187.75

Market Close, Wednesday 26th August pre-release, $192.40. Close Thursday 27th $193.25

Forward P/E 16.7

 

On August 9th third-ranked U.S. broiler producer by volume, Sanderson Farms announced their acquisition by a consortium comprising Continental Grain and Cargill Inc.

 

In commenting on results Joe F. Sanderson, Jr., Chairman and CEO stated, “Our financial results for the third quarter of fiscal 2021 reflect significantly improved demand and prices for products sold to food service customers, continued strong demand for products sold to retail grocery store customers, reduced volumes due to planned egg set reductions that we implemented during the early stages of the COVID-19 pandemic, and higher costs of feed grains”. He continued “Our results also reflect superior execution in all areas of our business, including live production, processing and sales. We benefitted from improved market conditions for the products we sell to food service customers due to the phased reopening of more food service establishments across the nation. While food service customer demand has improved with more people dining out, consumers also continue to prepare meals at home.

 

According to Sanderson, overall realized prices for chicken products sold to retail grocery store customers remained strong during the third quarter, and volumes reflected the strong demand. In addition, the quoted commodity markets for products sold to food service customers were higher across the board, reflecting the improved demand from food service customers. The average quoted market price for boneless breast meat was 71.4 percent higher during the quarter compared with the third quarter of fiscal 2020, the average market price for bulk leg quarters increased by 66.3 percent, the average market price for chicken breast tenders increased by 107.3 percent and the average market price for jumbo wings increased by 107.0 percent.

 

Sanderson concluded, “With respect to chicken production levels, the USDA’s latest estimates forecast United States broiler production during calendar year 2021 to increase less than one percent compared to calendar year 2020. While egg sets have returned to pre-pandemic levels, lower hatchability rates have resulted in fewer chicks placed than egg set activity would suggest. We estimate our total production during the fourth quarter of fiscal 2021 will be lower by 3.1 percent compared to the fourth quarter of fiscal 2020. If that projection holds true, our total fiscal 2021 production will be 0.6 percent lower than our fiscal 2020 production.”


 

Tyson Foods Donates to Asian American Communities

08/27/2021

In an August 18th release, Tyson Foods announced donations of $16,000 to the Amarillo, TX Chin Christian Church and to the Karen Community of Amarillo.

 

Paul Finch, Amarillo plant manager, noted “We are proud to stand with and support organizations that address issues that members of the Asian community are facing.”  He added, “Diversity enriches and strengthens our communities.” 

 

 

 

 

Both the Chin Christian Church, an affiliate of the Chin Baptist Churches USA, and the Karen Community of Amarillo are religious and service organizations active in outreach to their local communities.


 

Union Rejects Olymel Offer Extending Strike

08/27/2021

A strike at the Olymel Vallee-Jonction plant in Quebec has now entered the fifth month.  The union representing approximately 1,000 workers recently rejected an offer by the cooperative to end the strike.  Farmers have been consigning hogs to distant plants imposed stress on animals and increasing expenses.  Farmers have indicated that they will start euthanizing hogs to reduce the backlog of 150,000 animals.  Producers are urging the Government of Quebec to intervene based on the need to restore production.  It is noted that the Government of Quebec has a considerable investment in Olymel and it is in the public interest to restore production. Accordingly the Minister for Labor for the Province has intervened following a threat to by Olymel to close the plant resulting in unenployment and disruption of hog production.

 

The episode indicates the problem associated with intransigent and militant unions and a divided workforce.  The situation in Quebec should be a warning to companies and unions alike that failure to negotiate in good faith is a recipe for mutual financial damage.


 

Iowa Pork Producers' Association Challenge to California Proposition 12 Dismissed

08/27/2021

The United States District Court of the Northern District of Iowa has dismissed the Iowa Pork Producers Association challenge to Proposition 12. District Court Judge C.J. William held that it was improper for plaintiffs in Iowa to bring a case against the state of California in an Iowa court.  A request for preliminary injunction against the state of California setting aside Proposition 12 was also rejected.

 

Clearly the decision was based on the standing of the plaintiffs but not necessarily the merits of the case.  Notwithstanding the decision, it is evident that gestation stalls have been replaced by the majority of large pork producers, including Tyson Foods and Smithfield Foods who have adopted group housing for sows.  Holdouts for gestation stalls may be defeated not only in a court of law but also in the court of public opinion.  Those that would perpetuate this housing system generally regarded as inhumane will find fewer customers for their products.

 


 

Salmonella Outbreak in the U.K. Traced to Canadian Product

08/27/2021

 

The Canadian Food Inspection Agency is recalling Mr. Porky cooked seasoned pork rind snacks, potentially contaminated with Salmonella.  The action resulted from investigations conducted in the U.K. following an outbreak traced to the product involving 179 cases over an 11-month period.


 

COMMODITY REPORT

08/26/2021

WEEKLY COMMODITY REPORT: August 26th 2021.

  • Commodity prices fluctuated widely this past week but corn and especially soybeans ended higher reversing the trend of the previous week. Factors influencing prices in either direction included:-
  • Release of the August 12th WASDE (upward pressure);
  • Results of the ProFarmer crop review (downward pressure)
  • Lower than anticipated export sales especially to China (downward pressure);
  • Continued drought in many counties in the corn belt and especially in Iowa (upward pressure);
  • Drought in Brazil causing a low Safrinha (second) crop (upward pressure);
  • Restoration of shipments from Argentine albeit at lower than normal volume (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 August 12th WASDE especially since there was greater clarity on acreage and the effects of weather and trade to date on ending stocks. Annual field assessment of crop condition by ProFarmer scouts was released this past week.

 

  • S producers are now receiving and conversely livestock producers in the Midwest will pay above $5.50 per bushel for corn and crushers will pay $13.70 per bushel for soybeans plus transport and basis in September. Corn was up 0.4 percent this week for September delivery and the price of soybeans was 3.3 percent higher compared to the corresponding quotation on August 19th for September delivery. Soybean meal was up1.4 percent for September delivery compared to last week but will soon reflect the escalation in the price of soybeans.
  • The FAS Export Report released on August 26th for the week ending August 19th 2021, reflecting market year 2020-2021, confirmed that outstanding export orders for corn for the present market year amounted to 4.15 million metric tons (164 million bushels) with 66.17 million metric tons (2,607 million bushels) actually shipped. During the past week net orders for the 2020-2021 market year amounted to 0.07 million metric tons (2.8 million bushels). A total of 0.76 million tons (29.9 million bushels) of corn was shipped. For the succeeding 2021-2022 market year commencing in September, 0.68 million metric tons (26.8 million bushels) was ordered this past week with outstanding sales amounting to 19.3 million metric tons (760 million bushels) of new crop corn.
  • According to the USDA FAS Export Report released August 26th for the week ending August 19th 2021, reflecting market year 2020-2021, outstanding export orders for soybeans amounted to 2.20 million metric tons (80.7 million bushels) with 59.97 million metric tons (2,201 million bushels) actually shipped. Weekly soybean orders attained 0.08 million metric tons (2.9 million bushels) with 0.26 million metric tons (9.5 million bushels) shipped. For the 2021-2022 market year outstanding sales for soybeans amount to 15.6 million metric tons (573 million bushels) with 1.75 million metric tons (64.2 million bushels) sold this past week
  • During the past week 61,700 metric tons of soybean meal and cake were ordered, down 14.8 percent from the previous week. The quantity shipped amounted to 240,300 metric tons, 12.5 percent more than the quantity exported during the previous week. For the 2021/2022 market year 139,500 metric tons were sold and outstanding sales now amount to 1,661,500 metric tons.

The following quotations for delivery in the months as indicated were posted by the CME at close of trading on August 26th 2021, compared with values posted at close of trading on August 19th 2021 (in parentheses):-

 

COMMODITY

Corn (cents per bushel)

Sept. 552 (550)

Dec. 550 (551)

Soybeans (cents per bushel)

Sept. 1,368 (1,324)

Nov. 1,326 (1,321)

Soybean meal ($ per ton)

Sept. 356 (351)

Dec. 356 (354)

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 up 2 cent per bushel (+0.4 percent)

Soybeans: Sept. quotation up 44 cents per bushel (+3.3 percent)

Soybean Meal: Sept. quotation up $5 per ton (+1.4 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 August 26th compared with August 19th quotations for September delivery would increase nest-run production cost for eggs by 0.3* cents per dozen and for broilers 0.2 cents per live pound adding to the increase from the previous week .

 

Year-to-date, escalation in the prices of major ingredients has added 6.6 cents per dozen eggs and 4.0 cents per live-weight lb. to broiler production cost

*(rounded to 0.1cent)


 

Scientist at Hamlet Protein Presents at PSA 2021

08/26/2021

Dr. Kyle Brown recently presented a paper at the remote-format 2021Poultry Science Association Meeting.  The paper entitled "Evaluation of increasing levels of enzyme-treated soy protein on turkey poult live performance" demonstrated the nutritional value of Hamlet Protein in poult diets.  Inclusion of enzymatically treated soybean meal reduces the quantity of antinutritional factors to which turkey poults are extremely sensitive.

 

The text of the paper including data can be obtained from Hamlet Protein by clicking on to the company logo on the Welcome page.


 

Salmonella Infections Attributed to Processed Meats from Fratelli Beretta

08/26/2021

The CDC has concluded an investigation of outbreaks of salmonellosis attributed to S. Typhimurium and S. Infantis. For the S. Typhimurium infections, 23 cases were investigated from fourteen states with onset from May 30th to July 27th. Nine hospitalizations were documented and of 16 cases investigated, 14 reported consuming Italian-style meats including salami prior to onset of symptoms.

 

For the S. Infantis outbreak 13 cases were investigated with onset from May 9th to June 24th.  This outbreak involved ten hospitalizations.  Investigation showed that all eight of those questioned consumed salami and prosciutto before symptoms developed.

 

Investigations determined the source of infection to be Fratelli Beretta of Mount Olive NJ. The Company has agreed to recall 862,000 lbs of antipasto products. It is presumed that whole genome sequence data on pathogens isolated from patients was applied to confirm the source of theSalmonella outbreaks.


 

Recall of Salads for Plastic Contamination

08/26/2021

Willow Tree Poultry Farm of Attleboro, MA. is recalling 26 tons of chicken salads and dips as a precaution following consumer complaints of plastic particles.  Product was processed August 10th through August 13th and was packed in a variety of presentations ranging from 15 oz. containers to 10 lb. commercial units.  There have been no reports of injury, but the action was taken in an abundance of caution.

 

The cost associated with the recall and loss of product illustrates the need for regular inspection of equipment. Standard procedures should include inspection, usually post cleaning, to ensure that all components of packaging equipment are functional and conform to manufacturers’ specifications with special reference to seals or flexible items that can wear or become detached.

 


 

Burger King Appoints CEO

08/26/2021

Tom Curtis

Tom Curtis has been promoted to the position of president of Burger King U.S. and Canada.  He joined Burger King in April as Chief Operating Officer.  Previous to joining Burger King he spent 35 years with a major pizza company rising to the position of Executive Vice president of U.S. operations.

 

Jose Cil, CEO of Restaurant Brands International, parent company of Burger King stated, "Tom will lead the acceleration of our business to deliver on our vision that Burger King should always be our guests' first choice for a quality meal".  In commenting on his appointment, Curtis stated, "together we will work to accelerate the performance of the Burger King brand through an intense focus on our guest experience and success on key priorities".

 


 

Mexico to Increase Chicken Production

08/25/2021

According to USDA-FAS GAIN report MX 2021-0045 released August 17th, chicken production in Mexico will increase by 2.6 percent from 2021, to 3,900 million metric tons (8,580 million pounds) in 2020. Of the total domestic consumption of 4.767 million metric tons, 18 percent will be imported. Accepting a population of 131 million per capita consumption will be 36 kg (80.1 lb.). 

 

Currently the economy of Mexico is depressed as a result of COVID.  The Nation’s GDP is expected to grow to 6.0 percent in 2021 but inflation is currently at 5.9 percent.  For the period 2018 through the advent of COVID encompassing 2020, household income fell 5.3 percent with retail spending on meats, rising to 5.2 percent. This represented 23 percent of all food expenditures.  Demand for chicken in 2020 and into 2021 was reduced by collapse of tourism resulting in reduced demand from the hotel sector.

 

Major diseases including avian influenza are controlled by a combination of vaccination and biosecurity, facilitated by the high proportion of broilers produced by integrators. Production costs will increase in 2022 reflecting international feed prices with incremental costs  passed on to consumers.

 

During the first half of 2021 Mexico received 435,090 metric tons of chicken from the U.S. valued at $428 million with a unit price of $983 per metric ton. Volume and value were higher by 30 percent and 46 percent respectively compared to the corresponding first half of 2020.


 

Philippines prematurely Claims Control of African Swine Fever

08/24/2021

The Ministry of Agriculture of the Philippines claims that cases of African swine fever (ASF) are declining. The Ministry predicts a meat surplus in 2023 based on suppression of African swine fever and a $586 million program to increase the number of hogs produced.

 

ProMED reports that since the first case in July 2019 the disease has been diagnosed on the Islands of Mindanao, Leyte, Luzon and Samar. Through July 2012 ASF has occurred in 12 regions, 50 provinces, 541 cities and 2,836 villages. Over 500,000 hogs have been depleted in an attempt to control the disease.

 

It is difficult to see how authorities in the Philippines can claim to have to suppressed ASF within a short period in an industry comprising small independent farms with defective biosecurity and widespread trading in live hogs. Control in China has been variable with successive reoccurrence of outbreaks in various regions. The disease has not been eradicated from Poland, the Russian Federation, Baltic nations and in eastern European countries formerly allied with the Soviet Union. Nations with predominately small-scale production will only control African swine fever following the advent of a safe and effective vaccine combined with structural and operational biosecurity attained with integration.

 

It would appear that the statement by the Ministry of Agriculture is premature and is probably intended for domestic consumption in advance of a national election. Declining incidence rates reported for a contagious disease may be less a function of control than negligence in detection, and reporting in addition to bias in  compilation of official data.


 

Bulgaria Reports Outbreak of ASF on Commercial Farm

08/24/2021

Authorities in Bulgaria have reported on an outbreak of African swine fever (ASF) on a commercial farm with 13,000 hogs.  The farm is located near the town of Apriltsi in Lovech Province in a mountainous region in the center of the Nation.

 

Apriltsi is popular as a tourist location with the potential for dissemination of virus if contaminated or uncooked pork products are transported to other areas of the nation or are illegally exported.


ASF in Eastern Europe and Baltic Region

 

Two additional cases of ASF have been reported subsequently to the Apriltsi event, both in semi-commercial small-scale units. This suggests that ASF may be widespread and undiagnosed in Bulgaria with owners slaughtering and consuming hogs that show clinical signs.

 

The Food Safety Agency of Bulgaria will follow OIE recommendation establishing a 1.8 mile quarantine zone around affected premises and imposing controls over movement of livestock.


 

Union Claims of Abuse of Temporary Workers Refuted by Seaboard Foods

08/24/2021

The United Food and Commercial Workers local chapter representing workers at the Guyman, OK. plant has filed a complaint with the U.S. Department of Labor alleging that the company pays low wage rates to temporary workers.

 

David Eaheart representing Seaboard confirmed that the Company makes use of the H-2B visa program for temporary workers. Over the past five years this procedure has been in accordance with the collective bargaining agreement with the UFCW.  Seaboard claims that full-time and temporary workers are paid the same rate and receive the same benefits.  Starting wage is now $18.50 per hour.  This is higher than the average hourly wage for workers in animal slaughtering and processing plants that amounts to $16.16 according to the North American Meat Institute, citing Department of Labor data.

 

 


 

Plainville Farms Implicated in PETA Allegations of Mistreatment

08/24/2021

People of the Ethical Treatment of Animals (PETA) posted a video alleged to have been filmed on a Plainville Farms operation during harvesting.  The video, as viewed by this commentator, showed egregious mistreatment of turkeys with workers kicking and stomping birds and inapropriately euthanizing birds in the process of catching and handling.  As with all intrusion videos, there is no certainty as to the location or time at which the images were made, neither is there any certainty that the images were not staged or that the video clip was edited. This said, Plainville Brands LLC. initiated an investigation into the allegations and will report in due course.

 

Predictably some customers have suspended purchasing Plainville Farms products including Whole Foods Market pending results of the investigation and a response from PETA as to the location of the video and validation of the allegations.

 

It is noted that a number of broiler and turkey companies are recording each harvest and transport event as a component of their welfare management and auditing programs.  Absent a clearly stated operating procedures manual, direct supervision and audio visual confirmation of compliance, companies are vulnerable to intrusion videos whether valid or not with consequential erosion of reputation and brand value.

 


 

Image of WH Group Sullied by Family Conflict

08/24/2021

Following an 18 percent decline in first-half profit for the WH Group and subsidiary Shuanghui International, quoted on the Hong Kong Exchange, Wan Hong Jian, the son of the founder and Chairman resigned as Deputy Chairman and Vice President.  Following his June resignation or dismissal from the company over allegations of “misconduct and aggressive behavior against the company’s properties”, Wang Hong Jian published a series of allegations implicating his father Wan Long and former CFO Guo Lijun of illegal financial actions and tax evasion.

 

Following a restructuring of corporate management, Wan Hong Gwei, a younger son of Wan Long was appointed Executive Director and Deputy Chairman replacing his brother and Guo Lijun was named CEO.  Wan Long relinquished his role as CEO and is now Executive Director and Chairman of the group that owns Smithfield Foods of the U.S.


 

STOP PRESS

08/24/2021

FDA Approves Pfizer Vaccine

 

On Monday 23rd August the Food and Drug Administration (FDA) granted permanent approval for the Pfizer-BioNTech mRNA vaccine for all recipients over the age of 16 years. This will allow government agencies, the military and commercial organizations to mandate COVID vaccination.

 

It is hoped that the FDA approval based on an extensive review of safety and efficacy will persuade the  “vaccine hesitant” of the protective value of the product against serious clinical symptoms and hospitalization. Immunization is required to reduce the incidence rate of COVID especially in areas of our Nation where disease correlates with low  uptake of any of the three available vaccines. There is no longer any valid scientific excuse why eligible individuals cannot receive the Pfizer-BioNTech vaccine.


 

ASF Outbreaks Continue in Europe

08/22/2021

ProMED-Mail reported on the prevalence of African swine fever (ASF) in European nations since the beginning of 2021.  Most recently in August, cases were reported to the World Organization of Animal Health from Bulgaria, Russia, Latvia, Hungary and Moldova. A correlation between diagnoses in feral hogs (wild boars) and small-scale commercial farms and backyard units is evident.  Given the frequency of isolation from wild boars, it could be concluded that ASF is endemic in this population in Poland.  Many eastern European nations are affected as documented by the Institute for Epidemiology, a division of the Freidrich-Loeffler Institute in Germany.

 

The role of wild boars in eastern and central Europe should serve as a warning for the U.S.  If African swine fever is introduced to Florida by extension from the Caribbean, eradication will be extremely difficult if not impossible given the wide distribution and large population of feral hogs.


Outbreaks of ASF in European nations 2021. Blue dots indicate diagnoses in feral hogs (wild boars). Red dots in domestic hogs.

 

China Overreacts to Sporadic Cases of COVID

08/22/2021

Container vessels are forced to divert from the port of Ningbo due to restrictions imposed by health authorities following the diagnosis of a single case of COVID in a worker.  Currently 50 container vessels are awaiting entry into the port and 14 vessels operated by the world’s largest shipping companies are attempting to obtain berths at other ports.

 

The Ministry of Transportation in China is requiring crews of vessels to have negative COVID tests before allowing discharge of cargo.  There does not appear to be consistency in policy among ports in China with regard to attempts at preventing introduction of infection. Officials at the Ningbo Zhoushan Port Company are trying to restore normal activity with a concentration on containers.

 

Closure of ports is playing havoc with supply chains.  Delays in Shanghai and Xiamen have resulted following restrictions on berthing and unloading. This has exacerbated the shortage of available containers to ship U.S. agricultural products west-bound to Asia. The shortage of containers and consequential rise in shipping rates, that emerged as a logistic problem has now become far worse due to the intervention of the Government of China and authorities administering ports.


 

AMS Request Products for the Emergency Food Assistance Program

08/22/2021

On August 20th, the USDA-AMS announced that it intends to purchase beef, pork, poultry, fish, dairy products and produce to the value of $400 million under the Emergency Food Assistance Program.  Purchases will be funded under the CARES Act and will be distributed to food banks and local organizations serving communities in need. 

 

Solicitations will be issued within weeks and will be posted on the Web-Based Supply Chain Management System. 

 

For additional information access www.ams.usda.gov/selling-food.  The AMS Commodity Procurement website posts copies of documents required to qualify as a contractor, product specifications and operating procedures.


 

USDA-AMS Chicken Purchases

08/22/2021

On August 20th, USDA Marketing Service announced purchases of chicken products for distribution to the Child Nutrition Program and other food assistance initiatives during fiscal 2021.

 

On August 13th the AMS acquired 7,650 tons of chilled large chicken in bulk at a price range of $0.98 to $1.06.  In addition, AMS purchased 432 tons of chilled bulk chicken legs at $0.49 to $0.53 cents per lb.

 

On August 16th, the AMS purchased 214.5 tons of frozen chicken fillets at a price range of $3.42 to $3.77 per lb.  AMS purchased 273 tons of frozen chicken strips at a price range of $3.22 to $3.37. 

 

The purchase quantity of 8,569 tons will be delivered during the month of October 2021.


 

House to Consider Infrastructure and Budget Bills

08/22/2021

Following the passage of the Infrastructure Investment Jobs Act of 2021 by the Senate on August 10th, it is now up to the House to reconcile and finalize legislation.  According to House Majority Leader, Congressman Steny Hoyer (D-MD), the House returned on the evening of August 23rd to consider budget resolutions and will remain in session until conclusion of business.  It is understood that ten committees will have to consider individual bills required to adopt a budget. Congress must also resolve the question of raising the debt ceiling that expired on July 31st. The House has a goal of framing the Bills for both the infrastructure and social benefits  legislation for a final vote on September 27th.

 


 

OSHA Releases Updated COVID Guidelines

08/20/2021

In a Monday, August 16th release, OSHA issued updated guidelines to protect workers from COVID based on the recommendations of the Centers for Disease Control and Prevention.  OSHA suggests: -

 

  • Fully vaccinated workers in areas involving close contact with potentially infected coworkers or family members must wear masks for 14 days unless they have received a negative coronavirus test three to five days after a contact.
  • Fully vaccinated workers in areas with high community prevalence must wear masks to protect unvaccinated coworkers.
  • Specific recommendations are provided to protect unvaccinated workers in meat and poultry processing plants and other agricultural enterprises.
  • Recommendations were provided for K-12 schools and for transport

 

The release included the statement, “OSHA continues to emphasize that vaccination is the optimal step to protect workers and encourages employers to engage with workers and their representatives to implement multi-layered approaches to protect unvaccinated or otherwise at-risk workers from the Coronavirus”.  The latest release makes reference to guidance issued on July 27th corresponding to rules introduced by the USDA Food Safety and Inspection Service for their personnel and employees.

 

It is self-evident that neglecting to follow guidelines issued by a federal agency exposes employers to the possibility of citations in addition to increased liability in the event of civil litigation.


 

NIH Scientists Develop Rapid PCR Procedure

08/19/2021

Scientists at the National Institutes of Health, National Eye Institute, the Clinical Center and the National Institute of Dental and Craniofacial Research have jointly developed a modification of the PCR procedure to diagnose COVID.  The modification bypasses the required extraction of viral RNA, simplifying purification and reducing time and expense.  The procedure allows direct detection of virus by applying real time-quantitative polymerase chain reaction (RT-qPCR).

 

Dr. Robert B. Hufnagel, Principal Investigator, noted, "this novel methodology has clear benefits in increasing the sensitivity, cost and time savings for testing".  He added, "the method stabilizes the RNA at room temperature for easier transport, storage and handling in clinical settings".  The preparation procedure is suitable for either nasopharyngeal or saliva samples and also inactivates the virus creating safer conditions for lab personnel.

 

It is anticipated that the procedures will be licensed to a pharmaceutical company for commercial application.


 

Durban, RSA Port Impacted by Second Cyberattack

08/19/2021

Transnet, responsible for operation of rail and ports in the Republic of South Africa has announced that a second cyberattack has occurred following a previous intrusion on July 22nd. Ship movements, clearing and tracking of containers will have to be effected manually until computer service can be restored.  Ports at Durban, Cape Town, and Ngqura are involved.  Durban harbor handles 60 percent of container trade and is the largest port in Sub-Saharan Africa.

 

The delays encountered as a result of the cyberattack will impact shipments of chicken and turkey to the Republic of South Africa.


Durban RSA Container Terminal

 

Legislators Raising Ethics Issues Regarding JBS

08/19/2021

Senators Robert Menendez (D-NJ) and Marco Rubio (R-FL) have addressed a letter to Secretary of the Treasury, Dr. Janet Yellen, requesting a review of acquisitions of U.S. companies by JBS S.A.  At issue are court disclosures that major shareholders Joesley and Wesley Batista, executives of J&F Holdings, the parent company of JBS S.A., were involved in national and foreign bribery.  JBS S.A. paid a penalty of $280 million to the U.S. Department of Justice to settle foreign bribery charges. The Batista Brothers were recently released from jail in Brazil.  It is a matter of record that the Batista brothers distributed more than $150 million to cabinet members, politicians, executives in the Brazil Development Bank, the Brazil Ministry of Agriculture, and many government agencies to obtain sweetheart loans used to purchase U.S. companies in addition to other concessions.

 

The letter to the Department of the Treasury is a repeat of a previous request in 2019 alleging JBS of “illicit financial activities”. Senators Menendez and Rubio have also requested the Committee on Foreign Investment in the United States to scruitinize JBS acquisitions in the U.S.  The legislators consider that there may be security concerns over concentration of ownership of U.S. food production by a company based in Brazil.


Wesley (left) and Joesely Batista

 

In a related matter, Senator Chuck Grassley (R-IA) has expressed concern over the intention of JBS to purchase the 20 percent of the shareholding in Pilgrim’s Pride Corporation that is not owned by the holding company in Brazil.  Grassley is an opponent of concentration of beef and pork production by four major companies including JBS subsidiaries JBS USA Pork and JBS USA Beef and Pilgrim’s Pride the Nation’s second-ranked broiler producer.


 

Walmart Releases Q2 Results

08/19/2021

On Tuesday, August 17th Walmart Inc. released results for the second quarter of fiscal 2022 ending July 31st. For the period, consolidated net income fell 34 percent from the second quarter of fiscal 2021 to $4,276 million.  Total revenues increased by 2.4 percent from the previous second quarter to $141,048 million.  EPS declined 33 percent to $1.52 from $2.27.  Cost of sales increased by 2.4 percent contributing to a gross margin of 25.4 percent.  The comparison between Q2 of the current fiscal year and the previous year was affected by a non-recurring gain of $3,222 million compared to an expense of $953 million in the most recently completed quarter. 


Doug McMillon CEO Walmart

In reviewing segments of the company, Walmart U.S. attained net sales of $98,200 million with an operating income of $6,100 million.  Comparative sales, excluding fuel, increased by 5.2 percent with a 6.1 percent gain in transactions offset by a lower average ticket of 0.8 percent.

 

For Walmart International, net sales attained $23,000 million with an operating income of $900 million.  Sam’s Club generated net sales of $18,600 million with an operating income of $700 million.  Comparative sales excluding fuel increased by 7.7 percent with transactions and average ticket increasing by 5.1 percent and 2.5 percent respectively.

 

Addressing Q3 FY2022 guidance, Walmart projected comparative sales growth to range from 6 to 7 percent and EPS from $1.30 to $1.40.

 

In commenting on results, Doug McMillon, President and CEO stated, "we had another strong quarter in every part of our business.  Our global E-commerce sales are on track to reach $75 billion by the end of the year strengthening our position as a leader in omnichannel".  He added, "we grew market share in the U.S. grocery, added thousands of new sellers to our marketplace and rapidly grew advertising business around the world". 

 

Walmart has a market capitalization of $417,801 million.  The company has traded over the past fifty-two weeks in a range of $126.28 to $153.66 with a 50-day moving average of $143.05.  WMT trades with a forward P/E of 25.8.  On a trailing 12-month basis, return on assets was 7.6 percent and 15.7 percent on equity.  The company generated an operating margin of 5.1 percent and a profit margin of 2.2 percent. 

 

Heirs of the founder, Sam Walton and other insiders own 49.3 percent of the equity with 31.4 held by institutions.


 

McDonald's Corp Joins Broiler Antitrust Lawsuit

08/17/2021

McDonald's Corporation has filed a lawsuit alleging antitrust violations by major broiler producers and AgriStats Inc.  The case was originally filed by a class of plaintiffs in September 2016 and is referred to as "Broiler Antitrust Litigation".

 

The plaintiffs allege collusion to maintain or raise prices for chicken products and contriving to adjust production levels to artificially sustain prices.

 

Some defendants have settled with plaintiffs and have agreed to cooperate in disclosing documents of the benefit to plaintiffs.


 

Tyson Foods Settles with CFTC Over Technical Violations

08/17/2021

The Wall Street Journal and the CFTC (Release 8413-21) reported that Tyson Foods has agreed to pay $1.5 million to the Commodity Futures Training Commission (CFTC) to settle charges relating to violations relating to soybean meal futures contracts. The Company has also accepted a cease and desist order concerning futures contracts. The period covered extended from January 2016 to January 2021.  During this time, Tyson apparently held more contracts then allowed, and did not comply with record keeping requirements and also filed incorrect 204 Forms reporting non-existent sales of soybean meal.


 

WH Group Posts 2021 Half-Year Results

08/16/2021

In a press release dated August 12th, the WH Group Limited, quoted on the Hong Kong Exchange, reported results for the six months ended June 30th. The company owns hog production and packing facilities in North America (Smithfield Foods) the E.U. and China.  For the period, revenue increased by 6.8 percent over the corresponding first half of 2020 to $13,331 million.  Net profit declined by 2.0 percent to $539 million.

 

The Packaged Meats Segment produced 1,614 million metric tons and accounted for 48.5 percent of group revenue of $6,464 million.  The Pork Segment processed 25.3 million head with sales of 2,138 million tons.  Recovery of the hog industry in China following the devastation caused by African swine fever is indicated by the fact that WH Group production during the first half of 2021 in China increased 54 percent to 5.0 million head.  Inflationary factors including the cost of feed decreased operating marked profit by 71 percent to $77 million.  The pork segment generated an operating loss of $17 million.

 

In a statement accompanying results, management attributed the decline in both operating margin and net profit to the additional costs and disruption associated with COVID-19 and inflationary pressures, mainly feed. 

 

Founder and major shareholder, Wan Long resigned as CEO and will assume the position of Executive Chairman of the Board.  This change was made to conform to Hong Kong regulations that require separation of the two positions.  Guo Lijun was appointed as CEO.  Previously he was the CFO and will be replaced in this position by Ms. Yan Kam Yin. Appointments were also made to the positions of Vice-president responsible for International Trade and Vice-president for Operations Management.


Wan Long, Chairman WH Group

 

In commenting on the appointments, Wan Long stated, "I believe that the management team will embrace the culture of the WH Group, promote digitization by adopting new technologies and take the company's management and governance to the next level". 


 

Shortage of Truck Drivers Continues

08/16/2021

The Bureau of Labor Statistics estimates that U.S. industry and agriculture collectively were short of 33,000 drivers at the end of the first quarter of 2020.  The transportation industry apparently lost six percent of 1.52 million drivers during COVID restrictions and disruptions, but since the decline in incidence of the infection, approximately 63,000 have returned to driving.  Many of the older operators took the opportunity to retire.  Many of the younger drivers found work in industry and construction and are able to spend more time at home with their families.

 

Trucking companies have successively increased wages by as much as 35 percent over twelve months to attract new entrants and to recover trained drivers.  An industry spokesman suggested that additional increases in wage rates and benefits may be required but this will inevitably result in higher shipping rates. 

 

It is estimated that spot rates for flatbed loads increased 46 percent from July 2020 through July 2021 and reefer rates increased by 36.1 percent reflecting driver and also fuel price increases of 37 percent over the twelve-month period.  Average national van rates averaged $2.76 per mile in July.  Reefer freight rates averaged $3.19 per mile and flatbed rates were $3.14.  It is estimated that the cost to ship a dozen eggs from Columbus, OH. to Los Angeles, CA. would be 2.1 cents based on a 20-ton load.


 

Argentine Government Ban Impacted Beef Exports

08/16/2021

Argentina, previously the world's fourth ranked exporter of beef posted a 29 percent year-on-year decline in export volume during June to 35,000 metric tons.  The decline was due to a ban on exports imposed by the Government in an attempt to increase domestic availability and lower the price of beef.

 

Faced with unintended consequences and strenuous opposition from farmers, packers and exporters, the Government of Argentina reversed their decision on June 22nd allowing limited exports from August onwards.

 

An unpopular socialist government that has mismanaged the economy resulting in inflation rate of 50 percent is facing the electorate on November 14th.  The ham-handed ban on beef exports intended to make beef, a proteins staple more freely available at a lower price resulted in an immediate shortage in the market and a rise in price. Predictably farmers held onto their livestock resulting in less supply than existed prior to the ban together with layoffs in packing plants.

 

It is said that under socialism the government confiscates your steer. Under communism the government also confiscates the animal but in addition sends you to a salt mine.


 

BRF of Brazil Posts Substantial Q2 Loss

08/16/2021

In a release dated August 12th, BRF S.A. (BRFS) posted results for the second quarter ending June 30th. BRF Foods is a multinational protein producer with extensive sales of chicken under the Sadia Perdigao and Perdix brands.  Total chicken production for the quarter amounted to 871,000 metric tons distributed between Brazil (19.5 percent of sales volume) and the International Segment (76.2 percent).

 

For the second quarter, net revenue attained $2,195 million with a net loss of $45.25 million, and a negative EPS of $0.25.  For the corresponding quarter in 2020, sales amounted to $1,718 million with a net profit of $57.95 million and an EPS of $0.07.

 

BRFS has a market capitalization of $3,650 million with total assets of $10,295 million and long- term debt and lease obligation of $3,599 million.

 

On a trailing 12-month basis, operating margin was 8.7 and profit margin 3.5 percent. Over the past four quarters the company generated a return on assets of 4.5 percent and 19.1 percent on equity.

 

In comments accompanying the release, management alluded to the impact of COVID on both production cost, productivity, and disruption of activities.

 


 

CHORE-TIME Appointment

08/16/2021

Mike Orgill, Engineering Manager for the CTB, Inc. Chore-Time business unit has named Grant Winter to the position of Product Design Engineer. In his role, Winter will enhance existing products and develop new components for poultry production to meet customer demands and add to the Chore-Time reputation for innovation in the industry.

 

Winter, a native of Monroe, MI., earned a baccalaureate degree in mechanical engineering from the Purdue Polytechnic Institute, Indianapolis, IN.


Grant Winter

 

Mexico Resumes Imports from Smithfield Foods, NC. Plant

08/16/2021

In mid-June, Mexico placed a ban on shipments from the Tar Heel, NC. plant owned by Smithfield Foods.  At issue was the quality of a consignment of pork skins that allegedly was due to problems created by a cold storage and forwarding facility in Laredo, TX.  Product produced after August 5th is eligible to be shipped to Mexico.

 


 

JBS S.A. Posts Record Q2

08/16/2021

On August 11th JBS S.A. (JBSAY. NY) posted results for the second quarter of fiscal 2020 ending June 30th. For the period, the multinational protein producer posted revenue of $16,156 million approximately 26 percent more than the corresponding second quarter of fiscal 2020 ($12,751 million).  For the second quarter JBS S.A. earned $866 million, 29 percent more than $638 million in the second quarter of fiscal 2020.  EPS increased by 37 percent from $0.24 in Q2 2020 to $0.33 in the most recent quarter. 

 

In reviewing the revenue and EBITDA of the operating segments, the following financial data was including in the release: -

  • Pilgrim's Pride Corporation: $3,638 million; EBITDA, $371.6 million
  • JBS USA Pork: $2,026 million; EBITDA, $159.6 million
  • JBS USA Beef: $6,744; EBITDA, $1,397 million
  • JBS Brazil: $2,403; EBITDA, $82.8 million
  • SEARA: $1,686 million; EBITDA, $152.0 million

 

JBS S.A. has a market capitalization of $14,969 million and carries $12,999 million in long-term debt and lease liabilities.  Total asset value is $32,506 million.

 

JBSAY has traded over the past 52-weeks in a range of $6.66 to $13.12 with a 50-day moving average of $11.86.  The share closed on Wednesday, August 11th at $12.64. Post release on Thursday, August 12th JBSAY closed at $11.90.  JBSAY trades with a forward P/E of 8.1 and has a beta of 0.3.  On a trailing twelve-month basis operating margin was 8.2 percent and profit margin was 4.4 percent.  The company generated a return of 9.2 percent on assets and 32.7 percent on equity.


 

Severe Floods in Henan Province of China Disrupt Livestock Production

08/16/2021

Since July 17th through the end of the month, Henan Province in China has been impacted by severe flooding following unprecedented rainfall.  The death toll is now 302 with numerous people unaccounted for.  Floods have resulted in relocation of 1.1 million residents of the province out of a total of 100 million.  Major cities including Zhengzhou, the capital, that received 24 inches of rain in three days in mid July suffered extensive damage, destroying as many as 400,000 vehicles with over $1 billion in insurance claims.  Other cities with populations of 5 million, encountering flooding and damage include Xinxiang and Kaifeng.

 

According to press reports, 15,000 farms were inundated with the loss of close to seven million chickens and a quarter million hogs.


 

JBS S.A. To Acquire Entire Shareholding of Pilgrim’s Pride Corp.

08/16/2021

JBS S.A., based in Brazil Has offered to buy the proportion of equity in Pilgrim’s Pride Corporation (PPC) that it does not own. The holding Company controls 80.5 percent of the equity with 17 percent held by institutions and the remainder by individual investors.  The offer of $26.50 per share in cash represents a premium of 17 percent over the closing price of $22.68 on Thursday, August 12th.

 

Pilgrim’s Pride has a market capitalization of $6.67 million with total assets of $7,755 million and carries $2,270 million in long term debt.

 

Pilgrim’s Pride Corp. has traded over a 52 week period in the range of $14.06 to $27.78 with a 50-week moving average of $21.97. On a 12-month trailing basis, operating margin was 4.9 percent but profit margin was a negative 0.25 percent.  The company has returned 5.4 percent on assets but with a negative return on equity of 1.3 percent.

 

The offer will be subject to the approval by a special committee of the board of Pilgrim’s Pride. Given the overwhelming vote of the parent company, the transaction is inevitable.

 

The move to acquire all the equity of Pilgrim’s Pride is part of a strategy by JBS S.A. to consolidate protein operations in the U.S. in advance of an IPO. This action was previously  proposed in 2019 but delayed by legal events in Brazil concerning the major shareholders of the holding company. Subsequently in 2020 the advent of COVID obviously sidetracked the IPO.


 

Sysco Posts Improved Q4

08/13/2021

In an August 10th release, Sysco Corporation (SYY) released results for Q4 and fiscal 2021 ending July 3rd.  For the most recently completed quarter, net profit was $151.1 million on revenue of $16,137 million with an EPS of $0.29.  For the corresponding quarter of fiscal 2020 ending June 27th, Sysco lost $618.4 million on sales of $8,867 million with a negative EPS of $1.22.

 

For fiscal 2021, Sysco posted a net profit of $524.2 million on revenue of $51,297 million with an EPS of $1.02 for fiscal 2020, net earnings were $215.48 million on revenue of $52,893 million with an EPS of $0.42.  As with all food service companies, Sysco was severely impacted by COVID for four consecutive quarters commencing Q2 of 2020.

 

In commenting on Q4 performance, Kevin Hourican, CEO stated, "Sysco's fourth quarter result was strong, reflecting market share gains and industry demand that continues to rebound earlier and stronger than expected".  He added, "while labor and product availability cost are pressuring our industry, we planned ahead to be well-positioned and managed through the demand increase resulting from these transitory pressures".


 

Recall of 30 Tons of Raw Breaded Chicken Products

08/12/2021

Serenade Foods located in Milford, IN. is recalling approximately thirty tons of frozen, raw, breaded stuffed chicken products due to potential contamination with Salmonella Enteritidis.  The USDA-Food Safety and Inspection Service issued a health alert on June 2nd followed by the recall on Tuesday, August 10th.  Implicated product was produced between February 24th and February 25th 2021, by establishment P-2375. 

 

The recall arises from field investigations carried out by the Centers for Disease Control and Prevention.  Outbreaks of SE infection involved over 30 cases in eight states with dates of onset ranging from late February through late June.  Investigators confirmed the presence of a specific strain of SE in both intact packages of raw frozen breaded chicken and a patient, presumably applying whole genome sequencing.

 

This outbreak is yet another example of consumers inadequately cooking raw breaded chicken products that might be contaminated with pathogens including Salmonella, Campylobacter or E. coli.  Despite clear directions on labels warning against microwave heating and specifying cooking in ovens so that the internal temperature of 165F is attained, inexperienced cooks are creating a risk of foodborne infection. The question arises as to why any raw breaded product should be marketed irrespective of label directions and cautions.


 

Export Restraints Result in Congressional Action

08/11/2021

Representatives John Garamendi (D-CA) and Dusty Johnson (R-SD) have introduced the Ocean Shipping Reform Act of 2021.

 

Exporters of agricultural products have experienced significant losses due to a shortage or non-availability of shipping containers in addition to demurrage and other fees.  In many cases shippers' intent on expediting turnaround in congested U.S. West Coast ports are returning empty containers to Asia to re-ship goods eastbound to meet demand.

 

The Act will place a greater pressure on ocean carriers to practice more reasonable policies to export U.S. agricultural products including meat, fruit and other perishables for markets in Asia.  The bill is strongly supported by a wide range of agricultural associations including the National Pork Producers Council, the North American Meat Institute and others.

 

Predictably the ocean freight companies have commenced an intense lobbying campaign through their organization, the World Shipping Council that is actively questioning the contentions and data that led to the drafting of the Ocean Shipping Reform Act of 2021.

 

The cost of ocean freight may be tracked using the Baltic Dry Index.  In May 2020, the index reached a low of 500 rising sharply to 1,800 in June of that year with a steady rise to the current level of 3,292 at the end of July 2021, representing the highest level since September 2017.  The current cost of shipping a 40-foot container from a port in China to the U.S. West Coast now exceeds $20,000. This compares to $11,000 at the end of July 2020 and is a fivefold increase from August 2020.  COVID-related delays of 7 to 8 days in ports are cited as a reason for the surge in container freight rates.

 

In past years, ocean freight companies held back on ordering new vessels.  The current surge in demand and the need to use vessels that are more environmentally acceptable has simulated orders for an additional 20 percent capacity. New vessels and containers will only be available at the end of 2023.


 

Canada Achieves Success in Reducing Antimicrobial Resistance

08/11/2021

A recent article in Emerging Infectious Diseases confirmed a decrease in microbial resistance among bacterial pathogens derived from broiler chickens over a range of 6 to to 38 percent as a result of restrictions on administration of antibiotics to flocks.

 

The Canadian Integrated Program for Antimicrobial Resistance Surveillance detected increasing resistance to ceftiofur, a third-generation cephalosporin in 2005.  Concurrently Salmonella Heidelberg resistant to the drug was isolated from both retail chickens and humans.  Accordingly, ceftiofur was eliminated for routine administration in ovo to broiler chicks in the Province.  Within a year there was a reduction in the prevalence of ceftiofur-resistant Salmonella  Heidelberg.

 

A strategy to reduce antimicrobial use was adopted in 2014 by the Canadian broiler industry.  Third generation cephalosporins and fluoroquinolones were eliminated for preventive administration in 2014.  By 2018 the program was extended to include a number of antibiotic classes used in human therapy including lincosamides, macrolides, and aminoglycosides.  The third phase, yet to be implemented, will be the elimination of bacitracins and tetracyclines, originally intended for the end of 2020.

 

Huber, L et al Reduction in antibiotic use and resistance to Salmonella, Campylobacter and Escherichia coli in broiler chickens, Canada 2013-2019. Emerging Infectious Diseases. 27:9.September (2021) early release.

 


 

Iowa State University Receives $500,000 USDA Research Grant

08/11/2021

The National Institute of Food and Agriculture has awarded Iowa State University $500,000 to investigate the intestinal microbiome, and the immune system of broiler chickens with specific reference to coccidiosis and necrotic enteritis.  The project will be led by Dr. Elizabeth Bobeck and Dr. Stephan Schmitz-Esser of the Department of Animal Science.

According to the USDA release, studies will focus on anti-IL-10 in relation to intestinal immune mechanisms with specific reference to a feed additive that apparently suppresses this interleukin.


Professor Elizabeth Bobeck

 

Poultry Industry Supports Safe+Sound Week

08/11/2021

August 9th through 15th is designated as Safe+Sound Week, a collaborative initiative between the U.S. Occupational Safety and Health Administration (OSHA) with USPOULTRY, the National Chicken Council (NCC), and the National Turkey Federation (NTF).  The purpose of the endeavor is to raise awareness of safety and health programs in the workplace.  During the week, poultry organizations will stress commitment to workplace safety and health that is even more important following the emergence of COVID. 

 

The chicken industry has been preemptive in applying preventive measures from a health screening perspective and was early to adopt plant-wide voluntary vaccination against COVID.

 

In a joint statement, John Starkey of USPOULTRY, Mike Brown of the NCC and Joel Brandenberger, of the NTF stated, "our organizations are pleased to continue to serve as Safe+ Sound Week partners and to collaborate with OSHA and other sponsors on programs and initiatives to help preserve the safety of the U.S. poultry workforce".


 

USDA Promotes Transparency in the Livestock Market through Reporting

08/10/2021

Effective August 9th, following Executive Order 14017 on supply chains, the USDA Market News initiated the issue of two new reports:-

 

  • The National Daily Direct Formula Base Cattle report will provide data on negotiated trade and base prices in addition to premiums and discounts.  The Daily Formula Base Price report will be released each morning and afternoon.  Weekly and monthly base reports will be both national and regional and will include forward contract base information.

 

  • The National Weekly Cattle Net Price Distribution report will document trade including weekly weighted average price for each purchase type including negotiated, formula and forward contract.

 

Tom Vilsack secretary of the USDA stated, “During the past five years stresses and disruptions caused by concentration in livestock markets have hurt producers, workers and consumers and highlighted vulnerabilities in America’s food system supply chain.”  He added, “Current negotiated cattle trade is approximately 13 percent less than it was in 2005 while formula transactions have increased at the same rate.”

 

The USDA intend introducing producer-focused outreach to help understand how data can lead to improved marketing decisions at the farm and feed-lot level.

 

The Supply Chain Disruptions Task Force introduced by the Administration includes Secretary Vilsack.  The Task Force will evaluate and diagnose problems and develop and implement solutions to alleviate bottlenecks and enhance the economy stressed by COVID restrictions.


 

House Members Urge USDA to Support Small Meat and Poultry Processors

08/10/2021

Thirty members of the House of Representatives have addressed a letter to USDA Secretary Tom Vilsack promoting financial and logistic support for small and medium-sized red meat and poultry processors.  In their letter, the bipartisan group commended the Administration for the $500 million intended for packers and processors as part of the American Rescue Plan.

 

The letter encouraged USDA “to make investments that will provide leverage for producers and at all levels of the supply chain including industries that are less vertically integrated such as the cattle industry and vertically integrated production of poultry and pork.”

 

The House members requested the USDA ensure that small and regional processors have access to grant funds to allow expansion and also to support small processors with training grants to improve local and regional markets and improve farm income.

 

The initiative by Members of the House has the support of the American Farm Bureau Federation, the National Sustainable Agriculture Coalition and the National Cattleman’s Beef Association.


 

Seaboard Corp Posts Q2 Results Incorporating Butterball LLC

08/10/2021

On August 3rd Seaboard Corporation (SEB) published results for the second quarter ending July 3rd. For the period, the company earned $176 million on revenue of $2,430 million with an EPS of $151.56.  Corresponding values for Q2 of fiscal 2020 ending June 27th, included a net loss of $(27) million on revenue of $1,589 million with an negative EPS of $(23.51). For the most recent quarter, pork represented a net contribution of $129 million out of total segment earnings of $171 million.

 

Seaboard Corporation holds 50 percent of the equity of Butterball LLC.  For the quarter, based on the Seaboard Corporation SEC Q-10 posting, Butterball attained a net loss of $7 million for Q2 FY 2021 reflected as a $4 million loss on the income statement of Seaboard Corporation.  The loss for Q1 is estimated at $20 million.  Butterball revenue amounted to $371 million with total assets valued at $1.2 billion. The Seaboard SEC 10.Q report ascribes the loss in the Butterball subsidiary as due to higher feed and plant production costs offset by an increase in sales volume and higher unit revenue. Seaboard was unable to provide guidance for Butterball based on an inability of the management to predict market price for turkey products, the cost of feed or ongoing impacts of COVID.

 

Seaboard Corporation has a market capitalization of $4,519 million and 52-week share price has ranged from $2,624.50 to $4,390.50 with a 50-day moving average of $3,917.87.  On a trailing 12-month basis, operating margin was 5.1 percent and profit margin 9.5 percent.  The company generated a return on assets of 4.0 percent and 20.3 percent on equity. Seventy eight percent of the Company equity is held by insiders.


 

Comparison of Commodity Prices in China with CME Quotations.

08/10/2021

The relative prices expressed in US$ per short ton for corn, soybeans and soybean meal, September 2021 delivery, were downloaded from the Dalian Commodity Exchange website reflecting major contracts at close of trading on August 10th. These values were compared with the spot price at close of trading on the CME as indicated

 

Commodity

Dalian CE

52-week range

CME 08/10

Corn

XV $360*

$311-$388

$200

Soybeans #2

XS $620*

$471-$657

$482

Soybean Meal

XU $494*

$406-$503

$361

* short ton with exchange rate CNY 6.50=US$1

 

It is evident that due to the higher price of feed, producers of hogs, eggs and conventional broilers in China are at a disadvantage in production cost compared to their counterparts in the U.S. and Brazil.

 

Large eggs (57g) traded on the Dalian exchange at 78 cents per dozen.

(12-month range 49 to 62 cents per dozen)


 

Sanderson Farms Agrees to Buyout

08/10/2021

According to press reports, Sanderson Farms (SAFM) has agreed to be acquired by a consortium comprising Cargill Inc. and Continental Grain for a cash consideration of $4.53 billion or $203 per share, representing a 30 percent premium over the closing price on Friday, August 6th.

 

Sanderson Farms processes approximately 14 million birds per week in 13 plants and facilities.  The deal will allow a merger with Wayne Farms currently ranked 6th in the Nation. Their approximately 8.0 million birds per week will contribute to a total of 22 million birds a week, moving the combined company closer to 2nd ranked Pilgrim's Pride in the U.S.

 

The transaction is expected to close by the end of 2021.  Clint Rivers, currently CEO of Wayne Farms LLC has been designated to lead the combined enterprise that will operate as a private Company. His challenges will be to integrate companies with widely different internal culture and to generate synergy from improved sourcing of ingredients and a rational marketing program. Given that Continental Grain has attempted two previous IPOs for Wayne Farms the transaction will have settled the future of their chicken subsidiary. Cargill operates broiler operations in the U.K., Thailand and Central America in addition to beef and other agribusiness operations. The Company has a deep bench of managers and experience that will be beneficial to the combined enterprise. The Cargill philosophy and business practices will positively influence the culture, image and long-range strategy of what is generally regarded as an efficient enterprise but dominated by the CEO who is the principal individual shareholder. Approximately ten percent of the equity of SAFM is currently held by insiders and with 80 percent by institutions.

 

The Wall Street Journal reported that Sanderson Farms was considering a strategic alternative on June 22nd when it hired Centerview Partners for guidance. Sanderson Farms has previously rejected unsolicited takeover offers from investment groups based on the Board considering that offers undervalued the company.

 

Effective 11H00 on Monday, August 9th following announcement of the acceptance, Sanderson Farms opened at $195.50 having closed on Friday, August 6th at $182.23.  Market capitalization was $4,370 million on August 9th with inconsequential long-term debt of $75 million and assets of $2,003 million as of April 30th.  SAFM has traded over 52-weeks in a range of $112.30 to $196.33 with a 50-day moving average of $184.13 reflecting favorable metrics in the broiler industry.  On a trailing 12-month basis, revenue attained $3,940 million.  The company posted an operating margin for the past twelve months of 6.9 percent and a profit margin of 4.2 percent.  The return on assets was 8.5 percent and on equity 11.6 percent. For the first half of Fiscal 2021 ending April 30th SAFM recorded a net profit of $106 million on revenue of $2,043 million.

 

(Financial results for the most recent quarter can be accessed by entering ‘Sanderson’ in the SEARCH block).


 

STOP PRESS

08/10/2021

Sanderson Farms Acquired by Consortium of Cargill Inc. and Continental Grain

 

Sanderson Farms ranked 3rd as a broiler producer will be acquired by a consortium of Cargill Inc. and Continental Grain for $4.53 billion in cash equivalent to $203 per share.  It is intended to combine the Sanderson Farms operations with Wayne Farms. This entity will have a projected throughput in the vicinity of 23 million chickens per week.  Given that the combined companies will represent only 16 percent of U.S. production, antitrust opposition is not anticipated. On completion of the transaction, Sanderson Farms will revert to the status of a private company with Clint Rivers as the CEO.  (see article below)

 


 

Tyson Foods Reports on Q3 of FY 2021

08/09/2021

In a press release dated August 9th Tyson Foods Inc. (TSN) announced results for the Third Quarter ending July 30th 2021.

 

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)

 

 

 

 

Quarter Ending

July 3rd 2021

June 27th 2020

Difference (%)

Sales:

$12,478,000

$10,022,000

+24.5

Gross profit:

$1,620,000

$1,313,000

+23.4

Operating income:

$1,062,000

$773,000

+37.3

Pre-tax Income

Net Income

$966,000

$749,000

$665,000

$526,000

+45.3

+44.3

Diluted earnings per share:

$2.05

$1.44

+42.4

Gross Margin (%)

13.0

13.1

-0.8

Operating Margin (%)

8.5

7.7

+10.3

Profit Margin (%)

6.0

5.2

+15.4

Long-term Debt:

$10,478,000

$12,519,000

-16.3

12 Months Trailing:

Return on Assets (%)

7.2

Return on Equity (%)

13.9

Operating Margin (%)

9.1

Profit Margin (%)

4.9

Total Assets

$35,663,000

$34,456,000

+3.5

Market Capitalization

$27,961,000

 

52-Week Range in Share Price: $55.82 to $77.06 50-day Moving average $72.31

Market Close Friday Aug. 6th $71.10. Monday 9th post-release, noon $76.65 (+7.8%)

Forward P/E 10.9 Beta 0.8

 

In commenting on results that beat consensus on both the top and bottom (adjusted) lines president and CEO Donnie King succinctly stated: “We delivered a strong performance in a strong protein market,” He added “With trusted brands that met strong consumer demand, we have delivered twelve consecutive quarters of share gains in core business lines at retail. Our foodservice volume improved as the restaurant industry began to reopen and recover. Our beef business increased production to meet strong U.S. and international demand for higher-quality products. And we continued to build financial strength, reducing our debt and investing in future growth by laying out plans to expand our business, both to address capacity constraints and meet growing demand.”


Donnie King CEO Tyson Foods

 

The Chicken Segment attained sales of $3,476 million ($3,112 million in Q3 FY 2020) representing 27.9 percent of Company revenue. Operating income was $(279 million) adjusted to $27.0 million after non-recurring legal settlements. In Q3 of 2020 operating income was $120 million).

 

In supplementing data on performance of the Chicken Segment during the most recent quarter, the Company statement noted: “Sales volume increased during the third quarter of fiscal 2021 primarily due to increased demand in the foodservice channel and reduced production inefficiencies associated with COVID-19 compared to the third quarter of fiscal 2020, a decline in hatch rate and a challenging labor environment, partially offset by increased demand. Average sales price increased in the third quarter of fiscal 2021 due to favorable sales mix and inflationary market conditions. Operating loss increased during the third quarter of fiscal 2021 primarily due to a $306 million loss from the recognition of legal contingency accruals and $270 million of higher feed ingredient costs, partially offset by $125 million of incremental net derivative gains as compared to the third quarter of fiscal 2020.


 

Beyond Meat Reports on Q2 FY 2021

08/08/2021

In a press release dated August 5th. Beyond Meat Inc. (BYND) announced results for the second quarter ending July 3rd 2021.

 

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)

 

 

 

 

Second Quarter Ending

July 3rd 2021

June 27th 2020

Difference (%)

Sales:

$149,426

$113,338

+31.8

Gross profit:

$47,352

$33,651

+40.7

Operating income:

$(18,601)

$(8,166)

-127.8

Pre-tax Income

Net Income

$(19,443)

$(19,652)

$(10,189)

$10,205)

-90.8

-92.6

Diluted earnings per share:

$(0.31)

$(0.16)

-93.8

Gross Margin (%)

31.7

29.7

+6.7

Operating Margin (%)1

(12.5)

(7.2)

-73.6

Profit Margin (%)

(13.2)

(9.0)

-46.0

Long-term Debt:

$1,139,540

$11,942

12 Months Trailing:

Return on Assets (%)

(4.5)

Return on Equity (%)

(28.3)

Operating Margin (%)

(15.8)

Profit Margin (%)

(20.1)

Total Assets

$1,466,520

$468,006

+213.4

Market Capitalization

$7,812,000

Note 1. R&D increased from 6.0 million Q2 2020 to $13.8 million Q2 2021.

52-Week Range in Share Price: $99.86 to $221.00 50-day Moving average $135.58

Market Close Thursday Aug. 5th pre-release $121.86. Close Friday August 6th $127.87

Forward P/E 666 Beta 1.6

Of U.S. revenue (67 percent of total), 76 percent from Retail; 24 percent Food Service

Shareholding (percent): 11, insiders; 53, institutions; 36, retail. 19, short of float.


Founder and CEO. Ethan Brown

In reviewing Q2 results Ethan Brown CEO of Beyond Meat stated, "We are pleased to report record net revenues and the return to growth in foodservice as our customers welcomed consumers back to their venues. We are also proud of our retail performance, where we drove year-over-year growth despite cycling last year's demand surge driven by consumer panic-buying."


Competition in the "faux meat" case

Brown added, "We continue to make substantial investments in our long-term growth here in the U.S. and abroad, maintaining our focus on building innovation, production, and team capabilities for the future. We are thrilled with the response to our new Beyond Chicken product and the continued accolades we are receiving for our latest iteration of the Beyond Burger. I'm optimistic about what lies ahead. That said, given the recent uptick of COVID-19 cases, which could disrupt demand patterns, we believe caution for the balance of the year generally remains appropriate."

 

Recently Ethan Brown suggested a tax on real meat. This may be construed as a self-serving aspiration rather than a dispassionate, altruistic and eco-friendly sentiment.


 

Church’s Chicken Acquired by Investment Group

08/06/2021

In an August 3rd release, High Bluff Capital Partners has announced acquisition of Church’s Chicken from FFL Partners.  Church’s operates 1,500 locations in 26 nations with system-wide sales exceeding $1.2 billion.

 

In commenting on the transaction, Anand Gowda founder of High Bluff Capital Partners stated, “Our investment strategy continues to center and identify brands with long-term connections with consumers that can be energized and propelled to greater success through targeted industry expertise, operations efficiencies, innovation and creative brand management.”

 

Joe Christina, CEO of Church’s stated, “The past few years have been all about growth for the brand and its franchisees.”  He added, “Our focus will be to deliver against our strategic plan with new locations in the U.S. and internationally and to continue profitable sales growth.”


 

AquaBounty Technologies Announces Ohio Project

08/06/2021

In a July 29th press release AquaBounty Technologies (AQB) announced that it intends to establish a land-based aquaculture project in Pioneer, OH.  The facility in Williams County will located above I-80 in the northwest corner of Ohio close to the Michigan and Indiana borders. Buildings and installations will cost $200 million and will extend over 500,000 square feet.

 

Projected annual output when completed in 2023 will be 10,000 metric tons of salmon.  This far exceeds the production of an existing facility in Albany, IN. erected as a semi-commercial pilot plant.

 

Sylvia Wulf, CEO of AquaBounty stated, “We are excited to announce Pioneer, OH. as the location of our next farm.”  She added, “She added the State of Ohio, Williams County, the Village of Pioneer and JobsOhio and the Regional Growth Partnership have all been a pleasure to work with and highly supportive of the economic benefits we plan to bring to the community”.

 

 

AquaBounty Technologies has developed a genetically engineered salmon with growth characteristics that contribute to sustainability and financial return.  Location of production facilities in a landlocked area precludes the possibility of accidental release of GMO fish to the environment.  In any event, salmon produced by AquaBounty are all sterile females.  AquaBounty operates a patented Recirculating Aquaculture System that is designed to prevent disease, maintain containment and allow for antibiotic-free production.


 

Restaurant Brands International Inc Posts Second Quarter Results

08/06/2021

In a company release dated July 30th, Restaurant Brands International Inc (QSR) reported on second quarter results for the period ending June 30th 2021. For the period, the company posted net earnings of $390 million on revenue of $1,438 million with an EPS of $0.84.  For the corresponding second quarter of 2020 net earnings amounted to $163 million on revenue of $1,048 million with an EPS of $0.36.

 

In reviewing individual segments,

  • Tim Horton’s attained revenue of $831 million with an EBITDA of $253 million.  Same-store sales increased by 27.6 percent among 5,065 locations. 
  • Burger King revenue was $459 million with an EBITDA of $266 million with a same-store sales increase of 18.2 percent among 18,776 locations. 
  • Popeye’s Louisiana Kitchen posted sales of $148 million with an EBITDA of $58 million.  Same-store sales declined by 0.3 percent, compared to a second quarter of fiscal 2020 in 3,562 stores.

 

The company posted an increase in digital sales of 60 percent year over year.

 

In commenting on results, Jose E. Cil, CEO stated, “We are encouraged by the momentum across our business including sales increases driven by quality menu items, rapid adoption of a digital channel by our guests and acceleration in new restaurant openings around the world by our franchisees who believe strongly in our brands and business model.”

 

Restaurant Brands International has a market capitalization of $20.20 billion and carries long-term debt and other obligations of $15.56 billion.  QSR has traded over a 52-week range from $51.12 to $71.12 with a 50-day moving average of $65.08.  On a trailing 12-month basis, operating margin was 34.0 percent and profit margin, 12.5 percent.  The company has returned 5.1 percent on assets and 25.3 percent on equity.


 

Hotraco Agri Launching Fortica® 2.0 Controller

08/06/2021

Hotraco Agri released the Fortica® 2.0 controller on August 2nd. The system incorporates a new flock chart option for broilers. Managers can view a range of data in real time or generated each day including bird weight with standard deviation, feed intake and environmental parameters.  Data can be retrieved from five days before the start date of a flock cycle.

 

Temperature sensors that are integrated with the Fortica® 2.0 controller can auto-detect faulty units allowing specific defective sensors to be deactivated.

 

Room temperature can be controlled by zone allowing heating in specific areas of the house.  Up to five zones can be controlled and displayed, each with its own temperature sensor.  The Fortica® 2.0 integrates inputs and generates a graphic display of temperature for each zone.

Additional information can be obtained by clicking on to the Hotraco logo on the right side of the welcome page or accessing www.hotraco-agri.com

 


 

China Bans Imports from BRF and JBS Plants

08/06/2021

According to media reports, the General Administration of Customs (CGAC) of the Peoples Republic of China has banned imports from a BRF S.A. plant in Lucas do Rio Verde located in Mato Grosso State producing chicken. 

 

At this time no formal communication has been issued by the CGAC and there is no explanation or justification for the action.  A BRF release indicated that the Company would make use of representatives of Brazil to liaise with authorities in China concerning the ban. 

 

On July 7th Reuters reported that imports to China were suspended from pork plants owned by JBS S.A. and BRF S.A. located respectively in Tres Bassos and Lajeado in the State of Rio Grande do Sul.  As with the most recent August ban, no reason was provided although it is presumed to relate to prevailing high incidence rates for COVID in the designated plants and communities.

 

China is operating under the presumption that COVID may be transmitted through food although scientific opinion discredits this possible route.  Currently China is responding vigorously to emerging cases of the Delta variant of COVID that they maintain was introduced into the nation by a traveler from the Russian Federation.  Lockdowns have now been implemented in major centers including Beijing and all residents of a number of metropolitan areas including Wuhan are to be tested for SARS-COV-2 virus.

 


 

Maple Leaf Foods Reports on Q2

08/05/2021

In a press release dated August 4th Maple Leaf Foods (MFI.TO) announced results for the 2nd Quarter of FY 2021 ending July 30th.

 

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS. Conversion Can$1 = US$0.80)

 

2nd Quarter Ending July 30th

2021

2020

Difference (%)

Sales:

$927,089

$875,659

+5.8

Gross profit:

$108,525

$133,851

-18.9

Operating income:

$15,940

$33,804

-52.9

Pre-tax Income

Net Income

$11,371

$7,019

$29,750

$20,527

-61.8

-65.8

Diluted earnings per share:

$0.056

$0.168

-66.7

Gross Margin (%)

11.7

15.3

-23.5

Operating Margin (%)

1.7

3.9

-56.4

Profit Margin (%)

0.8

2.3

-65.2

Long-term Debt:

$1,025,875

$759,700

+35.0

12 Months Trailing:

Return on Assets (%)

5.1

Return on Equity (%)

8.3

Operating Margin (%)

7.3

Profit Margin (%)

3.8

Total Assets

$3,363,122

$2,948,390

+14.1

Market Capitalization

$2,586,000

 

Meat Protein segment sales Q2 2021 $894.0 million. EBITDA $103.8

Plant Protein segment sales Q2 2021 $38.5 million. EBITDA $(20.7)

52-Week Range in Share Price: $18.56 to $ 24.53 50-day Moving average $20.19

Market Close: Wed. 4th August $19.48. Close post release Thu. 5th August $20.84

Forward P/E 22.1 Beta 0.3

 

In commenting on Q2 results Michael H. McCain, president and CEO stated "As we anticipated, our second quarter faced material market headwinds and a difficult year-over-year comparable quarter due to COVID-19 effects, and yet our business delivered excellent results" He added "In Meat Protein, performance was impressive with sales growth of 7.4% and Adjusted EBITDA margins of 11.6%. We expect our margins to fully recover beginning in the third quarter.


Michael McCain CEO

 

With respect to the Plant Protein segment McCain opined “We continue to invest for long-term growth, we expected our sales in the first and second quarters to come in soft. At the same time, we expect to return to our strategic growth targets or above in the second half of this year. Our brand momentum, innovation pipeline and customer activity all support this.


 

Schwarz Group of Germany Posts Sales Data

08/05/2021

The privately held Schwarz Group that owns and operates Lidl and Kaufland stores posted revenue data for the fiscal year ending February 28th.  Sales increased 9.6 percent from the previous fiscal year to $150 million.  Lidl represented 76.9 percent of revenue and increased same store sales by 9.9 percent from the previous year.  Retail chain Kaufland contributed 18.8 percent of revenue with a 7.5 percent increase over the previous fiscal year.

 

The four largest food retailers in Germany comprising Schwarz Group, Edeka, Rewe and Aldi comprise 75 percent of sales in 2020 estimated at $268 billion.


Dieter Schwarz Owner of Group holding LIDL and Kaufland

 

Mountaire Farms Awards Student Scholarships

08/05/2021

Mountaire Farms has awarded 27 scholarships each valued at $2,500 for the 2021-2022 college year.  Children and grandchildren of employees, growers, and grain suppliers are eligible. This year 15 scholarships were awarded in Delaware for community colleges and universities in and out of state.  Twelve scholarships were awarded in North Carolina. 

 

In commenting on the program, Phillip Plylar, president of Mountaire Farms, stated “We are proud of this program because it embraces everything that we care about-our employees, our growers, our grain producers, and their families.”  He added, “These students have all demonstrated a commitment to their education and to their communities that we believe should be celebrated.”


 

Wingstop Posts Higher Revenue but Static Earnings in Q2

08/04/2021

In a July 28th release, Wingstop Inc (WING) reported on the second quarter of fiscal 2021 ending June 26th.  For the period net earnings were $74 million on revenue of $11,312 million with an EPS of $0.38.  For the comparable second quarter of fiscal 2020 ending June 27th, net revenue was $11.3 million on revenue of $74 million with an EPS of $0.38.  For the comparable second quarter of fiscal 2020 net income was $11.5 million on revenue of $66.1 million with an EPS of $0.39.  The company reported a two percent same-store sales increase for the quarter compared with Q2 of 2020 that was impacted by COVID.  During the quarter, digital orders represented 64.5 percent of revenue.  WING operates 1,624 locations with 45 new stores in Q2.

 

WING has a market capitalization of $5,100 million with total assets of $234.26 million, of which 41.5 percent are intangibles including goodwill, trademarks and “franchisee relations”.  The company carries $493.3 million in long-term debt.

 

WING has traded over the past 52 weeks in a range of $112.47 to $176.69 with a 50-day moving average of $157.29.  The 12-month trailing operating margin was 23.8 percent and profit margin 10.4 percent.  The return on assets was 18.6 percent.

 

In commenting on Q2, Charlie Morrison, chairman and CEO stated, “Despite the challenging commodity environment we had another record quarter of development and have now opened more than 200 restaurants during the last 12 months, highlighting our brand partners’ continued excitement to grow with our brand.”

 

 


 

YUM! Brands Reports on Q2

08/04/2021

On July 29, YUM! Brands (YUM) reported on Q2 ending June 30th. For the period, the company posted net earnings of $391 million on revenue of $1,602 million with an EPS of $1.29.  Comparative values for Q2 of fiscal 2020 were net earnings $206 million on revenue of $1,198 million with an EPS of $0.67.

 

The KFC division comprising 25,720 restaurants posted a 30 percent increase in same-store sales, system-wide sales of $7,638 million and company revenue and franchise fees combined of $682 million.  The KFC division generated a profit of $318 million achieving an operating margin of 46.5 percent.


David Gibbs CEO

 

The Pizza Hut division comprising 17,809 restaurants achieved a 10 percent growth in same-store sales.  System-wide sales amounted to $3,143 million with company revenue and franchise fees of $249 million.  The Pizza Hut division generated $103 million in profit and increased operating margin to 41.3 percent.

 

The Taco Bell division comprising 7,567 restaurants posted a 21 percent increase in same-store sales with system wide revenue of $3,189 million.  Revenue from company stores, franchise fees and other incoming including advertising amounted to $532 million with a profit of $198 million with an operating margin of 37.2 percent.

 

In commenting on results David Gibbs, CEO stated, “Our strong second-quarter results led by record unit development and 23 percent same-store sales growth are a testament to our iconic brands, world-class talent and best-in-class franchisees.”  He added, “This sustained momentum was underpinned by our investments in digital and off-premise sales and the agility of our brands to meet the needs of customers in an ever-changing environment.”

 

YUM! Brands has a market capitalization of $39.14 billion.  The share has traded over 52 weeks in a range of $88.08 to $132.02 with a 50-day moving average of $118.35.  On a trailing 12-month basis, operating margin was 34.4 percent, profit margin 21.2 percent with a return on assets of 22.4 percent.  YUM! is held primarily by institutions that collectively hold 80.1 percent of equity.


 

2022 IPPE to Exceed 507,000 Square Feet

08/04/2021

According to an August 3rd release by USPOULTRY, the 2022 International Product and Processing Expo (IPPE) has now exceded 507,000 square feet of exhibit space and has enrolled more than 1,000 exhibitors.

The event is sponsored jointly by the U.S. Poultry and Egg Association, the American Feed Industry Association (AFIA) and the North American Meat Institute (NAMI). 

The IPPE will be held Tuesday through Thursday January 25th-27th, 2022, at the Georgia World Congress Center.

 

Attendee registration will open on October 4th with information on <www.ippexpo.org>.

 

Show hours will comprise

  • Tuesday, January 25th 10h00 to 17h00
  • Wednesday, January 26th 09h00 to 17h00
  • Thursday, January 27th 09h00 to 15h00

 

The organizers of the IPPE will follow the COVID-prevention protocols issued by the Centers for Disease Control and Prevention then pertaining.

 


 

South Africa Calculating the Cost of Disturbances

08/04/2021

The Absa Purchasing Managers Index indicated that manufacturing activity in the Republic of South Africa shrank during July, at the fastest rate for the past 14 months despite the previous Coronavirus lockdowns.  The index fell to 43.5 points in July from 57.4 points in June.  The nation is still confronting COVID, but the index was impacted mainly closure of plants during looting and arson in urban areas of KwaZulu-Natal and Gauteng Provinces.

 

Civil disturbances closed all harbors and inter-provincial transport for two weeks. Durban, the main import harbor for U.S. poultry exports was seriously impacted.  The extent of disruption will in all probability be reflect in the level of July shipments of chicken to the RSA.


 

Perdue Farms Settles Class Action Lawsuit

08/04/2021

Perdue Farms has settled a class action lawsuit brought by contractors that claimed the Company conspired with other integrators to reduce grower compensation.  Perdue Farms has not acknowledged any guilt or antitrust violation but has settled in order to avoid distraction of management arising from litigation.

 

In a statement Perdue Farms noted "we value the excellent relationships built on trust we have with our farmers and remain committed to providing them fair competitive contracts that benefit them and thereby our flocks, company, customers and consumers".


 

Tyson Foods Settles with Growers

08/04/2021

Following the settlement between Perdue Farms and a class of contractors, Tyson Foods has agreed to pay $21 million to resolve complaints of unfair compensation.  Tyson Foods has not admitted guilt but has agreed to pay a negotiated amount of compensation to plaintiffs. The Company will cooperate in providing documentation to be used in litigation against other integrators.

 

Complaints regarding unfair practices by integrators have circulated for a few years but without substance.  The USDA will evaluate proposed action to be taken under Packers and Stockyard Act to ensure that contractors receive a fair treatment and with possible elimination of the tournament basis of remuneration.


 

Koch Foods Indicted on Allegations of Collusion

08/04/2021

A federal grand jury in Denver indicted Koch Foods for participating in an alleged nationwide conspiracy to rig bids and fix prices for poultry.  Koch Foods is the fifth largest broiler producer in the U.S. with an average weekly slaughter of approximately 15 million birds. In a statement the Company “steadfastly denied” engaging in any form of price fixing.

 

The Company will appear before a federal magistrate on August 11th to answer to the charge.  In October 2020 the Department of Justice indicted William Kantola a Senior Vice-president for participating in a wide ranging conspiracy involving other broiler integrators that apparently colluded to fix prices.

 

Tyson Foods and Pilgrim’s Pride have settled with the Department of Justice and with civil plaintiffs in litigation that led ultimately to the criminal charges.


 

Domestic Chicken Production and Trade in China

08/04/2021

USDA-ARS GAIN report CH2021-0087 released on July 27th projects production, supply and distribution of chicken meat in China for calendar 2022. Data for chicken meat combines yellow- feathered traditional birds and white-feathered broilers but excludes paws.

 

In 2022, China will produce 14.3 million metric tons of chicken meat approximately 2.1 percent higher than in the preceding year. Imports will amount to 930,000 metric tons an increase of 3.3 percent over 2021. China will export 440,000 metric tons representing a net import of 490,000 metric tons. The USDA-FAS estimates domestic consumption at 14.79 million metric tons corresponding to a per capita consumption of 23 pounds.

 

Due to COVID restrictions in 2021 large cities including Harbin, Yulin and Wuxi implemented bans on wet markets disfavoring purchase of traditional yellow-feathered birds. The cost of production of the domestic breeds is considerably higher than conventional broilers based on inferior growth rate and feed conversion efficiency. White feathered conventional broilers are favored by QSR's. Approximately 70 percent is sold as pre-cooked and seasoned with the remaining proportions split evenly between preserved products including sausages and fried or pre-cut salad presentations.

 

With the restoration of hog production in China following severe losses due to African swine fever, broiler meat has and will continue to decline in value based on greater availability and lower prices for pork.

 

Live bird prices have declined from $1.54 per pound during mid-February 2021 to $1.45 per pound in mid-June of that year. Currently small and medium sized producers faced with increasing feed and chick costs are operating below breakeven. Going forward, production will be derived more from integrated units with a number of complexes planned with capacities up to two million birds per week. In some cases, integration extends forward into retail and QSR's operation.

 

It is estimated that in 2021 imports of U.S. jumbo paws exceeded 250,000 metric tons, a 25 percent increase over 2020. The U.S. supplies almost 50 percent of the market for imported paws based on size, price, and consistent quality, outcompeting Brazil, Russia, and Argentina.


 

FSIS Employees to Wear Masks

08/04/2021

The USDA Food Safety and Inspection Service (FSIS) will now require all employees of the Agency whether in plants or regional offices to wear a face covering in accordance with recommendations issued by the Centers for Disease Control and Prevention.  This requirement applies to employees that have received a COVID vaccine in areas with high prevalence rates of COVID. 

 

Government has indicated that it will require all Federal employees to receive COVID vaccination allowing some religious or health exemptions.

 

FSIS employees who are not fully vaccinated must continue to wear a face shield and mask and practice social distancing in plants.


 

STOP PRESS

08/03/2021

Tyson to Mandate COVID Vaccination

 

Having vaccinated 56,000 employees in over 100 events and spent $700 million in 2021 to suppress infection, Tyson Foods has announced mandatory COVID vaccination for all employees and new hires to be implemented before November 1st. Religious and health exemptions will be allowed and recipients will receive a $200 bonus.

 

Donnie King, CEO of Tyson Foods thanked employees for accepting vaccination “to keep us all safe” Dr. Claudia Coplein, Chief Medical Officer regards vaccination as “the single most effective thing we can do to protect our team members their families and communities” in the face of increasing incidence rates, hospitalizations and deaths in states where the Company operates.


 

Concern Over Additives in Vegetable-Based Meat Alternatives

08/03/2021

Consumer advocacy group, the Center for Food Safety, is opposing FDA approval of the vegetable-derived heme pigment used to produce a meat-like appearance in Impossible Burger products.  Other organizations are questioning additives including propylene glycol, erythrosine (Red No. 3 dye).  These ingredients are classified by the FDA as “generally regarded as safe” although their presence in a product must be indicated on the label.  The European Food Safety Authority has banned a number of food additives used in the U.S. applying the “precautionary principle”.  This regulatory approach may prevent export of a number of U.S. plant-based meat substitutes.

 

It is axiomatic that the demographic favoring alternatives to ‘real meat” are health conscious and accordingly demand “clean labels” and freedom from processing. These requirements may limit future sales of currently formulated vegetable-based alternatives to meat.



 

Crop Progress

08/02/2021

Status of 2021 Corn and Soybean Crops

 

The USDA Crop Progress Report released on August 2nd documented corn and soybean crop conditions to August 1st compared to their 5-year averages. This past week 91 percent of corn was silking. For soybeans 86 percent of the crop was blooming and 58 percent was setting pods all ahead of the 5-year average.

 

U.S. surface moisture levels were generally lower during the past week over the corn-belt attaining an average of 23.7 percent of area classified in the two lowest categories of dryness. The severe drought in Western states and the Dakotas continues with extensive wildfires in the Northwest. Topsoil moisture in Iowa improved slightly this past week from 53 percent to 50 percent in the “Very Short” and “Short” categories. The topsoil moisture levels in significant corn/soy-producing states in the Midwest deteriorated slightly as noted by the increase for the two driest topsoil categories.

 

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 July 12th WASDE Report #614 and the Acreage Report retrievable under the STATS tab for projected 2021 acreage and yields. This data will be updated when WASDE #615 is released in mid-August with a firmer projection of yields and ending stocks.

 

  WEEK ENDING  

Crop

July 25th

August 1st

5-Year Average

Corn Planted (%)

Corn Emerged (%)

Corn Silking (%)

Corn Dough (%)

100

100

79

18

100

100

91

38

100

100

86

33

Soybeans Planted (%)

Soybeans Emerged (%)

Soybeans Blooming (%)

Soybeans setting pods

100

100

76

42

100

100

86

58

100

100

82

52

Crop Condition

V. Poor

 Poor

Fair

Good

Excellent

Corn 2021 (%)

Corn 2020 (%) 1

1. Late planting

3

2

8

5

27

21

47

55

15

17

Soybeans 2021 (%)

Soybeans 2020 (%)1

1. Late planting

3

1

9

5

28

21

48

58

12

15

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture %: Past Week*

20

28

48

4

Past Year

11

25

57

7

Subsoil moisture %: Past Week

20

27

49

4

Past Year

10

25

59

6

 

The major corn and soybean-producing states have an average of 24% in the “Very Short” and “Short” categories (last week 22%) with a range of 11% for MI and MO to 50% for IA.

 

  • Iowa 50% (was 53%)
  • Illinois 17% (was 15%)
  • Indiana 19% (was 9%)
  • Kansas 44% (was 34%)
  • Kentucky 29% (was 25%)
  • Michigan 11% (was 13%)
  • Missouri 11% (was 10%)
  • Ohio 14% (was 20%)
  • Pennsylvania 19% (was 22%)

 

Argentine Production of Corn in Market Year 2021-2022

08/02/2021

USDA-FAS GAIN Report AR2021-0017 dated July 20th provided details of Argentine grain production including corn. Argentine will produce 2.03 billion bushels of corn (51.5 million metric tons) from the harvest area of 16 million acres.  The FAS post in Buenos Aires predicts a yield of 127 bushels per acre and 73 percent of the market year production will be exported.

 

Farmers in Argentine are paying significantly higher prices for fertilizers and herbicides.  Since the economy is only recovering at a slow rate from COVID, domestic consumption will be reduced. 

 

Low water level in the Parana River is impeding exports from the Port of Rosario Complex responsible for handling 80 percent of shipments, as vessels are only loading to between half and two-thirds of capacity.

 

The extent of shipments by Argentine and the CIF cost to importers directly influences the price of domestic corn.


 

USDA Confirms African Swine Fever in the Dominican Republic

08/02/2021

The USDA Foreign Animal Disease Diagnostic Laboratory has confirmed the presence of African Swine Fever in the Dominican Republic. Extension to Haiti is inevitable given uncontrolled border trade.

 

Importation of Products from this nation are prohibited by existing restrictions to prevent introduction of classical swine fever.  The Customs and Border Protection Agency is increasing surveillance of flights from the Dominican Republic. Garbage and non-consumed food from aircraft will be disposed of by incineration to help prevent introduction of ASF.  USDA has offered assistance to the Dominican Republic and Haiti that have a common border to test for ASF and to support control and eradication activities.

 

Should ASF be introduced into the U.S., the pork industry would most certainly be subject to export restrictions. It is reiterated that the approximately 10 million feral hogs, especially those on the eastern seaboard and Gulf states, represent the potential of becoming reservoirs of infection making eradication difficult. The situation in eastern Europe, and more recently Germany, illustrate the role of feral hogs in persistence and dissemination of African swine fever.


 

DOJ Indictments for Alleged Price Collusion

08/02/2021

The Department of Justice has announced that a federal grand jury has indicted four executives previously employed by Pilgrim's Pride Corporation for alleged collusion in attempting to fix the prices of broiler chicken products.  In addition, Koch Foods was indicted for collaborating in an industry conspiracy to set prices.

 

The Pilgrim's Pride executives none of whom are presently with the Company that were indicted included Jason McGuire, former Executive Vice-president of sales, Timothy Stiller, a former General Manager and Wesley Tucker and Justin Gay, former sales executives.

 

Pilgrim's Pride has settled with the Department of Justice, paying a $108 million penalty and has reached agreements with plaintiffs in a related civil case that ultimately led to the criminal indictments of two previous CEO's and other managers.  Pilgrim's Pride took an approximately $410 million charge during Q2 of the current fiscal year.


 

Daring Foods to Supply Whole Foods Market

08/02/2021

Daring Foods Inc., a manufacturer of plant-based chicken substitute, will market products in Whole Foods commencing August 2021.  The product will be available as “original pieces” and “original breaded pieces” in eight ounce packages. 

 

Justin Neal, Head of Retail at Daring Foods, stated “Entering such an iconic retailer as Whole Foods Market is a major milestone for Daring.”  He added “We are thrilled that Daring will now be available to the loyal customers of Whole Foods Market.”

 

In May 2021, Daring raised $40 million from a consortium comprising T1 Capital Partners, Palm Tree Crew, Maveron and private investors.

 

Products from Daring Foods is now available in a range of supermarket chains including Kroger, Wegmans and Bristol Farms in addition to direct-to-consumer sales.

 


 

Dog Food Recalled for Aflatoxin Contamination

08/02/2021

Sunshine Mills has recalled a wide range of dog foods as a result of potential aflatoxin contamination.  Dogs are highly sensitive to this mycotoxin.

 

The question arises as to the source of the violative levels, since corn from the 2020 harvest is low in this mycotoxin.  Another ingredient such as DDGS or an oilseed meal may have been responsible for contamination or alternatively batches of corn from 2019 and 2020 may have been blended. Contamination in storage may have taken place. An additional possibility is that the company concerned received batches of corn or other ingredients from a specific area where pre-harvest contamination occurred. This should have been detected by routine assay as part of an HACCP program given that aflatoxin is a recognized hazard for pet food.

 

Appropriate investigations would be beneficial since there is a likelihood that the problem may reoccur in subsequent years.


 

Livestock Entrepreneur in China Sentenced to 18 Years in Jail

08/02/2021

Entrepreneur and empoyer, Sun Dawu was sentenced to 18 years in jail for crimes involving criticism of President Xi Jin Ping and allegedly being responsible for a mass protest against local government.  The catch-all crime of “picking quarrels and provoking trouble” is frequently employed to silence critics of the Communist party and central government.


Sun Dawiu

 

Sun was the president of a conglomerate in the Province of Hebei involved in poultry and hog processing and ownership of hospitals and recreational facilities.

 

Among many concerns expressed by Sun included attempts to cover up the extent of African swine fever in 2019 and suppression of human rights.  According to the People’s Court of Gaobeidian City in Hebei Province, Sun was guilty of “assembling a crowd that attacked a state tax agency, obstructing government workers from performing duties and sabotaging production and operations.”

 

Dissent even by billionaires is not tolerated in China. 


 

Government of China to Regulate Pork Pricing

08/02/2021

The sharp decline in the price of pork has stimulated the central government to intervene to support small and medium-sized farms.  Increase in availability of product both from restored production, especially from large complexes and also from imports, has resulted in lower prices.  Small-scale farmers have consigned hogs to market for fear of losing animals from African swine fever that has demonstrated an upsurge in incidence in recent weeks. 

 

Most recently farmers in many provinces, including Henan, have been affected by floods resulting in the Cabinet evaluating the feasibility of extended support programs.  In the short term, local governments have offered temporary relief including extension of loans to those impacted by flooding and African swine fever.


 

Greater Omaha Packing Recalls 150 Tons of Raw Beef Products

08/02/2021

Following a routine examination of beef samples that yielded E.coli Strain O157:H7 the Greater Omaha Packing Company has recalled 150 tons of raw beef. Products were processed in plant 960A on July 13th and included choice cuts and trim. The recall currently includes four Midwest states.


 

Hendrix-Genetics Installing Solar Arrays in Poland

08/01/2021

Hendrix-Genetics is committed to sustainability including sparing of resources.  Accordingly the company has installed solar arrays on turkey parent egg-production units in Woplawki and Sykstyny in Poland.  Each installation consists of 99 panels divided into two sections, each with an output of 500 watts.  The installation is intended to supplement grid power for fans and lighting.  Since Poland is heavily dependent on coal-fired generation of electricity the investment in solar contributes to a reduction in carbon emissions.

 


 

Ninth Circuit Dismisses Challenge to California Proposition 12

07/30/2021

In a unanimous decision, the Ninth Circuit rejected an appeal by the National Pork Producer’s Council and the American Farm Bureau Federation challenging California Proposition #12.  Since California Proposition #2 was adopted by ballot in 2008, numerous challenges advanced by animal producers and a consortium of states have been rejected by Federal courts.  Unless some relevant and unique legal issue is raised there is little possibility that a further appeal to SCOTUS will have any other outcome that refusal to grant certiorari, letting stand the Ninth Circuit decision.


 

Pilgrim’s Pride Reports on Q2 of 2021

07/30/2021

In a press release dated July 28th Pilgrim’s Pride (PPC) announced results for the 2nd Quarter of FY 2021 ending June 27th.

 

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS)


Fabio Sandri CEO

Second Quarter Ending

June 27th 2021

June 28th 2020

Difference (%)

Sales:

$3,637,698

$2,824,023

+28.8

Gross profit:

$380,241

$119,859

+217.2

Operating income:             

$(123,131)1

$27,289

-551.2

Pre-tax Income

Net Income

          $(176,315)

          $(166,687)

$(9,356)

$(6,036)

-1,784.0

-2661.5

Diluted earnings per share:

$(0.68)

$(0.02)

-3,300.0

Gross Margin (%)

10.5

4.2

+150.0

Operating Margin (%)

(3.4)

1.0

-440.0

Profit Margin (%)

(4.6)

(0.2)

-2,200.0

Long-term Debt:

$2,370,115

        $2,404,307

           -1.4

12 Months Trailing:

 

 

 

           Return on Assets    (%)

3.0

 

 

           Return on Equity    (%)

(1.3)

 

 

           Operating Margin   (%)

2.7

 

 

           Profit Margin          (%)

(0.3)

 

 

Total Assets

$7,748,845

        $7,474,497

          +3.6

Market Capitalization

$5,427,000

                    

          

Note 1. Increase of $410 million in SGA compared to Q2 2020 presumed to reflect DOJ and legal settlements

 

 

52-Week Range in Share Price:  $14.06  to  $26.28   50-day Moving average  $$21.90

 

Market Close Tuesday 27th pre-release $22.30. Open Wednesday 28th post-release $21.73

 

Forward P/E 12.6                   Beta 1.1

 

In commenting on the Q2 results, Fabio Sandri, Chief Executive Officer of Pilgrim’s Pride stated, “Our second quarter results reflect a shift to more normal patterns in the U.S. as we saw a slight increase in retail store trips and more foodservice locations reopened. Our U.S. business turned in a solid operational performance despite higher and more volatile input costs and product-mix issues resulting from continued, albeit improving, labor challenges. Our big bird business performed very well on commodity pricing that has remained consistently near or above historical ranges. Our foodservice business was stronger than anticipated as restrictions continued to ease, boosting demand back above 2019 levels. With consumers’ continued emphasis on the retail channel, we further expanded our retail branded presence. We grew our branded consumer packaged foods business in the second quarter by 215% by investing in our Just Bare® and Pilgrim’s® brands at retail and in e-commerce.

 

In reference to non-U.S. activities Sandri noted “Our Mexico business had another strong quarter, driven by a balanced supply to demand equation and continuous improvements in operational performance, while effectively managing higher grain pricing and supplying our customers with Fresh and Prepared Foods under the Pilgrim’s®Del Dia® and Alamesa® brands.

 

With regard to the E.U. and U.K. Sandri commented “In Q2, although challenged by increasing grain costs, Moy Park improved EBIT by 7% vs. the first quarter 2021. Moy Park continue to deliver operational efficiencies, better agricultural performance and improved yields to help offset grain cost and labor challenges. Pilgrim’s UK has been affected by low hog prices and rising grain costs. Despite similar labor challenges, the Pilgrim’s UK operations have also improved its margins from the same period last year.”


 

Broiler Week

07/30/2021

Weekly Broiler Production and Prices, July 30th 2021.

Chick Placements.

The Broiler Hatchery Report released on July 28th 2021 confirmed that a total of 241.5 million eggs were set during the week ending July 24th 2021, up six percent from the corresponding week of the previous year and 1.7 percent (4.0 million eggs) more than the previous week in 2021.

 

A total of 177.3 million day-old chicks were placed among the 19 major broiler-producing states during the week ending July 24th 2021. Total chick placements for the U.S. amounted to 186.7 million, one percent less than the corresponding week in 2020 and 0.2 percent (0.3 million) more than the previous week. Claimed average hatchability was 80.1 percent for eggs set three weeks earlier, (80.1 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 2nd 2021 through July 24th 2021 amounted to 5.42 billion chicks, up one percent from the corresponding period in 2020.

 

During the period June 19th through July 24th 2021 weekly placements were on average 1.5 percent lower compared with the corresponding six weeks in 2020. This represents on average, placement of 2.9 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 attained based on age. The sharp increase in eggs set during the past week should be reflected in higher placements during mid-August and broilers harvested at the beginning of October

 

Broiler Production

According to the July 30th USDA Broiler Market News (Vol. 68, No. 30) for the processing week ending July 24th 2021, 170.1 million broilers were processed during the past week (previous week 163.1 million) at an average live weight of 6.39 lbs. (6.43 lbs. last week) and a nominal yield of 76 percent. The number of broilers processed was 3.7 percent more than the corresponding processing week in 2020. Processed (RTC) broiler production for the week was 825.9 million lbs. (375,406 metric tons), (796.9 million lbs. last week), 7.6 percent more than the corresponding processing week in 2020. In 2021 Processed (RTC) production attained 23.4 million lbs. (10,629,174 metric tons), 0.1 percent less than YTD 2020.

 

Broiler Prices

The USDA National Composite Weighted Wholesale price on July 30th 2021 was down 0.9 cent per lb. from the previous week to 105.0 cents per lb., compared to 64.9 cents per lb. during the corresponding week of 2020; 105.6 cents per lb. for July 2021 and 82.0 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 and nuggets.


 

Bachoco Reports on Q2 of FY 2021

07/30/2021

In a press release dated July 26th Industrias Bachoco S.A.B. de C.V. (IBA) announced results for the 2nd Quarter ending June 30th 2021.

 

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS. Conversion, Mex. Peso 20 = $1)

 

2nd Quarter Ending June 30th

2021

2020

Difference (%)

Sales1:

$1,045,700

$821,600

+27.3

Gross profit:

$198,500

$92,900

+113.7

Operating income:

$104,700

$41,400

+152.9

Pre-tax Income

Net Income

$82,100

$72,300

$(10.8)

$(1.4)

+860.0

+5264.3

Diluted earnings per share:

$0.12

$0.01

+1,300.0

Gross Margin (%)

18.9

11.3

+67.3

Operating Margin (%)

10.0

5.0

+100.0

Profit Margin (%)

6.9

(0.2)

+3550.0

Long-term Debt:

$122,000

$124,700

-2.2

12 Months Trailing:

Return on Assets (%)

8.5

Return on Equity (%)

11.9

Operating Margin (%)

10.6

Profit Margin (%)

7.0

Total Assets

$3,091,500

$2,923,800

+5.7

Market Capitalization

$2,199,000

Note 1. Mexico 76.3%; U.S. (OK Foods) 23.7%

52-Week Range in Share Price: $33.91 to $48.47 50-day Moving average $45.44

Market Close Monday 26th July $45.22. Open post release Tuesday 27th $47.25

Trailing P/E 8.2 Beta 0.8

Capital expenditure $65.4 million Q2 2021: $49.6 million Q2 2020

 

In commenting on results for the 2nd. Quarter, Rodolfo Ramos Arvizu, Chief Executive Officer of Bachoco, stated, “During this quarter we continued to observe a good balance between supply and demand. Even though costs were higher, our focus on efficiencies drove us to achieve good results in our second quarter of 2021”. He added “Regarding our cost of sales, raw material prices continued to be high in USD terms. This meant an increase in our total cost of sales of 16% when compared to the same quarter of 2020. However, our efforts and focus towards efficiencies in our processes permitted us to offset part of this increase”.


 

Turkey Week

07/30/2021

Weekly Turkey Production and Prices July 30th 2021

Poult Production and Placement:

The July 14th 2021 edition of the USDA Turkey Hatchery Report, issued monthly, documented 26.0 million eggs in incubators on July 1st 2021 (26.0 million eggs on June 1st 2021) and down 6.2 percent (1.7 million eggs) from July 1st 2020.

 

A total of 21.8 million poults were hatched during June 2021 (20.9 million in May 2021), representing a decrease of 9.1 percent (2.2 million poults) from June 2020.

 

A total of 20.9 million poults were placed on farms in the U.S. in June 2021, (19.5 million in May 2021), and almost the same as in June 2020. This suggests disposal of 0.9 million poults during the month (1.2 million in May 2021). Assuming the proportion of placements corresponded to the respective numbers of toms and hens reared year to date (55:45) 3.7 percent of June-hatched tom poults (0.4 million) and 4.6 percent of hen poults (0.5 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).

For the twelve-month period July 2020 through June 2021 inclusive, 267.5 million poults were hatched and 246.7 million were placed. This suggests disposal of 20.8 million poults. Assuming the proportion of placements corresponded to the number of toms and hens reared year to date (55:45), 6.8 percent of tom poults (9.4 million) and 8.2 percent of hen poults (11.4 million) were not reared.

 

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

 

Turkey Production:

The July 30th 2021 edition of the USDA Turkey Market News Report (Vol. 68: No.30) confirmed the following provisional data for turkeys slaughtered under Federal inspection:-


 

Draconian Ballot Initiative Considered for Oregon

07/30/2021

Following the rejection of the Colorado Initiative #16 (PAUSE) by the Supreme Court of that state, an Oregon activist organization End Animal Cruelty, is proposing a ballot initiative that would effectively close down the livestock industry in the state.  Designated IP-13, the initiative would require 112,000 signatures to appear on the November 2022 Oregon ballot.

 

Among other considerations, the proposed bill would ban farming, ranching, hunting, trapping, pest control or killing any animal for any reason.  The proposal also includes the rejected Colorado requirement relating to "sexual assault of an animal" that would ban artificial insemination, neutering of pets and livestock and would place restrictions on breeding of companion and food animals and equines.

 

Oregon producers have organized to oppose the petition under the Oregon Farm Bureau and through various affiliated organizations. The provisions included in IP-13 are so extreme, that passage is doubtful and intervention by State courts is anticipated.

 

In the case of both Colorado and Oregon, animal activists appear to have been too radical in their demands.  They may have achieved greater success by emulating California with successive Propositions #2 and then #12 that have improved the welfare of flocks and herds raised for intensive livestock production.

 

At the end of the day, animal activists have little to offer in the way of a substitute for conventional beef, pork, milk and eggs either through satisfying consumer demand or supplying nutritional value.


 

Transnet in South Africa Restores Port Operations

07/30/2021

The South African Ministry of Public Enterprises has announced that container operations in the major ports have been restored and that the status of force majeure would be lifted.

 


Port Elizabeth Harbor
 

A cyberattack suspended container terminals at the ports of Durban, Ngqura and Port Elizabeth in addition to Cape Town.  Durban terminals are fully operational to be followed by Eastern Cape facilities.  The failure of computer systems has resulted in a backlog that should be resolved within a week subject to no further cyberattacks and maintaining civil order in the Nation.


 

COMMODITY REPORT

07/29/2021

WEEKLY COMMODITY REPORT: July 29th 2021.

  • Commodity prices fluctuated this past week but corn and soybean meal ended lower continuing the trend of the previous week. Factors influencing prices in both directions included:- relief of drought in many counties in the corn belt; the July 12th WASDE. USDA Grain Stocks and Planted Acreage reports; Drought in Brazil, reduced shipments from Argentine; China tightening fiscal policy and government attempts to stabilize prices of pork and corn. Projected harvests and ending stocks in the U.S. were updated in the July 12th WASDE especially since there was greater clarity on acreage and the effects of weather and trade on ending stocks. Annual field assessment of crop condition is underway.
  • S producers are now receiving and conversely livestock producers in the Midwest will pay above $5.60 per bushel for corn and crushers will pay $13.80 per bushel for soybeans plus transport and basis in September. Corn was down 1.9 percent this week for September delivery and the price of soybeans was 0.5 percent higher compared to the previous quotation on July 21st for September delivery. Soybean meal was down 2.5 percent for September delivery compared to last week.
  • The FAS Export Report released on July 29th for the week ending July 22nd 2021, reflecting market year 2020-2021 confirmed export orders for corn for the present market year amounted to 7.5 million metric tons (296 million bushels) with 62 million metric tons (2,447 million bushels) actually shipped. During the past week orders for the 2020-2021 market year amounting to 0.12 million metric tons (4.7 million bushels) were cancelled. A total of 1.4 million tons (55.1 million bushels) of corn was shipped. For the succeeding 2021-2022 market year commencing in September, 0.53 million metric tons (21 million bushels) was ordered this past week with outstanding sales amounting to 16.7 million metric tons (658 million bushels) of new crop corn.
  • According to the USDA FAS Export Report released July 29th for the week ending July 22nd 2021, reflecting market year 2020-2021, outstanding export orders for soybeans amounted to 2.8 million metric tons (103 million bushels) with 59.1 million metric tons (2,169 million bushels) actually shipped. Weekly cancellation of soybean orders attained 0.08 million metric tons (2.9 million bushels) with 0.24 million metric tons (8.8 million bushels) shipped. For the 2021-2022 market year outstanding sales for soybeans amount to 10.2 million metric tons (374 million bushels) with 0.07 million metric tons (2.6 million bushels) sold this past week
  • During the past week 87,300 metric tons of soybean meal and cake were ordered, up 27.8 percent from the previous week. The quantity shipped amounted to 244,000 metric tons, 40 percent more than the quantity exported during the previous week. For the 2021/2022 market year 73,100 metric tons were sold and outstanding sales amounted to 1,130,000 metric tons.

 

The following quotations for delivery in the months as indicated were posted by the CME at 14H00 on July 29th 2021 compared with values posted at 14H00 on July 22nd 2021 (in parentheses) reflecting specified months for delivery.

 

COMMODITY

Corn (cents per bushel)

Sept. 557 (568)

Dec. 556 (565)

Soybeans (cents per bushel)

Sept. 1,385 (1,378)

Nov. 1,378 (1,370)

Soybean meal ($ per ton)

Sept. 357 (366)

Dec. 359 (369)

 

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 11 cents per bushel (-1.9 percent)

Soybeans: Sept. quotation up 7 cents per bushel (+0.5 percent )

Soybean Meal: Sept. quotation down $9 per ton (-2.5 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 from July 22nd compared with July 29th quotations for September delivery would decrease nest-run production cost for eggs by 0.9 cents per dozen and for broilers 0.5 cents per live pound extending the reduction from the previous week .

Year-to-date, escalation in the prices of major ingredients has added 6.8 cents per dozen eggs and 4.1 cents per live-weight lb. to broiler production cost

 

The USDA weekly wholesale feedstuffs prices expressed per short ton posted on July 28th (with previous week in parentheses) were:-

  • Corn: $204 ($213), Chicago
  • Soybean Meal: $364 ($372), Central Illinois
  • Meat and Bone Meal: $405 ($415), Central Midwest
  • DDGS: $180 ($162), Eastern corn belt

 

According to the July 12th WASDE, corn harvested in calendar 2021 will attain 15,165 million bushels with ending stocks projected at 1,432 million bushels, up 5.5 percent from the 1,357 million bushels in the June 2021 WASDE Report. Values will be updated reflecting production, ongoing export volumes and domestic use in the August WASDE report. Total corn stocks as at June 1st amounted to 4.11 billion bushels down 18 percent from June 1st 2020. Compared with the July 22nd value, the CME quotation for corn at 14H00 on July 29th for September delivery was down 11cents per bushel to 557 cents.

 

The 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 81.1 percent of the U.S. ethanol fermentation capacity 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 approximately ten percent of production 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 July 23rd the industry produced on average 1,014,000 barrels per day down 1.4 percent below the week ending July 16th 2021. On July 23rd ethanol stock was 0.9 percent above the previous week at 22.7 million barrels, representing an approximate 20-day reserve.

 

Ethanol was priced at $2.48 per gallon on July 29th unchanged from the previous seven weeks compared with a five-year low of $0.92 per gallon on March 26th 2020 during COVID restrictions. Concurrently RBOB gasoline at $2.32 per gallon (quoted, New York Harbor) was up 11 cents per gallon (4.9 percent) from the previous week, consistent with an increase of $2.16 in WTI crude price to $72.46 per barrel. Gasoline is 16 cents per gallon lower than ethanol but with a 63 percent higher BTU rating.

 

With most plants among the 201 that were operational on January 1st 2021 and now functioning, DDGS is freely available but commanded a higher price than in the first quarter of 2021. Eastern Corn-belt DDGS was priced at $180 per ton on July 28th 2021, $21 per ton higher than the previous week and $42 per ton more expensive than on July 22nd 2020. Generally DDGS is incorporated at low inclusion levels 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 14H00 on July 29th increased 7 cents per bushel to 1,385 cents per bushel compared to $1,378 on July 22nd for September delivery. The USDA documented a 2021 crop of 4,405 million bushels unchanged for 2021. Ending stocks according to the July 12th 2021 WASDE projection will be 155 million bushels, unchanged from the June Report. This quantity is however close to a seven-year low and possibly represents an over-estimate. Total soybean stock as at June 1st amounted to 767 million bushels down 44 percent from June 1st 2020 indicating the effect of exports.

 

According to a release on July 15th by the National Oilseed Processors Association, 152 million bushels of soybeans were crushed in June compared to a pre-release estimate of 159 million bushels. The June crush value was 7.3 percent lower than in May partly due to disruption caused by maintenance and a disinclination to purchase high-priced soybeans. On July 25th 2021 soybean meal quoted central Illinois attained $364 per ton, $8 per ton lower than the previous week and compared to $286 per ton on July 22nd 2020.

 

On July 25th 2021 Meat and Bone meal quoted Central U.S. was $405 per ton, down $10 from the previous week and compared to $203 per ton on July 22nd 2020 beyond the surplus caused by COVID-related disruption of packing operations.

 

On July 29th the conversion of CNY 1 to the BRL was 0.78 BRL, up CNY 0.03 from the previous week. The conversion of US$1 to the CNY was set at CNY 6.46 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 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 during 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 July 12th 2021 WASDE #614 and the Crop Progress, Grain Stocks and Planned Acreage reports under the STATISTICS Tab.


 

Perdue Foundation Sponsors Eastern Shore Achievement Center

07/27/2021

The Franklin P. and Arthur W. Perdue Foundation, the charitable giving arm of Perdue Farms has joined with the Richard A. Henson Foundation to donate $1.25 million to Junior Achievement of the Eastern Shore.  Funding will be assigned to the Perdue-Henson Junior Achievement Center that will enhance the literacy of students on the Eastern Shore.  The Perdue- Henson Junior Achievement Center is scheduled to open in the fall of 2023 at a cost of $5.5 million.

 

Dr. Jim Perdue, Chairman of Perdue Farms stated, "we are committed to improving the quality of life in our communities.  Junior Achievements of the Eastern Shore is an example of an asset to our hometown community. The future of financial education for students in the region is about to get a lot more fun thanks to the opportunities available through the Perdue-Henson Junior Achievement Center".  There are 58 Junior Achievement locations in the U.S. including three in Maryland and one in Northern Delaware.

 

Greg Olinde, Chairman of the Board of Trustees for the Richard A Henson Foundation stated, "we are incredibly proud of the work of Junior Achievement and the hundreds of volunteers annually helping to elevate and prepare our youth for an exciting future".


 

U.S. Paws in Demand in China

07/27/2021

A recent release by the USA Poultry and Egg Export Council (USAPEEC) confirmed that through May 2021, the U.S. exported 105,000 metric tons of chicken paws valued at $254 million.  Given that the U.S. represents 44.8 percent of export supply to China, total importation of paws during 2021 to date has attained 234,375 metric tons.  In 2020 following restoration of trade, China, imported 201,000 metric tons of paws valued at $460 million.

 

Reconciling USAPEEC prices and volumes with USDA data, it is apparent that the 105,000 metric tons of paws imported over the first five months of 2021 represented 57.5 percent of volume shipped amounting to 182,587 metric tons.  Given a total value of $254 million for paws, the unit price was $2,457 per metric ton.  The value of paws shipped to China represented 80.4 percent of the total shipment of chicken products to that Nation amounting to $321 million.

 

It is evident that the remaining 77,587 metric tons of chicken products shipped during the first five months of 2021 generated total revenue of $63 million, equivalent to $1,199 per metric ton.  These products included some bone-in items but also edible giblets.

 

In reviewing current trends, it is evident that pork imports by China will decline as domestic volume increases.  This is evident in the settlement price for live hogs as quoted on the Dalian Commodity Exchange.  Fortunately chicken exports, with a concentration on paws, will continue as domestic production of white feathered broilers in China will be inadequate to supply demand for this product.  China favors U.S. paws based on size derived from birds with an average live weight of 6.5 pounds compared to 4 to 5 pounds for domestic broilers in China and lower live weights from Brazil and Thailand.

 

Commenting on the demand for paws, Jim Sumner, President of USAPEEC, stated “Our industry wanted to regain access to China after five years to be able to export paws, but we did not expect such tremendous demand for our product.” Unfortunately the increase in shipments to China comes at the expense of sales to Hong Kong. Prior to March 2020 about half the consignments of paws to this destination were transhipped to the mainland.


 

Interest in FAUX GRAS®, Even in France

07/27/2021

Alternatives to foie gras are under development based on the banning of the traditional fatty liver delicacy derived from waterfowl force fed by gavage. Numerous nations including the U.K., Italy and Norway have enacted or are in the process of passing legislation to ban production of the product using what is generally regarded as inhumane procedures.

 

 A plant-based alternative has been developed in Belgium marketed under the FAUX GRAS® brand.  Chef Alexis Gauthier is creating a vegan duck liver terrine recipe based on a fungal culture as an alternative to the traditional product.

 

As yet, there have been no attempts to create a laboratory culture of liver, and it is doubtful whether it will be possible to reproduce foie gras a since the product represents a pathological state induced by force feeding.


 

 
Copyright © 2021 Simon M. Shane