Poultry Industry News

Foster Farms Discloses COVID Results

10/30/2020

Foster Farms has disclosed the results of COVID testing in two turkey processing facilities in Stanislaus County and two broiler plants in Fresno County.  The company has conducted 6,314 tests for COVID-19 (presumably PCR assays) among 3,405 employees with most tested twice over a seven-day interval.

 

Among the turkey processing plants the prevalence rate was one percent of 2,134 assays.  Following the Memorial Day weekend, a surge in COVID-19 cases occurred involving 75 employees of whom 43 have returned to work.

 

 During the first ten days in September, Foster Farms conducted 4,180 tests among workers in the broiler plants yielding a prevalence rate of less than one percent.  The situation in Stanislaus County turkey plants was similar with surges recorded following Memorial Day and July 4th.  The broiler facilities reported 158 COVID-19 cases with 75 workers returning to work, although two fatalities occurred in the workforce.

Foster Farms conducted the most comprehensive testing program of any agricultural enterprise in California.  The company followed CDC guidance and implemented preventive measures in mid-March.


 

Perdue Farms Disavows Affiliation with Eponymous Georgia Senator

10/20/2020

The rush to judgment by users of social media is illustrated by the fact that within days of the contentious remarks by Senator David Perdue (R-GA) there were online calls for a boycott of Perdue Farms brands.

 

The company was forced to issue statements that the company has no connection with the Senator. Social media can be powerful in both a positive and a negative direction.

 

Senator David Perdue is in fact the first cousin of Dr. Sonny Perdue, Secretary of Agriculture, born George Ervin Perdue III.


Dr. Jim Perdue (left) and 4th generation Perdue sons

 


 

Status of 2019 Corn and Soybean Crops

10/19/2020

The USDA Crop Progress Report released on October 19th documented the 2020 corn and soybean crops as almost mature and ahead of the 5-year average due to the earlier start in 2020. Over half of the 2020 corn crop has been harvested, significantly more than at this time last year. Almost three quarters of the soybean crop is in, progressing at a higher rate than the corresponding week of last year.

 

The condition of both corn and soybean crops deteriorated in late August and early September as a result of drought. The condition of corn and soybeans has improved following rains in the Midwest and both crops are moderately superior to the 2019 season. The USDA did not assess the condition of the soybean crop this past week and values reflecting October 11th are shown in the table below. Iowa and N. Dakota stand out as having poor soybean condition. Corn in Iowa, Colorado and Pennsylvania is suboptimal in quality contrasted to Minnesota, Wisconsin and Kentucky with corn superior to other states.

 

Subsoil and surface moisture levels denote some relief from drought conditions except in Western and Pacific states. Both topsoil and subsoil moisture levels are similar to the past week. The corn-belt has experienced unseasonal high temperatures in combination with elevated humidity that may predispose to mycotoxicosis in the 2020 corn harvest. 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 2020 harvest in November.

 

Reference is made to the October 9th WASDE Report #605 in this edition, documenting actual 2020 acreage, and projected yields and ending stocks for corn and soybeans. The Pro Farmer 7-State Crop Tour projected corn and soybean yields of 177.5 and 52.5 bushels per acre. These were respectively, lower than USDA estimates that were revised to 178.4 and 51.9 bushels per acre in the October 9th WASDE Report.

 

 

WEEK ENDING

 

Crop

October 4th

October 11th

5-Year Average

Corn Mature (%)

Corn Harvested

94

41

97

60

94

43

Soybeans Dropping Leaves (%)

Soybeans Harvested

93

 

61

97

 

75

95

 

55

Crop Condition

V. Poor

 Poor

Fair

Good

Excellent

Corn 2020 (%)

Corn 2019 (%) *

* late planting

5

4

9

10

25

30

46

45

15

11

Soybeans 2020 (%)

Soybeans 2019 (%)*

 * late planting N/A

3

4

8

10

26

32

49

45

14

9

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture: Past Week

22

34

41

3

Past Year

8

16

59

17

Subsoil moisture: Past Week

20

33

47

3

Past Year

8

17

60

15


 

McDonald’s Corp and Tyson Foods to Donate to Ozarks Food Harvest

10/19/2020

In a joint announcement, McDonald’s Corporation and Tyson Foods announced donation of 32 tons of food to Ozarks Food Harvest.  It is anticipated that this generous act will provide more than 55,000 meals to children families and seniors across the 28 county area served by the food bank.


 

Corn Rises on Dalian Commodity Exchange Due to Shortage

10/19/2020

Hog and poultry producers in China will pay more for corn based on increased demand and a disproportionately lower availability.  Domestic crops were damaged by typhoons this year and planting was limited by a preference for soybeans. Corn for January delivery attained $340 per short ton in mid-October representing a record. On Monday October 19th at noon, corn for December delivery was quoted at 405 cents per bushel ($147 per short ton)

During September, the first month of the 2020/2021market year, China placed orders for corn but has yet to follow-through with subsequent large orders from the U.S. that are the subject of  rumors. Obviously by delaying a commitment China can wait for the most advantageous price as new-crop corn is harvested.


 

Pilgrim’s Pride to Expand Cold Spring MN Plant

10/19/2020

On October 9th Pilgrim’s Pride announced a $75 million expansion to a plant located in Cold Spring, Stearns County, MN.

 

The project will add 50,000 square feet to the plant including worker facilities comprising a cafeteria, expanded breakroom, bathrooms, and locker rooms.  It is intended to add an additional 130 positions over the 1,200 workers.  The expansion will allow an increase in production of Just Bare™ brand whole birds and portions.

 

The plant originally producing under the Gold ‘n Plump brand was acquired in the purchase of GNP Poultry from the Masschoffs in late 2016 for $350 million. The following year Pilgrim’s Pride closed the Luverne, MN. plant, consolidating production.

 

Recently Pilgrim’s Pride donated $575,000 to the Cold Spring community as part of the Hometown Strong initiative.


 

Trend in Sales of Meat Substitutes

10/18/2020

Wendy Nicholson an analyst with City Group documented a 39.1 percent increase in sales of all vegetable-based meat substitutes during September compared to the corresponding month in 2019.  In comparison, fresh meat sales increased by 10.9 percent.

 

Within the meat- substitute segment, Kellogg Morning Star Brand led with a 30.6 percent share of the market followed by Beyond Meat at 21.4 percent and Impossible Foods at 4.3 percent. Beyond Meat recorded a decline in successive monthly sales in the face of competition from other vegetable-based brands.

 

Nicholson noted "we view this favorable trend as consumers have both destocked their freezers from pre-COVID levels and continue to purchase at elevated rates even as fresh-meat sales have also continued to pick up". 


 

Hybrid Turkeys Appoints Technical Service Specialist

10/18/2020

Hannah Menges has joined the Hybrid Turkeys Technical team and will work with customers in the North American market.  Hannah is a graduate of Pennsylvania State University and has interned with poultry producers to gain experience including breeding.

 

Trevor Aitchison, Director of Business Development for Hybrid Turkeys stated, "as the industry and our business continue to evolve, I am excited to highlight our newest team member".  He added this confirms our commitment to customer support and indicates just one of the ways we are contributing to a sustainable industry for many years to come".


Hannah Menges

 

Jack in the Box Testing Raised & Rooted™ ‘Unchicken’ Sandwiches

10/18/2020

Jack in the Box will test market sandwiches incorporating Tyson Food’s Raised & Rooted™ alternative chicken launched in 2019.  The product is manufactured using pea protein and will be presented in sandwiches creating a texture and taste similar to real chicken.

 

Jennifer Kennedy, Chief Product Officer for Jack in the Box stated, "we are delivering an industry leading innovation with the first plant-based chicken sandwich at retail in the U.S.".  She added, "we are excited to meet the growing demand for meatless alternatives with our new unchicken sandwiches providing indulgent taste, crispy crunch and savory flavor in a new plant-based option".

David Ervin, VP of Marketing for the Raised & Rooted Brand stated, "we are excited to be partnering with Jack in the Box to bring us delicious taste people have come to love from our plant-based nuggets and tenders to even more people with the unchicken sandwiches".  The new plant-based products are available through December 12th in Monterey and Salinas, CA and Reno, NV.


 

Sysco Pivots to New Merchandising Initiatives

10/18/2020

The appointment of Judith Sansone to the position of Executive Vice-president and Chief Commercial Officer signals a move by Sysco to broaden their market scope from the food service sector that has declined sharply since the advent of COVID-19.

 

In her role, Sansone will be responsible for merchandising, marketing, pricing, digital sales enablement, a customer loyalty program and developing new channels for sales. Previously Sansone was the Chief Merchandising officer for CVS Health.

 

Sysco (SYY), as with other suppliers to the food service segment was severely impacted by COVID restrictions including restaurant and University closings. For FY 2020 ending June 27th the Company earned $215 million on revenue of $52.9 billion with an EPS of $0.42. Comparable values for FY 2029 were net earnings of $1.7 million on revenue of $60.1 billion and an EPS of $3.20. The 12-month trailing operating margin is 3.0 percent and the profit margin 0.4 percent. The returns on assets and equity are 5.0 and 11.6 percent respectively. SYY has traded over the past 52-weeks from $26.00 to $85.96 with a 50-day moving average of $63.71. Shares closed at $65.78 on Friday October 16th.


Judith Sansone

 


 

COVID Will Influence Seasonal Turkey Consumption

10/17/2020

According to an October 8th article in The New York Times COVID restrictions and an emerging disinclination for families to gather in large groups will affect turkey sales. Smaller gatherings obviously will reduce the demand for large birds with selection shifting from whole roasters to breasts, wings and legs.

 

A survey conducted by Chicago-based Numerator involving the attitudes of 2,000 shoppers suggests that 70 percent of consumers will modify their usual Thanksgiving and Christmas festivities.

 

In addition to COVID, the economic situation and uncertainty will reduce spending on gifts with half of the respondents intending to spend less in 2020 than in previous years.  Only six percent of those surveyed envisage purchasing more over the 2020 Christmas and New Year periods.


 

J&F Investments Fined $256 Million over Corruption

10/17/2020

J&F Investimentos S.A. the family-controlled holding company of JBS S.A. and hence subsidiaries was fined $256 million in a settlement with the U.S. Department of Justice over  violation of the Foreign Corrupt Practices Act.

 

The agreement arises from gross corruption in Brazil between 2005 and 2017 when J&F Investimentos and subsidiaries bribed officials to obtain sweetheart loans and preferential treatment from the Government of Brazil.


Batista Brothers

More than $148 million was paid to officials at BNDES a state-controlled bank.  Proceeds were used to purchase meat production companies throughout the world including in the U.S.  Approximately $5 million was paid to executives of Petros a state-controlled pension fund that allowed a merger benefiting J&F.  An additional $25 million was paid in bribes to Caixa a state-owned and controlled bank.

 

The U.S. Department of Justice claimed jurisdiction since U.S. banks were used to facilitate bribery by processing transactions and effecting payments. 

 

In Brazil, J&F paid a fine of $1.4 billion and was obliged to contribute $414 million to social projects.  In view of the magnitude of the fines in Brazil, the Department of Justice reduced the $256 million penalty by half given cooperation by the company.

 

In a separate issue, JBS S.A. paid the Securities and Exchange Commission $26.9 million for contravention of SEC regulations. 

 

On Tuesday October 13th, Pilgrim’s Pride Inc. a subsidiary controlled by JBS S.A. paid a fine of $110 million to settle allegations of collusion arising from a criminal investigation.  A class action civil lawsuit will now proceed following intervention by the Department of Justice.

 

Details of the activities of the Batista brothers over the past three years were documented in a series of posts and can be retrieved by entering ‘Batista’ in the search block.


 

Updated USDA-ERS Poultry Meat Projection for 2020-2021.

10/16/2020

The USDA-Economic Research Service released updated production and consumption data on October 16th 2020 for broilers and turkeys covering 2019 (revised), a projection for 2020 and a forecast for 2021.

 

Broiler RTC production in 2020 was unchanged from the September report to reflect a 1.5 percent increase for 2020 over 2019 to 20.27 million metric tons RTC (44,602 million lbs.). Processing rates in March and April were depressed due to COVID-19 despite demand. Per capita consumption in 2020 is projected to be 1.6 percent higher than in 2019 at 43.8 kg. (96.4 lbs.). Exports will represent 16.2 percent of RTC production in 2020 attaining 3.293 million metric tons (7,246 million lbs.) representing both RTC and feet.

 

The projection presumably takes into account exports to China in 2020 following signing of the Phase-1 Trade Agreement on January 15th 2020. Disruption in shipping attributed to the COVID-19 outbreak restricted exports to China during the first quarter of 2020. China and Hong Kong combined imported 347,620 metric tons of chicken products with feet predominating during the first eight months of 2020 valued at $498 million.

 

For 2021 RTC production is expected to increase 1.1 percent from 2020 to 20.48 million metric tons, (45,060 million lbs.) with a 0.7 percent increase in per capita consumption to 44.1 kg (97.0 lbs.). Exports are projected to decrease 0.6 percent to 3.30 million metric tons (7,260 million lbs.)

 

Turkey production for 2020 was reduced by 1.9 percent to 2.594 million metric tons RTC, (5,702 million lbs.). Per capita consumption is forecast at 7.2 kg. (15.8 lb.) during 2020, 1.4 percent less than 2019 despite promotions and introduction of further-processed items. Export volume for 2020 is expected to decline 0.250 million metric tons (550 million lbs.) Forecast values for production and consumption of RTC turkey in 2020 are considered to be realistic, given the prevailing economy, lower poult placements, disposal of hen poults, weekly production levels and inventories.

 

USDA projected an increase in turkey RTC production in 2021 to attain 2.622 million metric tons (5,770 million lbs.) with decreases in per capita consumption to 7.1 kg (15.7 lbs.) and a 3.6 percent increase in exports of 259 million metric tons (570 million lbs.)

 

The export projections do not allow for a breakdown in trade relations with existing partners including China nor the emergence of catastrophic diseases including HPAI and vvND. Metric values for the broiler and turkey segments of the U.S. poultry meat industry are tabulated below:-

 

Subscribers are referred to the weekly updates of production and inventories of broilers and turkeys posted weekly on CHICK-NEWS and the review of monthly export data under the STATISTICS tab.

  

Parameter

    2019 (revised)     

      2020

   (projection)

       2021           Difference %

  (forecast)     2019 to 2020

Broilers

 

 

 

Production (m. metric tons)

   19.957

20.251

        20.463                 +1.1

Consumption (kg per capita)

43.1

43.8

          44.1                   +0.7

Exports (m. metric tons)

3.231

3.293

         3.300                  +0.2

Proportion of production (%)

16.2

16.2

          16.1                   -0.6

 

 

 

 

Turkeys

 

 

 

Production (m. metric tons)

2.644

2.594

        2.622                    +1.1

Consumption (kg per capita)

7.3

7.2

          7.1                       -1.3

Exports (m. metric tons)

      0.291

0.250

       0.259                     +3.6   

Proportion of production (%)

11.2

          9.6

          9.9                      +3.3     

Source: Livestock, Dairy and Poultry Outlook –October 16th 2020

 


 

Turkey Week

10/16/2020

Weekly Turkey Production and Prices

Poult Production and Placement:

The October 15th edition of the USDA Turkey Hatchery Report, issued monthly, documented 27.0 million eggs in incubators on October 1st 2020 (26.0 million eggs on September 1st 2020) and down 7.8 percent (2.3 million eggs) from October 1st 2019.

 

A total of 21.9 million poults were hatched during September 2020 (21.0 million in August 2020), representing a decrease of 2.4 percent from September 2019.

 

A total of 19.3 million poults were placed on farms in the U.S. in September 2020, (21.0 million in July 2020), 4.0 percent less than in September 2019. This suggests disposal of 2.5 million poults during the month (1.6 million in August 2020). Assuming all tom poults were placed (an unsubstantiated estimate in a fluctuating demand for products), 22.9 percent of September-hatched hen poults or 11.4 percent of all September-hatched poults were not placed.

 

For the twelve-month period October 2019 through September 2020 inclusive, 277.2 million poults were hatched and 253.8 million were placed. This suggests disposal of 23.4 million poults. Assuming all tom poults were placed, (representing a broad assumption), 16.8 percent of hen poults or 8.4 percent of all poults hatched during the period were not placed.

 

Turkey Production:

The October 16th 2020 edition of the USDA Turkey Market News Report (Vol. 67: No. 42) confirmed the following provisional data for turkeys slaughtered under Federal inspection:-

  • For the processing week ending October 10th 2020, 1.758 million young hens were slaughtered during the processing week at a live weight of 16.8 lbs. (last week 1.794 million at 16.6 lbs.). During the corresponding week in 2019, 1.702 million hens were processed, 3.2 percent less than the current week. Ready-to-cook (RTC) hen weight for the week attained 23.7 million lbs. (10,788 metric tons), 6.1 percent more than the corresponding processing week of 2019. Dressing percentage was a nominal 80.5. For YTD 2020 RTC hen production attained 930.5 million lbs. (422,933 metric tons), 1.1 percent less than during YTD 2019.
  • For the processing week ending October 10th 2020, 2.061 million toms were slaughtered at 43.3 lbs. compared to 2.268 million toms processed during the previous week at 43.8 lbs. For the corresponding processing week in 2019, 2.594 million toms were processed. Ready-to-cook tom weight for the week attained 71.9 million lbs. (32,685 metric tons), 18.1 percent less than the corresponding processing week in 2019. Dressing percentage was a nominal 80.5 percent. For 2020 YTD, RTC tom product attained 3.27 million lbs. (1,486,147 metric tons), 2.9 percent less than for the YTD 2019.
  • The National average frozen hen price during the past week was 114.0 cents per lb., down 1.0 cent per lb. from the previous week and up 17 cents from the three-year average. The following prices rounded to nearest cent were documented for domestic and export trading on October 16th 2020:-

 

 

Broiler Week

10/16/2020

Weekly Broiler Production and Prices

 

Chick Placements.

The Broiler Hatchery Report released on October 14th 2020 confirmed that a total of 223.6 million eggs were set during the week ending October 10th 2020, two percent more than in the corresponding week of 2019 and 1.4 percent (3.1 million eggs) more than the previous week. A total of 168.7 million day-old chicks were placed among the 19 major broiler-producing states during the week ending October 10th 2020. Total chick placements for the U.S. amounted to 177.3 million, three percent less than the corresponding week in 2019 and 2.5 percent (4.6 million chicks) less than the previous week. Claimed average hatchability was 82.3 percent for eggs set three weeks earlier, (82.6 percent for the previous week). Cumulative placements for the period January 4th through October 10th 2002 amounted to 7.61 billion chicks, one percent lower than the corresponding period in 2019.

 

Broiler Production

According to the October 16th 2020 USDA Broiler Market News Report (Vol. 67: No. 42) for the processing week ending October 10th 2020, 168.3 million broilers were processed during the past week (last week 169.7 million) at an average live weight of 6.48 lbs. (6.44 lbs. last week) and a nominal yield of 76.0 percent. The number of broilers processed was 3.6 percent less than the corresponding processing week in 2019. Processed (RTC) broiler production for the week was 828.8 million lbs. (376,751metric tons), (830.6 million lbs. last week) 1.8 percent less than the corresponding processing week in 2019. For YTD 2020 Processed (RTC) production attained 32,342 million lbs. (14,701,000 metric tons), 1.2 percent more than YTD 2019.

 

Broiler Prices

The USDA National Composite Weighted Wholesale price on October 16th 2020 was up 2.8 cents per lb. from the previous week to 67.9 cents per lb. compared to 78.5 cents per lb. during the corresponding week of 2019; 63.6 cents per lb. for September 2020 and 83.0 cents per lb. for the three-year average. The USDA Composite price has now been relatively stable albeit at a depressed value for over eight weeks. Price moved up 22 cents per lb. from a bottom of 52.7 cents per lb. recorded during the last week of April. The decline during April and May was attributed to the collapse of the food service segment following imposition of COVID-19 restrictions.


 

COMMODITY REPORT: October 16th 2020.

10/16/2020

  • The financial and economic implications of the COVID-19 pandemic continue but gradual easing over an extended period is expected as society struggles to return to a “new normal” with recent noteworthy upsurges in incidence in both rural and urban areas of the U.S. Markets do not appear to be influenced by the imminent General Election on November 3rd.
  • Commodity prices this past week were mixed and fluctuated, influenced by export orders, lower projections for 2020 crop yields, ending stocks projected in the October 9th WASDE Report and the September Grain Stocks Report. Corn showed an increase of 2.0 percent for the week despite lack of orders from China but responding to a shipment to Mexico and in anticipation of large orders from China. Soybeans fell 1.3 percent in price this week despite orders booked by China and other nations and projected lower ending stocks attributed to a downward revision of yield and associated factors. Soybean meal rose by 1.7 percent disproportionate to soybeans.
  • Since July 10th year-to-date exports and 2020/2021 market-year orders for corn have attained 7.54 million metric tons (297.0 million bushels) but with a single order this past week. Exports and orders for soybeans amounted to 18.2 million tons (666.2 million bushels) of which 20 percent was ordered during September. Approximately 0.65 million metric tons (2.4 million bushels) was ordered this past week
  • Prospects for commodity exports to China during the 2020/2021 market year that began on September 1st for corn and soybeans have improved. China adjusted their domestic short-term demand for soybeans as a result of an apparent increase in the hog herd after severe losses in 2019 and early 2020 from African swine fever. White-feathered chicken production has now recovered after COVID disruptions and on QSR demand. China is also taking advantage of shipping rates that are rising sharply in order to build inventory. The Baltic Dry Index was 1,860 in mid-October 2019, fell to 744 in April 2020 and is now at 1,471.

 

The following quotations for delivery in the months as indicated were posted by the CME at close of trading on October 16th compared with values posted on October 10th (in parentheses) reflecting specified months for delivery.

 

COMMODITY

Corn (cents per bushel)

 Dec. 402 (394)

March ‘21 407 (402)

Soybeans (cents per bushel)

 Jan. ’21 1,051 (1,065)

March ’21 1,038 (1,047)

Soybean meal ($ per ton)

 Dec. 368 (362)

March ‘21 355 (364)

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

 

COMMODITY CHANGE FROM PAST WEEK

Corn: Dec. quotation up 8 cents per bushel (+2.0 percent)

Soybeans: Jan. quotation down 14 cents per bushel (-1.3 percent)

Soybean Meal: Oct. quotation up $6 per ton (+1.7 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

 

Uncertainties still include:-

  • There are questions as to whether China will satisfy quantitative obligations in terms of the Phase One Trade during calendar 2020. The Agreement signed in mid-January incorporated U.S. tariff rescissions, promised purchases of agricultural commodities (valued at $36.5 billion in 2020 and $43.5 billion in 2021), concessions on some structural issues by China and strengthened enforcement provisions. For the first half of calendar 2020 China imported agricultural commodities to the value of $7.3 Billion

 

  • Domestic U.S. soybean and soybean meal demand is now less constrained by COVID-induced cutbacks in the intensive livestock and poultry sectors.

 

According to the October WASDE, corn to be harvested in calendar 2020 is expected to attain 14,722 million bushels with ending stocks projected at 2,167 million bushels. Final values will be modified by actual yield influenced by weather conditions and export volume. Compared with the October 9th at close of trading the CME quotation for corn on October 16th was up 8 cents per bushel for December delivery to 402 cents, adding to the 15 cent per bushel advance from the preceding week. The Friday October price was the highest since January 24th 2020 at 387 cents per bushel.

 

The social restrictions imposed in the U.S. as a result of COVID-19 will reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2020 requirement accepting a nominal ten percent addition to gasoline. More than thirty percent of U.S. ethanol fermentation capacity is off-line at present and the outlook for increased demand is questionable. Ethanol was priced higher at $1.43 per gallon on October 16th up 32 cents per gallon (28.8 percent) reversing the decline from the previous week and compared with a five-year low of $0.92 per gallon on March 26th. Concurrently gasoline at $1.17 per gallon (quoted, New York Harbor) is 26 cents per gallon lower than ethanol but has a 63 percent higher BTU rating.

 

With more plants producing ethanol in the 4th quarter, DDGS is now available but at a higher price than in the second quarter. Eastern Corn-belt product was priced at $165 per ton on October 13th, $11 higher than the previous week but $35 per ton less expensive than October 15th 2019.

 

Soybeans are the beneficiary of the Phase-One agreement with China but down 14 cents per bushel to 1,051 cents for January 2021 delivery. The USDA anticipates a 2020 crop of 4,268 million bushels, but this value is subject to continuing drought in some states. Ending stocks according to the October WASDE projection will attain 290 million bushels.

 

On October 16th the BRL exchange with the CNY was 0.84, (up 0.01 from the previous week). The conversion of the US$ to the CNY was set at 6.7 on October 16th, unchanged from the previous week.

 

For consecutive 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.

 

The following extracts from the September 30th 2020 edition of the Quarterly USDA Grain Stocks Report indicate the levels of storage on farms and in fields and off-farm for corn and soybeans.

 

  • “Old crop corn stocks in all positions on September 1, 2020 totaled 2.00 billion bushels, down 10 percent from September 1, 2019. Of the total stocks, 751 million bushels are stored on farms, down 8 percent from a year earlier. Off-farm stocks, at 1.24 billion bushels, are down 12 percent from a year ago. The June to August 2020 indicated disappearance is 3.02 billion bushels, compared with 2.98 billion bushels during the same period last year. Based on an analysis of end-of-marketing year stock estimates, disappearance data for exports, and farm program administrative data, the 2019 corn for grain production is revised up 2.67 million bushels from the previous estimate. Corn silage production is revised up 715 thousand tons. Planted area is revised to 89.7 million acres, and area harvested for grain is revised to 81.3 million acres. Area harvested for silage is revised to 6.62 million acres. The 2019 grain yield, at 167.5 bushels per acre, is up 0.1 bushel from the previous estimate. The 2019 silage yield, at 20.2 tons per acre, remains unchanged from the previous estimate”.

 

  • “Old crop soybeans stored in all positions on September 1, 2020 totaled 523 million bushels, down 42 percent from September 1, 2019. Soybean stocks stored on farms totaled 141 million bushels, down 47 percent from a year ago. Off-farm stocks, at 382 million bushels, are down 41 percent from last September. Indicated disappearance for June - August 2020 totaled 858 million bushels, down 2 percent from the same period a year earlier. Based on an analysis of end-of-marketing year stock estimates, disappearance data for exports and crushings, and farm program administrative data, the 2019 soybean production is revised down 333 thousand bushels from the previous estimate. Planted area is unchanged at 76.1 million acres, but harvested area is revised to 74.9 million acres. The 2019 yield, at 47.4 bushels per acre, is unchanged from the previous estimate”.

 

COMMENTS

Subscribers are referred to the October 9th WASDE #605 in this edition and the results of the 2020 Pro Farmer 7-State Tour retrievable under the Search TAB.

 

The President opined on July 10th that he is “not contemplating a second phase of a trade agreement with China”

 

Approximately $16 billion will be disbursed under the Coronavirus Food Assistance Program (CFAP). As of August 10th, $7.1 Billion was distributed. An additional $14 Billion relief package was announced by the Administration on September 18th with a proportion already distributed.


 

AGR Partners and StepStone Group Complete Ownership of Green Plains Cattle Company

10/15/2020

GR Partners LLC together with co-investor StepStone Group have completed the purchase of Green Plains Inc. acquiring all the outstanding equity. AGR and StepStone Group completed the purchase of half of the shares in Green Plains Cattle Company during September 2019.

 

Green Plains Cattle Company is the fourth-largest U.S. cattle feeder with a total capacity of more than 355,000 head spread among six feed lots in three southwestern states.

 

AGR Partners is an investment firm based in Davis, CA. with an office in Chicago, IL. specializing in food companies and agribusiness concerns.


 

International Poultry Scientific Forum to be Virtual in 2021

10/15/2020

The Southern Poultry Science Society (SPSS) has announced that the 2021 International Poultry Scientific Forum will take place as a virtual meeting January 25th and 26th in conjunction with the week during which the IPPE was scheduled to take place.

 

The SPSS is soliciting abstracts for the virtual program that will include oral and poster presentations and incorporate the usual student competition and Keynote Lecture. 

 

Abstract submission is open until October 28th.  Information is available on both the SPSS and USPOULTRY websites.  Additional information is available from Dr. Mary M. Beck, Executive Secretary of the SPSS at <mbeck@poultry.msstate.edu>.

 


 

Comparison of Commodity Prices in China with CME Quotations.

10/15/2020

The relative prices expressed in US$ per short ton for corn, soybeans and soybean meal, December delivery, were downloaded from the Dalian Commodity Exchange website reflecting major contracts at close of trading on October 15th.  These values were compared with the spot price at noon on the CME indicated in parentheses. 

 

Commodity

Dalian CE

52-week range

CME 09/02

Corn

$345*

$257-$349

($144)

Soybeans

$609*

$496-$623

($354)

Soybean Meal

$433*

$358-$443

($371)

 

* short ton with exchange rate CNY 6.7=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 33 cents per dozen.

 


 

USDA Forecasts Global Production and Trade in Chicken Meat

10/14/2020

The October 9th Livestock and Poultry Report documented two percent higher production in 2021 World production of broiler meat attaining 102.9 million metric tons.  China will increase production of chicken meat, predominately as white-feathered broilers in 2021 to 15.3 million metric tons 2.7 percent above the 14.85 million metric tons in 2020.  U.S. production will increase by one percent in 2021 to 20.47 million metric tons.  

 

Total non-U.S. broiler production will increase by 2.4 percent to 80.1 percent or 82.46 million metric tons out of the world total of 102.93 million metric tons. China will represent 14.9 percent, Brazil 13.8 percent, the European Union 12.2 percent, the Russian Federation 4.6 percent compared to the U.S. with 19.9 percent.

 

The significant importers will include Japan (1.1 million metric tons); China (0.9 million metric tons); Mexico (0.89 million metric tons) and six other nations ranging from 0.32 million metric tons to 0.6 million metric tons.

 

The major exporters will be Brazil (3.9 million metric tons); the U.S. (3.3 million metric tons); the European Union (1.5 million metric tons) and Thailand (0.92 million metric tons).  Six other nations will each export between 0.15 million metric tons and 0.47 million metric tons.

 

In 2021, total imports will amount to 9.96 million metric tons and total exports 12.19 million metric tons.

 

The values projected by USDA exclude chicken feet.

 


 

South Korea Impacted by African Swine Fever

10/14/2020

According to Reuters, citing the official Yonhap Korean news agency, an outbreak of African swine fever was diagnosed on a farm in Gangwon Province on Thursday October 8th. This is the first time in approximately 12-months that authorities have had to cull herds to control ASF. An outbreak in November 2019 resulted in depletion of close to 500,000 hogs housed on 15 farms.

 

In the absence of a vaccine, biosecurity is the only preventive measure and control involves depletion, quarantine measures and intensified surveillance.

 

Given that ASF has emerged in South Korea, it is difficult for that nation to ban imports from Germany based on World Organization for Animal Health (OIE) guidelines.  The source of ASF in South Korea has not been determined but may be associated with the presence of endemic ASF in wild boars near the demilitarized zone separating North and South Korea.  The ASF problem in Germany is confined to wild boars that have strayed from Poland and may by now have infected the German population of feral hogs.  There have been no reports of an outbreak in any commercial or backyard hog operation in Germany irrespective of size.


 

SpartanNash Issues Stock Warrant to Amazon.com Inc

10/14/2020

SpartanNash (SPTN) ranked fifth among U.S. food distributors has issued warrants to an Amazon subsidiary, NV Investment Holdings covering 5.4 million shares valued at $96.4 million. This potentially makes Amazon the largest single investor in SpartanNash. The Company has signed a long-term agreement with Amazon for distribution and logistics.

 

The Company operates twelve grocery and seven military DCs in addition to 155 supermarkets in nine states.  The SpartanNash distribution network includes 2,100 independent grocers.

 

SpartanNash (SPTN) has a market capitalization of $737million and trades with a forward P/E of 9.9.  The company has traded over the past 52-weeks from $9.00 to $23.94 with a 50-day moving average of $17.95.  The company has recorded a trailing 12-month operating margin of 1.1 percent and a profit margin of 0.5 percent.  Return on assets attained 2.6 percent and on equity 7.0 percent.  Announcement of the Amazon warrant resulted in $4.25 increase in share price at the opening on Friday October 9th. This must have stung short speculators since 10.5 percent of the float was short as of September 30th. At close of trading on October 14th SPTN traded at $20.36.


 

Status of 2019 Corn and Soybean Crops

10/13/2020

The USDA Crop Progress Report released on October 13th documented corn continuing to mature and soybeans dropping leaves ahead of the 5-year average due to the earlier start in 2020. Nearly half of the 2020 corn crop has been harvested, twice the volume at this time last year. Almost two thirds of the soybean harvest is in, three times the rate during the corresponding week of last year.

 

The condition of both corn and soybean crops deteriorated in late August and early September as a result of drought. The condition of corn and soybeans has improved following rains in the Midwest and both crops are moderately superior to the 2019 season. Iowa and N. Dakota stand out as having poor soybean condition. Corn in Iowa, Colorado and Pennsylvania is suboptimal in quality contrasted to Minnesota, Wisconsin and Kentucky with corn superior to other states. 

 

Subsoil and surface moisture levels denote some relief from drought conditions except in Western and Pacific states. Both topsoil and subsoil moisture levels are similar to the past week. The corn-belt has experienced unseasonal high temperatures in combination with elevated humidity that may predispose to mycotoxicosis in the 2020 corn harvest. 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 2020 harvest in November.

 

Reference is made to the October 9th WASDE Report #605 in this edition, documenting actual 2020 acreage, and projected yields and ending stocks for corn and soybeans. The Pro Farmer 7-State Crop Tour projected corn and soybean yields of 177.5 and 52.5 bushels per acre. These were respectively, lower than USDA estimates that were revised to 178.4 and 51.9 bushels per acre in the October 9th WASDE Report.

 

 

WEEK ENDING

 

Crop

October 4th

October 11th

5-Year Average

Corn Mature (%)

Corn Harvested

87

25

94

41

87

32

Soybeans Dropping Leaves (%)

Soybeans Harvested

85

38

93

61

90

42

Crop Condition

V. Poor

 Poor

Fair

Good

Excellent

Corn 2020 (%)

Corn 2019 (%) *

* late planting

5

4

9

11

25

30

46

44

15

11

Soybeans 2020 (%)

Soybeans 2019 (%)*

 * late planting N/A

3

4

8

10

26

32

49

45

14

9

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture: Past Week

20

33

43

4

Past Year

10

16

55

19

Subsoil moisture: Past Week

17

33

47

3

Past Year

10

18

56

16


 

NCI Launches SeroNet

10/13/2020

The National Cancer Institute (NCI) has launched the Serological Sciences and Network for COVID-19 referred to as SeroNet.  This program will increase the capability of diagnostic laboratories and researchers to quantify antibody response to COVID-19.  This capacity will improve knowledge of how COVID-19 infection affects immune function and will be critical in monitoring the response to vaccination programs and as an aid in understanding the epidemiology of COVID-19.

 

The funding for SeroNet amounting to $300 million was provided as part of the Health Care Enhancement Act intended for "developing, validating, improving and implementing serological testing and associated technologies".  SeroNet represents half of the Congressional allocation.


 

Update on Compliance by China with Phase One Trade Agreement

10/13/2020

According to the January 2020 Phase-One Trade Agreement, China was committed to the purchase of $36.5 billion in agricultural products in 2020.  Through August the total stood at $10.7 billion approximately 13 percent below the value shipped for the corresponding period in 2017 before the initiation of the trade conflict with China.

 

According to an October 6th report by the U.S. Census Bureau, the U.S. shipped agricultural products to China in August amounting to $2.15 billion. During the month soybean exports were valued at $881 million, cotton at $215 million and corn at $190 million.

 

 During September, representing the new market year, soybean shipments to China probably exceeded four million tons, the highest for September since 2017.  Although there were no recorded shipments of corn to China in September, a volume of 1.2 million tons was shipped in August representing a record for any month since October 1995.


 

World Food Program Wins 2020 Nobel Peace Prize

10/13/2020

The World Food Program, an agency of the United Nations, was awarded the 2020 Nobel Peace Prize for efforts to combat hunger in regions affected by war and famine.  During 2019, the World Food Program assisted 100 million at risk of starvation in 88 nations.

 

Berit Reiss-Andersen, the Chair of the Norweigen Nobel Committee, stated, “With this year’s award, the Committee wishes to turn the eyes of the world to the millions of people who suffer from or face the threat of hunger.”  He added, “The World Food Program plays a key role in multilateral cooperation on making food security an instrument of peace.”

 

In the official statement accompanying the award, the Nobel Peace Committee emphasized the need for global solidarity and cooperation “at a time of increasing polarization and go-it-alone nationalism.”


 

Dietary Supplementation with Dried Egg Product Ineffective Against Coccidiosis

10/13/2020

A recent trial* failed to demonstrate any benefit from supplementing diets with an egg-derived compound apparently demonstrating an anti-Interleukin-10 effect.  Challenging caged broilers with Eimera tenella and E. acervulina reduced weight gain, feed intake and feed conversion compared to uninfected controls.  Neither oocyst shedding, serochemistry nor hematological parameters were improved by administration of the egg-based anti-IL-10 additive.

 

*Abdul Rasheed, M.S. at al Poultry Science doi.org/10.1016/j.psj.2020.09.012


 

Cargill Donates $1 Million to World Food Program

10/13/2020

Cargill Inc. has matched the Nobel Peace Prize award with a donation of $1 million to the United Nations, World Food Program. This donation matches the amount that accompanies the Prize and recognizes the recipient's efforts to combat hunger, help build a world free of conflict and to prevent the use of food as a weapon of war.

 

Michelle Grogg, Vice President of Corporate Responsibility at Cargill stated, "this one million dollar contribution builds on our twenty-year partnership to address food insecurity and advance farmer livelihoods around the world.  We encourage others to join in and support the World Food Program as it will take all of us working together to end systemic hunger and ensure a safe sustainable and affordable food system for all".

 

Randy Russell, the U.S. Board Chair of the World Food Program stated, "we are grateful to our long-standing partner Cargill for their significant commitment to the support of our program".

 

Although the generosity and commitment of Cargill Inc. is recognized and lauded, we should also take into account that there are almost fifteen million children in the U.S. currently deprived of adequate nutrition as a result of the COVID-19 pandemic and accompanying job losses. Hunger does not only occur in overpopulated regions in underdeveloped far-off nations beset with strife and severe weather—it is on our own doorstep.

 


 

World Animal Protection Promoting Fifty Percent Reduction in Meat Consumption

10/13/2020

World Animal Protection, a UK-based organization using welfare as a cloak for a vegan agenda is promoting their Meating Halfway campaign to reduce consumption of red meat and poultry by half. 

 

The Center for Consumer Freedom funded by agribusiness characterized the campaign as an example of  "the politics of incrementalism".  The Center considers that the call for a 50 percent reduction in meat consumption is merely a less radical position then total abstinence from meat. 

 

It must be remembered that World Animal Protection is in partnership with Compassion in World Farming to create standards for farm animal welfare some of which are being adopted by U.S. producers.

 

Neither welfare nor sustainability are the objectives of organizations such as World Animal Protection.  Their avowed intent is to eliminate intensive livestock production and then proceed  to ban all animal consumption.

 


 

CoBank Webinar

10/12/2020
 

JOIN US FOR A WEBINAR ON OCTOBER 15

The Economy and Agriculture are Recovering. Is the Rebound Sustainable?

CoBank's Knowledge Exchange Division is pleased to invite you to attend a webinar on the near-term outlook for the U.S. and agricultural economies. Our featured presenters from Knowledge Exchange will provide an update on the economy, grain markets, and the animal protein and dairy industries.

Featured Speakers:

Dan Kowalski

Vice President,

Knowledge Exchange

Kenneth Scott Zuckerberg

Lead Economist, Grain and Farm Supply

Knowledge Exchange

Will Sawyer

Lead Economist, Animal Protein

Knowledge Exchange

Register now for this informative event.

Title: The Economy and Agriculture are Recovering. Is the Rebound Sustainable?

Date: Thursday, October 15, 2020

Time: 11:00 AM MDT

View System Requirements


 

Tönnies Plant in North Germany Closed Over COVID

10/12/2020

The Tönnies plant located in Soegel in the Emsland District of the State of Lower Saxony near the border with Holland was closed by authorities following an outbreak of COVID among workers.  According to press reports, 112 of 2,000 employees have tested positive for SARS-CoV-2 virus. The official order to close the plant for 22 days is contested by the Tönnies Group. 

In June, Tönnies was forced to close a large pork plant in Guttersloh as a result of an extensive outbreak of COVID. The extensive outbreak ended after personnel were equipped with adequate PPE and extensive changes were made to the ventilation system to increase air exchange in addition to modification of processing lines to allow social distancing. 

 

Authorities point to the use of labor contractors to supply workers for meat processing plants in Germany as a risk factor in community COVID infection. Laborers are recruited from Eastern Europe and are housed under conditions that could promote infection both in plants and local communities. Outbreaks of COVID in meat-processing plants in Germany have resulted in the introduction of legislation in Parliament to regulate and monitor recruitment of plant labor.


State Police enforce plant closure

 

Tyson Faces COVID Lawsuit Over Fatality in Plant

10/12/2020

The Estate of Pedro Cano, a worker in the Columbus Junction, IA. plant operated by Tyson Foods is suing for compensation for their loss.  Mr. Cano contracted COVID-19 early during the course of the epidemic, subsequently dying of the disease.  Approximately 20 workers in the plant were diagnosed with COVID-19 before the Cano case and ultimately 522 workers were identified as positive for the virus as determined in May.

 

The lawsuit claims negligence citing lack of decontamination and screening. Tyson maintains that plants were operated in accordance with CDC guidelines then in effect and at a time when little was known concerning the epidemiology of COVID-19.

 

On April 28th, the President signed an Executive Order compelling meat packing plants and poultry processing facilities to continue operating on the basis of a national emergency.  The order contained proviso that companies should follow CDC guidelines with respect to protection of workers including testing.  Tyson Foods was in fact proactive in introducing measures to prevent infection and contracted with a national medical services group to conduct testing of workers, provide education on procedures to prevent infection and to conduct health screening.

 

In order to successfully pursue the claim, the plaintiffs would have to demonstrate that Mr. Cano acquired the infection in the plant, that is basically impossible. 


 

Tyson to Hire 245 Workers at Waterloo, IA. Hog Plant

10/12/2020

Tyson’s Fresh Meats was under an obligation to hire 245 full-time workers at the Waterloo, IA. Plant by September 30th, 2020.  This requirement was a condition for a tax credit of $2 million. The date for compliance was extended by the Iowa Economic Development Authority as Tyson expanded the plant by 56,000 square feet and invested in renovations.

 

Due to the COVID outbreak, Tyson has not been able to fulfill its obligation and the date to hire the incremental workers has been extended until May 31st, 2021.

 

Tyson Foods suspended operations at the plant on April 22nd when it was disclosed that 1,000 workers yielded positive antigen tests for COVID-19.  Following an investigation by the Iowa Occupational Safety and Health Administration, no violations were found as Tyson was operating in accordance with CDC directives then in operation.


 

Projection of Soy Production in Brazil

10/11/2020

Conab, the official crop agency of Brazil, has forecast a soybean crop of 133.7 million metric tons for the 2020-2021 season, approximately four percent higher than for the 2019-2020 crop.  The October 9th WASDE estimates the U.S. soybean crop at 116 million metric tons, lower than Brazil. 

 

The U.S. dominates in corn production with an estimated 2020 crop of 373 million metric tons compared to 105 million metric tons to be produced in Brazil during the 2020-2021 season.


 

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

10/10/2020

Export data for the first eight months of the current year confirmed a 4.1 percent increase in exports of broiler parts including feet, in comparison to January-August 2019. Unit price was 1.9 percent lower compared to the corresponding period in 2019 at $1,006. Volume increased by 4.1 percent but value declined by 2.1 percent compared to the first eight months of 2019. There were progressive reductions in value during May (7 percent), June (11 percent), July (14 percent) and August (10.7 percent) compared to corresponding months in 2019.

 

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

 

The extensive outbreak of African swine fever has boosted U.S. livestock and poultry exports to Asia over the intermediate-term, as all animal protein will rise in price as pork supply is restricted. The effect of increased demand from Viet Nam is apparent but disruption in ports and transport infrastructure due to the COVID-19 outbreak impacted exports to China during January and February 2020.

 

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


 

USDA-WASDE FORECAST #605 October 9th 2020

10/09/2020

OVERVIEW

The October 9th 2020 USDA WASDE Report was updated from the September edition reflecting drought conditions and the August 10th derecho with consequences to corn and soybean harvests. October projections are based on updated estimates of harvest area and yield. The corn acreage to be harvested is currently estimated at 82.5 million acres, down 1.0 million acres from the September 11th WASDE report. Soybeans will be harvested from 82.3 million acres, down 0.7 million acres from the September 11th WASDE report.

 

The October 2020 WASDE estimate of corn yield was lowered fractionally to 178.4 bushels per acre, (168.0 bushels per acre in 2019). The projection of soybean yield was unchanged at 51.9 bushels per acre. (47.4 bushels per acre in 2019)

 

The October USDA projection for the ending stock of corn was decreased by 13.4 percent to 2,167 million bushels. Due to decreased supply and exports the ending stock for soybeans was reduced by 36.9 percent to 290 million bushels.

 

Projections for ending stocks of both corn and soybeans have influenced recent CME price quotations concurrently with increased compliance with the Phase-One trade agreement with China. The September WASDE projected the corn price at $3.60 per bushel and soybeans at 980 cents per bushel.

 

It is presumed that projections are based on the assumption that China will as far as possible honor commitments that were disrupted during the first quarter of 2020 by COVID-19. China booked substantial orders for corn and soybeans delivered through August for the 2019-2020 market year in addition to large quantities booked from September onwards for the 2020-2021 market year. Reports on export volumes of commodities to China will be included in upcoming editions of CHICK-NEWS and in subsequent mailings as data becomes available.


 

COMMODITY REPORT: October 9th 2020.

10/09/2020

  • The financial and economic implications of the COVID-19 pandemic continue but gradual easing over an extended period is expected as society struggles to return to a “new normal” with recent noteworthy upsurges in incidence in both rural and urban areas of the U.S. Markets do not appear to be influenced by the imminent General Election on November 3rd.

 

  • Commodity prices this past week were higher, influenced by lower projections for 2020 crop yields developed from the Pro Farmer 7-state Tour, the October 9th WASDE Report and the September Grain Stocks Report. Corn showed an increase of 4.0 percent for the week despite lack of orders from China but presuming lower ending stocks. Soybeans rose 4.1 percent in price this week based on orders booked by China and other nations and projected lower ending stocks attributed to a downward revision of yield and associated factors. Soybean meal rose by 3.7 percent in proportion to soybeans.

 

  • Since July 10th year-to-date exports and 2020/2021 market-year orders for corn have attained 7.41 million metric tons (292.5 million bushels) but with no reported orders this past week. Exports and orders for soybeans amounted to 17.5 million tons (656.9 million bushels) of which 20 percent was ordered during September. Approximately 10 million metric tons (36.5 million bushels) was ordered this past week

 

  • Prospects for commodity exports to China during the 2020/2021 market year that began on September 1st for corn and soybeans have improved. China adjusted their domestic short-term demand for soybeans as a result of an apparent increase in the hog herd after severe losses in 2019 and early 2020 from African swine fever. White-feathered chicken production has now recovered after COVID disruptions and on QSR demand. China is also taking advantage of shipping rates that are rising in order to build inventory.

 

The following quotations for delivery in the months as indicated were posted by the CME at 15H30 on October 9th compared with values posted on October 3rd (in parentheses) reflecting specified months for delivery.

 

COMMODITY

 

Corn (cents per bushel)

 Dec. 394 (379)

March ‘21 402 (389)

Soybeans (cents per bushel)

 Jan. 1,065 (1,023)

March ’21 1,047 (1,005)

Soybean meal ($ per ton)

 Oct. 362 (349)

Dec. 364 (352)

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

 

COMMODITY CHANGE FROM PAST WEEK

Corn: Dec. quotation up 15 cents per bushel (+4.0 percent)

Soybeans: Jan. quotation up 42 cents per bushel (+4.1 percent)

Soybean Meal: Oct. quotation up $13 per ton (+3.6 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

 

Uncertainties still include:-

  • There are questions as to whether China will satisfy quantitative obligations in terms of the Phase One Trade during calendar 2020. The Agreement signed in mid-January incorporated U.S. tariff rescissions, promised purchases of agricultural commodities (valued at $36.5 billion in 2020 and $43.5 billion in 2021), concessions on some structural issues by China and strengthened enforcement provisions. For the first half of calendar 2020 China imported agricultural commodities to the value of $7.3 Billion
  • Domestic U.S. soybean and soybean meal demand is now less constrained by COVID-induced cutbacks in the intensive livestock and poultry sectors.

According to the October WASDE, corn to be harvested in calendar 2020 is expected to attain 14,722 million bushels with ending stocks projected at 2,167 million bushels. Final values will be modified by actual yield influenced by weather conditions and export volume. Compared with the October 3rd 2020 at 15H30 the CME quotation for corn on October 9th was up 15 cents per bushel for December delivery to 394 cents, adding to the 14 cent per bushel advance from the preceding week. The Friday October price was the highest since January 24th 2020 at 387 cents per bushel.

The social restrictions imposed in the U.S. as a result of COVID-19 will reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2020 requirement accepting a nominal ten percent addition to gasoline. More than thirty percent of U.S. ethanol fermentation capacity is off-line at present and the outlook for increased demand is questionable. Ethanol was priced at $1.11 per gallon on October 2nd down 28 cents per gallon (20.1 percent) from the previous week and compared with a five-year low of $0.92 per gallon on March 26th. Concurrently gasoline at $1.21 per gallon (quoted, New York Harbor) is 10 cents per gallon higher than ethanol but has a 63 percent higher BTU rating.

With more plants producing ethanol in the 4th quarter, DDGS is now available at a lower price than in the second quarter. Eastern Corn-belt product was priced at $154 per ton on October 6th, $6 lower than the previous week and $24 per ton less expensive than October 8th 2019.

 Soybeans are the beneficiary of the Phase-One agreement with China and were accordingly up 42 cents per bushel to 1,065 cents for January 2021 delivery. The USDA anticipates a 2020 crop of 4,268 million bushels, but this value is subject to continuing drought in some states. Ending stocks according to the October WASDE projection will attain 290 million bushels.

On October 9th the BRL exchange with the CNY was 0.83, (unchanged from the previous week). The conversion of the US$ to the CNY was set at 6.7 on October 9th. (unchanged from the previous week).

For consecutive 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.

The following extracts from the September 30th 2020 edition of the Quarterly USDA Grain Stocks Report indicate the levels of storage on farms and in fields and off-farm for corn and soybeans.

  • “Old crop corn stocks in all positions on September 1, 2020 totaled 2.00 billion bushels, down 10 percent from September 1, 2019. Of the total stocks, 751 million bushels are stored on farms, down 8 percent from a year earlier. Off-farm stocks, at 1.24 billion bushels, are down 12 percent from a year ago. The June to August 2020 indicated disappearance is 3.02 billion bushels, compared with 2.98 billion bushels during the same period last year. Based on an analysis of end-of-marketing year stock estimates, disappearance data for exports, and farm program administrative data, the 2019 corn for grain production is revised up 2.67 million bushels from the previous estimate. Corn silage production is revised up 715 thousand tons. Planted area is revised to 89.7 million acres, and area harvested for grain is revised to 81.3 million acres. Area harvested for silage is revised to 6.62 million acres. The 2019 grain yield, at 167.5 bushels per acre, is up 0.1 bushel from the previous estimate. The 2019 silage yield, at 20.2 tons per acre, remains unchanged from the previous estimate”.
  • “Old crop soybeans stored in all positions on September 1, 2020 totaled 523 million bushels, down 42 percent from September 1, 2019. Soybean stocks stored on farms totaled 141 million bushels, down 47 percent from a year ago. Off-farm stocks, at 382 million bushels, are down 41 percent from last September. Indicated disappearance for June - August 2020 totaled 858 million bushels, down 2 percent from the same period a year earlier. Based on an analysis of end-of-marketing year stock estimates, disappearance data for exports and crushings, and farm program administrative data, the 2019 soybean production is revised down 333 thousand bushels from the previous estimate. Planted area is unchanged at 76.1 million acres, but harvested area is revised to 74.9 million acres. The 2019 yield, at 47.4 bushels per acre, is unchanged from the previous estimate”.

COMMENTS

Subscribers are referred to the October 9th WASDE #605 in this edition and the results of the 2020 Pro Farmer 7-State Tour retrievable under the Search TAB.

The President opined on July 10th that he is “not contemplating a second phase of a trade agreement with China”

Approximately $16 billion will be disbursed under the Coronavirus Food Assistance Program (CFAP). As of August 10th, $7.1 Billion was distributed. An additional $14 Billion relief package was announced by the Administration on September 18th with a proportion already distributed.


 

Broiler Week

10/09/2020

Weekly Broiler Production and Prices

 

Chick Placements.

The Broiler Hatchery Report released on October 7th 2020 confirmed that a total of 219.9 million eggs were set during the week ending October 3rd 2020, fractionally (<0.1 percent) more than in the corresponding week of 2019 and 3.2 percent (7.4 million eggs) less than the previous week. A total of 173.3 million day-old chicks were placed among the 19 major broiler-producing states during the week ending October 3rd 2020. Total chick placements for the U.S. amounted to 182.1 million, two percent less than the corresponding week in 2019 and 0.3 percent (0.6 million chicks) more than the previous week. Claimed average hatchability was 82.6 percent for eggs set three weeks earlier, (82.4 percent for the previous week). Cumulative placements for the period January 4th through October 3rd 2002 amounted to 7.43 billion chicks, one percent lower than the corresponding period in 2019.

 

Broiler Production

According to the October 9th 2020 USDA Broiler Market News Report (Vol. 67: No. 41) for the processing week ending October 3rd 2020, 169.7 million broilers were processed during the past week (last week 170.6 million) at an average live weight of 6.44 lbs. (6.44 lbs. last week) and a nominal yield of 76.0 percent. The number of broilers processed was 3.3 percent less than the corresponding processing week in 2019. Processed (RTC) broiler production for the week was 830.6 million lbs. (377,567metric tons), (834.8 million lbs. last week) 1.0 percent less than the corresponding processing week in 2019. For YTD 2020 Processed (RTC) production attained 31,513 million lbs. (14,324,268 metric tons), 1.3 percent more than YTD 2019.

 

Broiler Prices

The USDA National Composite Weighted Wholesale price on October 9th 2020 was up 1.8 cents per lb. from the previous week to 65.1 cents per lb. compared to 78.7 cents per lb. during the corresponding week of 2019; 63.6 cents per lb. for September 2020 and 83.0 cents per lb. for the three-year average. The USDA Composite price has now been relatively stable albeit at a depressed value for over seven weeks. Price moved up 22 cents per lb. from a bottom of 52.7 cents per lb. recorded during the last week of April. The decline during April and May was attributed to the collapse of the food service segment following imposition of COVID-19 restrictions.


 

Turkey Week

10/09/2020

Weekly Turkey Production and Prices

 

Poult Production and Placement:

The September 15th edition of the USDA Turkey Hatchery Report, issued monthly, documented 25.9 million eggs in incubators on September 1st 2020 (27.2 million eggs on August 1st 2020) and down 2.7 percent (0.7 million eggs) from September 1st 2019.

 

A total of 22.3 million poults were hatched during August 2020 (23.8 million in July 2020), representing a decrease of 8.0 percent from August 2019.

 

A total of 20.6 million poults were placed on farms in the U.S. in August 2020, (23.0 million in July 2020), 10.4 percent less than in August 2019. This suggests disposal of 1.6 million poults during the month (0.9 million in July 2020). Assuming all tom poults were placed (an unsubstantiated estimate in a fluctuating demand for products), 14.4 percent of August-hatched hen poults or 7.2 percent of all August-hatched poults were not placed.

 

For the twelve-month period September 2019 through August 2020 inclusive, 277.5 million poults were hatched and 254.2 million were placed. This suggests disposal of 23.4 million poults. Assuming all tom poults were placed, (representing a broad assumption), 16.9 percent of hen poults or 8.4 percent of all poults hatched during the period were not placed.


 

McDonald's Releases Q3 Sales Data

10/09/2020

In a company release on October 8th, McDonald's Corp reported a global same-store sales decrease of 2.2 percent compared to Q3 of 2019, before the emergence of COVID. The U.S. achieved a positive 4.6 percent on promotions, drive-through and delivery sales.  International Operated Markets declined by 4.4 percent due to negatives in France, Spain, Germany and the U.K. International Developmental Licensed Markets declined by 10.1 percent. A gain in Japan in this segment was offset by declines in China and Latin America.

 


 

Chr. Hansen Posts Q4 and FY2020 Results

10/09/2020

Chr. Hansen A/S reported Q4 revenue of $363 million with earnings before interest and taxes (EBIT) of $125 million.  For the quarter, growth in revenue attained seven percent with the Health and Nutrition segment contributing 18 percent to EBIT.  The Food Cultures and Enzyme segment contributed five percent to organic growth.

 

For fiscal 2020, revenue attained $1.403 billion with an EBIT of $420 million for the entire year, revenue increased by five percent with the Health and Nutrition segment contributing nine percent.

 


Mauricio Graber

In providing guidance for FY2021, the company anticipates revenue growth of between five and eight percent and an EBIT margin of 27 to 28 percent.

 

In commenting on results, CEO Mauricio Graber stated, "2019/2020 was a defining and extremely eventful year for Chr. Hansen.  We launched our new 2025 strategy to become a focused bioscience company and to grow a better world naturally".  He added "everyone has had to manage through a pandemic which has imposed unique challenges"


 

USDA to Cease Issuing Biannual Farm Labor Report

10/08/2020

The USDA-National Agricultural Statistic Service will cease publishing the biannual Farm Labor Report effective November 2020.

 

The Agricultural Labor Survey provides quarterly statistics on the numbers of agricultural workers, hours employed and their wage rates.  This data is used to estimate agricultural productivity and is applied in estimating the numbers of H-2A visas required and establishing wage rates.

 

USDA has apparently concluded that sufficient data is available from other sources including the Agricultural Resources Management Survey, the Census of Agriculture, American Communities Survey, Quarterly Census of Employment and Wages and other official publications.  Due to the fact that the Farm Labor Report will not be issued in November the National Agricultural Statistic Service will not collect data in October 2020.

 

 


 

Eradication of ASF in German Wild Boar Population Elusive

10/08/2020

CHICK-NEWS has reported on the increasing numbers of wild boars found dead in Brandenburg State near the border with Poland.  Effective October 5th, 49 individual animals have been diagnosed with African swine fever based on post-mortem specimens.  It is disquieting that the most recent case was 35 miles from the first. This indicates that either wild boars that have moved across the border with Poland are either moving westward or that these animals have infected the wild boar population of Germany.

 

Unless authorities in Germany can effectively locate and destroy affected animals and seal the border with Poland it is unlikely that the nation will resume pork exports to China, their major market outside the EU.

 

The reason why China is imposing a stringent nationwide ban on import of pork is inexplicable.  African swine fever has not been diagnosed in any commercial herd in Germany.  The requirements imposed by the World Organization for Animal Health (OIE) allow for regionalization.  Even if China did not have endemic African swine fever, they are legally only entitled to place a ban on imports of pork originating in the state of Brandenburg or as an extreme precaution, adjoining states. 

 

The response of China to the outbreak of ASF in wild boars in Germany should be a warning to other nations exporting pork to China. Accordingly the U.S. should initiate intensive efforts to eradicate the domestic population exceeding 10 million boars, feral hogs and hybrids now present in approximately 30 states.


 

October 2020 Short-Term Energy Outlook

10/08/2020

The Energy Information Agency released the October Short-Term Energy Outlook on October 5th.  According to Dr. Linda Capuano COVID has shifted energy consumption from offices and malls to homes with implications for the coming winter.  Due to the LaNina event, it is anticipated that winter temperatures will be lower than normal resulting in demand for home heating. Currently natural gas storage is at a record high at approximately four trillion cubic feet but will decline by the end of March 2021 to a figure six percent lower than the five-year average.  An anticipated two percent decline in natural gas prices will be offset by an eight percent increase in consumption over winter resulting in increased expenditure by homeowners.

 

The EIA anticipates that liquid fuels will stabilize but with high inventory levels and pressure on oil prices.  The EIA anticipates a monthly Brent spot price of $42 per barrel during the fourth quarter of 2020.  U.S. crude oil production rose to 11.2 million barrels per day in September up 1.2 million barrels from May, representing a 40-month low.  Natural gas prices will increase to $3.38 per million BTU in January 2021 with average prices for the coming year approximately $1 per million BTU higher than in 2020.

 

Coal production in 2020 will be 26 percent lower than in 2019 due to competition from natural gas.  The decline in mining activity has less to do with EPA and OSHA that it is to do with straightforward price competition.  As natural gas prices rise in 2021, demand for coal will increase with production anticipated to rise by 19 percent.

 


 

Uber Technologies Integrating Postmates Acquisition

10/08/2020

A filing by Uber Technologies quantified the accumulated deficit of $929 million generated by Postmates through June 30th.  The company lost $32 million in the second quarter, presumably a profitable period given the extent of COVID-related ordering from restaurants. Uber is nevertheless confident that the acquisition will generate synergies equivalent to $200 million one year after closing.

 

A serious overhang will be the result of California Proposition #22.  If passed, Postmates- Uber drivers would be regarded as employees eligible for fringe benefits.  According to an article by Laura Forman in the October 5th edition of The Wall Street Journal, there is no certainty as to the outcome of the November 3rd ballot.

 

Uber Technologies (UBER) has traded during the past 52-weeks over a range of $13.71 to $41.86 with a 50-day moving average of $34.28.  Market capitalization is $65.1 billion with three percent of shares outstanding short.  Fundamentals are horrendous with a return on assets of (10.0) percent and a return on equity of (52.7) percent.  Operating margin over the trailing   12-months is (34.8) percent and the profit margin (51.0) percent.  The company carries $9.6 billion in total debt. 


 

Pfizer CEO Commits to “Speed of Science” for COVID Vaccine Development

10/07/2020

In a letter to company employees, Dr. Albert Bourla, CEO of Pfizer noted that the company is “moving at the speed of science” and is not influenced by political considerations or dictates by the Administration.  In the letter, later circulated by Associated Press, Bourla stated “I cannot predict exactly when or even if our vaccine will be approved by the FDA for distribution to the public.  I do know that the world will be safer if we stop talking about the vaccine delivery in political terms.”  He added, “People don’t know whom or what to believe.”  U.S. Federal health officials have continuously maintained that a vaccine is unlikely to be available before the end of 2020 and there will only be sufficient quantities for general administration by mid-2021 despite assertions by the White House to the contrary.

 

Pfizer anticipates obtaining data from the Stage-3 evaluation in late October but will not apply for approval until the company is convinced of the safety and efficacy of the product.

 

The consensus among the scientific community is that deployment of a vaccine over a broad segment of the U.S. population will not occur before mid-2021.  At the current time, at least half of the U.S. population is disinclined to receive a vaccine that will require two doses spaced one month apart.  Unless at least 65 percent of the population is effectively immunized, herd immunity to protect susceptible individuals will not be achieved.

 

It is note that a number of the mRNA vaccines under development will require a cold chain of minus 90 F (Pfizer) through 14 F (J&J and Astra Zeneca) that will impose additional logistic restraints.  As of the beginning of October, the Administration has not provided any details of how the vaccine will be handled or distributed and the priorities for administration of the limited number of initial doses that will be available.


 

U.S. Trade Deficit Increased in August

10/07/2020

According to a release by the Department of Commerce on October 6th, the trade deficit jumped 5.9 percent to $67.1 billion, the largest amount for August in 14 years. 

 

Imports increased by 3.2 percent to $239 billion. Of this total, goods represented $203 billion.

 

Exports increased 2.2 percent to $172 billion with $119 billion represented by goods, the difference between the total and goods exported comprised commodities and services.

 

In August commodity exports to China included corn valued at $190 million; soybeans, $881 million and cotton $215 million.


 

Thai Broiler Production to Recover from COVID Impact

10/07/2020

According to a September 15th GAIN report, TH2020-0126 detailing broiler production and consumption in Thailand, a 2.8 percent increase in production is projected in 2021.  Output in 2020 dropped 1.5 percent from 2019 to 3.25 million metric tons.  In 2021, production will attain 3.340 million metric tons.  Thailand will export 27.5 percent of production equivalent to 0.92 million metric tons.  Domestic consumption that dropped 4.8 percent from 2019 to 2020 will increase by 2.9 percent in 2021 to 2.42 million metric tons.  Assuming a Thai population of 70 million, per capita consumption will be 34.6 kg or 76.1 pounds.  This figure may be misleading since Thailand regularly welcomes 40 million visitors annually. Assuming a three-pound per capita consumption, the hotel restaurant and catering market would theoretically account for 0.12 million metric tons almost equivalent to the projected increase from 2020 to 2021.

 

Thailand is unique in that a significant proportion of exports are in cooked form.  The last reliable data in 2019 showed exports of 590,000 metric tons of cooked product; 291,000 metric tons of raw chicken, mostly in the form of portions and added-value and 18,700 metric tons of feet. Japan is the largest recipient of Thai chicken. In 2019, 50 percent of cooked chicken exports were shipped to Japan, equivalent to 294,000 metric tons. The EU was the second largest destination with 39 percent of cooked product amounting to 227,000 metric tons.  Lesser quantities are imported by South Korea, Singapore, Hong Kong and Canada. 

 

The export of raw chicken products comprised 39 percent to Japan at 122, 000 metric tons, 25 percent to China at 76,400 metric tons Malaysia at 13 percent with 41,000 metric tons and the remainder among South Korea, Hong Kong and diverse nations.  In 2021 the Government of China approved thirty export facilities in Thailand.

 

There are minimal prospects for export of U.S. product to Thailand given the high level of exports over and above domestic requirements. Potentially Thailand could receive leg quarters since there is a preference for dark meat in addition to deboned MDM. If exports become a reality, the most likely products will be leg quarters for processed and re-export.


 

Sysco Corp Testing Electric Delivery Vehicles

10/07/2020

Sysco Corporation is now testing Freightliner eCascadia Class-8 tractors for deliveries in the San Franciso metropolitan area. The eCascadia trucks manufactured by Daimler Trucks North America have a 250-mile range.

 

Neil Russell, Vice President of Cooperate Affairs for Sysco stated, "we are excited to partner with Daimler Trucks North America on this important work".  He added "collaborating with manufacturers to develop new truck models that can meet this specialized requirements of food delivery is a vital step towards reducing our impact on the planet".


eCascadia Freightliner Semi

 

Sysco is a member of the Freightliner Electric Vehicle Council that included J.B. Hunt and    Wal-Mart among other fleet owners.  The Council is evaluating costs of operation and identifying and resolving obstacles to deployment of electric vehicles.

 

Richard Howard, Senior Vice President Sales and Marketing for Daimler Trucks North America stated, "our customers provide important and continuous feedback and contribute to our ongoing design and innovation of vehicles".


 

Federal Farm Support May Attain $40 Billion in 2020

10/07/2020

In case you weren't keeping score, payments to the agricultural sector by the Federal government may exceed $40 billion in 2020.  Dr. Pat Westhoff, Director of the University of Missouri, Food and Agriculture Policy Research Institute (FAPRI) commented "these record payments support farm income in a year when cash receipts from sales of agricultural commodities have been reduced by the COVID pandemic and other factors".

 

Farmers will receive payments through the Coronavirus Food and Agriculture Program (CFAP), Phases One and Two, the Farmers to Families Box Program in addition to $10 to $15 billion annually in traditional crop subsidies.  FAPRI estimates that over a third of farm income will be derived from subsidies and support.

 

Dr. Rob Johansson, Chief Economist for the USDA noted that CFAP 2 payments will extend into 2021 coincident with expiry of programs to compensate for losses sustained in a trade war with China initiated in 2018.  


 

Red Meat Companies Cognizant of COVID Threat to Workers

10/07/2020

Speaking at the Wall Street Journal Global Food Forum on Monday October 5th, Andre Nogueira, CEO of JBS USA Holdings outlined measures taken by his company to improve safety in hog and beef plants.  Stunned by criticism from the United Food and Commercial Workers Union, negative OSHA reports and public reaction, JBS is apparently now implementing standard procedures to prevent transmission of COVID in their plants.  The company has intensified testing and is using an algorithm based on incidence rates to test in both plants and the communities where workers reside.

 

JBS SA the parent company engendered both national and international condemnation for a slow response to COVID in their plants in Brazil. Belatedly JBS will invest approximately $200 million in developing automated processing systems, recognizing the inevitability of displacing manual workers performing repetitive tasks.

 

Nogueira does not anticipate plant closures such as those that occurred in April and May when the entire industry was unprepared to respond to the COVID crisis and beef and pork output was halved and the supply chain disrupted.

 

It is unknown whether the low incidence rates recorded in plants during the past month are due to the testing protocols used or whether protective measures have reduced the rate of spread. It is questioned whether plant workers have developed protective antibodies. Accordingly sampling to ascertain the level of immunity would be beneficial in guiding future planning and to evaluate the effect of protective measures.

 

Mark Lauritsen representing the United Food and Commerical Workers Union noted that the measures taken by JBS albeit late in the pandemic have created a higher sense of security among workers.  This is exemplified by the fact that JBS is re-employing older workers who were sent home with pay since they were regarded as being at a higher risk of complications from infection compared to their younger colleagues.


 

China Holds Successful Animal Husbandry Expo

10/06/2020

The 17th China International Animal Husbandry Expo. took place in late September in Changsha, the capital of Hunan Province.  Due to the control of COVID-19 in China, it was possible to arrange the Expo that attracted 140,000 visitors to a broad program of interest to livestock and poultry producers, feed manufacturers and suppliers of additives with 1,200 companies exhibiting.

 

It is hoped that the COVID-situation in the U.S. will allow the 2021 IPPE to take place in Atlanta.


 

Progress in Understanding Pectoral Myopathy

10/06/2020

Dr. Sandra G. Velleman of Ohio State University recently presented the final report on Project #710 funded by USPOULTRY Foundation.  The report entitled Early Post-Hatch Nutritional Strategies to Reduce the Incidence and Severity of Wooden Breast and Inflammatory Myopathies, suggested that early nutritional intervention applying dietary supplementation with Vitamin E and ALA, an Omega-3 fatty acid influenced gene expression, favoring an improvement in breast muscle microanatomy.  Supplementation with Vitamin E was not associated with any significant improvement in body weight or yield but reduced the severity of wooden breast syndrome.  Supplementation with Vitamin E reduced shear force values in the pectoralis major muscle. 

 

Increasing Vitamin E in the starter diet was beneficial, but there was no effect from added Vitamin E in the grower diet.  Supplementation with Vitamin E increased the proportion of giant myofibers in pectoral muscle when included in the starter diet. Vitamin E supplementation in combination with Omega-3 fatty acid decreased the number of intraepithelial lymphocytes in the mucosa of the intestinal tract and increased villus height and crypt depth. These changes are indicators of optimal intestinal function. 

 

The study conducted at Ohio State provided an insight into the mechanisms associated with the pathogenesis of pectoral myopathy in high-yield broiler strains.  If Vitamin E and ALA supplementation are financially beneficial, dietary modification of chick diets extending through three weeks of age may provide a means of suppressing myopathy.  Over the long term however, resolution of the problem will depend on genetic selection guided by biomarkers. 

 

It is possible that the marketing and financial drivers of high-yield birds may now be inappropriate if restoration of the food service segment of the broiler market is delayed or is even permanently reduced in volume. Some integrators have transitioned from heavy birds raised for cut-up to harvest weights for tray-pack presentations suitable for home cooking. This trend has been driven by COVID-related factors that may well persist for years since recovery of the U.S. economy is not expected before 2024. 

 


Dr. Sandra Velleman,

Ohio State University

In reality primary breeders are obliged to make their selections of elite stock at least three years before their progeny is ultimately marketed. This requires both an understanding of market demand and the ability to select financially desirable traits to the exclusion of deleterious outcomes.

 

In retrospect we have seen this movie before. “Pushing the envelope” in the early 1970's confronted the broiler industry with tibial dyschondroplasia. During the late 1970's ascites syndrome emerged and right heart failure became a field problem in the 1980s. Short-term modalities were introduced to reduce the impact of these conditions. Within a few generations the defects were successively resolved by appropriate adjustment of selection programs, guided by knowledge from the disciplines of pathology and genetics.

 

The studies conducted by Dr. Velleman as supported by USPOULTRY help in understanding the molecular mechanisms leading to pectoral myopathy. This condition is accepted to be the outcome of intensive phenotypic selection for ‘high yield” strains that are financially beneficial for specific markets but at a given period of time. Knowledge concerning the causation of pectoral myopathy will help guide index selection at the elite level in male lines allowing integrators to benefit from high breast yield without the current need for downgrading and consumer rejection.

 

 


 

UAE Broiler Production and Trade

10/06/2020

The USDA-FAS GAIN report TC2020-0021 issued on September 29th documents projected broiler production in the United Arab Emirates (UAE) incorporating data on imports, exports and consumption.  The USDA projects a 12 percent increase in domestic production from 50,000 metric tons in 2020 to 56,000 metric tons in 2021.  Total imports will decline by two percent to 400,000 metric tons.  Net imports will be 352,000 metric tons given an export volume of 48,000 metric tons.  Accepting a population in the UAE of 10 million, the per capita consumption of chicken will be 40.8 kg (90 lb.). This per capita consumption value may be misleading given that the UAE has a large contingent of expatriate workers from Bangladesh and Pakistan who consume chicken but are not included in the population census.

 

 

The Abu Dhabi Agriculture and Food Safety Authority have assigned $272 million to improve agricultural production in the Emirate to include poultry.  Renovation of existing facilities is in progress and a new integrated broiler enterprise is planned.

 

As with many nations, COVID restrictions disrupted production and consumption in early 2020, but the domestic industry is less reliant on the food service sector that uses imported chicken.

 

The U.S. exported 41,000 metric tons of leg quarters to the UAE during the first half of 2020 representing 17 percent of the import market.  It is not anticipated that the volume of exports from the U.S. will increase due to competition from Brazil that holds 65 percent of the market and from the Ukraine, becoming more aggressive in exporting to the Middle East. Both exporters supply whole-birds in the 2.2 lb. to 2.5 lb. range with appropriate labeling, produced without animal protein or antibiotic additives in feed and slaughtered according to supervised Halal standards.


BRF Plant in Abu Dhabi UAE

 

Hamlet Expanding Marketing Efforts to Chicken

10/06/2020

Erik Visser CEO

Erik Visser, CEO of Hamlet Protein confirmed a commitment to U.S. broiler and turkey production in a recent interview.  Hamlet Protein specializes in the nutrition of young animals including piglets, chicks and poults.  Visser commented "we all know that good intestinal health in young chicks drives performance.  Their digestive and nutritional requirements are different from older broilers.  Our highly digestible protein products with low anti-nutritional factors help improve the quality of the diet and promote gut health without the use of antibiotics".  He added "we are continuously investing in trials in various locations to further support our product with scientific data". 

 

Hamlet Protein is specifically interested in the U.S. No-Antibiotic-Ever market and is working with producers to optimize starter programs that maximize productivity.

 

In September, Hamlet Protein appointed Dr. Kyle Brown as the poultry nutritionist for the North America region.  Dr. Brown will provide technical and nutritional consulting to clients in the U.S. and Canada.


 

Status of 2019 Corn and Soybean Crops

10/05/2020

The USDA Crop Progress Report released on October 5th documented corn continuing to mature and soybeans dropping leaves ahead of the 5-year averages and 2019 due to the earlier start in 2020. A quarter of the 2020 corn crop has been harvested, equivalent in volume to last year. Thirty eight percent of the soybean harvest is in, ahead of last year by ten percent. The condition of both corn and soybean crops deteriorated in late August and early September from drought. Condition of corn and soybeans has improved following rains in the Midwest and both crops are moderately superior to the 2019 season.

 

Subsoil and surface moisture levels denote some relief from drought conditions except in Western and Pacific states. Both topsoil and subsoil moisture levels are similar to the past week. The corn-belt has experienced unseasonal high temperatures in combination with elevated humidity that may predispose to mycotoxicosis in the 2020 corn harvest. 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 2020 harvest in October.

 

Reference is made to the September 11th WASDE Report #604 under the STATISTICS tab documenting projected 2020 acreage, yields and ending stocks for corn and soybeans to be updated after release of the October 9th Report.

 

The Pro Farmer 7-State Crop Tour projected corn and soybean yields of 177.5 and 52.5 bushels per acre respectively, lower than USDA August estimates that were revised to 178.5 and 51.9 bushels per acre respectively in the September 11th WASDE Report.

 

 

WEEK ENDING

 

Crop

September 27th

October 5th

5-Year Average

Corn Mature (%)

Corn Harvested

75

15

87

25

78

24

Soybeans Dropping Leaves (%)

Soybeans Harvested

74

20

85

38

82

28

Crop Condition

V. Poor

 Poor

Fair

Good

Excellent

Corn 2020 (%)

Corn 2019 (%) *

* late planting

4

4

9

11

25

29

48

45

14

11

Soybeans 2020 (%)

Soybeans 2019 (%)*

 * late planting N/A

3

4

7

11

26

32

50

45

14

8

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture: Past Week

16

31

50

3

Past Year

11

16

53

20

Subsoil moisture: Past Week

16

30

51

3

Past Year

10

18

57

15


 

Ziggity Systems Appoints Manager for Asia-Pacific Region

10/04/2020

Ziggity Systems has announced the appointment of Chenwei Ji as Account Manager for Asia-Pacific region. Chenwei is a resident of Canada and earned a Bachelor of Science degree in Agriculture and is fluent in Mandarin. 

 

Although restrained by current travel restrictions due to COVID, Chenwei will provide remote assistance and support to Ziggity customers in the Asia-Pacific Region.

 

Robert Hostetler, Vice President of Ziggity Systems welcomed Chenwei to Ziggity citing his experience in the poultry industry.

 


 

Sad Passing of Industry Stalwart Blake Lovette

10/04/2020

Blake Lovette

Blake Lovette passed on September 29th in Winston Salem, NC.  Raised on a farm in Wilkes County he graduated from North Carolina State University in 1965 and joined Holly Farms co-established by his brother, the late Fred Lovette.  In his career in the broiler industry, Lovette served as a plant manager for Holly Farms in Temperanceville, VA, as Vice-president of Holly Farms in 1976, at Valmac Industries in 1978, at Perdue Farms in 1985 with a return to Holly Farms as president and COO in 1988.  He left the company in 1999 following the acquisition by Tyson Foods.  He then joined ConAgra Poultry in 1998 and retired in 2003 after the Pilgrim's Pride acquisition.

 

Lovette was active in civic affairs serving on the Wilkes Board of Education, the Wilkes Regional Medical Center, the Wilkes Economic Development Corporation and the Wilkes Art Gallery. 

 

During his career he served on the National Chicken Council including three years as chairperson, the U.S. Poultry and Egg Association, the American Poultry Export Council, the N.C. Poultry Federation and the Arkansas Poultry Federation.  Lovette was inducted in the N.C. Poultry Federation Hall of Fame in 2010.


 

Meat Sales Increased by COVID

10/04/2020

According to a report entitled the Midyear Power of Meat 2020, issued by the Food Marketing Institute and the Foundation for Meat and Poultry Research and Education supported by the North American Meat Institute meat and poultry sales grew by 35 percent between mid-March and the end of July 2020 compared with the corresponding period in 2019.  The surge in buying was fueled by home preparation and consumptions of meals as COVID restrictions closed restaurants.  Consumers purchased different brands, cuts and types of meat, with choice frequently motivated by out-of-stock situations.  Non-availability also prompted an increase in consumption of seafood and meat alternatives.

 

The Midyear Power of Meat 2020 survey noted the importance of value after the initial surge in COVID buying.  With a complete range of products now available, almost half consumers have reverted to lower-priced products and are carefully evaluating price per pound especially with limited promotions.

 

Julie Potts, President and CEO of NAMI stated, "the survey affirms that meat and poultry remain what food consumers want when times are good and when faced with a crisis".


Julie Potts NAMI

 

NPIP Proposes Changes to Specific Programs

10/04/2020

The National Poultry Improvement Plan (NPIP) will amend regulations arising from deliberations and proposals at the 2018 Biennial Conference.  The most significant changes of relevance to the commercial poultry industry will be establishing a Newcastle Disease Clean Program with compartment status.  This will allow primary breeders to export stock in the event of a Newcastle disease outbreak in the U.S.  The second item of interest to the commercial industry involves changes in compensation in the event of exposure to low-pathogenicity avian influenza.  The proposed rule redefines cleaning and disinfection before restocking and addresses indemnity.

 

NPIP updated the regulations relating to game bird production.  This segment of the poultry industry is widely distributed through the U.S. with considerable interstate movement of birds.  Since many pathogens are common to both game birds and commercial chickens and turkeys, regulations to encourage participation in disease prevention programs will benefit commercial production.


 

West Liberty Foods Fire in Tremonton, UT. Plant

10/04/2020

According to press reports, a fire erupted at the Tremonton, UT. plant operated by West Liberty Foods on Friday October 2nd.  The fire started at approximately 05h30 in a boiler room that housed equipment to heat thermal cooking fluid.

 

Three employees were injured in initial attempts to contain the fire that was doused by the Tremonton City Fire Department.  The area around the plant was evacuated as a precautionary measure against the possible release of ammonia. The fire was confined to the service room and did not affect the plant although damage is estimated at $1.5 million.


 

STOP PRESS

10/04/2020

Federal Government Funded by Continuing Resolution

 

President Donald Trump signed a continuing resolution on Thursday, October 1st ensuring adequate funding of the Federal government through December 11th.  The Continuing Resolution was passed by the Senate on a vote of 84 to10 following passage by the House of Representatives on a 359 to 57 vote.  During the current session, the House has passed eleven appropriations bills while the Senate has yet to hold a vote on any appropriations.


 

Foster Farms Donates Chicken to Northwest Harvest

10/04/2020

Approximately 19 tons of chicken were delivered to the Northwest Harvest warehouse, a food bank in Kent, WA. on September 30th.  The donation represented 75,000 servings of chicken.  This is a second recent donation of similar size to Northwest Harvest. Since the onset of the COVID outbreak Foster Farms has donated 2.4 million servings to food banks in West Coast states.

 

Ira Brill, Vice President of Communications for Foster Farms stated, “We are happy to support the important work of our long-time food bank partners and are doing this to fight hunger amid an unprecedented demand for food that is expected to last long beyond the pandemic.”

 


 

Dr. Jim Perdue Elected to Meat Industry Hall of Fame

10/04/2020

Dr. Jim Perdue, Chairman of Perdue Farms, will be inducted into the Meat Industry Hall of Fame in a virtual ceremony during January 2021.  He follows his late father, Frank Perdue, elected into the Hall of Fame in 2009.

 

Andy Hanacek, Director of the Meat Industry Hall of Fame, stated, “Once again the Board of Trustees and living members of the Hall have done well to sort through a crowded field of well-qualified nominations.”  He added, “The Hall welcomes a class representing a wide variety of disciplines and divisions in the meat and poultry industry.  As the third generation leader of Perdue Farms, Jim continues to carry on the legacy of quality and consumer trust from his grandfather and father and exemplifies true leadership in our industry.”

 


Dr. Jim Perdue

In responding to the honor, Perdue stated, “Reaching our first century of business would not have been possible without the dedication and passion of our associates, farmers, customers, business partners, loyal customers and many more.  We look forward to entering our next 100- years in business with an unwavering commitment to our values of quality, integrity, teamwork, and stewardship”. 


 

Conagra Brands Releases Q1 FY 2021 Results

10/04/2020

The results for the first quarter of FY2021 posted by Conagra Brands (CAG) on October 1st demonstrate the current dichotomy induced by COVID in the U.S. food industry.  With eat-at-home boosting sales in packaged and frozen foods Conagra Brands reported a twenty percent decline in sales to the food service sector. 

For the quarter ending August 30th, CAG posted net income of $329 million on revenue of $2.68 billion with earnings per share of $0.67.  Comparable figures for Q1 of fiscal 2020 were net income of $174 million on revenue of $2.39 billion with earnings per share of $0.36.  Gross margin declined from 73 percent in Q1 of 2020 to 69 percent in Q1 of 2021.  For fiscal 2021, guidance included a one percent to two percent increase in sales an operating margin between 18 percent and 19 percent and earnings per share of $2.66 to $2.76.

 

CAG posted assets of $22.38 billion of which $15.74 billion was represented by the category of Goodwill, Brand Equity and Intangibles.  Long-term debt was $11.08 billion.

 

On October 1st, CAG market capitalization was $17.53 billion.  The company share price traded over a 12-month range of $22.83 to $39.34 with a 50-day moving average of $36.54.  CAG trades with a forward P/E of 15.1 and closed on Thursday, October 1st at $35.87.  The twelve-month trailing return on assets is 5.1 percent and on equity 10.9 percent.  Trailing twelve-month operating margin was 16.4 percent and profit margin 7.6 percent.


 

DSM Acquisition of Biomin and Romer Labs. Completed

10/03/2020

Following approvals by relevant authorities in the EU and the U.S., DSM has completed the acquisition of Biomin and Romer Labs from the Erber group of Austria.

 

In statements, DSM and Biomin noted that all existing contracts and commercial and technical contacts will remain unaffected for the foreseeable future.

 

It is anticipated there will be a transition period during which opportunities for synergy will be evaluated.  DSM management has “aspired to make animal protein and food production safer, more productive and more sustainable while feeding a growing global population.”


 

Walmart Stake in Asda to be Sold

10/03/2020

Following the acquisition of Asda, a major UK supermarket chain, for approximately $8 billion in 1999, Walmart has now relinquished ownership to a consortium comprising the Issa Brothers and TDR Capital.  The proposed acquisition by Sainsbury’s in 2019 was derailed by UK monopolies regulators as being anti-competitive.  The new owners of Asda will have to invest heavily in enhanced technology and rationalization of the chain to be competitive against larger chains and the deep discounters Ald and Lidl. 

 

Walmart elected to withdraw from the highly competitive UK supermarket space and to use the proceeds to pay for an investment in Flipkart in India.  The value of this investment is questioned given policies implemented by the government of India, disfavoring a free-enterprise business model.


 

COMMODITY REPORT: October 2nd 2020.

10/02/2020

  • The financial and economic implications of the COVID-19 pandemic continue but gradual easing over an extended period is expected as society struggles to return to a “new normal” with recent noteworthy upsurges in incidence in both rural and urban areas of the U.S.
  • Commodity prices this past week were higher influenced by lower projections for 2020 crop yields developed from the Pro Farmer 7-state Tour, the September 11th WASDE Report and the September Grain Stocks Report. Corn showed an increase of 3.8 percent for the week despite lack of orders from China but presuming lower ending stocks. Soybeans rose 1.8 percent in price this week based on orders booked by China and other nations and projected lower ending stocks attributed to a downward revision of yield. Soybean meal rose by 3.3 percent disproportionate to soybeans.
  • Since July 10th year-to-date exports and 2020/2021 market-year orders for corn have attained 7.41 million metric tons [292.5 million bushels]. Exports and orders for soybeans amounted to 16.5 million tons (620.4 million bushels) of which 20 percent was ordered during September.
  • Prospects for commodity exports to China during the 2020/2021 market year that began on September 1st for corn and soybeans have improved. China adjusted their domestic short-term demand for soybeans as a result of an apparent increase in the hog herd after severe losses in 2019 and early 2020 from African swine fever. White-feathered chicken production has now recovered after COVID disruptions and on QSR demand. China is also taking advantage of shipping rates that are rising in order to build inventory.

 

The following quotations for delivery in the months as indicated were posted by the CME at 14H30 on October 2nd compared with values posted on September 25th (in parentheses) reflecting specified months for delivery.

COMMODITY

Corn (cents per bushel)

 Dec. 379 (365)

March ‘21 389 (373)

Soybeans (cents per bushel)

 Jan. 1,023 (1,005)

March ’21 1,017 (1,000)

Soybean meal ($ per ton)

 Oct. 349 (337)

Dec. 352 (339)

 

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

 

COMMODITY CHANGE FROM PAST WEEK

Corn: Dec. quotation up 14 cents per bushel (+3.8 percent)

Soybeans: Jan. quotation up 18 cents per bushel (+1.8 percent)

Soybean Meal: Oct. quotation up $11 per ton (+3.3 percent)

 

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

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

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

 

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

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

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

 

Uncertainties still include:-

  • There are questions as to whether China will satisfy quantitative obligations in terms of the Phase One Trade during calendar 2020. The Agreement signed in mid-January incorporated U.S. tariff rescissions, promised purchases of agricultural commodities (valued at $36.5 billion in 2020 and $43.5 billion in 2021), concessions on some structural issues by China and strengthened enforcement provisions. For the first half of calendar 2020 China imported agricultural commodities to the value of $7.3 Billion
  • Domestic U.S. soybean and soybean meal demand is now less constrained by COVID-induced cutbacks in the intensive livestock and poultry sectors.
  • Justifiable concern exists regarding the spread of African swine fever, with many importing nations embargoing Germany as a result of a September 9th diagnosis of ASF in a wild boar followed by an additional six individual affected dead animals over 2 weeks. COVID-19 represents a risk to Asian nations, Europe and North America with the potential to create a worldwide depression as economic activity is curtailed

 

According to the September WASDE, corn to be harvested in calendar 2020 is expected to attain 14,900 million bushels with ending stocks projected at 2,503 million bushels. Final values will be modified by actual yield influenced by drought, the August 10/11th derecho and export volume. Compared with the September 25th 2020 at 14H30 the CME quotation for corn was up 14 cents per bushel for December delivery to 379 cents, reversing the decrease from the preceding week. The Friday October price was the highest since March 5th

 

The social restrictions imposed in the U.S. as a result of COVID-19 will reduce ethanol demand by 1.5 billion gallons or 10 percent of projected 2020 requirement accepting a nominal ten percent addition to gasoline. More than thirty percent of U.S. ethanol fermentation capacity is off-line at present and the outlook for increased demand is questionable. Ethanol was priced at $1.39 per gallon on October 2nd up 8 cents per gallon from the previous week and compared with a five-year low of $0.92 per gallon on March 26th. Concurrently gasoline at $1.14 per gallon (quoted, New York Harbor) is 25 per gallon cents cheaper than ethanol but has a 63 percent higher BTU rating.

 

With more plants producing ethanol, DDGS is now available at a lower price than in the second quarter. Eastern Corn-belt product was priced at $160 per ton on October 2nd, $2 higher than the previous week and $28 per ton more expensive than September 24th 2019.

 

Soybeans are the beneficiary of the Phase-One agreement with China and were accordingly up 18 cents per bushel to 1,023 cents for January 2021 delivery. The USDA anticipates a 2020 crop of 4.313 billion bushels, but this value is subject to continuing drought in some states. Ending stocks according to the September WASDE projection will attain 460 million bushels.

 

On October 2nd the BRL exchange with the CNY was 0.83, (0.81 the previous week). The conversion of the US$ to the CNY was set at 6.7 on October 2nd.

 

For consecutive 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.

 

The following extracts from the September 30th 2020 edition of the Quarterly USDA Grain Stocks Report indicate the levels of storage on farms and in fields and off-farm for corn and soybeans.

  • “Old crop corn stocks in all positions on September 1, 2020 totaled 2.00 billion bushels, down 10 percent from September 1, 2019. Of the total stocks, 751 million bushels are stored on farms, down 8 percent from a year earlier. Off-farm stocks, at 1.24 billion bushels, are down 12 percent from a year ago. The June to August 2020 indicated disappearance is 3.02 billion bushels, compared with 2.98 billion bushels during the same period last year. Based on an analysis of end-of-marketing year stock estimates, disappearance data for exports, and farm program administrative data, the 2019 corn for grain production is revised up 2.67 million bushels from the previous estimate. Corn silage production is revised up 715 thousand tons. Planted area is revised to 89.7 million acres, and area harvested for grain is revised to 81.3 million acres. Area harvested for silage is revised to 6.62 million acres. The 2019 grain yield, at 167.5 bushels per acre, is up 0.1 bushel from the previous estimate. The 2019 silage yield, at 20.2 tons per acre, remains unchanged from the previous estimate”.
  • “Old crop soybeans stored in all positions on September 1, 2020 totaled 523 million bushels, down 42 percent from September 1, 2019. Soybean stocks stored on farms totaled 141 million bushels, down 47 percent from a year ago. Off-farm stocks, at 382 million bushels, are down 41 percent from last September. Indicated disappearance for June - August 2020 totaled 858 million bushels, down 2 percent from the same period a year earlier. Based on an analysis of end-of-marketing year stock estimates, disappearance data for exports and crushings, and farm program administrative data, the 2019 soybean production is revised down 333 thousand bushels from the previous estimate. Planted area is unchanged at 76.1 million acres, but harvested area is revised to 74.9 million acres. The 2019 yield, at 47.4 bushels per acre, is unchanged from the previous estimate”.

 

COMMENTS

Subscribers are referred to the September 11th WASDE #604 in this edition and the results of the 2020 Pro Farmer 7-State Tour retrievable under the Search TAB.

 

The President opined on July 10th that he is “not contemplating a second phase of a trade agreement with China”

 

Approximately $16 billion will be disbursed under the Coronavirus Food Assistance Program (CFAP). As of August 10th, $7.1 Billion was distributed. An additional $14 Billion relief package was announced by the Administration on September 18th.


 

Turkey Week

10/02/2020

Weekly Turkey Production and Prices

Poult Production and Placement:

The September 15th edition of the USDA Turkey Hatchery Report, issued monthly, documented 25.9 million eggs in incubators on September 1st 2020 (27.2 million eggs on August 1st 2020) and down 2.7 percent (0.7 million eggs) from September 1st 2019.

 

A total of 22.3 million poults were hatched during August 2020 (23.8 million in July 2020), representing a decrease of 8.0 percent from August 2019.

 

A total of 20.6 million poults were placed on farms in the U.S. in August 2020, (23.0 million in July 2020), 10.4 percent less than in August 2019. This suggests disposal of 1.6 million poults during the month (0.9 million in July 2020). Assuming all tom poults were placed (an unsubstantiated estimate in a fluctuating demand for products), 14.4 percent of August-hatched hen poults or 7.2 percent of all August-hatched poults were not placed.

 

For the twelve-month period September 2019 through August 2020 inclusive, 277.5 million poults were hatched and 254.2 million were placed. This suggests disposal of 23.4 million poults. Assuming all tom poults were placed, (representing a broad assumption), 16.9 percent of hen poults or 8.4 percent of all poults hatched during the period were not placed.


 

Broiler Week

10/02/2020

Weekly Broiler Production and Prices

Chick Placements.

The Broiler Hatchery Report released on September 30th 2020 confirmed that a total of 227.7 million eggs were set during the week ending September 26th 2020, one percent more than in the corresponding week of 2019 and 0.3 percent (6.3 million eggs) more than the previous week. A total of 173.0 million day-old chicks were placed among the 19 major broiler-producing states during the week ending September 26th 2020. Total chick placements for the U.S. amounted to 181.4 million, one percent less than the corresponding week in 2019 and 2.6 percent (4.8 million chicks) less than the previous week. Claimed average hatchability was 82.4 percent for eggs set three weeks earlier, (82.4 percent for the previous week). Cumulative placements for the period January 4th through September 26th 2002 amounted to 7.25 billion chicks, one percent lower than the corresponding period in 2019.

 

Broiler Production

According to the October 2nd 2020 USDA Broiler Market News Report (Vol. 67: No. 40) for the processing week ending September 26th 2020, 170.6 million broilers were processed during the past week (last week 170.3 million) at an average live weight of 6.44 lbs. (6.37 lbs. last week) and a nominal yield of 76.0 percent. The number of broilers processed was 2.6 percent less than the corresponding processing week in 2019. Processed (RTC) broiler production for the week was 834.8 million lbs. (379,452 metric tons), (824.3 million lbs. last week) 1.7 percent less than the corresponding processing week in 2019. For YTD 2020 Processed (RTC) production attained 30,683 million lbs. (13,946,818 metric tons), 1.3 percent more than YTD 2019.

 

Broiler Prices

The USDA National Composite Weighted Wholesale price on October 2nd 2020 was down 0.3 cents per lb. from the previous week to 63.2 cents per lb. compared to 79.6 cents per lb. during the corresponding week of 2019; 66.1 cents per lb. for August 2020 and 84.0 cents per lb. for the three-year average. The USDA Composite price has now been relatively stable albeit at a depressed value for over seven weeks. Price moved up 22 cents per lb. from a bottom of 52.7 cents per lb. recorded during the last week of April. The decline during April and May was attributed to the collapse of the food service segment following imposition of COVID-19 restrictions.


 

Chicken Production in the Russian Federation will be Unchanged for 2021 and Marginally Profitable Only for Large Producers

09/30/2020

USDA-FAS Gain Report RS-2020-0042 released on September 21st documents the current situation in the broiler industry of the Russian Federation.  Domestic production in 2020 will attain 4.715 million metric tons and will increase by 0.2 percent in 2021. Approximately 85 percent of all chicken is produced on commercial farms, 15 percent in small backyard flocks , and two percent on subsistence units.

 

Russia is essentially self-contained with a net export of 10,000 metric tons projected for 2021.  The nation imports 210,000 metric tons of which 60 percent is shipped across the border from Belarus with 30 percent of the requirement supplied by Brazil.  Russia exports 220,000 metric tons with China, the largest importer at 29 percent of volume, followed by the EU at 25 percent; Ukraine, 20 percent and Vietnam, 10 percent.  Exports to China comprise 55 percent feet, cut wings at 34 percent and bone-in and offal,10 percent.

 

It is estimated that domestic consumption will attain 4.715 metric tons in both 2020 and 2021.  Assuming a population of 146 million, domestic consumption is 32.3 kg  (71 pounds) per capita.  Chicken represents 94 percent of total poultry meat, with turkeys at 5.8 and other species including geese and ducks comprising 0.2 percent.

 

The broiler industry in Russia is an oligopoly with the top twenty companies representing 71 percent of production. The three largest comprise one third of output led by Cherkizovo at twelve percent, Resurs, ten percent and Piroskolie seven percent. The larger companies are fully integrated with grain production and soybean crushing contributing to marginal profitability.  Smaller companies each with less than five percent of national production are in a loss situation with a number having filed for bankruptcy over the past six months.

 

 The broiler industry in the Russian Federation has been impacted by escalation in the cost of ingredients and a decline in the ruble relative to the U.S. dollar.  Over the past year, the ruble has fallen by 15.5 percent in value against the dollar and in late September stood at RUB 7.7 to US$1. Domestic corn is $135 per short ton and soybean meal $333 per short ton, contributing to a feed cost in the region of $235 per ton.  Feed escalated sharply from June 18th 2019 through June 20th 2020 from $188 per ton to $235 per ton.  

 

Due to COVID-19 restrictions, there is extensive unemployment and the economy is based on international trade in oil and gas and other minerals with decreased international demand and hence lower value.  Accordingly, at least 20 percent of the population live below the poverty line.  USDA-FAS estimates that whole chicken retails at $8.30 per pound and leg quarters $10.00 per pound.  Bone-in pork is almost double the price of chicken.


 

Germany to Erect Secure Border Fencing to Prevent Ingress of Wild Boars

09/29/2020

Faced with export embargoes as a result of isolation of African Swine Fever virus from as many as 30 dead wild boars over the past three weeks, Germany has decided to erect a more secure border fence to prevent migration of wild boar westward from Poland.

 

Following the emergence of ASF in wild boars within eight miles of the border with Germany, a temporary fence was erected, but it was obviously inadequate to prevent movement of wild hogs that are notorious for burrowing and penetration of even moderately substantial structures.

 

For many years, veterinary authorities in the Republic of South Africa attempted to limit migration of animals from the Kruger National Park where warthogs are reservoirs of ASF.  In addition, antelope species and even elephants disseminate Foot and Mouth Disease.  Tick-borne protozoal infections of wild ungulates are essentially non-pathogenic in native species but result in severe diseases in cattle when introduced into areas where native and domestic species cohabit.  Although fencing can be used as a measure to control extension of diseases from areas populated by wildlife, this approach is disasterous under conditions of reocurring drought that dictates seasonal and occassional extensive migration of free-living species.

 

In the case of wild boars, feral hogs and hybrids, eradication is justified both as preemptive and control measures wherever these pests occur.


 

Punitive Tariffs in Trade War now the Subject of Litigation

09/29/2020

In 2019 the Administration imposed duties on Chinese goods based on allegations of misappropriation of intellectual property and coercive transfer of technology from U.S. companies to China. On September 15th, the World Trade Organization found the United States was in breach of global trading rules by imposing the unilateral tariffs applied as leverage in negotiations with China.

 

Approximately 3,500 U.S. companies have now brought suit in the U.S. Court of International Trade claiming that the imposition of tariffs was illegal and resulted in harm to both Claimant companies and consumers. U.S. Trade Representative, Ambassador Robert Lighthizer and the Customs Protection Agency are the Defendants in the case.


U.S. Trade Representative Robert Lighthizer

 

According to an article in Reuters, the plaintiffs stressed "unbounded and unlimited trade war impacting billions of dollars in goods imported from the Peoples’ Republic of China by importers in the United States".


 

GAIN Report for Argentina

09/29/2020

The USDA-FAS GAIN report on chicken production in Argentina (AR2020-0030) was released on September 22nd.  In 2021, total production is forecast at 2.230 million metric tons, a 1.8 percent increase from 2020.  Approximately 7.8 percent of production will be exported.  Domestic consumption will attain 45.8 kg (100.7 lbs.) per capita assuming a population of 45 million.

Of the known destinations for the first six months of 2020, comprising 43,000 tons of RTC, 54 percent was consigned to China and 21 percent to South Africa with neighboring Chile receiving nine percent.

 

It is noted that Argentina is undergoing severe financial problems with a massive fiscal deficient due to decades of over-generous entitlements. The international lenders of last resort do not appear to be willing to extend loans under the present left-leaning government.


 

USDA-FSIS Revises Humane Handling and Slaughter Requirements

09/29/2020

In a recent publication in the Federal Register, the USDA Food Safety and Inspection Service issued the third revision of Directive 6900.2 updating the industry and FSIS inspectors regarding systemic handling and slaughter of livestock.

 

Inspectors now will document "egregious inhumane treatment" in a noncompliance record.


 

Sanderson Farms Fails in OSHA Appeal

09/29/2020

The U.S. Court of Appeals for the Fifth Circuit supported a ruling by the Occupational Safety and Health Administration (OSHA) regarding a fine imposed on Sanderson Farms. The issue involved violations relating to the anhydrous ammonia system installed at the Waco, TX facility.  The Court accepted the submission by OSHA that maintenance and operation of the system did not meet standards of "good engineering practice". 

 

Litigation followed an inspection of the Waco plant in 2017 resulting in penalties amounting to $70,618.  A review commission reduced the penalty to $9,000 by waiving four of six violations.

 


 

L.A. Startup Receives Funding for Vegetable-Based Chicken Substitute

09/29/2020

Daring Foods has announced an $8 million funding round led by investment group Maveron with participation from Stray Dog Capital and Palm Tree Crew Investments.

 

The funding will be used to increase plant capacity.  The company produces frozen plant-based chicken pieces that are available online and through the number of high-end retail stores with a green image.  Plant-based chicken substitutes are derived from soy protein, sunflower oil and spices.

 

In commenting on the investment, Ross Mackay, Co-Founder and CEO stated, "this gets us a huge step closer to mitigating the negative impact of the poultry industry on the planet and human health”.  This may represent the overriding passion of the founder but is an example of  unrealistic puffery. There are no health problems associated with commercial chicken that is correctly prepared. The production of chicken products represents a sustainable source of protein. 

 

For the edification of Mr. Mackay, one third of the market capitalization of Tyson Foods, and the combined capitalization of Sanderson Farms and Pilgrim's Pride representing close to 50 percent of U.S. production amounts to $14.3 billion.  Daring Foods can only aspire to achieve prominence in a small niche market, facing extreme competition and despite unsubstantiated claims will certainly not move the needle on global warming, climate change or conservation of resources.


 

U.K. House of Lords Offers Amendment to Agriculture Bill

09/28/2020

The U.K. House of Lords, acting as an advisory body provided commentary and suggestions to amend and strengthen the Agriculture Bill of 2020 recently considered by the House of Commons.

 

The Upper House proposed changes regarding pesticides and recommended the establishment of a Trade and Agriculture Commission.  Trade Secretary Liz Truss subsequently announced the formation of a Commission to be chaired by the former CEO of the Food Standards Agency.

 

The amendments have the support of the National Farmers Union with Minnette Batters their president commenting, “we believe the role of the Trade and Agriculture Commission is to provide parliamentary oversight on our future trade policy”. She continued “the House of Lords was correct in strengthening the Agriculture Bill to provide better scrutiny for future trade deals.”

 

The Bill has been returned to the Lower House to consider amendments that will strengthen aspects of food safety and to maintain a level playing field between the UK and the EU  considered even more necessary in the light of economic damaged caused by COVID-19.

 

The amended Agriculture Bill may strengthen the hand of UK negotiators in any trade deal with the U.S. since concessions cannot be made by negotiators with regard to measures including the use of chlorine in processing chicken and administration of partitioning agents in the production of hogs and cattle.


 

Hamlet Protein Participates in USSEC Virtual Seminar

09/28/2020

On September 22nd the U.S. Soybean Export Council (USSEC) presented a webinar series intended to acquaint nutritionists with the value of soybean protein in neonatal nutrition.

 

Dr. Alfred Blanch, Category Manager for Poultry at Hamlet Protein, addressed The Change to Antibiotic Free Broiler Diets and the Role of Soy Protein. His presentation considered issues relating to withdrawal of antibiotics and the need to exclude antinutritional factors from diets fed to broiler chickens during the starter phase, leading to enhanced growth and feed conversion efficiency.

 

Hamlet Protein manufactures a soy-based ingredient for piglets, chicks, and poults at a plant in Finlay, OH. for distribution in North America.


 

JBS Commits to Combating Deforestation

09/28/2020

Stung by domestic and international criticism, JBS S.A., a multinational meat packer, has committed to ensuring that all purchased cattle are acquired from farms that have not engaged in illegal clearing of the Amazon rainforest.  The company intends using blockchain for all cattle purchases but only by 2025.  To date, JBS has selectively monitored the final point of purchase of cattle in an extended and complicated supply chain typical in Brazil. This has been characterized as a deliberate “don’t look-don’t find” policy.

 

Gilberto Thomazoni, CEO of JBS S.A., stated, “Currently the company does not monitor indirect suppliers and no company does so.  We plan to close this gap using technology to monitor 50,000 direct suppliers in addition to indirect suppliers who will be incorporated into the system in 2021 with special reference to the state of Mato Grosso.”

A pension fund in Norway, with $80 billion under management, will observe the results of the JBS S.A. announcement stating, “If this move by JBS can contribute to responsible and traceable supply chains, it is a positive step but we have to see the detailed evidence in practice.”  The fund is among a number of active global investors threatening to divest from Brazil unless deforestation is suppressed by the Federal government.


 

Mosa Meat Receives $55 Million in Funding

09/28/2020

Mosa Meat, located in Maastricht, The Netherlands, has received $55 million in funding from investment groups including Blue Horizon Ventures.  Mosa Meat previously produced a single, but very expensive small patty.  During the past two years, the company has apparently reduced costs through technical innovations. Mosa Meats claims to have removed fetal bovine serum from growth media, considered critical to acceptance by vegans.  Funding will be used to extend production from current laboratory scale to a pilot plant although no dates have been provided for completion of the project.

 

Maarten Bosch, CEO of Mosa Meat, stated, “We are very excited to welcome our new partners and see existing partners continue our journey together.”  He added, “With their support and capabilities we have the opportunity to take the next concrete steps to scale production.”  Dr. Regina Hecker, partner at Blue Horizon Ventures who will join the board stated, “Following a thorough investigation of its technology and team, we are convinced that Mosa Meats is strongly placed to pioneer the scale-up of cultured meat.”


 

3M to Divest Food Safety Unit

09/28/2020

According to Reuters, 3M is considering the sale of their Food Safety unit, valued at $3.5 billion.

 

For the second quarter of Fiscal 2020, the company reported net income of $1.29 billion on sales of $7.18 billion with an EPS of $2.22.  Comparable values for the second quarter of Fiscal 2019 were net income of $1.13 billion on revenue of $8.17 billion with an EPS of $1.92.

 

 Revenue for the Healthcare Segment declined 0.4 percent to $1.8 billion.  The company attributed the 9.2 decline in Safety and Industrial revenue and 6.2 percent in Consumer revenue to the “global economic slowdown” in comments made by Mike Roman, Chairman and CEO. 

The Company divested the drug delivery business, generating a pre-tax gain of $385 million and reduced net debt by $1.7 billion during the past quarter.


 

Status of 2019 Corn and Soybean Crops

09/28/2020

The USDA Crop Progress Report released on September 28th documented corn continuing to mature and soybeans dropping leaves close to or ahead of the 5-year averages despite the earlier start in 2020. Fifteen percent of the 2020 corn crop has been harvested, equivalent in volume to last year. Twenty percent of the soybean harvest is in, ahead of last year by five percent. The condition of both corn and soybean crops that were unaffected by the August 10th derocho, although having deteriorated during the past three weeks from drought, are recovering following rains in the Midwest and are moderately superior to the 2019 season.

Subsoil and surface moisture levels denote some relief from drought conditions except in Western and Pacific states. Both topsoil and subsoil moisture levels are similar to the past week. The corn-belt has experienced unseasonal high temperatures in combination with elevated humidity that may predispose to mycotoxicosis in the 2020 corn harvest. 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 2020 harvest in October.

Reference is made to the September 11th WASDE Report #604 under the STATISTICS tab documenting projected 2020 acreage, yields and ending stocks for corn and soybeans.

The Pro Farmer 7-State Crop Tour projected corn and soybean yields of 177.5 and 52.5 bushels per acre respectively, lower than USDA August estimates that were revised to 178.5 and 51.9 bushels per acre respectively in the September 11th WASDE Report.

 

WEEK ENDING

Crop

September 20th

September 27th

5-Year Average

Corn Dented (%)

Corn Mature (%)

Corn Harvested

100

59

8

100

75

15

100

65

16

Soybeans Dropping Leaves (%)

Soybeans Harvested

59

6

74

20

69

15

Crop Condition

V. Poor

 Poor

Fair

Good

Excellent

Corn 2020 (%)

Corn 2019 (%) *

* late planting

5

4

9

10

25

29

47

46

14

11

Soybeans 2020 (%)

Soybeans 2019 (%)*

 * late planting N/A

3

3

7

10

26

32

51

46

13

9

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture: Past Week

16

29

51

4

Past Year

11

20

55

14

Subsoil moisture: Past Week

16

28

52

4

Past Year

10

20

59

11


 

ASF Continues in the Philippines

09/28/2020

According to the USDA-FAS African swine fever has been diagnosed in six provinces in the Philippines.  To date 300,000 hogs have been culled and total output of pork in 2020 may be reduced by as much as 20 percent.

 

As with many Asian nations including China, African swine fever has become endemic in large areas of the Philippines and due to the structure of the industry, small farms representing the bulk of production are vulnerable to ASF since they have inadequate biosecurity and rely on a supply chain of dealers.  Control will be difficult without deploying a safe and effective vaccine that has yet to be developed. Long term integration and the development of large units will be required.

 

Increased production of chicken and imports of pork will compensate for the decline in domestic supply of pork over the intermediate term


 

Darden Restaurants Reports on FY2021

09/28/2020

Darden Restaurants International (DRI) reported on Q1 of fiscal 2021 on September 24th. For the quarter ending August 30th, the company posted earnings of $36.1 million on revenue $1.527 billion with an EPS of $0.28.  Comparative values for Q1 of FY2020 were net earnings of $170.6 million on revenue of $2.134 billion and an EPS of $1.39.  Sales were down by 28 percent consistent with COVID-restrictions and reduced patronage of casual dining restaurants.

 

For the quarter, the Olive Garden with 871 stores contributed 51.6 percent to sales and 63 percent to operating profit.  The second largest brand, Longhorn Steakhouse with 524 locations generated 24.7 percent of sales and 21 percent to operating profit.  Fine dining and other brands collectively 412 restaurants represented 24 percent of revenue and 16 percent of the contribution.

 

Darden controlled costs of food and beverages attaining a gross margin of 28 percent for both quarters.  The effect of reduced sales and additional wages is reflected in a 32 percent cost of labor compared to 28 percent in Q1 of 2020.

 

In commenting on results Gene Lee CEO sated, “the actions we continue to take in response to COVID-19 which include being laser-focused on execution and strengthening our business model, resulted in significantly improved first quarter performance that exceeded expectations.”

 

Darden provided forward guidance for Q2 2021 as net EPS of $0.65 to $0.75 and sales approximately 20 percent below the corresponding second quarter of 2020.  During fiscal 2021 capital expenditure will attain $250 million for approximately 35 new locations.

 

DRI posted total assets of $9.79 billion with long term debt and lease obligations of $5.83 billion.  Darden Restaurants has a market capitalization of $12.6 billion and trades with a forward P/E ratio of 32.4.  The 52-week range in share price was $26.15 to $124.01 with a 50-day moving average of $87.16.  The share closed on Friday September 25th at $97.17.  Darden posted a trailing 12-month return on equity of -2.1 percent and a return on assets of 2.3 percent.  Operating margin over the trailing 12-month period was 3.8 percent and profit margin -0.7 percent.


 

Direct Action Everywhere Plans Protest

09/28/2020

The militant animal rights organization Direct Action Everywhere (DxE) planned civil disobedience including sit-ins on a national basis for September 27th and again on October 4th.  Given the current Covid-19 situation, pre-election and social justice demonstrations, Direct Action Everywhere will probably not gain the publicity they desire. 

 

United Egg producers, the National Chicken Council and the National Turkey Federation have advised members to take appropriate precautions to secure facilities. Although September 27th passed without notable incident, it may be of value to contact local law enforcement and plan for an appropriate response to any situation that might imperil farm or plant personnel or the security of facilities.


 

High Price for Fraudulent Grading

09/26/2020
Moras and Buxbaum in better times

The Department of Justice announced on September 24th that two indicted co-conspirators have pleaded guilty in a U.S. District Court to commit wire fraud and using counterfeit USDA stamps.  At issue are the activities of Howard Mora and Allen Buxbaum who misbranded lower quality beef and sold product at inflated prices to consumers.  The defendants face up to 20 years in prison and criminal forfeiture of $250,000.

The Acting United States Attorney prosecuting the case stated “Mora and Buxbaum rang up hundreds of thousands of dollars in fraudulent profits by charging customers more than their   products were worth and now they will pay a price for their avarice.”  The criminal activity took place between September 2011 and October 2014 when the defendants were co-owners of A. Stein Meat Products located in Brooklyn NY.


 

Jayson Penn Replaced as CEO of Pilgrim’s Pride Corp.

09/25/2020

Following the June indictment of Jayson Penn on a charge of collusion, he was placed on administrative leave. Penn pleaded not guilty to the charge that he conspired with executives at Claxton Poultry to rig prices. The company has now decided to replace him permanently with the interim CEO and CFO Fabio Sandri effective September 23rd.

 

In commenting on the decision of the parent company JBS, Sandri stated, “I am humbled and excited to be selected by the Board to lead Pilgrim’s Pride.”  Sandri joined Pilgrim’s Pride as CFO in June 2011, previously serving as CFO of a secondary educational institution in Brazil.  For three years, he functioned as Director of Strategy and Comptroller for Braskem S.A., a petrochemical company in his native Brazil. Sandri earned a degree in electrical engineering from the polytechnic of the University of Sao Paulo and an MBA from the Wharton School at the University of Pennsylvania.

 


Fabio Sandri CEO Pilgrim's Pride
The executive management of Pilgrim’s Pride includes:
  • Charles Von der Heyde as Senior Vice President of Commodity Risk Management, Feed Ingredient Purchasing and Export Sales
  • Chris Kirke, President of Moy Park in the U.K.
  • Andrew Cracknell, CEO of Tulip Ltd. of the U.K., a hog producer
  • Kendra Waldbusser, Head of Food Safety and Quality Assurance
  • Randy Stroud, Head of Global Live Support
  • Joe Waldbusser, Head of Commodity Risk Management and Feed Ingredient Purchasing
  • Lisa Burdick, Head of Human Resources

 


 

Status of 2021 IPPE

09/25/2020

On September 24th, USPOULTRY a co-organizer of the 2021 International Production and Processing Expo (IPPE) circulated an update on the status of the event based on the current prevalence of COVID-19.  A decision on whether the IPPE will take place will be announced on October 30th.

 

USPOULTRY circulated a questionnaire to past exhibitors and attendees to assess potential participation.  The majority of responders indicated that they either "plan to" or "want to" attend.  Favorable responses were obtained from both U.S. and Latin America presuming that safety measures will be followed and that the incidence rate does not increase between October and the projected show date in January 2021.

 

In the event that the IPPE takes place, management of the IPPE will implement pandemic safety measures including face coverings, monitoring temperatures on entering the GWCC and attempting to implement social distancing.

It is noted that the Georgia World Conference Center has achieved Global Risk Advisory Council-Star Accreditation relating to cleaning and disinfection and measures to prevent disease.  It is anticipated that additional surveys will be distributed and the organizers have requested patience while the situation is evaluated.


 

Broiler Week

09/25/2020

Weekly Broiler Production and Prices

 

Chick Placements.

The Broiler Hatchery Report released on September 23rd 2020 confirmed that a total of 222.7 million eggs were set during the week ending September 19th 2020, two percent less than in the corresponding week of 2019 and 1.6 percent (3.7 million eggs) less than the previous week. A total of 177.4 million day-old chicks were placed among the 19 major broiler-producing states during the week ending September 19th 2020. Total chick placements for the U.S. amounted to 185.8 million, one percent less than the corresponding week in 2019 and 0.2 percent (0.4 million chicks) less than the previous week. Claimed average hatchability was 82.4 percent for eggs set three weeks earlier, (82.5 percent for the previous week). Cumulative placements for the period January 4th through September 19th 2002 amounted to 7.07 billion chicks, one percent lower than the corresponding period in 2019.

 

Broiler Production

According to the September 25th 2020 USDA Broiler Market News Report (Vol. 67: No. 39) for the processing week ending September 19th 2020, 170.3 million broilers were processed during the past week (last week 149.1 million) at an average live weight of 6.37 lbs. (6.30 lbs. last week) and a nominal yield of 76.0 percent. The number of broilers processed was 2.7 percent less than the corresponding processing week in 2019. Processed (RTC) broiler production for the week was 824.3 million lbs. (374,898 metric tons), (734.3 million lbs. last week) 1.5 percent less than the corresponding processing week in 2019. For YTD 2020 Processed (RTC) production attained 29,848 million lbs. (13,567,249 metric tons), 1.4 percent more than YTD 2019.

 

Broiler Prices

The USDA National Composite Weighted Wholesale price on September 25th 2020 was down 0.2 cents per lb. from the previous week to 63.3 cents per lb. compared to 78.5 cents per lb. during the corresponding week of 2019; 66.1 cents per lb. for August 2020 and 84.0 cents per lb. for the three-year average. The USDA Composite price has now been relatively stable albeit at a depressed value for over seven weeks. Price moved up 22 cents per lb. from a bottom of 52.7 cents per lb. recorded during the last week of April. The decline during April and May was attributed to the collapse of the food service segment following imposition of COVID-19 restrictions.


 

Turkey Week

09/25/2020

Weekly Turkey Production and Prices

 

Poult Production and Placement:

The September 15th edition of the USDA Turkey Hatchery Report, issued monthly, documented 25.9 million eggs in incubators on September 1st 2020 (27.2 million eggs on August 1st 2020) and down 2.7 percent (0.7 million eggs) from September 1st 2019.

 

A total of 22.3 million poults were hatched during August 2020 (23.8 million in July 2020), representing a decrease of 8.0 percent from August 2019.

 

A total of 20.6 million poults were placed on farms in the U.S. in August 2020, (23.0 million in July 2020), 10.4 percent less than in August 2019. This suggests disposal of 1.6 million poults during the month (0.9 million in July 2020). Assuming all tom poults were placed (an unsubstantiated estimate in a fluctuating demand for products), 14.4 percent of August-hatched hen poults or 7.2 percent of all August-hatched poults were not placed.

 

For the twelve-month period September 2019 through August 2020 inclusive, 277.5 million poults were hatched and 254.2 million were placed. This suggests disposal of 23.4 million poults. Assuming all tom poults were placed, (representing a broad assumption), 16.9 percent of hen poults or 8.4 percent of all poults hatched during the period were not placed.

 

Turkey Production:

The September 25th 2020 edition of the USDA Turkey Market News Report (Vol. 67: No. 39) confirmed the following provisional data for turkeys slaughtered under Federal inspection:-


 

COMMODITY REPORT: September 25th 2020.

09/25/2020

  • The financial and economic implications of the COVID-19 pandemic continue but gradual easing over an extended period is expected as society returns to a “new normal” despite a recent noteworthy upsurge in cases in some areas of the U.S.
  • Commodity prices this past week were down and influenced by data relating to the August 10th derecho storm and lower projections for 2020 crop yields developed from the Pro Farmer 7-state Tour and the September 11th WASDE Report. Corn showed a decrease of 3.4 percent for the week based on lack of orders from China presuming higher ending stocks. Soybeans fell 4.1 percent in price this week despite orders booked by China and lower ending stocks attributed to a downward revision of yield. Soybean meal fell only by a disproportionate 0.3 percent.
  • Since July 10th year-to-date exports and 2020/2021 market-year orders for corn have attained 7.41 million metric tons [292.5 million bushels]. Exports and orders for soybeans amounted to 15.5 million tons (568.9 million bushels) of which 20 percent were ordered during the first three weeks of September.
  • Prospects for commodity exports to China during the 2020/2021 market year that began on September 1st for corn and soybeans have apparently improved. China adjusted their domestic short-term demand for soybeans as a result of an apparent stabilization of the hog herd after severe losses in 2019 and early 2020 from African swine fever. White-feathered chicken production has now recovered after COVID disruptions and QSR demand. China is also taking advantage of shipping rates that are rising in order to build inventory.

 


 

Sad Passing of Adriaan Westrate

09/24/2020

Adriaan Cornelius Westrate died in Atlanta after a prolonged illness.  Prior to his recent retirement he was in charge of Rabobank Poultry business in the U.S.  He served as vice chairman, Global Corporate Clients from 2015 until his 2020 retirement after 27 years with Rabobank. 
 

In July he was awarded the “Poultry Person of the World” based on his contributions to the industry including his service on the boards of the National Chicken Council, the World Poultry Foundation, and the C5 Youth Foundation of Georgia.

 

Born in 1954 in Nieuwerkerk-aan-den Ijssel in the Netherlands he graduated from Leiden University with a Master in Law degree.  During his career with ABN Bank he served in Singapore, Brazil, and the U.S., and joined Rabobank in 1993.

 

CHICK-NEWS extends condolences to his widow Ladan and family.


Adriaan Westrate

 

Costco Reports on Q4 and Fiscal 2020

09/24/2020

In a press release dated September 24th Costco Wholesale Corp. (COST) announced results for Q4 and Fiscal 2020 ending August 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)

4th Quarter Ending

Aug. 30th 2020

Sept. 1st 2019

Difference (%)

Sales:

$53,383,000

$47,498,000

+12.4

Gross profit:

$6,892,000

$6,188,000

+12.8

Operating income:             

$1,929,000

$1,463,000

+31.9

Pre-tax Income

Net Income

         $1,869,000

        $1,389,000

$1,492,000

$1,097,000

+25.3

+26.6

Diluted earnings per share:

$3.13

$2.47

+26.7

Gross Margin (%)

13.1

13.0

+0.8

Operating Margin (%)

3.6

3.1

+16.1

Profit Margin (%)

2.6

2.3

+13.0

Long-term Debt and lease obligations:

$12,007,000

        $6,579,000

        +82.5

12 Months Trailing:

 

 

 

           Return on Assets    (%)

6.8

 

 

           Return on Equity    (%)

23.5

 

 

           Operating Margin   (%)

3.2

 

 

           Profit Margin          (%)

2.3

 

 

Total Assets

$55,556,000

      $45,400,000

        +22.3

Market Capitalization

$151,237,000

                    

          

 

52-Week Range in Share Price:  $ 271.28 to $343.77      50-day Moving average  $342.80

Market Close Thursday 24th Sept. pre-release $347.12.  Close Friday 25th Sept. $342.58

 

Forward P/E  36.9        Beta 0.7

 

For FY 2020 COST posted net earnings of $4.0 billion on revenue of $166.8 billion with an EPS of $9.02. For the corresponding FY 2019 net earnings were $3.7 billion on revenue of $152.7 billion with an EPS of $8.26.

 

COST posted an increase in same-store sales of 11.4 with the U.S gaining 11.0 percent (with 69 percent of 795 locations), Canada 9.0 percent (13 percent of locations) and International 16.0 percent (18 percent of locations)


 

Ethanol Stock Reflects Plant Closures

09/24/2020

For the week ending September 18th U.S. ethanol stock attained 19.99 million barrels.  Since the advent of COVID-19, inventory has declined from a peak of 27.69 million barrels on April 17th reflecting plant closings

 

Ending stock is little changed from June 2010 attesting to lower off take of E-10 attributed to smaller and more efficient vehicles with lower consumption and fewer miles travelled by average consumers.

 

The recent decision by the Administration to promote E-15 will probably not make any difference to ethanol demand in the near future given that a high proportion of existing vehicles are ineligible to use dilution rates in excess of 10 percent of ethanol in gasoline. The Renewable Fuel Standard is based on a gross over-estimate of demand and should undergo revision to correspond to reality and to exclude the myth of cellulosic ethanol that has not materialized.

 


 

Additional Cases of ASF in Wild Boars

09/24/2020

The Friedrich-Loeffler Institute in Germany (analogous to the USDA National Veterinary Services Laboratory) has confirmed African swine fever (ASF) in at least twelve boars since September 10th.  Most of the cases were discovered in a 10-mile2 area in the Oder-Spree District in the state of Brandenburg, close to the Eastern border with Poland. 

 

The number of dead animals yielding ASF virus suggests widespread infection in feral swine.  Authorities are now working to ensure that the infection is not introduced into commercial farms as a result of defective biosecurity.

 

It is again emphasized that if ASF were to be introduced into the wild boar population in the U.S. Gulf Coast states, extensive dissemination of the disease would occur as in Eastern Europe. In 2019 the USDA assigned $75 million in a pilot program to eradicate feral hogs.  It is suggested that this initiative should assume a greater level of priority with commensurate allocation of money and resources, given the consequences of introduction of ASF into the U.S. including disruption of exports and a high cost of control and eradication.

 


Population of Feral Hogs Has Expanded Since 2014

U.S. Feral Hogs

It is estimated that there are close to ten million feral hogs in the U.S. with a presence in possibly as many as thirty-nine states.  Dale Nolte quoted in The Atlantic September 19th 2020 edition in an article by Diane Peters, refers to the hog problem as a "feral swine bomb".  Nolte is the manager of The National Feral Swine Damage Management Program.  Most of the feral hogs in the U.S. are hybrids of domestic breeds and wild boar.  It is estimated that Texas may have as many as 1.5 million feral hogs with Florida, Georgia, and California also having large populations, essentially out of control.  Wildlife biologists have determined that when organized shooting occurs, hogs become nocturnal creating even more difficulty in reducing populations. 

 

Regrettably, so called "sportsmen" have transported feral hogs from Gulf Coast states to as far north as Saskatchewan and Ontario creating problems in Canada.


 

Traceability to be Enforced by FDA

09/23/2020

The Food and Drug Administration has released a proposed rule developed in accordance with Section 204 of the Food Safety Modernization Act (FSMA).  According to Deputy Commissioner Frank Yiannas, the Agency will standardize record keeping relating to production and distribution of foods.  It is intended that any company should be able to provide the FDA with an electronic spreadsheet to facilitate traceability within one working day.

 

The FDA is promoting electronic records for traceability to respond to possible public health problems.  This approach is consistent with the adoption of the Produce Traceability Initiative and the Marketing Agreement of the California/Arizona Leafy Greens Association.  The rule requires electronic recording of the identity of the product, traceability lot code, the dates product was received and shipped.  The Food Traceability List includes nine categories of vegetable and fruit that must be tracked through growing to delivery.  The FDA has focused on green produce as a priority based on consecutive seasonal outbreaks of foodborne STEC infection from this food category that is consumed raw.  It is anticipated that the electronic data requirements to facilitate traceability will soon be extended to all food products.


 

USDA Awards Contracts for Farmers to Families Food Box Program

09/22/2020

The USDA has announced that $857 million will be assigned to fifty companies participating in the third round of the Farmers to Families Food Box Program.  This allocation is part of the $1 billion extension of the original $2.7 billion assigned.  As of September 17th, the program has distributed 92 million boxes.  The new round will include produce, dairy, cooked meat and hopefully eggs. Based on experience with the initial program, boxes will be more evenly distributed through U.S. states and territories.

 

According to the USDA, the contracts were assigned according to a two-step process ensuring even distribution and incorporating "truck-to-trunk" delivery.  Participating companies were ranked on content of boxes, support of local regional food systems and compliance with means- testing.  Among the 18 largest contracts ranging from $18 to $115 million, it is noted that Caribbean Produce Exchange LLC receive $35 million.  This company was implicated in alleged threefold overcharging for boxes and less than optimal service and distribution in Puerto Rico. 

 

In commenting on the awards, Secretary of Agriculture, Dr. Sonny Perdue, stated, "these contract awards will go to vendors who submitted the strongest proposals in support of American agriculture and the American people".

 

Criticism of the program includes the reality that providing food to the needy could have been achieved more expeditiously, at less expense and more conveniently for recipients by expanding existing SNAP and similar USDA programs. Detractors of the Farmers-to-Families Box Program maintain that the action was based on the anticipation of political benefits.


 

OK Foods Exports Unjustly Embargoed by China

09/22/2020

OK Foods was placed on a list of banned suppliers based on an erroneous release of COVID-19 data by the Arkansas Department of Health.

 

The president and CEO of OK Foods, Trent Goins noted that, there were sixty active cases of COVID-19 out of 774 employees in the Fort Smith plant since March 2020 with no current active cases.  Accordingly, the Company is negotiating with authorities in China for the ban to be lifted.


 

H-E-B Partners with Swisslog for Micro-Fulfillment Centers

09/21/2020

H-E-B has entered into an arrangement with Swisslog to establish automated micro-fulfillment centers within stores.  The advantages of assembling orders for curbside pickup and delivery are self-evident and H-E-B will benefit from the experience gained by Swisslog in installing 2,000 existing units.  The micro-fulfillment centers will feature cube storage with  retrieval based on Swisslog Syn Q software.

 

Demand for omni-channel shopping has created demand for micro-fulfillment as demonstrated by investment in equipment and technology by Albertson’s companies, Ahold Delhaize and other national chains. Kroger Companies has taken an equity position in Ocada of the U.K. to erect large fulfillment centers.


 

Aviagen Sponsors Virtual Delmarva Meeting on Poultry Health Processing and Production

09/21/2020

In a September 17th release, Aviagen announced support for the 55th National Meeting on Poultry Health, Processing and Live Production to be held September 28th through 30th.  Aviagen will support the event as a Platinum Sponsor for the meeting that will be attended by veterinarians, processing managers, QA supervisors, live bird production personnel, government regulators and academia.

Dr. Grant Mason Aviagen Program Geneticist will lead a discussion on skeletal integrity and selection programs.  Eddy van Lirde, Aviagen Incubation Specialist will discuss chicks quality.

 

Jeremy Martin, Aviagen U.S. Sales Manager noted, “Aviagen is committed to spreading knowledge to promote the health and welfare of our birds.”  He added, “We also believe in the power of allying with organizations such as Delmarva together working towards the common good for the poultry meat industry.”

 


 

State Meat Labeling Laws Targeted by Litigation

09/20/2020

Oklahoma Capitol

As with ag-gag laws, legislators in meat-producing states including Oklahoma have passed hastily-drafted legislation to appease beef producers regarding labeling of meat substitutes.

 

The Oklahoma Meat Consumer Protection Act scheduled to take effect on November 1st is now the subject of a challenge by the Plant Based Foods Association.  The plaintiff claims that the food labeling law is a violation of the First Amendment.

 

 

On first glance it would appear that Oklahoma legislators went overboard requiring that "products derived from plant-based sources indicate origin in a type face uniform in size and prominence to the brand name of the product".  Upton's Naturals, a co-plaintiff clearly marks products as "vegan" with disclaimers that products do not contain meat.

 

By the same token, manufacturers of vegetable-based meat substitutes should refrain from using descriptors normally associated with red meat such as ‘jerky’, ‘bacon’, ‘burgers’, ‘meatballs’ and other terms that may create confusion.  Labeling is extremely important as supermarkets are now displaying alternatives to meat in coolers alongside real meat products. 

It is anticipated that over the next five years the issue of labeling in relation to meat and vegetable-based substitutes will be resolved.  What is needed is uniform federal legislation clearly defining what is meant by "meat", presumably derived from animals to differentiate from plant-based substitutes.  Legislation will also have to address the issue of hybrid products that contain both real meat and vegetable-based extenders.

 


 

Appointments to USDA Food Safety Advisory Committee

09/20/2020

In a September 18th announcement, the USDA noted that Dr. Alice Johnson of Butterball LLC., was appointed as a new member of the National Advisory Committee on Meat and Poultry Inspection to serve a two-year term.  Four previous members of the Advisory Committee were appointed for an additional year including Tina Rendon of Pilgrim's Pride Corp. 

 

The Advisory Committee was established in 1971 to interact with the Food Safety and Inspection Service on concerns relating to the inspection program and to provide input on establishing policy on food safety.


Dr. Alice Johnson

 

Burger King Eliminates Artificial Colors and Flavors from Whoppers

09/20/2020

In a September 18th announcement, Burger King, a subsidiary of Restaurant Brands International, noted that all artificial coloring agents and preservatives will be eliminated from the iconic Whopper sandwich.  The company claims that 85 percent of menu items are now free of artificial coloring agents and flavors, with a goal of complete elimination by mid-2021.

 

The action taken by Burger King follows initiatives in the EU where so called “clean labels” are favored.  The wrappers used for Whoppers will specify ingredients and will emphasize the absence of artificial preservatives, colors, flavors, MSG, and high-fructose corn syrup.  The wrapper also has a reference to the company website for additional information.


 

China Suspends Imports from OK Foods Plant

09/19/2020

Based on what Chinese authorities consider to be an unacceptable level of COVID-19 infection in plant workers, imports from an OK Foods plant in Fort Smith, AR have been suspended. In June, China suspended imports from a Tyson Foods plant in Springdale, AR.

 

In commenting on the decision by authorities in China, Jim Sumner, president of the USA Poultry and Egg Export council stated, “We do not think that either one of the one of the two bans are justified, especially considering the fact that the virus cannot be transmitted in poultry meat.” 

 

It is understood that 234 plant workers tested positive for COVID-19 as of the end of August.  By mid-September, almost all of the affected workers, most of whom were asymptomatic, have recovered according to the Arkansas Department of Health.

 

Previously CHICK-NEWS has commented on international agencies that consider transmission of COVID-19 either on meat or packaging exported from the U.S. to be extremely unlikely given failure of viability of SARS-CoV-2 virus under conditions approximating intercontinental shipment by sea.


 

Ex-Broiler Contractors Sue Five Integrators

09/19/2020

A family contracted with Pilgrim’s Pride Corp. in Texas has filed suit against Tyson Foods Inc, Sanderson Farms Inc, Pilgrim’s Pride Corp, Perdue Foods LLC, and Koch Foods alleging that data sharing on grower compensation provided integrators with an unfair advantage.  In addition, the plaintiffs allege collusion with respect to “no poach agreements” that restricted the ability of potential contractors to negotiate equitable remuneration. Agri-Stats® Inc and other integrators have been named as co-conspirators.

 

In response to the lawsuit, Tyson Foods maintains that it operates according to a Contract Poultry Farmer’s Bill of Rights and is guided in policy by a Poultry Farmers’ Advisory Council.  Tyson Foods claims that the average duration over which contractors have worked with the integrator exceeds 15 years.  Contracts with growers extend three to seven years or longer and there is no restriction on farmers entering into contracts with other integrators in their areas of operation.  When approached by reporters neither Pilgrim’s Pride nor Perdue Farms would comment based on pending litigation.


 

Additional Wild Boars Die of ASF in Brandenburg

09/19/2020

Minister Julia Kloeckner

Following a case of African Swine Fever in a wild boar suspected of having strayed westward across the border with Poland into the German state of Brandenburg, six additional dead boars have been found.  Initial laboratory assays confirm the presence of ASF virus.

 

According to the Federal Minister of Agriculture, Julia Kloeckner, the Government is “monitoring” the situation including the hog and pork markets following export bans imposed by China and a precipitous fall in the value of live hogs. Kloeckner indicated that support may be extended to farmers impacted by the fallout from ASF in wild boars.

 

Despite the fact that no commercial farms have been implicated in the disease, China and other nations have banned importation of pork from the entire nation of Germany, which is inconsistent with World Organization of Animal Health guidelines on regionalization.


 

Strauss Brands to Locate a New Plant in Franklin

09/16/2020

Following rejection of an application by Strauss Brands to erect a new plant in Milwaukee, the company will move the project to their hometown of Franklin, WI.  Strauss Brands currently operates a plant 41,000 square feet in extent providing employment for 170.

 

The proposed facility would process between 250 and 500 cattle per day and employee 260 workers. A public hearing will take place in early October to approve the new plant that could benefit from a tax rebate passed in 2018.


 

Pilgrim’s Pride to Donate $1.5 Million to Two Georgia Communities

09/16/2020

Pilgrim’s Pride Corp. employing more than 7,000 in Georgia will distribute $1.5 million in communities to assist with recovery from the COVID-19 outbreak.  Pilgrim’s Pride has requested proposals to be considered with decisions awaited before the end of 2020.  Pilgrim’s Pride will assign funding to communities in which Companypoultry processing plants are located including Atlanta,  Canton in Cherokee County and Carrollton in Carroll County. 

 

The intent is to work with local community leaders to identify programs relating to food insecurity and deficiencies in community infrastructure and emergency relief.


 

North American Meat Institute Defends Members over OSHA Action

09/16/2020

During the past week, OSHA has fined cited both Smithfield Foods and JBS for alleged exposure of workers to COVID-19. In the defense of members the NAMI notes the delays and confusion in specific standards released by the CDC in relation to social distancing, PPE and testing.

 

Julie Anna Potts, president and CEO of the NAMI stated, “Most importantly is the evidence in trends revealed in data collected by the Food and Environmental Reporting Network, these many programs and controls that were once in place worked and continue to work.  Positive cases of COVID-19 associated with meat and poultry companies are trending down compared with cases nationwide.” 

 

Regrettably the statement was not substantiated by data. It is also noted that OSHA action was taken with respect to conditions in plants that existed some months ago and the current situation, even if there is a decline, is not relevant to the time during which OSHA determined that alleged irregularities occurred.  It is hoped that measures taken by members of NAMI are effective and that these have reduced incidence rates in red meat plants.

 

The chicken industry was extremely proactive in introducing protective measures and as yet there have not been any Federal OSHA citations announced for poultry plants.


 

Consequences of ASF Diagnosis in Wild Boar on Border Between Germany and Poland

09/15/2020

Japan, South Korea and China have banned imports of pork and live hogs from Germany following a diagnosis of African swine fever (ASF) in a dead wild boar in the State of Brandenburg close to the border with Poland.

 

China has little justification for this action given that the infection is endemic in their nation and is responsible for serious losses.  Japan is however legally able to ban German pork since they are free of ASF notwithstanding the fact that no commercial herds in Germany have been infected.  In any event, no country is justified in banning pork from the entire nation of Germany since the OIE principle of regionalization should be applied.  At worst, pork from the state of Brandenburg should be banned.  Germany supplies approximately 14 percent of pork imports into China year to date.  In 2019 pork exports to China from Germany were valued at $867 million.

 

As expected, hog prices in Germany have crashed with other EU exporters including Denmark benefiting.  Hog prices have increased sharply over successive trading sessions on the CME attaining back-to-back limit gains.  The situation may be volatile going forward if China reverses its decision.


 

Beyond Meat to Establish Production Facility in China

09/15/2020

Recognizing the limitations of the vegetable-based meat-substitute market in the U.S. and intense competition, Beyond Meat has established a strategic venture with the Jiaxing Economic and Technological Development Zone (JXEDZ) to establish a production facility in China.

 

According to Company spokesperson Micky Pant, “Beyond Meat is building the perfect road to long-term success in China.”  He added, “It has the confidence to set up dedicated production capacity via a  wholly-owned subsidiary located on the mainland close to Shanghai.”

 

CEO Ethan Brown commented, “China is one of the world’s largest markets for animal-based meat products and potentially for plant-based meat.”  He added, “We are confident that after several months of productive and collaborative discussions, we will partner with the JXEDZ to develop two production facilities.” It is anticipated that pilot trials will commence within months transitioning to full production in 2021.

 

Based on the experience of companies entering into JV agreements in China, within a short time, the domestic partner will have gained the technology. This will inevitably be transferred to wholly-owned Chinese entities, negating the value of the partnership and benefits for the U.S. principal.

 


 

U.S. Share of Angola Market Declining

09/15/2020

According to data released by the USDA-FAS in GAIN Report AO2020-0008, the U.S. supplied 38 percent of chicken imports into Angola during 2020 to date.  Reviewing data for the first seven months of 2020, Angola was ranked 11th as an importing nation with 44,945 metric tons or 2.2 percent of total exports.  The value of exports to Angola for the first seven months attained $35.4 million, or a 1.2 percent of total export value with a unit price of $788 per metric ton.  For the first seven months of 2020, exports to Angola declined by 52 percent in volume and 56 percent in value compared to the corresponding first seven months of 2019.

 

In reviewing the GAIN Report, domestic production of chicken meat in Angola has remained at 28 metric tons since 2019 and exports represent 90 percent of supply.  Based on a population of 32 million, per capita consumption on average is 16 pounds.  This is a misleading figure since a high proportion of the population is economically inactive and consumption is stratified by income level and is predominantly in urban areas. 

 

During mid-2018, the Government of Angola introduced the Production Support, Export Diversification and Import Substitution Program to encourage economic development and reduced dependence on oil production and exports.  It is questionable whether investment in domestic chicken production will occur given deficiencies in infrastructure, a high level of corruption, and a disinclination of foreign companies and banking institutions to become involved in the agricultural sector in Angola.


 

Saudi Arabia Aims for Self-Sufficiency in Broiler Production

09/15/2020

According to USDA-FAS GAIN Report SA2020-0013 released on September 10th, Saudi Arabia has achieved a goal of 60 percent self-sufficiency and intends to extend this figure to 80 percent within three years. Currently Brazil dominates the importat market for chicken into Saudi Arabia with a 72 percent share, followed by the UAE at nine percent and lesser quantities from the Ukraine, Russia, and Argentina.

 

 

From 2019 to 2020, broiler production increased by 16.3 percent to 930,000 metric tons.  A further increase will raise production to 950,000 metric tons.  In 2021, imports will amount to 625,000 or 40 percent of total consumption.  Given a population of 35 million per capita, demand for chicken meat amounts to 99 pounds. Consumption of broiler meat is cyclical in Saudi Arabia, increasing in winter months and during the Umrah and Hajj seasons, but declines during the month of Ramadan.

 

 At the retail level, domestic chicken sells at $1.93 per pound, approximately equivalent to imported chicken from either Brazil or France and is a third of the cost of lamb or beef.  It is noted that Brazilian whole frozen chicken was shipped at $1,675 per metric ton in August.

 

In 2020, the government of Saudi Arabia withdrew the subsidy on imported animal feed and imposed specific subsidies on broiler parent chicks, commercial level chicks, and broiler meat to encourage efficiency and production. Subsidies range from $0.04 per broiler chick to $0.09 per pound of broiler mea In addition to the direct production subsidies, the government offers interest-free loans and rebates on equipment. 

 

The noteworthy increase in domestic production of 16.3 percent from 2019 to 2020 is essentially due to expansion by the four major producers, although second-tier companies have participated.  Ten integrators control 95 percent of production. The Ministry of Environment, Water, and Agriculture has issued a number of operational and construction licenses for new poultry farms and for expansion projects.  During the past few years, biosecurity has been improved and the Ministry has assisted with veterinary services reflected in sharply declining mortality rates. 

 

Domestic broilers are harvested between 28 to 35 days and an average weight of three pounds with a feed conversion of 1.7.

 

During May 2018, Saudi Arabia imposed a ban on electrical stunning prior to slaughter.  This effectively disqualified the U.S. as an exporter to Saudi Arabia.  Generally, devout Saudis consider domestic chicken to be of a higher halal standard than chicken imported from Brazil or France.  Saudi Arabia also imposed a ban on animal by-products in feed requiring certification by the USDA Agricultural Marketing Service Animal Protein Free Verification Program for export to Saudia Arabia. 


 

Poland Declared Free of HPAI

09/14/2020

According to USDA FAS GAIN report PL2020-0038 dated September 4th, Poland is now free of highly pathogenic avian influenza.  The announcement was made on August 13th by the nation’s Chief Veterinary Officer.  From December 31st 2019 through April 1st 2020, 35 cases of highly pathogenic avian influenza were diagnosed in flocks in Poland.  This had a significant impact on exports. 

 

On May 13th 2020 veterinary authorities in Poland reported that the last outbreak in a flock of 30,000 turkeys in the Lubuskie Province was eradicated.  According in conformity with the World Organization for Animal Health (OIE) Terrestrial Animal Health Code, Poland was considered free of the infection from August 13th onwards.

 

It remains to be seen whether Poland can retain an HPAI-free stators given that migratory waterfowl could reintroduce infection from December 2020 onwards. Meat producers in Poland have endured a number of disease challenges in the current year with exports encountering embargos due to Salmonella, HPAI and for the hog sector, African swine fever.

 


 

USDA-FAS GAIN Report on South Korea

09/13/2020

The FAS-GAIN Report KS 2020-0035 documented the status of the broiler industry in South Korea.  USDA noted a two percent increase in domestic production from 952,000 metric tons in 2019 to 971,000 metric tons in 2020.  An additional one percent expansion to 980,000 metric tons is forecast for 2021.  Per capita consumption based on a population of 52 million will be 46.8 pounds. 

 

In 2019, 76 percent of chicken meat comprised broilers processed at 3.5 lbs. live. About 17 percent of the market comprised samgye birds, a broiler-layer hybrid, processed at 1.9 lbs. live, principally for traditional soup dishes.  Native strains and spent hens comprise the remainder of chicken consumed in the nation. 

 

During 2021 South Korea will import 168,000 metric tons of chicken meat representing 13.8 percent of total supply. Brazil is the principal supplier with 66 percent of the import market, followed by Thailand with 22 percent, and the U.S. at two percent.  Consumption of chicken in South Korea is seasonal, with higher demand through June through August. Approximately 30 percent of white-feathered broilers are consumed through QSRs and 20 percent through catering and other food service establishments.  For conventional broilers, the farm-gate price is $0.37 per pound, live. Wholesale processed broiler meat is $0.92 per pound, and chicken retails at $1.84 per pound representing a high margin depressing consuption.

 


 

McDonald’s Evaluating Recycled Coffee Cups In the U.K.

09/12/2020

McDonald’s Corporation in the U.K. has joined with TerraCycle the operator the loop recycle operation.  Customers pay a small redeemable charge for cups taken from the store.  Cups are returned to TerraCycle for processing including removal and replacement of the plastic liner and decontamination comprising washing through the loop system before delivery to a McDonald’s restaurant.  McDonald’s operates the Recup system in Germany and is evaluating a recycling system with NexGen in the U.S. 

 

It is evident that major QSRs will have to reevaluate re-cycling of plates, cups, utensils and containers to reduce wastage.  Most QSRs have embarked on programs to replace plastic with recyclable alternatives.

 


 

Lithuania Condemns 40 Tons of Imported Poultry Meat

09/12/2020

It is apparent that Lithuania has imposed a zero tolerance for Salmonella contamination in imported poultry meat.  Press reports note that a number of consignments from Eastern European nations have been condemned with up to 40 tons destroyed most recently.  Given previous reports of Salmonella on poultry processed in Poland, it is understandable that more than a third of the condemned consignments were supplied by this nation. During the first five months of this year 18 of 19 batches of adulterated poultry meat were originated from Poland. Other sources of contaminated products included Hungary and Romania. 

Capial of Lithuania

Serotypes involved in condemned poultry meat included S.Enteritidis, Infantis, Typhimurium, and Newport. 


 

Aviagen Appoints Global Director of Export Logistics

09/12/2020

Aviagen has appointed Diane Hartjes as the Global Director of Export and Logistics.  In this role she will lead a global team to improve the company’s deliveries of Aviagen broiler breeding stock.  Her team will be responsible for the U.S. and U.K. exports including global trade compliance and government relations.

 

Diane was most recently Vice-president of Trade and Compliance for a major U.S. retailer.  Ms. Hartjes earned a Baccalaureate degree from the University of Wisconsin-LaCrosse majoring in communications and French.

Diane Hartjes, Global Director of Export and Logistics

 

Jan Henricksen, CEO of Aviagen stated, “Security of supply to our customers is the foremost priority.”  He added, “The poultry value chain is often challenged by trade barriers including avian influenza, natural disasters, and more recently the COVID-19 pandemic.”


 

Denial of Retroactive Waivers to Small Refineries Contemplated

09/12/2020

Press reports indicate that the Administration will deny requests for retroactive small refinery waivers.  The White House will direct the Environmental Protection Agency to reject requests based on recent court decisions.  Essentially, the ruling by the Administration in favor of corn farmers and ethanol refiners is political, given the intensity of pressure exerted by corn-state legislators, lobbying by agricultural associations and the Renewable Fuels Association.

 

In January, a federal appeals court ruled that waivers granted to small refineries in 2010 could only be approved as extensions of existing waivers.  Many of the requests were retroactive and contrary to legislation.

 


 

Bell & Evans Receives "Green Loan" from Rabobank

09/11/2020

Bell & Evans will use a “Green Loan” extended by Rabobank to erect and equip the new processing plant to be on a tract of land near Fredericksburg, PA. Requirements include compliance with exceptional standards of sustainability, conservation of energy and water, environmental excellence, welfare and compatibility with the area in which a facility is located.


Rabobank Provided Finance

Scott Sechler

According to Scott Sechler, principal shareholder of Bell & Evans, the plant he refers to as a ‘Chicken Harvesting Facility’ will incorporate state-of-the-art installations and construction approximating European standards.  It is anticipated that the plant will be operational by late 2021 and will cost $330 million, doubling the current output of the company.

 

Bell & Evans is committed to organic production and is investing in expansion to satisfy customer demand. Products are featured in Whole Foods Market, Wegman’s Food Market, Publix, Roche Bros., in addition to many upscale restaurants.

 

The structure of the plant will be built by Stellar, previously responsible for a further-processing and packaging facility and a modern hatchery equipped with HatchTech, incubation and automated handling.

The structure of the plant will be constructed using Thermomass precast concrete exterior walls with a high thermal rating.  Production areas will have acid brick flooring and extensive polystyrene installation will be incorporated into freezers. 


Conceptual View of new Plant

Processing equipment will be supplied by Marel-Stork and will incorporate an innovative automated transport system, a slow-induction modified atmosphere stunning system, a high level of automation and air-chilling. Chemical rinses will not be used. Sustainability will include the use of recycled water processed by onsite treatment plant. In commenting on the project, Sechler stated, "I spent more than 50 years in the chicken business making upgrades to old processors and retrofitting facilities with the most innovative equipment". He added "now to be building these beautiful state-of-the-art chicken plants from the ground up is a dream come true".

 


 

Germany Diagnoses ASF in Wild Boar

09/11/2020

Inevitably, a wild boar was diagnosed with African swine fever (ASF) in the State of Brandenburg adjacent to the border with Poland.  Previously, Germany upgraded border fencing to prevent entry of free-roaming boars from Poland. 

 

The diagnosis was confirmed by the Friedrich Loeffler Institute (analogous to the USDA National Veterinary Service Laboratory in Ames, IA).

African swine fever is now endemic in China, Vietnam, and adjacent southeast Asian nations.  The disease also occurs with intermittent frequency in the Russian Federation and nations of Eastern Europe as reported to the World Organization for Animal Health.  Prevention of the infection in commercial farms relies on biosecurity since there is no available vaccine.

 

Predictably the report to the World Organization of Animal Health (OIE) has precipitated a number of embargos on pork exports from Germany. This is unjustified since the diagnosis was on a single animal straying from Poland and is not representative of the commercial industry in Germany. In any event importing nations should recognize the OIE principle of regionalization and restrict bans to States or the equivalent of counties subject to astructured program of surveillance.


 

Canadian Ministry of Agriculture Supporting COVID Protection in Plants

09/11/2020

The Minister of Agriculture and Agri-Food, Marie-Claude Bibeau has announced that approximately US$60 million will be made available as emergency funding to allow processing and packing plants to purchase PPE and to install sanitation stations and protective barriers.  Applications have been approved for 32 requests valued at $8 million.  Minister Bibeau stated, “the Government of Canada will continue working with food processors to ensure the wellbeing of essential workers in food processing plants across the country.  The safety of essential workers is key to continuing to provide safe, high quality food for all Canadians.”


Minister of  Agriculture Marie-Claude Bibeau

 

Food and Packaging Unlikely to Transmit COVID-19 in Export Shipments

09/11/2020

The International Commission on Microbiological Specification for Foods (ICMSF) evaluated the literature concerning the length of persistence of coronavirus on food and packaging. The ICMSF concluded, “to date there has not been any evidence that food, food packaging or food handling is a source or of importance as a transmission route for SARS-COV-2 resulting in COVID-19.”  This opinion conforms to the findings of the U.S. Food and Drug Administration.

 

In March, the New England Journal of Medicine noted that SARS-COV-2 is detectable for up to three hours in aerosols, for up to four hours on metallic surfaces, for 24 hours on cardboard and two to three days on plastic and stainless steel. This sensitivity to environmental exposure would not allow the virus to persist in product shipped between continents.

 

China claims that RNA from SARS-COV-2 was demonstrated from the skin of one sample of chicken wings shipped from a plant in Brazil. Outer packaging yielded two additional samples from which RNA was demonstrated. Authorities in China have not disclosed the methods used to show the presence of RNA of SARS-CoV-2, the level of specificity or what is more important the proportion of samples that were negative. 

 

The ICMSF cautions that food-processing facilities should implement state-of-the-art methods of protecting workers to prevent infection.  China has adopted a policy of banning imports from plants known to have employed infected workers.

 


 

Bob Evans Farms Filing Lawsuit Alleging Collusion by 19 Integrators

09/11/2020

Bob Evans Farms, operating a chain of restaurants, has filed a lawsuit claiming that 19 chicken integrators representing the largest U.S. companies engaged in an illegal conspiracy from 2008 to 2017 to curtail the supply of chickens in order to manipulate wholesale prices of chicken products.

 

Existing civil lawsuits alleging collusion filed in 2019 were suspended before depositions were taken at the request of the Department of Justice. Subsequent investigations by anti-trust lawyers at the DOJ led to criminal indictments of two executives each at Pilgrim’s Pride, controlled by JBS S.A. and Claxton Farms on numerous charges centering on collusion between their companies. It is considered significant that indictments were restricted to these two integrators and that no other companies were involved, despite presumed intensive scrutiny of voluminous records of transactions discovered in the civil cases.


 

Activists Organizations and Unions Opposing Increased Line Speeds

09/11/2020

In 2017 the USDA rejected a petition from the National Chicken Council to deregulate all line speeds.  The nominal rate of 140 birds per minute is however subject to waivers at the discretion of USDA-FSIS taking into account the level of mechanization, configuration of the hanging room and defeathering and evisceration equipment. Irrespective of speed, lines are split to allow USDA personnel to inspect carcasses.

 

The United Food and Commercial Workers Union and Public Citizen, an advocacy organization have filed lawsuit to deprive the USDA-FSIS of discretion in assigning waivers. Initial targets of UFCW action are five specified Tyson Foods plants and five Wayne Farms plants. Lobbying activity has resulted in a bill entitled “The Safe Line Speed and COVID-19 Act” co-sponsored by Senator Cory Booker (D-NJ) and Representative Marcia Fudge (D-OH).

 

Senator Booker noted, “The USDA has now proposed to permanently increase line speed in poultry plants – an action that is both dangerous and irresponsible.” Neither Senator Booker nor Representative Fudge represent states with substantial broiler production and it is presumed that their concern in proposing restrictive legislation is a reaction to Union pressure. 

Senator Booker is intent on not only fixing line speed at 140 birds per minute but also wishes to eliminate the New Swine Inspection System and all discretionary waivers.

 

Disallowing appropriate requests for increased line speed will effectively raise the cost of production that will ultimately have to be passed on to consumers and shareholders of the integrators concerned.  Higher line speeds do not necessary increase the probability of injury.  The UFCW must realize that if forced by unrealistic labor regulations, processors will install a greater level of automation and robotics eliminating the need for many workers, to the determent of both unionized and non-union employees.


 

OSHA Fines Smithfield Packaged Meats Corp

09/11/2020

The Occupational Safety and Health Administration has proposed a penalty of $13,500 on Smithfield Packaged Meats Corporation as a result of the extensive outbreak of COVID-19 at the Sioux Falls, S.D. hog plant.  According to CDC and County data, 1,294 cases of COVID -19 were recorded with four fatalities. Assuming the plant employs 7,000 the rate of infection attained 18 percent. The fine proposed is the maximum allowed by law and effectively represents approximately $10 per affected employee.  In commenting on the proposed penalty, Sheila Stanley, Director of OSHA in the Sioux Falls Area commented in a press release "employers must quickly implement appropriate measures to protect their workers' safety and health".  She added "employers must meet their obligations and take the necessary actions to prevent the spread of coronavirus at their work sites".

 

Although there was considerable confusion as to specific protective measures, OSHA followed the lead of the Centers for Disease Control requiring social distancing, physical barriers, face shields and masks with safety and health information, training and warnings in languages that workers could understand.  Smithfield claims to have functioned in accordance with the Presidential Executive Order of April 28th requiring food plants to remain operational provided that CDC guidelines were followed. OSHA contends that protective measures were inadequate or delayed.

 

It is noted that many chicken companies including Perdue Farms were preemptive in their approach to prevention, implementing protective measures including installation of partitions between adjacent workstations, supplying PPE and other measures. In contrast a number of major red meat packers were tardy in complying with health and safety recommendations.

 

Smithfield owned by the WH Group of China have indicated that they will appeal the OSHA determination and fine, obviously to avoid an adverse verdict in anticipated civil litigation. It is anticipated that class action lawsuits will be filed against all the major red meat processors. A specific lawsuit in Texas against Tyson Foods was withdrawn without prejudice and will re-surface in the coming months.


 

Need to Dredge Lower Reaches of Mississippi River

09/10/2020

The American Soybean Association is investing checkoff funds in a feasibility study to determine the cost and approach to dredging the lower reaches of the Mississippi river.  Currently maximum depth of channels is 45 feet with the intent to increase draught to 50 feet to accommodate vessels that can carry 79,000 metric tons (2.9 million bushels) of soybeans compared to the current 65,000 metric tons (2.4 million bushels).  It is estimated that larger loads will benefit farmers located within 250 miles of the Mississippi river to the extent of 13 cents per bushel in basis.


 

Aviagen Conducts International Production Management School as Virtual Presentation

09/10/2020

In a September 8th release, Aviagen reported on the well-received first virtual Management School held August 3rd -7th.  A total of 480 geographically and culturally diverse students attended from all continents with poultry industries.

Topics that were covered included:-

  • Biosecurity
  • Trends in the international broiler industry
  • Value of genetic improvements
  • Nutrition
  • Ventilation
  • Diseases and parasites
  • Vaccination
  • Processing and myopathies

The course was led by Wouter Lassauw and included specialists from Aviagen in addition to Faculty of Auburn University.

 

The course was conducted over five days with four topics per day followed by a quiz to ensure comprehension. The virtual School allowed for discussion, exchange of ideas and networking while allowing participants to proceed at their own pace from homes and offices in all time zones.

 

Normally the school is offered annually in Huntsville, AL, but due to COVID restrictions Aviagen elected to present the program in a virtual format.  In the event the technical problems were minimal, and attendees participated using desktop and laptop computers or tablets.  Feedback from students was complementary with 325 votes submitted with scores ranging from 4.5 to 5 stars.

 

Following numerous requests, Wouter Lassauw has initiated planning future virtual schools.  Attendance by invitation can be arranged through regional Aviagen managers.

 

For further information access <www.aviagen.com>.


 

China Stages Animal Husbandry Expo

09/10/2020

The Seventeenth China International Animal Husbandry Expo was held September 4th - 6th in Changsha, the capital of Hunan Province in south central China.  This is the first national meeting since the advent of COVID-19.

 

Elimination of antibiotics from livestock feed, as proposed by the central government, represented an important topic considered at the meeting. Withdrawal of antibiotics creates opportunities for alternative feed additives including prebiotics and probiotics. Among the participating international suppliers, Hamlet Protein generated interest in early feeding of piglets and chicks to achieve optimal performance.

 

The CIAH Expo was held under the reality of continuing African swine fever that is yet to be controlled by an effective vaccine.


 

Tyson Foods Appoints Marathon Health to Establish Company Clinics

09/07/2020

Tyson Foods has extended the We Care Workplace Safety program to include seven permanent clinics to serve the needs of employees and their families.

 

Marathon Health will provide primary and preventive care including health screening, lifestyle coaching and health education.  The staff of the clinics will cooperate with health providers in local communities to enhance the wellbeing of Tyson personnel.

 

Johanna Soderstrom, Executive Vice President and Chief Human Resources Officer for Tyson Foods stated, “We’re piloting these clinics to promote a culture of health in our company that results in a healthier workforce.”  She added, “Some of our frontline team members aren’t using their health plan benefits, and others don’t seek care until there’s a crisis. We want to change that by providing access to care that can help detect health conditions early and promote healthy habits.”


Tyson foods temporary covid screening by Marathon Health

 

Following the advent of COVID-19 Tyson Foods contracted with Marathon Health to provide COVID testing and screening and to advise workers on appropriate preventive measures.  Tyson Foods has appointed a Chief Medical Officer and will add 200 nurses and support personnel to the existing team of 400 employees involved in health services.

 

The first clinic will be established in Storm Lake, IA. serving a staff complement of 3,300 Tyson workers.  The second clinic will be installed at the Holcomb, KS. beef plant with 3,000 employees. Locations of other clinics will be announced as planning is completed.


 

Argentina Deferring Large Scale Hog Production to Supply China

09/07/2020

In an exercise in what may be regarded as agricultural colonialism, China attempted to establish extensive hog production in Argentina. The intent was to produce approximately 650,000 tons of pork annually over a four year period, effectively doubling production from Argentina.

 

 


Anti-hog farm protest over odor

 

The nation has deferred entering into a memorandum of understanding with China until the end of the year.  The announcement of the national initiative to make use of land, water, labor and resources to raise hogs for China elicited considerable opposition.  Environmentalists and academics in addition to citizens expressed concern over pollution resulting in a social media campaign and open protests in the streets of Buenos Aires. According to Reuters the Government of Argentina has decided to amend the memorandum of understanding to include stricter environmental conditions including compliance with all relevant laws.

 

Reference is made to the problems in North Carolina where large hog grow-out units use lagoons to hold waste that is then sprayed on fields creating an environmental nuisance.  The major producer in Eastern North Carolina is Smithfield Foods a subsidiary of WH Group of China. Following adverse judgments against Smithfield Foods claiming loss of value of property and nuisance, Smithfield Foods threatened to withdraw from North Carolina.  Cases are currently on appeal but it is clear that hog farms are unwelcome based on current methods of waste disposal.  It is possible to install bioreactors capable of turning waste in to energy but this requires capital investment and advanced technology.  It China were to apply technology available in that nation to proposed projects in Argentina, they would be in a more favorable position to work with their supplier.


 

Growth of the Chicken Industry in the Ukraine

09/07/2020

According to FAS GAIN Report UP2020-0035 released at the end of August 2020, production of commercial chicken meat in 2020 will attain1.41 million metric tons 4.1 percent higher than in 2019. Ukraine will import 100,000 metric tons of chicken meat and will export 430,000 tons contributing to domestic consumption of 1.12 million metric tons.  With a population of 43.7 million, per capita consumption will be 25.6 kg (56.4 pounds). 

 

Currently chicken availability is derived from commercial boilers (89%), backyard chickens (8%) and spent layer hens (3%).  Consumption of animal protein in the Ukraine comprises chicken (49 percent), pork (35); beef (14) with the remainder comprising other meats.

The industry was impacted by an outbreak strain of H5N1 HPAI in January.  Although the infection was controlled by flock depletion and quarantine, trading partners including the EU, Saudi Arabia and the United Arab Emirates placed bans on exports from Ukraine.  China also deferred imports that were under negotiation for the spring of 2020.  Most restrictions were relaxed at the end of the first quarter consistent with the World Organization of Animal Health protocols.

 

A decline in demand for chicken in the EU associated with COVID-19 restrictions further reduced markets for producers in the Ukraine.

 

Although the GAIN Report does not indicate ending stocks as of the end of 2020, it is understood that the collapse of the food service sector has resulted in an increase in the inventory of frozen chicken with low wholesale price.

 


 

GAIN Report on Turkey Reveals Pressures from Cost, Currency, and COVID

09/07/2020

The USDA-FAS GAIN Report 2020-0029 on broiler production in Turkey was released on August 31st.  After a muted 2.9 percent expansion from 2019 to a level of 2.2 million tons in 2020, the USDA projects a 2021 RTC production of 2.31 metric tons.

 

Given a population of 82 million, domestic consumption is in the region of 48.5 pounds per capita with chicken as the predominant animal protein.

 

Factors impacting growth and profitability of the chicken industry in Turkey include COVID shutdowns which have eliminated tourism, fluctuation in currency (Turkish Lira 7.4 to USD).  Feed cost is high at $255 per ton.  Turkey has been unable to purchase soybean requirements from the U.S. due to non-approval of some GMO cultivars resulting in the purchase of more expensive soybeans from Latin America. National regulations based on Halal forbid the inclusion of animal by-products in feed. 

 

Retail prices for chicken escalated sharply from 2018 to $0.86 per pound in July 2019 with moderation to $0.79 per pound in July 2020.  High prices represent a constraint to domestic consumption.  The Government took action against the major broiler producers early this year as a result of alleged collusion in the industry that is effectively an oligopoly.

 

In 2021 21.7 percent of production will be exported, representing a 9.9 percent increase over 2020. Half of export volume is shipped to neighboring Iraq, but inherent problems of logistics and civilian unrest in this nation and also in Syria present ongoing problems to producers.  Hong Kong, Angola, and the Eurasian Union are less significant importers although product is delivered to as many as 80 nations. The government of Turkey provides a subsidy of $24 per metric ton for exported chicken meat.

 

Chicken farmers receive rebates on electrical power and value added tax on chicken and eggs is set at one percent, compared to eight percent for other food items.  As with all chicken industries, margin between production cost and wholesale price determines volume over the intermediate term.  The optimistic forecast of a five percent increase in output in 2021 will in all probability not be attained.


 

Japan Broiler Production Stagnant, Relying on Imports

09/07/2020

According to USDA-FAS GAIN Report JA2020-0154, RTC broiler production in 2021 will attain 1.78 million metric tons, fractionally above 2020.  Japan relies on imports for 35 percent of consumption, with 1.06 million metric tons  shipped from Brazil, the EU, Thailand and China in 2021.  This is a 0.5 percent lower value than in 2020.  Domestic consumption will rise by 0.6 percent in 2021 to 49 pounds per capita.


 

South African Chicken Importers Establish Promotional Website

09/07/2020

Importation of chicken into South Africa is vigorously opposed by the South African Poultry Association representing domestic producers.  Their adversary is the Association of Meat Importers and Exporters (AMIE) who benefit from importation and provide low-income consumers with product from the U.S., Brazil, Argentina, and other nations.

 

The AMIE has launched the ChickenFacts site dedicating to providing information concerning the poultry industry and the origin of imported product.

 

The action by AMIE is supported by USAPEEC as the website will counter false information circulated by entities supporting local production.  This site can be accessed at <www.chickenfacts.co.za>.  According to the USDA-FAS GAIN Report dated September 3rd 2019, South African imported 520,000 tons of chicken meat in 2018 with a five percent increase in 2019 to 545,000 tons. 

 

USDA estimate that RSA production will be 1.420 million metric tons in 2020, imports will comprise 28.1 percent of total supply.  South Africa imposes a duty of 31 percent on frozen carcasses with cuts removed, 82 percent on frozen whole birds, 12 percent on boneless cuts, and 37 percent on bone-in portions.  An anti-dumping duty of $0.25 is imposed per pound beyond the quota of 69,000 tons annually.  Similar duties apply to chicken and products from the European Free Trade Association. 

 

The bulk of chicken consumed in the RSA is in the form of frozen whole chicken (59 percent), giblets and necks, (13 percent); frozen bone in, (9 percent) and chilled, (8 percent).  Mechanically deboned meat represents seven percent of consumption.  Per capita consumption of chicken amounts to 92 pounds, followed by beef  (40 pounds); pork (11 pounds)  and lamb  (6.6 pounds).

 

Over the past five years, USAPEEC has worked hard to establish a quota for U.S. chicken with constant opposition from the South African Poultry Association using both litigation and representations to government agencies.


 

Mountaire Donation to Louisiana Hurricane Victims

09/07/2020

Mountaire Farms trucked 20 tons of processed chicken to Lake Charles, LA. following Hurricane Laura.  Mount Airy personnel helped cook and serve first responders, volunteers, and residents in Operation Barbecue Relief.


 

NCC Promotes National Chicken Month

09/07/2020

Throughout September, the National Chicken Council will post items promoting the benefits of chicken including nutrient values,  quality, sustainability and welfare.

 

The Environmental Protection Agency has determined that collectively chicken, turkey, and egg production account for 0.08 percent of the total U.S. greenhouse gas emissions.

 

With advances in genetics since 1965, broiler production requires 75 percent less resources including feed and energy, a 72 percent decrease in farmland and a reduction of close to 60 percent in water used in growing and processing chickens.

 


 

Donnie King Appointed President of Tyson Foods Poultry Business

09/06/2020

Dean Banks president and CEO of Tyson Foods announced that Donnie King will serve as president of Tyson Foods Poultry Business effective September 3rd.  Previously, King served as Group President and Chief Administration Officer responsible for food safety, quality assurance engineering and supply chain.  He joined Tyson Foods in 1982 and has served as a manager of poultry plants and supply chain. At various times he has served as president of North American operations, managing aspects of poultry meat and prepared foods.  He also has experience in international operations.

 

In commenting on the appointment Donnie noted, “I am pleased to once again lead our poultry business and eager to work with the team as we explore additional ways to ensure that we are operating safely and efficiently while meeting the dynamic needs of our customers.”  Chad Martin will assume the role of Chief Operating Officer for poultry.  Chad Martin joined Tyson Foods in 1998 and has led the company’s poultry and beef businesses and served in various leadership roles.


Donnie King

 


 

COOL Litigation Favors Status Quo

09/06/2020

The country of origin (COOL) labeling rule introduced in 2013 and withdrawn in 2015 is still the subject of litigation.  On August 27th a federal judge granted motions by the ‘Big Four’ comprising Tyson Foods, Cargill Meat Solutions, JBS, and National Beef Packing Co to dismiss a  claim supporting COOL labelling by cattle producers.  Currently, “Product of the USA” can be applied to meat products derived from cattle raised in either Mexico or Canada but processed in the U.S.

 

The USDA will initiate rule-making that may restrict labeling of meat products as being of U.S. origin.  The Federal Trade Commission is soliciting comments on a proposed “Made in the USA” labeling rule. As with many trade related situations in which conflicting groups demand special privileges or rulings, the question of labeling has created a conflict between the USDA and the FTC.  The ongoing and as yet unresolved issue relating to small refinery exemptions, which has pitted the EPA against the USDA, is an additional example of suboptimization that has become politicized in an election year.


 

 
Copyright © 2020 Simon M. Shane