Poultry Industry News

Broiler Week

06/22/2021

Weekly Broiler Production and Prices, June 22nd 2021.

 

Chick Placements.

The Broiler Hatchery Report released on June 16th 2021 confirmed that a total of 240.8 million eggs were set during the week ending June 12th 2021, up two percent from the corresponding week of the previous year and 0.2 percent (0.5 million eggs) less than the previous week in 2021.

 

A total of 178.7 million day-old chicks were placed among the 19 major broiler-producing states during the week ending June 12th 2021. Total chick placements for the U.S. amounted to 187.8 million, one percent more than in the corresponding week in 2020 and 0.5 percent (0.8 million chicks) more than the previous week. Claimed average hatchability was 80.0 percent for eggs set three weeks earlier, (79.8 percent for the previous week). Each 1.0 percent change in hatchability represents 2.4 million chicks placed per week with current settings. Cumulative placements for the period January 2nd 2021 through June 12th 2021 amounted to 4.30 billion chicks, up one percent from the corresponding period in 2020. During the period May 8th through June 12th 2021 weekly placements were on average 5.7 percent higher compared with the corresponding six weeks in 2020. This represents placement on average of an additional 10.7 million chicks per week.

 

Broiler Production

According to the June 18th USDA Broiler Market News (Vol. 68, No. 24) for the processing week ending June 12th 2021, 169.2 million broilers were processed during the past week (previous short week 116.9 million) at an average live weight of 6.48 lbs. (6.45 lbs. last week) and a nominal yield of 76 percent. The number of broilers processed was 3.9 percent more than the corresponding processing week in 2020. Processed (RTC) broiler production for the week was 833.0 million lbs. (378,641metric tons), (572.8 million lbs. last week), 4.9 percent more than the corresponding processing week in 2020. In 2021 Processed (RTC) production attained 18.59 million lbs. (8,448,275 metric tons), 1.3 percent less than YTD 2020.

 

Broiler Prices

The USDA National Composite Weighted Wholesale price on June 18th 2021 was down 0.2 cent per lb. from the previous week to 107.0 cents per lb., compared to 72.4 cents per lb. during the corresponding week of 2020; 105.4 cents per lb. for May 2021 and 95.0 cents per lb. for the three-year average. The industry still is impacted by the contraction in the food service segment following imposition of COVID-19 restrictions, although QSRs are using increasing quantities of breast meat for sandwiches.


 

Sanderson Farms Considering Acquisition Offer

06/22/2021

According to The Wall Street Journal, Sanderson Farms (SAFM) the third largest U.S. broiler producer has engaged Centerview Partners to advise on a possible acquisition by multinational Continental Grain, owner of seventh-ranked Wayne Farms. Sanderson Farms previously rejected a $142 per share offer from Durational Capital Management in October 2020

 

On release of the news Sanderson shares soared, having closed closing at $166.58 on Monday 21st June to open at $185.62 on Tuesday 22nd June. As of 10H00 EDT Sanderson market capitalization attained $4.1 Billion. The shareholding is distributed in the proportion of 10.0 percent insiders and 82 percent institutions.

 

 The transaction if finalized will undergo Federal scrutiny but will probably be approved since a merger with Wayne Farms will still place the combination behind industry leader Tyson Foods and second-ranked Pilgrim’s Pride. The combination would provide synergy and allow the combined enterprise to benefit from the international and comprehensive scope of Continental Grain. 

 

SAFM has traded over the past 12 months in the range of $108.57 to $185.62 with a 50-day moving average of $167.23.  On a trailing 12-month basis SAFM has returned 8.5 percent on assets and 11.6 percent on equity. The company posted an operating margin of 7.0 percent and a profit margin of 4.2 percent over the past 12 months. For the most recent 2nd Quarter of FY 2021 ending April 30th SAFM earned $96 million on sales of $1.13 Billion

 


 

Status of 2021 Corn and Soybean Crops

06/21/2021

The USDA Crop Progress Report released on June 21st documented corn and soybean crop condition to June 20th compared to the 5-year averages. Corn planting is complete ahead of the 5-year average. Soybean planting is ahead of the five-year average, advancing 3 percent this past week to 97 percent completed. Corn and soybean emergence parallels the rate of planting at 100 percent for corn and 91 percent for soybeans.

 

U.S. average surface moisture levels were generally lower over the past week over the corn belt with Iowa, Illinois and Michigan deteriorating compared to last week and corresponding weeks in 2020. The severe drought in Western states and the Dakotas continues. Texas as a state is no longer in drought following prolonged and heavy rains with flooding across the Gulf Coast in early June. Topsoil moisture in Iowa improved 6 percent this past week to 64 percent compared to 39 percent two weeks ago in the “Very Short” and “Short” categories. Pennsylvania deteriorated slightly to 26 percent and Illinois recorded 32 percent representing the sum of the two driest topsoil categories.

 

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

 

Reference is made to the June 10th WASDE Report #613 accessible in this edition for projected 2021 acreage and yields. This data will be updated after Report #614 is released in mid-July when acreage and projected yields have firmed.

 

WEEK ENDING

Crop

June 13th

June 20th

5-Year Average

Corn Planted (%)

Corn Emerged (%)

100

100

100

100

100

100

Soybeans Planted (%)

Soybeans Emerged (%)

Soybeans Blooming (%)

94

86

0

97

91

5

94

85

5

Crop Condition

V. Poor

 Poor

Fair

Good

Excellent

Corn 2021 (%)

Corn 2020 (%) 1

1. Late planting

1

1

5

4

29

23

54

57

11

15

Soybeans 2021 (%)

Soybeans 2020 (%)1

1. Late planting

2

1

7

4

31

25

51

58

9

12

 

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture %: Past Week*

15

30

50

5

Past Year

8

26

59

7

Subsoil moisture %: Past Week

15

28

53

4

Past Year

6

22

65

7

 

*Western States with categories of “Very Short and “Short” Topsoil moisture combined (with previous week in parentheses):-

NM 90% (deteriorated, 75%)

SD 84% (deteriorated, 80%). This week 17% of corn and 35% of soybeans in “Poor” and “Very Poor” categories

ND 72% (deteriorated 62%). This week 20% of corn and 14% of soybeans in “Poor” and “Very Poor” categories

TX 31% (deteriorated, 20%; did improve following heavy rain in SE of State in early June)

CA 75% (stable 75%; low snow pack inadequate to support 2021 irrigation, dams depleted)

WY 71% (deteriorated 64%)

OR 84% (deteriorated 80%)

 

The major corn and soybean-producing states (KS, OH, IL, IN, IA, PA) have an average of 31% in the “Very Short” and “Short” categories (last week 28%) with a range of 11% for OH to 64% for IA.


 

Pilgrim's Pride Acquires UK Food Company

06/20/2021

Pilgrim's Pride Corporation has purchased the meats and prepared meals division of Kerry Consumer Foods with facilities in Ireland and the U.K.  The transaction is valued at $950 million with the acquired company posting 2020 sales slightly in excess of $1 billion.  Brands distributed in the UK and Ireland include Richmond, Fridge Raiders, Henry Denny, available through all major food retailers and club stores under both national and customers brands. 

 

In commenting on the purchase, Fabio Sandri, CEO of Pilgrim's Pride stated, "we are pleased to have the opportunity to position Pilgrim's as a leading prepared foods and branded product player.  The transaction enhances our portfolio by adding market-leading brands that will deliver a higher and more stable margin profile".


 

Brazil Amends GMO Import Regulations

06/20/2021

Faced with a soaring world price for corn and soybeans and a domestic drought, Brazil has amended import regulations to permit introduction of GM ingredients.  According to a recent entry into the official government gazette, different GM crops can be shipped in the same vessel provided each cultivar is approved.

 

Brazil recognizes the need to import both corn and soybeans from the U.S. since domestic production and


 

National Cattlemen's Beef Association Petition USDA Over Origin Labeling

06/19/2021

The National Cattlemen's Beef Association (NCBA) is advocating for a "Processed in the USA" generic label to replace the existing "Product of the USA" label currently used for meat products.  The “Product of the USA” label can be used even though the product has only been minimally processed or repackaged in a facility under USDA inspection.  The current label has neither source verification nor compliance with a food safety standard. 

 

The NCBA believes that a more descriptive label would benefit domestic producers and could form the basis of a consumer education program. This would ultimately allow cattle producers to benefit from a premium for local production.

 

The NCBA labeling proposal was developed by a Transparency in Labeling Working Group established in 2019 resulting in approval by the membership in 2020.

 

The issue relates to Country of Origin Labeling (COOL) introduced in 2002 with successive expansion of the range of food products marketed through 2015. In 2016 COOL was repealed for muscle cuts and ground pork and beef in accordance with a series of WTO rulings.


Covering the bases with consumer disclosure

 

Argentine Beef Export Ban to be lifted?

06/19/2021

Faced with a 50 percent inflation rate affecting food and especially beef, the Government of Argentina imposed an export ban that resulted in loss of foreign exchange and disruption within the livestock industry. 

 

After a month of protests and reevaluation, the Government appears to be close to a settlement with the beef industry, intending to relax the ban. Plants will be allowed to export 50 percent of normal volume during July.  Contractual commitments to the European Union and the United States would not be restricted.


 

China Claims to Have Restored their Sow Herd

06/19/2021

Following a 35 percent decline in hog production in China during 2019 as result of African swine fever, the Department of Animal Husbandry initiated a program to rebuild the herd over a 3-year period.  According to a release by the Ministry of Agriculture and Rural Affairs, the growing-hog herd rose by 23 percent in May 2021 compared to the corresponding month in 2020.  The sow herd increased by 20 percent by May 2021 attaining a level of 98 percent of the population as at the end of 2017.


Hog Hiltons add to overproduction

The availability of live hogs can be inferred from the Dalian Commodity Exchange.  On February 1st, live hogs closed at $3,773 per short ton of standard product.  On June 1st, price had fallen by 24 percent to $2,880 per short ton.

 

The National Development and Reform Commission (NDRC), a government agency issued a warning to hog farmers in May to restrain production as the hog-to-grain price ratio fell to below 6:1.  The Commission attributed the sharp drop in price to farmers consigning heavy hogs to market.  The Dalian standard is 240 lb. liveweight. According to Pan Chenjun, Senior Analyst at Rabobank low prices are due to high domestic production and exacerbated by the large volume of pork imports coupled with weak seasonal demand.  Despite warnings from the Commission, live hogs are flooding the market as a result of panic selling.  At a hog-to-grain price ratio of 5:1, the NDRC may purchase pork to bolster prices. 


 

The U.K. to Export Poultry Meat to Japan

06/19/2021

In terms of a recent  bilateral trade agreement, the U.K. is eligible to export poultry meat to Japan with the potential to generate $18 million in value annually.

 

Victoria Prentis, Minister for Food in the U.K. government stated, "the Japanese market will now be able to enjoy more of our unique produce adding to an already varied collection of U.K. food including pork, beef and lamb available to its customers".  She added, "this is a significant opportunity for the U.K. poultry sector as we are working hard to open new markets for agri-food businesses".


 

Turkey Week

06/18/2021

Weekly Turkey Production and Prices June 22nd 2021

 

Poult Production and Placement:

The June 16th 2021 edition of the USDA Turkey Hatchery Report, issued monthly, documented 26.6 million eggs in incubators on June 1st 2021 (25.4 million eggs on May 1st 2021) and down 6.9 percent (2.0 million eggs) from June 1st 2020.

 

A total of 20.6 million poults were hatched during May 2021 (22.6 million in April 2021), and representing a decrease of 4.4 percent (0.9 million poults) from May 2020.

 

A total of 19.4 million poults were placed on farms in the U.S. in May 2021, (21.6 million in April 2021), and 1.0 percent less than in May 2020. This suggests disposal of 1.2 million poults during the month (1.0 million in April 2021). Assuming all tom poults were placed, up to 11.7 percent of May-hatched hen poults or 6.3 percent of all May-hatched poults may not have been reared. This is an unsubstantiated estimate with a fluctuating demand for processed toms and hens in a post-COVID affected market. (See relative numbers of hen and tom poults processed under Production Data below).

 

For the twelve-month period June 2020 through May 2021 inclusive, 269.3 million poults were hatched and 248.3 million were placed. This suggests disposal of 21.1 million poults. Assuming all tom poults were placed, (representing a broad assumption as above), 15.7 percent of hen poults or 7.8 percent of all poults hatched during the period were not placed.

 

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

 

Turkey Production:

The June 18th 2021 edition of the USDA Turkey Market News Report (Vol. 68: No.24) confirmed the following provisional data for turkeys slaughtered under Federal inspection:-

  • For the processing week ending June 12th 2021, 1.911 million young hens were slaughtered during the processing week at a live weight of 18.6 lbs. (last week 1.617 million hens at 17.3 lbs.). During the corresponding week in 2020, 1.617 million hens were processed, 15.4 percent more than the current week. Ready-to-cook (RTC) hen weight for the week attained 28.6 million lbs. (12,985 metric tons), 15.1 percent less than the corresponding processing week of 2020. Dressing percentage was a nominal 80.5. In 2021 RTC hen production attained 526.5 million lbs. (239,323 metric tons), 0.2 percent less than for YTD 2020.
  • For the processing week ending June 12th 2021, 1.959 million toms were slaughtered at 43.3 lbs, compared to 1.685 million toms processed during the previous week at 44.3 lbs. For the corresponding week in 2020, 2.100 million toms were processed, 7.2 percent more than in the past week. Ready-to-cook tom weight for the week attained 68.3 million lbs. (31,060 metric tons), 11.2 percent less than the corresponding processing week in 2020. Dressing percentage was a nominal 80.5 percent. In 2021 RTC tom product attained 1,776 million lbs. (807,119 metric tons), 8.0 percent less than for YTD 2020.
  • The National average frozen hen price during the past week was 123.8 cents per lb., 4.9 cent per lb. higher than the previous week and up approximately 31 cents per lb. from the three-year average. The following prices rounded to nearest cent were documented for domestic and export trading on June 18th 2021:-


 

The Kroger Company Reports on Q1

06/18/2021

In a press release dated June 17th The Kroger Company (KR) announced results for the first quarter of FY 2021 ending May 22nd.

 

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)

1st Quarter Ending

May 22nd 2021

May 23rd 2020

Difference (%)

Sales:

$41,298,000

$41,549,000

-0.6

Gross profit:

$9,351,000

$10,095,000

-7.4

Operating income:

$805,000

$1,326,000

-39.3

Pre-tax Income

Net Income

$179,000

$140,000

$1,585,000

$1,212,000

-88.7

-88.5

Diluted earnings per share:

$0.18

$1.53

-88.2

Gross Margin (%)

22.6

24.3

-7.0

Operating Margin (%)

2.0

3.2

-37.5

Profit Margin (%)

0.3

2.9

-89.7

Long-term Debt and lease obligations:

$12,924,000

$12,376,000

+4.8

12 Months Trailing:

Return on Assets (%)

4.2

Return on Equity (%)

28.6

Operating Margin (%)

2.4

Profit Margin (%)

2.0

Total Assets

$48,811,000

$46,922,000

-4.0

Market Capitalization

$29,330,000

52-Week Range in Share Price: $30.35 to $ 42.99 50-day Moving average $37.49

Market Close June 16 pre-release $37.54 June 17 post-release $39.18

Forward P/E 13.4 Beta 0.4

Same store sales growth Q1 2021 (4.1%) Q1 2029 +19.0


In commenting on Q1 results CEO Rodney McMullin stated "Kroger's strong execution delivered identical sales results in the first quarter that exceeded our original expectations. Customers are responding to the investments we have made in digital, as evidenced by our triple-digit growth in digital sales since the beginning of 2019. We were disciplined in driving costs out of the business and we achieved record growth in Kroger's alternative profit business, demonstrating the power and attractiveness of our long-term model”. 

 

He concluded "We are raising our guidance based on the strength of our results and we remain confident in our ability to deliver consistently attractive total shareholder return."

 

Guidance for FY 2021 included:-

  • EPS of $2.95 to $3.10
  • Operating profit of $3.5 billion to $3.7 billion
  • Capital expenditure of $3.4 billion to $3.6 billion.

 

Feathers and Pillows from China?

06/17/2021

An article by Josh Zumbrun in the June 13th edition of The Wall Street Journal describes the financial plight of Down-light International, a U.S. manufacturer of feather-stuffed quilts and bedding.  The company was granted an exclusion from substantial duties on the feathers they import from China.  The company unfortunately still has to compete with manufactured products that incorporate lower labor rates and in some cases hidden subsidies and support extended by the Government of China. 

 

Discounting the question of import duties on raw material or finished products, the question arises as to whether importation of feathers or feather-containing products from China represents a potential danger to the U.S. poultry industry.  If feathers have been effectively sterilized then there should be no problem. Can we trust suppliers in China given that HPAI is endemic in that nation, placing our industry at potential risk? China previously imposed a blanket ban on all imports of live poultry and products from the U.S. immediately following a report of even a single case of LPAI in a backyard farm. Although China has accepted compartmentalization and regionalization with respect to some livestock diseases this is more a reflection of short-term need than a function of adherence to scientific principles or OIE regulations.

 

Perhaps it is time for the broiler industry to evaluate the relative income from feathers as a feed ingredient and consider producing a suitably processed commercial added value product for domestic use. At the very least importation of feathers from China should cease.


 

Hamlet Protein Co-Sponsors World Pork Expo

06/17/2021

The 2021 World Pork Expo in Des Moines over June 9th -11th was the first large in-person industry event since the advent of COVID.  The success of the program augurs well for the 2022 IPPE. Hamlet Protein was a co-sponsor of the event that allowed interaction among pork producers, industry professionals, academia and allied suppliers.

 

Grady Fain, Regional Director for North America for Hamlet Protein commented, "we are excited to be returning to a physical trade show and proud to be co-sponsoring the World Pork Expo". 

 

Erik Visser, CEO noted, "we have a strong growth ambition for the North Central America region and particularly for the U.S.  We have invested in plant capacity, product development and local resources over the past twelve months.  With travel restrictions lifted we can now return to face-to-face meetings and speak about exciting new research data and the introduction of a new product range based on functional fibers".


 

COMMODITY REPORT

06/17/2021

WEEKLY COMMODITY REPORT: June 17th 2021.

 

  • Markets declined sharply this past week influenced by upward pressure on the U.S. Dollar as a result of anticipated inflation; China tightening fiscal policy and stabilizing prices of pork and corn and China raising corn output by 4 percent to 271.8 million metric tons (10.709 billion bushels). There was little impact on prices from the June 10th WASDE Report that left areas and yields unchanged. Report #613 adjusted ending stocks for corn down by 10.0 percent and raised stocks for soybeans by 10.7 percent. Projected harvests and ending stocks will be restated in the July WASDE especially when there is greater clarity on the effect of weather.
  • S producers are now receiving and conversely livestock producers in the Midwest are paying above $6.50 per bushel for corn and crushers are paying $3.50 per bushel for soybeans plus transport and basis. Corn was a noteworthy 10.2 percent lower this week and the price of soybeans was 14.4 percent lower compared to the previous week. Soybean meal was down 5.5 percent for July delivery but will soon reflect the decrease in price of soybeans.
  • According to the USDA FAS Export Report for the week ending June 10th 2021, reflecting market year 2020-2021, outstanding export orders for corn for this market year amounted to 14.7 million metric tons (579 million bushels) with 54.6 million metric tons (2,151 million bushels) actually shipped. During the past week a net quantity of 0.18 million metric tons (7.1 million bushels) of corn was sold for delivery during the 2020-2021 market year. A total of 1.7 million tons (67.0 million bushels) of corn was shipped. For the succeeding 2021-2022 market year commencing in September, 0.3 million metric tons (12 million bushels) was ordered this past week with outstanding sales amounting to 15.4 million metric tons (607 million bushels) of new crop corn.
  • Outstanding export orders for soybeans for the 2020-2021 market year stand at 3.7 million metric tons (136 million bushels) with 57.9 million metric tons (2,125 million bushels) actually shipped. Weekly sales of soybeans attained <0.1 million metric tons (<3.7 million bushels) with 0.15 million metric tons (5.5 million bushels) shipped. For the 2021-2022 market year outstanding sales for soybeans amount to 7.6 million metric tons (279 million bushels) with 0.07 million metric tons (2.6 million bushels) sold this past week
  • During the past week 177,300 metric tons of soybean meal and cake were ordered, up 30.0 percent from the previous week. The quantity shipped attained 199,000 metric tons, 26 percent less than the previous week.

 

The following quotations for delivery in the months as indicated were posted by the CME at close of trading on June 17th 2021 compared with values posted at 13H00 on June 10th 2021 (in parentheses) reflecting specified months for delivery.

 

COMMODITY

Corn (cents per bushel)

 July 633 (705)

Sept 548 (640)

Soybeans (cents per bushel)

 July 1,325 (1,549)

Sept 1,252 (1,471)

Soybean meal ($ per ton)

 July 362 (383)

Sept. 364 (388)

 

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

COMMODITY CHANGE FROM PAST WEEK

 

Corn: July quotation down 72 cents per bushel (-10.2 percent)

Soybeans: July quotation down 224 cents per bushel (-14.4 percent )

Soybean Meal: July quotation down $21 per ton (- 5.5 percent )

 

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

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

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

 

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

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

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

 

This week the downward change in the prices of corn and soybean meal would decrease nest-run production cost for eggs by 4.1 cents per dozen and for broilers 2.3 cents per live pound. Over the past 23 weeks, escalation in the prices of major ingredients have added 10.6 cents per dozen and 6.6 cents per live-weight lb. to production cost

 

The USDA weekly wholesale feedstuffs prices expressed per short ton posted on June 16th (with previous week in parentheses) were:-

  • Corn: $238 ($242), Chicago
  • Soybean Meal: $374 ($391), Central Illinois
  • Meat and Bone Meal: $425 ($415), Central Midwest
  • DDGS: $213 ($215), Eastern corn belt

 

According to the June 10th WASDE, corn harvested in calendar 2021 will attain 14,990 million bushels with ending stocks projected at 1,357 million bushels, down 10.0 percent from the 1,507 million bushels in the May 2021 WASDE Report. Values will be updated reflecting production, ongoing export volumes and domestic use in the July WASDE report. Compared with the June 10th value, the CME quotation for corn at close of trading on June 17th was down 72 cents per bushel for July delivery to 633 cents.

 

The 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 2020-2021 requirement accepting a nominal ten percent addition to gasoline. This past week 82.1 percent of the U.S. ethanol fermentation capacity was operational, based on January U.S. Energy Information Administration (US EIA) data. The outlook for increased production will depend on higher domestic demand with approximately ten percent of production exported. According to the U.S. EIA, for the week ending June 11th the industry produced on average 1,025,000 barrels per day down 3.9 percent above the week ending June 4th 2021. On June 11th ethanol stock was 3.0 percent above the previous week at 20.6 million barrels, (an approximately 20-day reserve).

 

Ethanol was priced at $2.48 per gallon on June 17th unchanged from the previous week and should be compared with a five-year low of $0.92 per gallon on March 26th 2020 during COVID restrictions. Concurrently RBOB gasoline at $2.15 per gallon (quoted, New York Harbor) was down 7 cents per gallon (3.2 percent) from the previous week presumably due to reduced demand, since WTI crude price ($70.97 per barrel) was fractionally higher than last week. Gasoline is 33 cents per gallon lower than ethanol but with a 63 percent higher BTU rating.

 

With most plants among the 201 that were operational on January 1st 2021 now functioning, DDGS is freely available but commanded a higher price than in the first quarter of 2021. Eastern Corn-belt DDGS was priced at $215 per ton on June 16th 2021, $4 per ton lower than the previous week but $63 per ton more expensive than on June 9th 2020. Generally DDGS is incorporated at low inclusion levels in egg-production formulas based on high price relative to the nutrient contribution of corn and other ingredients.

 

 Soybeans continue to be the beneficiary of export demand by China and other nations. The CME price at close of trading on June 17th lost 224 cents per bushel over the week to 1,325 cents per bushel for July delivery. The USDA documented a 2021 crop of 4,405 million bushels. 6.5 percent higher than for 2020. Ending stocks according to the June 10th 2021 WASDE projection will attain 155 million bushels, up 15 million bushels from the May Report. This is however close to a seven-year low and possibly represents an over-estimate.

 

According to a release on June 15th by the National Oilseed Processors Association, 164 million bushels of soybeans were crushed in May compared to an estimate of 165 million bushels. The May crush value was 2.9 percent lower than in April partly due to disruption caused by maintenance and a disinclination to purchase high-priced soybeans. On June 16th 2021 soybean meal quoted central Illinois attained $374 per ton, $17 per ton lower than the previous week and compared to $289 per ton on June 9th 2020.

 

On June 16th 2021 Meat and Bone meal quoted Central U.S. attained $425 per ton, $10 per ton higher than the previous week and compared to $290 per ton on June 9th 2020 when a surplus prevailed due to COVID-related disruption of packing operations requiring euthanasia and disposal of hogs.

 

On June 17th the conversion of CNY 1 to the BRL was 0.82 BRL, up CNY 0.03 from the previous week. The conversion of US$1 to the CNY was set at CNY 6.25 (up CNY 0.14, from the previous week.

 

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

 

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

 

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

 

COMMENTS

Subscribers are referred to the June 10th 2021th WASDE #613 under the Statistics TAB.

 

Consistent with the need for self-sufficiency China announced on January 8th that an additional 1.7 million acres would be planted to corn in 2021. China intends to rehabilitate 6.8 million acres of “polluted land” to be brought into production.


 

USPOULTRY 2021 Education Schedule

06/16/2021

The following programs will be offered by USPOULTRY during 2021:

 

  • Financial Management Seminar; June 28-30, Amelia, FL

 

  • Hatchery Breeder Clinic; July 7-8, Nashville, TN

 

  • National Safety Conference for the Poultry Industry; August 16-18, Destin, FL

 

  • Women’s Leadership Conference; Aug 19-20, Destin, FL

 

  • Live Production, Welfare and Biosecurity Seminar; September 15-16, Nashville, TN

 

  • Environmental Management Seminar; September 16-17, Destin, FL

 

  • Human Resources Seminar; September 20-22, Destin, FL

 

  • Poultry Protein and Fats Seminar; October 6-7, Nashville, TN

 

  • Feed Mill Management Seminar; November 3-4, Nashville, TN

 

  • Poultry Processor Workshop; November 16-17, Nashville, TN

The Air Cargo Seminar, Grower Relations Seminar and Poultry Wastewater Operations Training Program will be scheduled on industry request.

 

For additional information access www.uspoultry.org/educationprograms


 

Specialty Food Producers Benefited from COVID Consumer Patterns

06/16/2021

The cooking and eat-at-home trend resulting from COVID restrictions benefited producers of specialty foods.  According to the Specialty Foods Association, sales were 13 percent higher in 2020 attaining $170.4 billion.  Protein including meat, poultry, seafood and cheese were the top categories in value although sales soared in all sectors including confectionary, entrees and condiments.  Bill Lynch, president of the Association stated, “The ripple across all channels of the specialty food industry has been tremendous.”  He added, “We have seen businesses flex their creativity in ways they never could have imagined including pop-up specialty food groceries in closed restaurants to meet demand by consumers”.

 

Going forward, specialty food manufacturers will face increased competition from major companies including Conagra Brands, Campbell Soup Company, Smithfield Foods, Post Holdings and Hormel Foods. 


Bill Lynch

 

USDA to Strengthen Enforcement of the Packers and Stockyards Act

06/16/2021

It is becoming readily apparent that USDA Secretary Tom Vilsack is picking up where he left off on Inauguration Day 2017.  At this time the USDA had completed a study of contract conditions and circumstances governing the relationship of cattle producers, poultry and hog contractors with packers and integrators. 

 

Deficiencies in the food production chain were highlighted during the COVID outbreak that demonstrated that packing of red meat was a choke point in production extending from farmers to consumers. 

 

The USDA has announced that rule-making in terms of the Packers and Stockyards Act is in progress with specific attention to: -

  • Strengthening enforcement of unfair and deceptive practices, undue preferences, and unjust prejudices
  • A new poultry contractor tournament system rule will be issued
  • The rule will clarify that aggrieved parties do not need to demonstrate harm to competition in order to initiate action under the Packers and Stockyards Act

 

The USDA considers that modifying rules will “ensure fairer and more resilient markets for farmers, ranchers, and producers”.

 

With regard to the chicken industry, proposed changes to the tournament system will represent a re-evaluation of the relationship between integrators and growers necessitating new parameters to encourage compliance with best practices.

 


 

TransPacific Shipping Impacted by COVID Delays in China

06/16/2021

An upsurge in COVID in the province of Guangdong has resulted in extended delays in handling containers at the ports of Nansha, Shiwan and Yantian. Delays at the last-named port are now at 16 days.  The number of container vessels waiting approval to dock has more than doubled to 50 compared to June 2020.

 

Delays and demurrage have imposed higher costs on shipment with freight rates from China to the EU rising to $11,000 per 40-foot container. The Baltic Dry Index reflects the escalation in sea-freight. On February 9th the low for 2021 to date, the Index was at 2,104. A sharp 5 percent escalation in recent weeks raised the Index  to 3,176 on June 16th

 

CHICK-NEWS reported on the problem of availability of containers to be filled by producers of agricultural commodities and products to be shipped to China and other Asian nations.  Vessels are undergoing rapid turnaround in West coast ports and are dead-heading with empty containers to the detriment of U.S. exporters.


 

Tyson Foods Aims for Net Zero Greenhouse Gas Emissions by 2050

06/16/2021

In a June 9th company release, Tyson Foods noted goals to achieve net-zero greenhouse gas emissions across all global operations and their supply chain by 2050.  The release referenced the 2020 Sustainability Progress Report. 

 

John R. Tyson, Chief Sustainability Officer for the company, noted “We believe progress requires accountability and transparency and we are proud to exemplify that, as we work to achieve net-zero greenhouse gas emissions by 2050.”  He added, “We hope to continue to push the industry as the leader and remain committed to making a positive impact on our planet.”


John R. Tyson

Tyson Foods operates 239 facilities with 140,000 employees and is in line to limit global temperature to a rise of 2.0 C (3.6 F) by 2030.  Practical steps to be implemented by Tyson include: -

  • Updating the baseline for emissions to align with limiting global temperature rise to 1.5 C (2.7 F) by 2023 consistent with the Paris Agreement to be achieved
  • Aiming for 50 percent renewable energy in domestic operations by 2030
  • Achieving a target of two million feed acres under land stewardship programs with a target of all feed purchased by 2030
  • Continuing efforts to eliminate deforestation throughout the global supply chain
  • Expanding the current five million acre grazing land target for sustainable beef production by 2025

 

The Tyson program conforms to the United Nations Sustainable Development Goals.  Tyson will also continue interacting with the World Wildlife Fund, Forestland and Agriculture Consultative Group, the Nature Conservancy, Environmental Defense Fund and World Wildlife Fund.


 

Sad Passing of Dr. Herb Kling

06/15/2021

Dr. Herbert F. “Herb” Kling, 73, passed away on June 2nd at the age of 74. He was raised on a family poultry farm in Lewisburg, PA. He earned his Bachelor’s and Master's Degrees in Poultry Science at Penn State University and was awarded a Ph.D. in Animal Science from Colorado State University. During his early career in the industry he worked for Hoechst-Roussel Pharmaceuticals, Inc. as a Nutritional Research Associate rising to the position of Director of Scientific Affairs in 1993. In 2005 he was Manager of Technical Services for Huvepharma, Inc. and in 2009 joined Chr. Hansen, Inc., where he served as a Technical Consultant supporting probiotic use in poultry in a post-antibiotic era.

 

Dr. Kling focused on the research and application of intestinal health products for poultry.  This included extensive work with anticoccidials, probiotics and antiparasitics extending from evaluation through licensing and extending to post-launch technical support to his colleagues in the industry.

The Late Dr. Herb Kling
 

The writer knew, travelled and worked with Herb over a 30-year professional relationship and can attest to the esteem in which he was held by his staff, peers and customers. He was always willing to provide assistance and in his quiet and sincere way provided guidance to younger colleagues who benefitted from his experience and wisdom.

 

 He is survived by his widow, Deborah, three married children and their families, a sister and 13 grandchildren and one great grandchild.

 

Herb will be sadly missed by all who had the privilege of his acquaintance. We extend our sincere condolences to his family at this sad time.


 

OSHA Emergency Temporary Standard Omits Packing and Processing Workers

06/15/2021

The Occupational Safety Health Administration (OSHA) this past week belatedly released Emergency Temporary Standard (ETS) with respect to workplace safety procedures to prevent spread of COVID.  The ETS originally due on March 15th lags rules issued by many states months ago.

 

The ETS excluded workers at meat-packing and food processing plants although providing standards to protect workers in healthcare and factory operations. Advocates of workers' rights and unions expressed disappointment with the exclusion of farm and plant personnel.  Pointing to the prevalence of COVID, estimated by advocacy group FERN, at more than 90,000 cases with 400 fatalities in 15,000 food and farm facilities, the United Food and Commercial Workers Union and Venceremos complained that lobbying by food processors was responsible for the failure to include food system workers. 

 

The ETS was also criticized by Rep Bobby Scott (D-GA), Chairman of the House Education and Labor Committee who pointed to the vulnerability of meat processing workers, retail grocery clerks and those incarcerated in prisons and living in homeless shelters.  In point of fact, major meat-packing and poultry processing companies arranged for vaccination of workers as soon as supplies were available.  Major poultry processors were proactive in providing masks to workers, isolating workstations with partitions and using health screening to reduce transmission of COVID.  The OSHA recommendations codify what was practiced during the second quarter of 2020. In the interim most workers have received protection thorough vaccines.


 

USAPEEC Promotional Activities

06/15/2021

Export promotion is critical to maintaining volume of shipments to established importing nations in the face of extreme competition.

Mexico is the major importer of U.S. broiler products both by volume and value.  In association with the Mexican Association of Poultry Producers (UNA) and the Mexican Poultry Institute (INA) USAPEEC will institute the Let's Talk About Chicken program series commencing June 21st.

 

The program will consist of a series of virtual conferences available to the general public on Facebook Live and Zoom platforms.  The objective is to inform consumers, health professionals, and academia of the nutritional benefits and versatility of chicken.  Topics will include nutrition for children, incorporating meat in athletes' diets, common myths regarding chicken and geriatric nutrition.  All programs will be in Spanish and will be presented during business hours.


 

WOTUS Still in Play

06/14/2021

The original Waters of the United States (WOTUS) Rule that generated extensive opposition was set aside by the previous Administration and replaced with the Navigable Waters Protection Rule (NWPR) issued in June 2020.

 

Michael Regan, Administrator of the U.S. Environmental Protection Agency has announced that the EPA and the Department of the Army, Corps. of Engineers will revise the definition of WOTUS and will set aside the NWPR.  This should come as no surprise since Administrator Regan noted during his confirmation hearing that this action would be taken.  In testimony he noted that he was not in favor of reinstating the standards as developed by his predecessors in the Obama Administration. It was his intention to conduct a complete review.

 

It is the opinion of the EPA Administrator that the NWPR has resulted in a reduction of the level of protection for waterways especially in Western states that are currently under a prolonged and severe drought.  In accordance with the NWPR up to 1,500 stream were determined to be “non jurisdictional” and that 300 or more projects that would have required Section 404 permitting under WOTUS proceeded without review.

 

The Department of Justice is filing a motion to remand the NWPR. The Army Corps of Engineers in conjunction with EPA will then establish a new rule.

 

The EPA has established four requirements to guide the proposed new rule including:-

 

  • Adoption of scientific principles to quantify the effect of climate change on U.S. waters

 

  • Protecting water resources in accordance with the Clean Water Act

 

  • Ensuring that the proposed rule will be practical to implement

 

  • Developing a rule that incorporates the experience of landowners, the agricultural community, local governments, community organizations, environmental groups with appropriate input from all concerned.

 

The most recent release from the EPA commits the agency to “meaningful stakeholder engagement to ensure that a revised definition of WOTUS considers essential clean water protection in addition to how the use of water supports key economic sectors.

 

Further information is available at www.epa.gov/wotus


 

Simulate Raises $50 Million in Funding

06/14/2021
Simulate Inc., based in New York, the producer of Nuggs vegetable-based chicken substitute has raised $50 million in a funding round led by Seven Seven Six, headed by Alexis Ohanian.  Additional investors include McCain Foods of Canada, Nomo Ventures and Day One Ventures.  Nuggs products are marketed through major retail chains including Walmart, Target, and Whole Foods Market.  The company previously raised $11 million and the proceeds of the latest round will be used to finance expansion and to increase the presence of the company in both retail and food service.

 


 

Smithfield Foods Facing Contentious Negotiations with Union

06/14/2021

Negotiators for the United Food and Commercial Workers Union representing employees at the Sioux Falls, SD. hog plant are backed by a 98 percent vote by workers to strike if wage and other demands are not met. 

 

The plant produces approximately five percent of the U.S. pork processed, with implications extending from growers through to retail.  In 2020 the Sioux Falls plant was impacted by COVID during March through May and the workforce has not returned to pre-COVID strength.  The Union notes that workers have left the plant for other facilities offering superior wages and benefits and also to other industries as the economy improves.

 

In a statement issued by Smithfield Foods, the company notes that the initial offer rejected by the Union was “in full alignment with agreements that UFCW has already accepted at other plants.”  Unless resolved  quickly, contentious negotiations will create uncertainty for hog producers over the next few months.

 


 

U.S. Energy Information Administration Short-Term Forecast

06/14/2021

Periodically the U.S. Energy Information Administration (USEIA) issues Short-Term Energy Outlook (STEO) reports.  Highlights from the June edition have relevance to the chicken industry that is reliant on energy for all areas of grow-out, processing and distribution.

The USEIA assumed a 6.7 percent growth in GDP in 2021 following restoration of the economy after COVID restrictions.  In 2022 GDP will increase by 4.9 percent.

 

The major conclusions from the most recent STEO are:

  • Brent Crude Oil spot prices that averaged $68 per barrel in May will remain near current levels as production increases to match demand.  Brent Crude will average $60 per barrel in 2022.

 

  • Gasoline consumption will increase to 9.1 million barrels per day during summer, approximately 20 percent higher than in 2020.  Return to work with commuting and holiday travel will increase consumption to an average of 8.7 million barrels per day for entire 2021 and 9.0 million barrels per day will be consumed in 2022.  It must be remembered that the bulk of gasoline used will incorporate 10 percent ethanol with limited uptake of blends higher than 10 percent.  For the summer driving season U.S. regular gasoline will retail at an average of $2.92 per gallon reflecting higher crude oil prices and margins.  For entire 2021 U.S. regular gasoline price will average $2.77 and households will spend approximately one-third more on fuel in 2021 compared to 2020.

 

  • The Henry Hub spot price for natural gas will average $2.92 per million Btu in the third quarter of 2021 and will average $3.07 for entire 2021.  Increases in 2021 are attributed to high natural gas exports and increased consumption.

 

 

  • Electricity demand in the U.S. will increase by 2.3 percent in 2021 after a fall of 4 percent in 2020.  Colder temperatures during the first quarter of 2021 increased domestic consumption.  With the increase in the price of natural gas and higher demand for electrical power it is projected that the proportion generated from natural gas will decline from 39 percent in 2020 to 36 percent in 2021 and 35 percent in 2022.

 

  • Coal production will increase in 2021 due partly to exports but also higher demand for electrical power. Generation from coal will rise from 20 percent in 2020 to 23 percent in 2021 and to 23 percent in 2022.  In contrast nuclear generation will decline by 1 percent to a level of 20 percent of electrical generation in 2021.

 

  • Wind and solar generating capacity will increase in 2021 with large-scale solar projects in western states and wind generation increasing by 16.0 GW in 2021 from Midwest and plains states.

 

  • The decline in power generation in 2020 resulted in reduced carbon dioxide emissions.  As the economy recovers, emissions will increase about six percent from the 2020 level followed by a two percent incremental rise in 2022.

 

The bottom line is that fuel and power costs depending on area and source will be approximately four to five percent higher in 2021 compared to the previous year.


 

Fired Danone CEO Expresses Grievance Over Board Governance

06/13/2021

Emmanuel Faber was recently relieved of his position as CEO and Chairman of Danone, a multinational food company based in France.  Faber attributes his ouster to the policies of investor groups Artisan Partners and Bluebell Capital that were dissatisfied with short-term returns. 

 

From evidence emerging from inquiries it is likely that the Board of Danone was dysfunctional with considerable conflict as to future strategy, placing Faber in a difficult position. In testimony before the Economic Affairs Committee of the National Assembly of France, Faber called for restructuring of company boards and called for legislation and regulations to allow boards to resist pressure imposed by "disgruntled investors including activist shareholders".

 


 

National Cattlemen's Beef Association Supports Build Back Better Initiative

06/13/2021

Recently, the USDA announced a $4 billion initiative to support the Administration Build Back Better Program.  In a recent industry conference call, the USDA emphasized that the program would address many aspects of food production, processing, distribution and availability to consumers.  The USDA and industry have recognized criticality in processing capacity and the lack of any safety factor. This was evident in the disruption caused by the fire in the Tyson Foods beef plant in Holcomb KS. in 2019 followed by the sharp decline in throughput as a result of COVID infection in red meat plants during the first quarter of 2020.


Holcomb KS Plant Closed after Fire

Colin Woodall, CEO of the National Cattlemen's Beef Association (NCBA) express the support of his membership for the program as outlined by the USDA.  Woodall emphasized that capacity of red meat processing represents a bottleneck in the chain of production extending from farmers to retail.  The lack of ‘hook space’ has depressed the revenue of producers and has impacted supply.  The NCBA is pressing for more packing facilities and favors multi-state distribution of beef from plants operating under state inspection.

 

The red meat industry including beef and pork is highly concentrated and COVID affected many plants simultaneously. In contrast chicken production is less vulnerable to extrinsic challenges given the relatively lower geographic concentration of production facilities and the fact that production is spread over many more processing operations compared to pork and beef.


 

Watering Wisdom – Interview with Robert Hostetler, Ziggity Systems

06/12/2021

Recently CHICK-NEWS had the opportunity to discuss nipple drinkers and watering concepts with Robert Hostetler, Vice-president of Ziggity Systems, a company that he co-owns with his brother Dale who serves as president. The Company was founded by Lloyd Bontrager and Eldon Hostetler in 1977 and is located in Middlebury, Indiana USA. Ziggity Systems specializes in the design and manufacturing of poultry watering systems for broilers, commercial layers, turkeys and ducks from day old to the end of their production cycle. Their products are sold worldwide through a distribution network serviced by account managers based around the world.

 

Ziggity’s strongly believes “that water supplied in a poultry house is your best friend if it ends up in the bird and your biggest enemy if it doesn’t” Ziggity believes that flocks should have constant access to water of a quality close to a potable standard as possible.


Robert Hostetler

 CHICK-NEWS:  How should a poultry watering system be evaluated?

 

 Robert: The suitability of systems should be evaluated based on what proportion of the water that goes through a meter in a poultry house is actually ingested, compared to the quantity that is not. The basic concept is to distinguish between water usage and actual consumption by the bird.  Usage is essentially the quantity of water that passes through the water supply pipe divided by the number of birds in a flock.  Consumption is what the bird actually ingests.  The difference between water usage and consumption is the quantity spilled.    

 

Unfortunately, nipple type drinkers are often evaluated and operated based on flow rate. A far better way to evaluate a watering system and a drinker is to evaluate and correlate bird performance with the moisture level of litter. Great broiler results including weight, conversion, livability and acceptable foot pad appearance means that the flock not only ingested adequate water but also had a favorable production environment. They were in fact raised on dry friable litter with little or no ammonia release. Comparing all the various brands and models of nipple type drinkers available today simply applying a flow rate formula may result in either too little water discharge or too much - either of which will have a negative effect on broiler performance.

 

CHICK-NEWS:  What is the difference between static flow rate and dynamic discharge?

 

 Robert:  “Static flow rate is the quantity of water released from the nipple drinker when the trigger pin is lifted vertically and held in the open position for a specific amount of time, usually for one minute with flow rate commonly expressed as ‘milliliters per minute’. Dynamic discharge is the quantity of water discharged from the drinker during the time that the bird is pecking intermittently at the trigger pin during the natural pattern of drinking “

 

CHICK-NEWS:  Can dynamic discharge be measured?

 

 Robert: “Unfortunately dynamic discharge cannot be directly measured. What we do know is that there is no direct correlation between the static flow rate when the trigger is lifted vertically compared to natural discharge with side-to-side dynamic activation. To demonstrate this Ziggity constructed a mechanical test bed that closely mimics the drinking pattern of a chicken pecking intermittently at a nipple trigger. Two available nipple drinker brands were selected for evaluation using the same water column pressure. Brand A had a static flow rate of 35 ml/min when the trigger was raised vertically while Brand B delivered 73 ml/min. yielding 109 percent more water than Brand A. When these two nipple drinkers were tested on the intermittent activation test bed Brand A discharged 12.2 ml/min of water while Brand B with the high static discharge rate released only 5.5 ml/min. Effectively Brand A discharged 120% more water than Brand B.  The takeaway is that a higher static flow does not automatically result in a higher dynamic discharge rate. While this does not tell how much water a chicken ingests when drinking it does question the validity of static flow rates in managing water column pressure or selecting a brand of nipple drinker to install or retrofit”.

 

CHICK-NEWS:  How do you relate the concept of dynamic discharge to management of water systems?

 

Robert: “Dynamic discharge or the amount of water that is released from the drinker when pecked by a bird is dependent on column pressure. Higher column pressure discharges more water into the bird’s beak than set at a lower column pressure. Selecting an appropriate column pressure is a function of beak capacity. Small chicks require a low column pressure so the drinker does not discharge more water than can be retained in the beak before swallowing. Any discharge of water above the capacity of the beak gravitates to the litter. The greater the volume of oversupply the higher the water content of litter. Growers are advised therefore to ‘read’ the litter directly under the drinker lines and adjust column pressure accordingly. Dusty dry litter under the drinker lines could mean column pressure should be raised and wet litter means it should be lowered. The ideal column pressure setting would provide dry friable litter with just a hint of moisture.” 

 

CHICK-NEWS:  What are the effects of wet litter?

 

 Robert:  “We are aware that wet litter can contribute to a number of health and quality problems.  These include pododermititis that is especially costly with heavy birds.  Feet that command a unit value of approximately $1,500 per ton when exported to China are downgraded or rejected if foot pads are damaged. Auditors consistently lower welfare scores if flocks demonstrate pododermititis either in the house or at the plant. Dermatitis is a concurrent problem occurring with pododermititis. Birds entering plants with fecal and litter-stained feathers increase the microbiological load entering scald tanks.  Wet litter also contributes to breast blisters that result in downgrades.  Wet litter is also associated with severity of coccidiosis and various forms of enteritis including clostridial necrotic enteritis.”

 

CHICK-NEWS:  Are there any other problems related to wet litter?

 

 Robert:  “Wet litter allows bacteria to generate ammonia that represents a manageable welfare criterion. Ammonia irritates the conjunctiva and corneas of eyes, degrading performance. Ammonia levels above 50 ppm for extended periods also damage the delicate lining of the respiratory tract, predisposing flocks to airsacculitis if respiratory viruses and pathogenic E. coli are present.”

 

CHICK-NEWS:  Don’t manufacturers sell nipple type drinkers with drip (catch) cups to prevent wet litter?

 

 Robert:  “That may be the intention but the reality is that a drip cup cannot absolutely ensure dry litter. Any watering system, even with catch cups can be mismanaged in a way that results in wet litter. But one thing a drip cup system cannot claim is that it permits an enclosed watering system. It is an open watering system birds drink and share their diseases. Whether in a floor system or in an aviary housing pullets or laying birds, drip cups represent a potential health hazard to flocks. There is no point in negating the beneficial effect of installing an enclosed drinking system and keeping it free of biofilm when inches below the water-bearing pipes, the flock can drink and sip from contaminated drip cups.  Numerous studies have shown that the bacterial level of water deposited in drip cups contains levels of E.coli quantified by laboratories as TNC (too numerous to count).  Drip cups are unnecessary if nipple drinkers are correctly selected on the basis of dynamic discharge and operated at an appropriate water column pressure.  Ziggity Systems has produced a series of instructional presentations in our Poultry Watering U series to demonstrate operation of nipple watering systems”

 

CHICK-NEWS:  What other topics are considered on Poultry Watering U?

 

 Robert: “The Ziggity Systems website <poultrywateringu.com> presents videos on topics including drinker management to optimize growth rate and feed conversion, bird welfare and prevention of biofilms.  Poultry Watering U is so popular that editions on the website are dubbed in Spanish, Mandarin, Korean, Japanese, French, Polish and Portuguese”.

 

 CHICK-NEWS:  What message do you wish to convey to service people and flock managers?

 

 Robert:  “Measure broiler performance by feed conversion, live weight and livability. Many of our international customers use the European Performance Factor that integrates these variables into a single figure. Quality and post-harvest criteria including saleable yield including top-grade feet, downgrades and re-work should also be considered”.

 

“Insufficient intake of water will obviously detract from genetic potential as water is a critical factor in growth and for temperature regulation. For that reason, it is important to have the proper  ratio of birds to nipples, the correct number of drinker lines based on house width, adjusting the height of drinker lines as the flock grows, adjusting column pressure based on beak size and preventing biofilm formation. But most importantly flock managers should be careful not to increase column water pressure too aggressively especially with young flocks. This will result in wet litter and release of ammonia creating a deleterious production environment.” 

 

“Ziggity Systems has invested in research and evaluation to ensure that our range of drinkers for broilers, breeders, commercial layers, ducks and turkeys function in accordance with the physiologic needs of flocks”.


 

Campbell Soup Company Reports on Q3 of Fiscal 2021

06/12/2021

On June 9th, Campbell Soup Company (CPB) reported on results for the third quarter of fiscal 2021 ended May 2nd.  For the three months, the company posted net earnings of $160 million on sales of $1,984 million with an EPS of $0.53.  Comparable figures for the third quarter ending April 26, 2020, were net earnings of $168 million on sales of $2,238 million with an EPS of $0.56.  During the most recent quarter approximately 52 percent of revenue was derived from the Meals and Beverages segment and the remainder from the Snacks segment.  Net sales for the two segments were down respectively 15 percent and eight percent compared to the corresponding quarter of FY 2020.

 

In commenting on results, Mark Clouse, President and CEO stated, "while we recognize the third quarter would be a challenging net sales comparison due to the demand surge at the onset of the COVID-19 pandemic a year ago, we faced additional headwinds.  Our results were impacted by a rising inflationary environment, short-term increases in supply chain costs and some executional pressures as we continue to advance our agenda, primarily in our Snacks segment".  The effect of inflation is evident in the gross margin that declined from 34.5 percent in Q3 FY 2020 to 31.7 percent for the most recently completed quarter.

 

Campbell Soup has a market capitalization of $14.1 billion. The company has traded over a fifty-two-week period in a range of $44.53 to $54.08 with a 50-day moving average of $48.96.  On a trailing twelve-month basis, operating margin was 15.7 percent and profit margin 9.0 percent.  Over the past twelve months CPB has returned 7.3 percent on assets and 29.7 percent on equity.  As of May 14th, 10 percent of the float was short.  Release of the results was reflected in a decline in share price from $49.10 at close of trading on Tuesday, June 8th to $46.51 at noon Wednesday, June 9th, down 5.3 percent.


 

Broiler Growers in Brazil Demanding Higher Payment

06/12/2021

According to a June 9th Report by Reuters, broiler growers in Mato Grosso state in Brazil are threatening to cease growing for BRF Brazil Foods S.A.  At issue is the transfer price with growers demanding a 10-12 percent increase.  Farmers in the state maintain that inflation is reducing margins and that a compensatory increase is necessary to maintain viability.


 

McDonald's Evaluating Voice Technology for Drive-Through Orders

06/12/2021

In 2019, McDonald's Corporation purchased Apprente that applies artificial intelligence software to interpret and record verbal orders in drive-through lanes.  The technology is currently under test at ten restaurants in Chicago, but accuracy is currently only at 85 percent.  McDonald's has indicated that additional development will take up to two years. 

 

Based on difficulty in recruiting workers and high wages, McDonald's is implementing automation some aspects of which may take five years to develop.

 

CEO, Chris Kempczinski, indicated that additional acquisitions may be required to jump start automation.


 

Food Manufacturers Claim Collusion Among Railroads

06/11/2021

Approximately 200 plaintiffs have been identified in a class-action lawsuit alleging that four Class-1 railroads (BNSF Railway Company; CSX Transportation; Norfolk Southern Railway Company and Union Pacific Railroad) colluded to impose a “fuel surcharge” on customers that exceeded fuel costs and was in fact intended to generate additional income.

The U.S. District Court for the District of Columbia previously ruled on multi-district litigation in favor of the Plaintiffs.  The ruling by Judge Paul L. Friedman denied a motion by the Defendants to exclude evidence of any discussion or agreement between or among rail carriers concerning interline movements and to enforce the statutory bar on inferring a conspiracy from specified evidence.”  Allegations of collusion and lawsuits commenced in 2007 and have continued without resolution.


U.S. District Court Washington DC

 

JBS USA to Expand Beef Packing

06/11/2021

According to Tim Schellpepper, president of the JBS USA, Beef Segment confirmed an investment of over $130 million to increase capacities at the Grand Island, NE. and Omaha, NE. facilities.  The Omaha plant will receive an upgrade of the fabrication area cooler space. Grand Island improvements include a new slaughter floor and holding facilities to enhance welfare. Projects should be completed during 2021. Incremental capacity as designed will expand processing by 300,000 head annually benefiting both producers and customers.

 


JBS USA Beef Plant Grand Isle NE

Concurrently JBS USA will increase wages at all nine of the U.S. beef plants amounting to an additional $150 million annually. Average hourly wage for workers at all beef plants now exceeds $22 per hour including special increments added in 2020 during COVID.  Qualified workers and their dependent children are offered free two years of college tuition as a benefit.  During the pandemic, an additional $70 million was disbursed as incentives and as temporary bonus payments.


 

Kemin Industries to Erect New Facility for Application Solutions Division

06/11/2021

Groundbreaking occurred on June 1st for a new building of 11,700 square feet to house the Kemin Application Solutions Division.  The facility will be completed in early 2022.  The Division supplies services and technologies relating to application of liquid animal nutrition and health products.  The division can supply drum, tote and bulk tank pumping and application systems to meet customers’ needs.

 

Kemin anticipates completion of a 15,000 square foot laboratory complex adjacent to the World Headquarters in Des Moines, IA.  This facility will incorporate advanced analytical resources to ensure that Kemin products are active, potent and safe and conform to specifications.


Kemin Worldwide H/Q

 

Bayer Faces New Claims Over Dicamba

06/10/2021

According to an article by Dan Nosowitz in Modern Farmer, Bayer that acquired Monsanto and its broad portfolio of liabilities is facing extensive litigation over drift of dicamba herbicide that has affected soybean crops in the southeast and mid-west.  A new problem has arisen involving extensive damage to vineyards in Texas, Ohio and Pennsylvania. 

 

Wine-grape cultivation has expanded in Texas and recently and farmers have suffered extensive damage as a result of dicamba drift from the herbicide applied to cotton fields in relatively close proximity.  A total of 57 grape growers in Texas have filed suit against Bayer-Monsanto and BASF alleging up to 90 percent reduction in yield and in some cases total loss of vines requiring replanting and years to achieve maturity.

 

As a result of lawsuits and evident liability, Corteva Agriscience, a spinoff from Dow–DuPont that previously marketed dicamba has exited the market.


 

Program to Repair of I-40 Bridge Announced

06/10/2021

CHICK-NEWS has reported on the structural failure of the Hernando de Soto bridge over I-40 crossing the Mississippi River at Memphis, TN.  U.S. Transportation Secretary Pete Buttigieg recently visited Memphis to review damage to the structure.  Materials to repair the cracked beam will be delivered in late June and installed through July.  It is hoped that the bridge will be reopened to traffic in August.  During the repairs, there may be some impact on barge traffic on the Mississippi. Obviously efforts will be made to reduce delays since the waterway is critical to conveying grain southward for both export and the southeastern broiler industry.

 

Additional reports will be posted as official statements are released.


 

Impact of Court Ruling on NSIS Stimulates Congressional Action

06/10/2021

A recent court ruling striking down the USDA New Swine Inspection System (NSIS) will reduce plant output at six large locations currently running the System by 25 percent.  Five of the affected plants have been operating safely for more than 20 years, demonstrating the efficiency of the NSIS.

 

Senators Chuck Grassley (R-IA) and Representatives Jim Hagdorn (R-MN) and Dusty Johnson (R-SD) have led the initiative to urge the USDA and the DOJ to appeal the Federal District Court ruling.  The National Pork Producers Council maintains that if the ban on NSIS is imposed, national pork production would be reduced by 2.5 percent.  According to Iowa State University economist, Dr. Dermot Hayes, small and medium-sized U.S. hog farmers will suffer more than $80 million in reduced income.

 

Jen Sorenson, NPCC President, stated “The economic impact to these packers will be significant, it is the nation’s small-and-medium-sized hog farmers who will suffer the greatest harm from upstream impacts.  It is imperative that USDA act quickly to move for a stay of the Judge’s order and an appeal to prevent this reduction in packing capacity, which is set to take place at the end of June.”


 

Charles River Laboratories Purchases Solar Energy

06/10/2021

Charles River Laboratories International has entered into an agreement to purchase solar power to cover their entire North American requirement.  Duke Energies Sustainable Solutions will generate approximately 250,000 MWh annually from the Pisgah Ridge Solar Project rated at 250 MW in Navarro County, TX due to come on-line in 2022.  The agreement between Charles River Laboratories and Duke Energy Sustainable Solutions will extend over fifteen years and will allow flexibility for the energy purchaser to either draw from a utility or retail provider or from the renewable energy source.  The virtual power purchase agreement (VPPA) is hedged against escalation in electricity price.

 

As a significant provider of specialty pharmaceuticals, laboratory animals and diagnostic procedures, Charles River Laboratories is intent on sourcing all power from renewable electricity by 2030.  The Pisgah project will represent 60 percent of company demand.

 

According to Gregg Belardo, Senior Director of Sustainability at Charles River, since 2018 the company has reduced greenhouse gas emissions by 26 percent through renewable energy agreements and conservation.

 

Charles River Laboratories is the holding company of SPAFAS the major supplier of specific-pathogen free eggs and chicks and diagnostic reagents.


 

USDA Develops Probiotic with Claimed Benefits Against Intestinal Coccidiosis

06/09/2021

The Animal Bioscience and Biotechnology Laboratory at the ARS-USDA Beltsville, MD. Center has developed a unique recombinant Bacillus subtilis probiotic expressing chicken NK-lysin peptide-2 with direct cytotoxicity against Eimeria* The probiotic proved effective against infection with E. acervulina that parasitizes the distal duodenum resulting in mild coccidiosis and serving as a precursor of necrotic enteritis.  An oral dose of the prebiotic reduced oocyst shedding on days six through nine, post-inoculation.


USDA ARS Beltsville MD. Research Center

In reviewing the trial, the following points are noted:

 

  • A limited number of birds (81) were used

 

  • The trial was conducted on wire which does not correspond to practical conditions permitting coprophagy and possible exposure to other Eimeria species and bacterial pathogens.

 

  • The trial was terminated at 28 days. This does not represent commercial conditions

 

  • There was no decrease in live weight or depression in weight gain as a result of infection with E. acervulina consistent with the low pathogenicity of this strain.

 

  • Since the probiotic is a recombinant strain use in producing certified organic product will probably be disallowed

 

The product will be commercialized by US Biologics Inc. although it is recognized that considerable work will be required to demonstrate the practical and financial benefits from the recombinant B. subtilis probiotic.

 

*Wickramasuriya, S. et al. Oral Delivery of Bacillus subtilis Expressing Chicken NK-2 Peptide Protects Against Eimeria acervulina Infection in Broiler Chickens.  Front. Vet. Sci., June 4th 2021 doi.org/10.3389/fvets.2021.684818.


 

USAPEEC 2021 Annual Meeting to Review Global Cold Chain Shipment

06/09/2021

During the General Session and Speaker’s Forum, Peter Friedmann Executive Director of the Agriculture Transportation Coalition and Jim Henderson VP Business Development at Lineage Logistics will review the global cold chain to distribute products.  This topic is critical to the global chicken market that has demonstrated disruption as a result of COVID and lower availability of refrigerated containers.  The program will take place between 08H00 and noon during the general session on Thursday June 24th.


Dr. Paul Aho

 

White House Provides Clarification on Taxation

06/08/2021

Arising from early criticism of the American Families Plan, the White House has issued clarifying statements intended to deflect opposition to changes in taxation that could affect farmers.  Although it is proposed to increase the capital gains tax rate to 40 percent for households making over $1 million annually, exceptions will apply to inherited assets especially within the farming community. 

 

The plan would eliminate the "stepped up basis" for gains in excess of $1 million.  The American Families Plan Reform of taxation will protect family-owned businesses and farms that are bequeathed.  It has yet to be decided whether unrealized gains will be taxed at death or only when inherited property is sold.  Congress is certain to scrutinize provisions of the American Families Plan and vested groups will as usual engage in lobbying resulting in a more complex tax law that will be subject to interpretation by professionals and result in legal challenges.


 

Rate of Rural COVID Vaccinations Increases

06/08/2021

According for the Centers for Disease Control, 361,000 rural Americans received COVID-19 vaccination during the first week of June raising the rural rate to 31.1 percent confirming that 13.2 million rural Americans are vaccinated against COVID-19.  The rate of rural vaccinations increased by one percent during the first week of June compared to a 1.8 percent increase in metropolitan areas.


 

African Swine Fever Persists in Poland

06/07/2021
According to a posting on ProMED Mail on June 5th, African Swine Fever (ASF) was diagnosed on a farm with 3,000 hogs on May 26th.  The affected unit is located in Miedzychod District, approximately 60 miles from the border with Germany.  The case is concurrent with isolations from wild boars in the affected area.

Since 2014 there have been 342 cases of ASF in hogs, mostly involving backyard units and small farms.  In 2020, 103 farms were diagnosed with ASF.  The inexorable expansion of ASF among wild boars in western Poland is intensifying the risk of extension to the most easterly states of Germany.  Aware of the situation, officials in Germany have erected fences between Poland and three eastern states, including Mecklenburg-Vorpommern.  A number of cases of ASF have been diagnosed in wild boars in Germany, but as yet there have been no reports of cases in either backyard or commercial hog farms.


Fence Building on border
between Poland and Germany

 

Chick-fil-A® to Open Delivery-Only Ghost Locations

06/07/2021

Chick-fil-A® will use the Little Blue Menu concept in developing delivery-only ghost locations.  All current menu items at conventional brick and mortar Chick-fil-A® stores will be available.  In addition, the company will serve additional items including salads, roasted wings and test items on a rotational basis.  The first store will open in Nashville in 2021 and a second in Atlanta the following year. 

 

The initiative by Chick-fil-A® is an expression of the need to innovate in order to restore revenue in the QSR category but also to take advantage of new buying patterns including home delivery.


 

Stop & Shop to Add 1,000 Positions in New York Metropolitan Area

06/07/2021

Stop & Shop, a subsidiary of Ahold Delhaize, will add jobs in stores in New York City, Long Island and adjacent New Jersey.  Positions will include bakery, deli, grocery, produce departments and night crews.  Personal shoppers will be added in Long Island for six in-store fulfillment units.  Stop & Shop has upgraded over 30 of the 50 stores on Long Island and have expanded their range of products.  The chain will refurbish 60 stores in 2021 and 2022.


 

USDA to Invest in Alleviating Hunger

06/07/2021

As part of the Build Back Better Initiative, the USDA has announced allocation of up to $1 billion in the Emergency Food Assistance Program.  Approximately half of this amount will be derived from the American Rescue Plan. 

 

Projects will include

  • $500 million to support emergency food assistance with the Food and Nutrition Service and the Agricultural Marketing Service collaborating to distribute domestically-produced  to food bank networks
  • $400 million to support local community and regional and socially disadvantaged farmers

 

State and tribal governments and other entities will be able to purchase food for food bank networks specifically from local and regional producers for distribution to food banks.

  • $100 million will be provided in grants to improve the infrastructure of food banks and to expand their reach into underserved areas.

 

Walmart Extends Hours of Operation

06/06/2021

As an indication of the restoration of normality after COVID precautions, Walmart stores extended open hours nationally from Saturday, May 5th.  Locations will open at 06h00 and close at 23h00, subject to local restrictions.


 

Tyson Foods Intensifies Hunger Support

06/06/2021

In a June 3rd release, Tyson Foods announced grants totaling $1.5 million to support hunger relief.  A total of 38 communities in 15 states where the company operates will benefit, Twentysix hunger relief organizations submitted requests and the grants will enhance efficiency in distribution of food to relieve hunger.

 

In commenting on the donation, Garrett Dolan, Senior Manager for Corporate Social Responsibility, stated “Feeding America projects that 42 million people, including 13 million children, may experience food insecurity in 2021.”  He added, “At Tyson we are honored to do our part to reduce food insecurity in the communities around the country where our team members live and work.”

 


 

JBS USA Activities Restored to Normal

06/06/2021

In a June 3rd statement, JBS USA confirmed that operations had returned to normal after the cyber attack perpetrated by criminal group R-Evil (Sodinokibi).  The statement included “the loss of food produced during the attack was less than one day’s worth of production, any lost production across the company’s global business will be fully recovered by the end of this week.”

 

In commenting on the event, the USDA stated that there was “a strong rebound in cattle and hog slaughter that will continue through this week.” The statement added, “All in all the market is moving towards normalization and if the situation continues to resolve quickly we do not expect this incident to have lasting effects on wholesale and retail prices.”

 

The rapid recovery from the cyber attack is attributed to JBS maintaining encrypted backup servers that were not affected. The CEO of JBS USA, Andre Nogueira, stated “The criminals were never able to access our core systems, which greatly reduced potential impact.”

 

A UK-based cybersecurity company, GlobalData, pointed to the increase in ransomware attacks noting that criminals are obviously ahead of the cybersecurity defenses installed by large companies. The company noted that food manufacturers should employ data backup and recovery for all critical information.  Systems should be tested regularly and software should be updated to resist attacks.

 


 

Wendy’s Opens First U.K. Store

06/06/2021

Wendy’s has announced the opening of their first store in the United Kingdom.  Located in Reading, Berkshire, the menu will include traditional U.S. favorites, but in addition will offer the Veggie Stack, Veggie Bites, and Avocado Veggie Salad.

 

Abigail Pringle, President, International and Chief Development Officer for the Wendy’s Company, noted “Our team is working on opening additional restaurants across the country starting in the Southeast and establishing new franchisee partnerships to help us quickly scale and expand our brand presence.” Liz Geraghty, Chief Marketing Officer, International for the Wendy’s Company, noted that the store will serve British beef patties and the menu will incorporate British produce.

 

It is interesting that Wendy’s selected Reading for their first store.  On October 10th 2019, Chick-Fil-A ® opened their first U.K. location in the Oracle Mall in Reading.  The advent of the store in the U.K. was greeted by concerted opposition from LGBTQ organizations responding to statements made by CEO Dan Cathy regarding single-sex marriage and corporate donations to groups opposed to gender-tolerance.  The store closed shortly after opening.

 

As a noncontroversial company with acceptable products, Wendy’s may have greater success in the university city of Reading.


 

Public Health Alert for Prepared Chicken

06/04/2021

On June 2nd the USDA-Food Safety and Inspection Service issued a public health alert for raw breaded and stuffed chicken products including chicken cordon bleu and chicken Kiev.  The brand was not specified but the products are potentially contaminated with Salmonella Enteritidis responsible for a cluster of cases extending from late February to early May 2021. 

 

Raw product has yielded the outbreak strain of Salmonella Enteritidis that would have remained viable unless the product was cooked to an internal temperature of 165 F.  It is possible that impacted consumers microwaved contaminated products, leading to foodborne infection from ingesting viable pathogens. Investigations are still in progress including evaluation of shoppers’ records and traceback in conjunction with the Centers for Disease Control and Prevention and various state public health departments.


 

Poet Acquires Flint Hills Resources

06/03/2021

On June 1st, Poet LLC announced acquisition of competitor Flint Hills Resources.  Poet will now operate 33 ethanol plants in eight states and will own terminals in Texas and Georgia.  The acquisition increases Poet output by 40 percent to three billion gallons annually. Obviously, Poet anticipates an increase in demand for ethanol having idled plants in South Dakota and Iowa in 2020.

 

In commenting on the transaction, CEO Jeff Broin stated, "we have been a leader in the biofuels business for thirty-three years and have never wavered in our belief in the power of agriculture and biofuels to offer the most accessible, near-term solution to climate change.  With this move we are demonstrating our commitment to the future of low-carbon, plant-based liquid fuels".


 

Big Dutchman Introduces FLUXX™ FX2 Feed Pan

06/03/2021

Following the successful introduction and application of the FLUXX™ FX2 feeder pan, Big Dutchman has now updated the unit by installing an integrated LED light within the inner cylinder.  This illuminates feed and contributes to uniform light intensity at floor level in the barn. The LED lights help chicks find feed quickly for a rapid start.

 

The FLUXX™ FX2 GLO feeder pan, with a diameter of 14 inches, allows for more feeding space than competitors’ pans allowing 16 feed positions. The design of the cone allows  distribution through 360° into the pan.  The FLUXX™ FX2 feed pan has an internal lip designed for easy access.  Feed levels are set using Spin n’ Lock adjustment.  The pan is designed for durability, constructed of heavy duty plastic and incorporates a latch to prevent opening in operation. Additional details on the FLUXX™ FX2 GLO pan are available at <info@BigDutchmanUSA.com>.


 

Aviagen V-P Receives Merit Award from the British Poultry Council

06/03/2021

Anne-Marie Neeteson, Global Vice President of Welfare, Sustainability and Compliance for the Aviagen Group, was awarded the British Poultry Council (BPC) Special Merit Award for 2019. This recognizes her representation of the industry on a global level to promote animal welfare and sustainability. The award recognizes “invaluable progress in the science around these issues and helping the industry take a leadership role in addressing them.”

 

Due to COVID-19 restrictions, the formal award presentation was postponed, but the BPC reports that it hopes to hold the event this year, and Anne-Marie will be formally presented with her certificate at that time.

 

In 2019, Anne-Marie Neeteson led the International Poultry Council (IPC) working group that adopted five of the United Nations’ Sustainable Development Goals (SDGs) as areas of concern to the global poultry meat sector. In 2021 she was appointed as Chair of the IPC working group on Animal Health and Welfare, Communication and Food Quality.

 

Ms. Neeteson earned a Masters degree in animal science and genetics from Wageningen University in the Netherlands.


 

Temporary Closure of CP Broiler Plant in SaraburiThailand

06/03/2021

This past week Charoen Pokphand Foods announced a temporary closure of a broiler plant in Saraburi Province in Thailand.  The facility will be closed for five days as a result of an outbreak of COVID.  Approximately 250 cases were diagnosed among 5,800 workers.  The ascending incidence rate of COVID in Thailand has resulted in closure of numerous industrial plants and has resulted in local lockdowns.

Processing plants in Thailand are characterized by a high level of manual labor especially in secondary processing with workers standing shoulder to shoulder on portioning and deboning lines creating ideal conditions for transmission of a viral respiratory infection by the aerogenous route. An additional risk factor comprises long commutes in crammed buses transporting workers from distant villages to plants.

 

It will be necessary to expedite vaccination of workers and supervisors in the broiler industry in Thailand if integrators are intent on maintaining production.


 

Argentina Takes Action Against Beef Exporters

06/03/2021

In the ongoing conflict between the Government of Argentina that is attempting to reduce inflation in food costs, the Ministry of Agriculture has suspended exports from six companies alleging foreign currency irregularities.  This action brings to 12 the number of companies accused of wrongdoing in addition to five additional companies under investigation.  Meat exports are currently suspended in an attempt to increase domestic supply and thereby reduce the domestic retail cost of red meat.


 

GNP a Subsidiary of Pilgrim’s Pride Initiates Water Recycling

06/03/2021

GNP a subsidiary of Pilgrim’s Pride Corp. has introduced ultra-filtration technology to allow recycling of water to wash carcasses and equipment.  The process has been approved by the Minnesota State Health Department.  It is anticipated that complete application of the technology will allow for an 80 percent reduction in abstraction of ground water. Similar technology is now in operation in plants operated by Hormel Foods the holding company of Jennie-O Turkey Store.

 

Availability of water is obviously not boundless.  Tyson Foods determined that abstraction for the Sedalia, MO. broiler plant contributed to a decline in the Ozark Aquifer.  A similar situation existed at the Smithfield Foods, Tarheel, NC. Hog plant drawing from the Upper Cape Fear Aquifer.

 

Sustainability objectives include reduction in water usage that can be achieved by filtration and other technology to allow recirculation.  Water conservation is now evaluated by investment groups such as Ceres and Morgan Stanley Capital International.  Black Rock with $6 trillion under investment has emphasized the need to conserve water with financing contingent on achieving sustainability goals.

 


 

Farmers Signal Pessimism Over Short-term Future

06/03/2021

The Purdue University-Chicago Mercantile Exchange Group Ag Economy Barometer for May demonstrated a 20-point decline to 158, the lowest reading since September 2020. In May the Current Condition Index fell 17 points to 178 and the Future Expectations Index was 20 points lower compared to April attaining a value of 149.

The Farm Capital Investment Index declined 10 points from April to 65.  In December this index peaked at 93.  Most of the four hundred respondents to the telephone survey indicated that they would maintain machinery purchases and erect grain bins and buildings at about the same level as 2020.

Despite pessimism, the Long-Run Farm and Value Expectations Index rose 10 points to a record 158 with most respondents anticipating a rise in land prices over the next five years.

 

 

In interpreting responses, compilers of the indexes point to concern over U.S. tax policy, with specific emphasis on a state tax exemption for inherited estates and capital gains tax increases.  These changes would generate complications and expenses for farmers bequeathing their land holdings to the next generation.


 

Tyson Introduces Vegetable-Based Products in Asia

06/03/2021

On June 1st, Tyson Foods announced release of three vegetable-based chicken substitutes in Malaysia.  The First Pride range will initially include nuggets, bites and strips with the intention of extending from Malaysia to other markets in Asia.  The initial launch will be directed to retail with approximately one-pound bags priced at a $4.82 equivalent.

 

Tyson Foods markets the Raised & Rooted brand in the U.S. and the EU to both retail and foodservice.

 

Tan Sun, the president of Tyson Business Units in the APAC region stated, "the key to meeting consumer preferences with new plant-based protein is through innovation and making locally relevant products that taste great".


 

Walmart Establishes Dedicated Meat Supply Chain

06/03/2021

Walmart Stores has entered into an agreement with McClaren Farms to source Angus beef to be marketed under a private-label. 

 

This move first negotiated in April 2019 will establish a brand to market Angus filet mignon, T-bone, Porterhouse and ribeye steaks.  All products will be produced in the U.S. and will be free of "hormones".

 

The primary motivation for the Walmart action was to avoid any interruption in supply such as the disruption following the emergence of COVID in March and April of 2020. To establish and market a brand Walmart requires a secure source of consistent high quality with traceability.

 

It is of course possible if the arrangement with McClaren Farms is beneficial to Walmart that the strategy might be extended to chicken.

 


 

HPAI in the Netherlands

06/03/2021

The Wageningen Bioveterinary Research Institute has confirmed H5N8 highly pathogenic avian influenza in a turkey grow-out farm near Weert, in the Province of Limburg, the Netherlands.  Seven other farms with a total of 66,000 birds are located within a 0.6 mile radius of the index farm but are all negative to avian influenza.  Within a six-mile zone there are 128 farms with commercial poultry indicating the density of chickens and turkeys within the area.

 

The affected farm was depleted, and surveillance initiated within the six-mile zone that includes a part of Belgium. 


Location of Weert on border with Belgium

There have been eleven outbreaks of HPAI in chickens, ducks or turkeys during the winter of 2020 extending through February 2021.  Unlike in previous years, veterinary authorities continue to identify H5N8 in free-living birds suggesting that the virus is now endemic, serving as a risk factor for commercial poultry especially those allowed access to pasture.

 

Highly pathogenic avian influenza was diagnosed in 28 European nations affecting commercial poultry, wild birds and backyard flocks between October 2020 and May 2021.


 

Comparison of Commodity Prices in China with CME Quotations.

06/02/2021

The relative prices expressed in US$ per short ton for corn, soybeans and soybean meal, July 2021 delivery, were downloaded from the Dalian Commodity Exchange website reflecting major contracts at close of trading on June 2nd. These values were compared with the spot price at close of trading on the CME as indicated

 

Commodity

Dalian CE

52-week range

CME 06/02

Corn

XV $388*

$352-$415

$244

Soybeans #2

XO $619*

$451-$657

$527

Soybean Meal

XU $511*

$412-$547

$396

 

* short ton with exchange rate CNY 6.25=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 57 cents per dozen.   (12-month range 49 to 62 cents per dozen)


 

Donnie King to Replace Dean Banks at Tyson Foods

06/02/2021

In a June 2nd release Tyson Foods, Inc. announced that Chief Operating Officer Donnie King has been named President and Chief Executive Officer, effective immediately. Current President and CEO Dean Banks is leaving the company and board for personal reasons.

 

In commenting on the transition John H. Tyson, Chairman of the Board stated “The Board and I know that Donnie has a deep understanding of our business, values and culture and the solid leadership skills needed to continue to implement our strategy and deliver strong results,” said. “We want to express our appreciation to Dean for his contributions as a board member and executive.”


Donnie King CEO and
president Tyson Foods

 

In announcing his resignation Dean Banks stated “being a part of Tyson Foods has been a very rewarding experience. Upon deep personal reflection, and discussions with my family, the board, and my colleagues, I believe that stepping down and concentrating on my family is the right decision at this time.”

 

King has more than 36 years of experience in the protein business, holding a variety of executive leadership positions involving virtually all facets of the company including poultry, beef, pork, prepared foods and international. He has also provided executive oversight of other important areas, such as food safety and quality assurance, health and safety, continuous improvement, engineering, and supply chain.


 

Consumers Plan Post COVID Barbeques and Entertaining

06/01/2021

According to a survey conducted in April by Advantage Solutions, grocery shoppers are now planning outdoor entertaining and barbeques.  The increased uptake of vaccines and lower incidence rates of COVID have created a desire to return to hosting social events among families and friends.  According to 1,000 shoppers interviewed, more than half did not hold a single summer barbeque outside their immediate families during the summer of 2020.  Only 17 percent are undecided over entertaining in 2021 with 71 percent planning approximately the same or more frequent events as in 2019.  Approximately 55 percent of those interviewed will hold a Fourth of July event. 

 

Respondents plan to purchase their food and supplies for barbeques in stores (61 peent), compared to 10 percent online and the remainder equally between stores and online.  Among foods intended to be served at barbeques, hamburgers were most frequently noted at 67 percent followed by either beef, pork or turkey hot dogs, 42 percent; chicken, 31 percent; ribs 24 percent; steak 23 percent; vegetable-based meat substitutes,18 percent and kabobs 12 percent.  Serving of traditional side dishes including baked beans, coleslaw, macaroni and green salads ranged from 25 to 35 percent.  Beer (46 percent), sodas (44 percent) and wine (30 percent) are planned as beverages at gatherings.

 


 

Consequences of Reputational Damage

06/01/2021

Evidence of misrepresentation or unethical practice can destroy the reputation of a company and brand.  The latest example is Belcampo Foods that markets premium meat to a high-income demographic based on local sourcing, selected quality and organic status. The Company suffered serious damage when these claims were refuted by an ex-employee who posted on social media that some products were imported from Australia and did not conform to advertised attributes and stating that irregularities were over a long duration.

 

The revelations by the ex-employee resulted in an apology by the management of Belcampo Farms confirming “mislabeling at one location” but an admission sufficient to question integrity.

 

It is anticipated that Belcampo Farms will lose custom and given the highly litigious environment in California, will lead to class action claims alleging misrepresentation that will be expensive for Belcampo Farms to defend or to settle. The second takeaway is that to avoid disgruntled employees it is necessary to keep them fully ‘gruntled’ or to be honest with customers.


 

U.S. Agricultural Trade Outlook

06/01/2021

According to the May 26th edition of the USDA Outlook for U.S. Agricultural Trade, exports of agricultural products will attain $164 billion in fiscal 2021 ending September 30th.  Imports will amount to $141.8 billion yielding a positive balance in agricultural trade of $22.2 billion.

 

For fiscal 2020-2021 the U.S. will export 70.0 million metric tons of corn valued at $17.2 billion with a unit price of $246 per metric ton.  Soybean exports will attain 62.1 million metric tons valued at $28.9 billion or a unit price of $465 per metric ton.  Exports of soybean meal will attain 12.9 million metric tons valued at $6.0 billion or a unit value of $465 per metric ton.

 

USDA estimates exports of 3.4 million metric tons of broiler meat valued at $3.2 billion or $941 per metric ton.


 

STOP PRESS

06/01/2021

JBS USA Victim of Cyber attack

 

In a Monday May 31st release JBS USA reported that a cyber attack was detected the previous day resulting in suspension of some systems and resulting in closure of operations in some facilities in Australia idling 10,000 workers. in addition to work stoppages in the U.S. and Canada. According to the Company there was no compromise of supplier, customer or employee data and backup systems were unaffected. Thde Company indicated that operations would be back to normal on Wednesday June 2nd.The extent of the problem will become apparent in subsequent days and will be denoted by evidence of disruption of operations.


 

Chr. Hansen to Present Self-Instructional Program on Probiotics

05/31/2021

Chr. Hansen has developed a series of instructional programs to explain the function and action of probiotics in livestock and poultry. The program was launched on May 27th with a series of four presentations each approximately 15 minutes in duration.

 

The instructional sessions will deal with how probiotics interact with feedstuffs, with other organisms in the microbiome of the intestine and interactions with the animal host.

 

According to Marcelo Lang, Global Marketing Director for Animal Health and Nutrition,  "the use of probiotics in animal production has shown that it will benefit digestion, animal performance and the immune system - but we also know it is not easy to choose the right probiotic".  He added, "to make the best choice you need to understand the different methods of action".

 

Information on accessing the course is available by accessing <www.Chr-Hansen.com>


 

Federal Motor Carrier Safety Administration Extends Hours-of- Service Exemption

05/31/2021

The Federal Motor Carrier Safety Administration has extended the Emergency Declaration exempting drivers hauling livestock from hours-of-service restrictions.  The Emergency Declaration was issued in March 2020 to facilitate transport of critical items including medical equipment, COVID-19 protective materials and animals for processing during the COVID crisis.  Extensions have been granted at regular intervals, but will be reviewed on July 1st based on restoration of normal commercial activity.


 

Livestock Producers in China Switch to Wheat for Livestock Feed

05/31/2021

Livestock producers are switching from imported corn to feed wheat now available from the winter harvest.  China imported 11.3 million tons of corn in calendar 2020, exceding the low-tariff cap of 7.2 million tons.  In an attempt to reduce reliance on imported corn, 43 million tons of wheat held in reserve was released from October 2020 through May 2021. During the 2021 harvest season producers in China consumed 38 million tons of feed wheat. It is expected that an equivalent or greater quantity will be used during the 2021-2022 crop year.

Wheat can be substituted for corn but requires inclusion of xylanase and other enzymes in diets to enhance digestibility and intestinal function in monogastric species.

 

Substitution of wheat for corn will reduce potential exports from the U.S. to China. this will ultimately reduce cost to domestic livestock producers.


 

USDA Issues Annual Food Safety Guidance

05/31/2021

On May 27th, the USDA issued an annual reminder to follow safe food preparation practices during the Memorial Day weekend and through summer.  The Agency also recommended compliance with the Centers for Disease Control and Prevention Guidance with respect to Covid. 

 

Sandra Eskin, USDA Deputy Under Secretary for Food Safety, stated “Memorial Day marks the beginning of warmer weather and summer fun.”  She added, “people cook and eat outside, making shortcuts to food safety tempting because they are away from the convenience of soap and running water at the kitchen sink.”

 

USDA again stressed the need to adequately cook poultry to attain a temperature of 165 F for at least 30 seconds; beef, pork, lamb, and veal to 145 F; to cook egg dishes to 160 F; and fish to 145 F.  The CDC and USDA emphasize the need to use a probe thermometer to ensure that food is adequately cooked so as to destroy any pathogenic bacteria that may be present.

 


 

Trade Talks Between U.S. and China

05/31/2021

U.S. Trade Representative Katherine Tai and her counterpart Vice Premier Liu He discussed trade issues on Thursday, May 27th.  Following the telephone meeting, the Ministry of Commerce of the PRC stated that the conversation was “candid, pragmatic, and constructive”.  Both sides have agreed to continued communication with the communique expressing satisfaction with the interaction between the major participants.


Amb. Katherine Tai, USTR

 

The Office of the U.S. Trade Representative noted that the discussions included trade policy and the U.S.-China trade relationship. Ambassador Tai apparently raised issues of concern without providing details. It is generally accepted that many trade practices followed by China are essentially one sided and inhibit competition.  Other issues include Government support for state-operated manufacturing enterprises ant theft of intellectual property none of which have been resolved following the January 2020 Phase-One Agreement.


 

Aviagen to Erect New Hatchery in Longview, TX

05/31/2021

According to a May 27th release, Aviagen will erect its ninth North American hatchery to be completed by July 2022.  The facility will be located in the Longview, TX area on I-20 Between Shreveport LA and Dallas, TX. Longview was selected based on its proximity to an international airport and distant from concentrations of poultry production.

 

The hatchery will set 1.1 million eggs each week to supply parent stock customers in North America and the international market and will represent an investment of $27 million. 

 

The President of Aviagen North America, Dr. Marc deBeer, stated “We are committed to securing a supply of quality parent stock to help our customers put food on the tables of families throughout North America and around the world.”  He added, “The new hatchery in Longview will play a big part in this goal.”


 

Tyson Foods Settles Turkey Litigation

05/29/2021

Tyson Foods has agreed to pay direct claim plaintiffs $4.63 million to settle a civil action alleging collusion in the price of turkeys.  The settlement will have to be approved by Judge Virginia M. Kendall of the U.S. District Court for the Northern District of Illinois. 

 

Remaining defendants include Butterball, Cargill, Cooper Farms, Hormel Foods, Farbest Foods and Foster Farms.  AgriStats as a non-producer defendant is at the center of allegations that the benchmark system facilitated what Plaintiffs consider a form of indirect collusion.

 

It is significant that in terms of the settlement, Tyson will provide "meaningful cooperation" to assist the direct purchase plaintiffs.  Tyson will provide extensive documentation and communications among the defendants and supply any documents produced to a state Attorney General or the Department of Justice.

 

A similar agreement was negotiated in the broiler price fixing civil litigation when Fieldale Farms settled with plaintiffs and agreed to provide documentation and cooperation instrumental in negotiating some settlements in the civil case.


 

National Pork Producers Council Urges USDA to Appeal Hog Line-Speed Ruling

05/29/2021

It is estimated that a recent ruling invalidating the line speed component of the New Swine Inspection System (NSIS) will reduce pork-packing capacity by 2.5 percent and will reduce income of all participants in the industry, especially for small U.S. hog farmers.  The NSIS was introduced as a trial during the Clinton Administration and has been in operation for over 20 years at five pilot plants. The system was approved for general adoption in 2019.

 

Jen Sorenson, President of the NPPC stated, "the U.S. pork production system is the most advanced in the World and is characterized by robust competition, innovation and efficiency".  Sorenson added, "with the stroke of a judges' pen the lives of many hog farmers will be upended if this misguided ruling takes affect". 

 

Dr. Dermot Hayes, an Iowa State University economist conducted simulation studies on the effect of reduced line speed demonstrating the disproportionate impact on small producers.  Slowing line speed in existing plants will create capacity issues on hog farms and will result in the need to transport live hogs over greater distances than at present.  This is both contrary to accepted welfare and sustainability.

 

The NPPC is urging the USDA to appeal the ruling, seek a stay during an appeal and to introduce a fast-track rule-making process to allow for resumption of proven line speeds facilitated by modern technology.


 

Court Rejects Sinclair Small Refinery Exemptions

05/28/2021

On May 19th the U.S. Court of Appeals for the 10th Circuit vacated three Small Refinery exemptions granted to the Sinclair Wyoming Refining Company. Geoff Cooper, President and CEO of the Renewable Fuels Association, stated “we are pleased that the Court has vacated these improperly-granted waivers and is sending them back to EPA for reconsideration.” He added, “if these exemptions had been allowed to stand, they would have erased RFS blending requirements for 260 million gallons of low-carbon renewable fuels.”

In the order released by the court it was evident that the EPA did not analyze determinative legal questions regarding whether the Petitioner was qualified to receive extensions of the Small Refinery Exemption. The three exemptions were granted in the declining hours of the previous Administration and allowed the three Wyoming refineries to be exempt from Renewable Fuel Standard obligations during 2018 and 2019.


 

COSTCO Reports on Q3 of FY 2021

05/28/2021

In a press release dated May 27th Costco Wholesale Corporation (COST) announced results for the 3rd Quarter ending May 9th

 

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

 

Quarter Ending May 9th

2021

2020

Difference (%)

Sales:

$45,277,000

$37,266,000

+21.5

Gross profit:

$5,862,000

$5,017,000

+16.8

Operating income:

$1,663,000

$1,179,000

+41.1

Pre-tax Income

Net Income

$1,650,000

$1,220,000

$1,163,000

$838,000

+41.9

+45.6

Diluted earnings per share:

$2.751

$1.89

+45.5

Gross Margin (%)

13.0

13.5

-3.7

Operating Margin (%)

3.7

3.2

+15.6

Profit Margin (%)

2.7

2.2

+22.7

Long-term Debt and lease obligations:

$12,318,000

$12,002,000

+2.6

12 Months Trailing:

Return on Assets (%)

7.8

Return on Equity (%)

26.6

Operating Margin (%)

3.6

Profit Margin (%)

2.4

Total Assets

$57,274,000

$55,556,000

+3.1

Market Capitalization

$167,397,000

Note 1. COVID related expenses detracted from EPS by 2 cents

52-Week Range in Share Price: $293.84 to $393.15 50-day Moving average $375.38

Market Close May 27th pre release: $387.38 

Market Close May 28th $378.28 down 2.3 percent

Forward P/E 34.8 Beta 0.6

 

For the 3rd quarter company same store sales increased 15.1 percent over Q3 of FY 2020 (adjusted for foreign exchange and excluding fuel). The U.S posted 15.2 percent, Canada 16.7 percent and International 13.1 percent. E-Commerce increased by 38.2 percent.

 

COSTCO operates 809 warehouses with 559 in the U.S., 105 in Canada and 145 in 10 other nations on four continents.


 

Sanderson Farms Reports on Q2

05/27/2021

In a press release dated May 27th Sanderson Farms (SAFM) announced results for the 2nd Quarter of FY 2021, ending April 30th 2021.

 

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


Joe F Sanderson Jnr. CEO

2nd Quarter Ending April 30th

2021

2020

Difference (%)

Sales:

$1,133,880

$844,711

+34.2

Gross profit:

$191,944

$12,428

+1,444

Operating income:

$127,699

$(43,786)

+391.6

Pre-tax Income

Net Income

$127,015

$96,911

$(45,566)

$6,1181

+378.8

+1,484

Diluted earnings per share:

$4.34

$0.28

+1,454

Gross Margin (%)

16.9

1.5

+1,027

Operating Margin (%)

11.3

-5.2

+317.3

Profit Margin (%)

8.5

0.7

+1,114

Long-term Debt and leases:

$74,139

$51,804

+43.1

12 Months Trailing:

Return on Assets (%)

3.3

Return on Equity (%)

5.5

Operating Margin (%)

2.7

Profit Margin (%)

2.1

Total Assets

$2,003,196

$1,849,031

+8.3

Market Capitalization

$3,734,000

Note 1. $51,684 Tax Benefit

 

52-Week Range in Share Price: $108.57 to $177.48

Market Close May 26th pre-release $166.65. Noon May 27th $167.20

Forward P/E 23.0 Beta 0.7

 

In commenting on Q2 results, Joe F. Sanderson, Jr., Chairman and CEO stated, “Improved poultry markets more than offset feed grain costs that were significantly higher compared to last year’s second fiscal quarter, resulting in increased operating margins. The improvement in the domestic poultry markets was driven largely by increased demand from food service customers, as U.S. consumers slowly returned to restaurants and several quick serve restaurant chains featured chicken sandwiches on their menus. In addition, export demand also improved during the quarter due to higher crude oil prices, improved liquidity as a result of currency valuations and some relief from COVID-19-related restrictions.”

 

According to Sanderson, overall realized prices for chicken products sold to retail grocery store customers increased 6.2 cents per pound during the second fiscal quarter of 2021 compared to the same period of last year. Volumes reflected strong demand, as many consumers have continued to prepare more meals at home instead of dining out. In addition, commodity quoted markets for products from the Company’s food service plants were significantly higher across the board.

 

In discussing unit revenue and feed cost Sanderson noted:-“compared with the second fiscal quarter of 2020, quoted boneless breast meat market prices were approximately 60.4 percent higher, the average quoted market price for bulk leg quarters increased approximately 12.3 percent, and jumbo wing quoted market prices were higher by 88.9 percent. The Company’s average feed costs per pound of poultry products processed increased by 26.6 percent when compared with the second quarter of fiscal 2020, while prices paid for corn and soybean meal, the Company’s primary feed ingredients, increased 39.7 percent and 40.0 percent, respectively, compared with the second quarter of fiscal 2020.

 

In projecting future trends Sanderson commented “looking ahead to the second half of the fiscal year, we continue to expect prices paid for feed grain to be significantly higher for the year compared to fiscal 2020. With respect to chicken production numbers, the USDA reports that weekly broiler egg sets are well ahead of 2020 numbers that were negatively affected by COVID-19. However, certain live production challenges, including lower than historical average hatch rates and broiler livability, have resulted in fewer poultry pounds than expected given the size of the layer flock”

 

Sanderson Farms expects total production during Q3 and Q4 of 2021 to be down 0.6 percent and 2.3 percent, respectively, compared to the same quarters of fiscal 2020. During April 2020, Sanderson Farms reduced production of larger birds for food service customers by five percent completing the reduction in July 2020. Plants will begin to return to full production starting in June 2021, and most plants will be back to full production by early September.


 

USDA Issues Public Health Alert over Potential Listeria Contamination of Diced Chicken

05/27/2021

On May 25th the USDA-FSIS issued a public health alert for approximately 60 tons of frozen, fully-cooked, diced chicken product.  Concern relates to potential contamination with Listeria monocytogenes.  Product was packed during late January and late March in 4-lb. plastic bags.  Product was distributed by Big Daddy Foods Inc. of Houston, TX.  The implicated chicken was delivered to local food banks in Florida and included in the USDA Farmer’s to Families Food Box program through April 8th.

 

Listeria was detected during routine FSIS quality inspection when it was noted that product required recooking and that the suspect food was subsequently repackaged without heat treatment.  To date there have no reports of an adverse reaction or illness resulting in a warning and not a formal recall.


 

KFC Modifies Packaging

05/27/2021

According to a May 25th release by KFC a subsidiary of Yum! Brands, the company will upgrade packaging to improve eye appeal and to emphasize brand identity.

 

KFC is evidently now promoting the “Colonel” image and the “It’s Finger Lickin’ Good” slogan.  The packaging will be constructed of certified paperboard with the seal of the Sustainable Forestry Initiative or the Forest Stewardship Council and will be labeled for recycling.


 

Petition by Seaboard Foods to Delay Implementation of Slower Line Speed Denied

05/25/2021

U.S. District Judge Joan Ericksen has ruled against Seaboard Foods, denying a request to delay implementation of a slower line speed for a hog plant in Guymon OK. by 10 months. Following publication of a 2019 Rule by USDA-FSIS to allow faster line speeds for hog processing, Seaboard invested in additional equipment to increase production and efficiency.  The United Food and Commercial Workers Union challenged the 2019 Rule in a lawsuit filed against the U.S. Department of Agriculture.  The Union claimed that faster line speeds would result in increased injuries in plants.


 

Marfrig Acquires Substantial Equity in BRF

05/25/2021

Following a failed attempt at acquisition of BRF S.A. by Marfrig Global Foods S.A. in mid-2019, Marfrig has now acquired 24 percent of the equity in the company.  According to a May 24th press release, Marfrig will function as a passive investor without representation on the Board of BRF.

 

The product scope of the two companies is complementary with Marfrig heavily committed to beef and BRF producing and exporting both chicken and pork.


 

USPOULTRY 2021 Hatchery-Breeder Clinic

05/24/2021

The 2021 USPOULTRY Hatchery-Breeder Clinic will take place on July 7th and 8th at the DoubleTree Downtown Hotel in Nashville, TN. 

 

Topics on the agenda include a poultry industry review, hatchery sanitation, incubation effects on chick quality, biosecurity for Salmonella control, house egg packing system, chick delivery, solar energy on breeder farms and transport equipment.

 

Previous hatchery-breeder clinic programs have advanced knowledge and contributed to improvements in performance.  Given the demand for chicken and reported problems of hatchability, the 2021 program should be both instructive and beneficial to participants.


 

Food Retailers Relaxing Masking Requirement

05/24/2021

Publix, The Kroger Company, Hy-Vee, and other chains will not require masks for employees and customers who have been fully vaccinated against Covid or as required by local regulations. Kroger will require non-vaccinated employees to wear masks and shoppers will operate on an honor system. The change in policy is consistent with the recommendations of the Centers for Disease Control and Prevention. 

 

Morning Consult Inc. a global survey company determined that 25 percent of adults responding to a questionnaire indicated that mask requirements should be lifted through the U.S., but 40 percent believe that the local situation including incidence rate should determine whether masking is required.  A noteworthy level of 27 percent still considered that masking was necessary.  There is considerable concern over relaxation of masking with 20 percent of respondents uncomfortable in situations involving a return to offices, dining outdoors, shopping at a mall or socializing in public.  The level of concern increases sharply to 48 percent for flying internationally and encompasses a range of 40 to 45 percent for activities including attendance at concerts, sports events, domestic air travel, and public transportation.  Approximately 40 percent of respondents had concerns over not wearing a mask at a gym, an observation evident during the morning workout of this commentator.

 

Quoted in Supermarket News, Marc Perrone, President of the United Food and Commercial Workers International Union, has been outspoken on protection of supermarket employees. He maintains that with a high proportion of the U.S. population unvaccinated, retention of masks in supermarkets is required and he has urged the Department of Labor to issue an OSHA standard outlining rules for masking. 

 

As of May 23rd, 49 percent (162 million) of the U.S. population had received at least one Covid vaccine with 39 percent (130 million) fully immunized.  An encouraging statistic is the number of teenagers 12 and older who have received at least one vaccine.  By May 23rd  59 percent are now partially vaccinated with 47 percent having received two doses of an mRNA vaccine.  Approximately 80 percent of the 350 million vaccines released by manufacturers have been administered, suggesting that additional efforts are required to convince the vaccine hesitant to achieve protection for their own safety and community health.


 

Burger King Enters Chicken War with Ch’King

05/24/2021

After initiating a development program in 2019, Burger King will roll out the hand-breaded Ch’King chicken sandwich in some markets.  Competition among QSRs dubbed the “chicken sandwich wars” was initiated by Popeye’s Louisiana Kitchen in 2019 and has been followed by McDonald’s, Wendy’s, and Kentucky Fried Chicken.  Taco Bell reintroduced the Naked Chicken Chalupa to compete.

 

Leellie Doty, Chief Marketing Officer for Burger King North America, stated “Our guests said our hand-breaded Ch’King sandwich is the greatest yet.”  Doty added, “We said we would create a delicious hand-breaded chicken sandwich that was worth the wait, we just didn’t anticipate that it would turn out quite this good.”  (and quite this long as an Editorial Comment)


 

Hormel Releases Q2 Results Including Jennie-O Turkey Store

05/24/2021

On May 20th Hormel Foods, parent company of Jennie-O Turkey Store, released results for the second quarter of Fiscal 2021 ending April 25th.  For the period, Hormel earned $227.9 million on revenue of $2,607 million with an EPS of $0.42.  Comparable figures for the second quarter of Fiscal 2020 ending April 26th were net earnings of $227.7 million on revenue of $2,423 million with an EPS of $0.42.

 

The Jennie-O Turkey Store segment earned $12.7 million on revenue of $351.2 million.  For the second quarter of Fiscal 2020, Jennie-O Turkey Store posted an operating profit of $27.4 million on revenue of $343.1 million.  Comparing the two consecutive quarters, volume was down three percent, sales were 2.1 percent higher but segment contribution was lower by 53.6 percent.  CEO Jim Snee attributed the lower contribution generated by Jennie-O to higher feed costs.  The increase in sales was attributed to partial recovery of food service.

 

In commenting on results for Q2, Snee noted “We were able to achieve these record results through strong food service sales, continued elevated demand in retail, deli, and international channels, and improved supply chain performance.”  He added, “We anticipated rapid demand changes in our food service business and our team delivered with sales exceeding 2019 pre-pandemic levels.  The investments we have made over the years to build a world-class food service business, including an experienced direct sales force and portfolio of products that sold for customer challenges, give us a competitive advantage as the industry recovery accelerates.”

 

In common with other poultry producers, Snee noted the impact of inflation and stated that the company will continue to offset margin pressure with price actions and supply chain improvements. In contrast to other turkey companies that publish results, Jennie-O Turkey Store is profitable despite inflationary pressures and the impact of Covid on food service.


 

JBS Workers Wins Worker’s Compensation Case over COVID

05/24/2021

In April 2020 a worker at the JBS USA beef plant in Cactus, TX was infected with COVID.  This resulted in his inability to work for three weeks. The insurer of JBS USA denied compensation.  Assisted by the Texas Rio Grande Legal Aid Agency, the claimant referred the case to the Texas Department of Insurance, Worker’s Compensation Division.  An Administrative Law Judge ordered JBS to compensate the worker after concluding that the infection was contracted in the plant. 


JBS Cactus TX Plant

JBS Health Screening

 

This case creates a precedent since to date, the obligation has been on claimants to demonstrate that infection was acquired in the plant and not in their community.

 

Since JBS did not appeal the determination of the Worker’s Compensation Division, the decision of the Administrative Law Judge is binding with implications for other claims in Texas.


 

Broiler Imports by China, 2021

05/24/2021

For the first four months of 2021 China imported 488,000 metric tons of broiler products.  Of this total, Brazil supplied 41.1 percent; the U.S. 36.5 percent; Russia 7.5 percent; Thailand 6.8 percent; Argentina 5.1 percent and others combined 3.0 percent.

 

For the month of April, China imported 123,000 metric tons of broiler products.  The major suppliers were Brazil with 44.8 percent; the U.S. 30.1 percent; Thailand 9.1 percent; Russia 7.4 percent; Argentina 4.9 percent and others combined 3.7 percent.

 

Of the April shipments of 37,000 metric tons to China, paws represented 62.5 percent of volume, bone-in legs, 30 percent; ‘byproducts’ (presumably gizzards, hearts and livers), 6.5 percent and wings, one percent. The value of April shipments from the U.S. attained $77.8 million representing a unit price of $2,103 per metric ton.


 

Federal Maritime Commission to Enforce Regulations on Containers and Export Shipments

05/24/2021

The Chairman of the Federal Maritime Commission, Daniel Maffei, is committed to assisting exporters of agricultural products that have been placed at a disadvantage due to the non-availability of containers.  With a surge in imports by sea as the U.S. economy recovers, containers that have shipped goods from China to west coast ports are turned around rapidly to allow vessels to return across the Pacific.

 

Producers of agricultural products inland are denied containers based on the action by shippers.  The Federal Maritime Commission will now apply "enhanced enforcement" if exporters are denied containers. 


Daniel B Maffei Chair of the
U.S. Maritime Commission

 

Pressure on availability of containers has been exacerbated by cancellation of intercontinental passenger flights restricted by COVID, that carry a considerable quantity of air freight which has been diverted to sea transport.


 

Claxton Poultry Farms Indicted on Price-Fixing Charge

05/23/2021

On Thursday, May 20th, the U.S. Department of Justice (DOJ) indicted Claxton Poultry Farms Inc. on a charge of price-fixing.  The case arises from the previous indictments of Mikell Fries, President and Scott Brady, Vice-president in a conspiracy to rig prices extending from 2012 through 2019.  According to court records, Fries and Brady colluded with managers, since dismissed by Pilgrim's Pride and criminally charged by the DOJ, to collude on price bidding.  In February 2021 Pilgrim's Pride Corp., a public- quoted subsidiary of JBS S.A. pleaded guilty to federal charges of conspiracy and paid $108 million in penalties, conceding collusion with Claxton Poultry Farms. 

 

In commenting on the Wednesday, May 19th indictment, Richard Powers, Acting Assistant Attorney General of the DOJ Antitrust Division stated, "as this charge shows we will not hesitate to prosecute crimes designed to put money in corporate coffers and line executives' pockets at the expense of everyday Americans including the hundreds of millions of us who rely on chicken to be an affordable staple food".

 

Claxton Poultry was founded by Norman W. Fries in the 1930's and operates under family ownership.  The company located in Claxton, GA is ranked approximately 20th among broiler producers and processes in excess of 2.5 million broilers each week.  It is inexplicable how Claxton Farms could have influenced national prices materially by colluding with Pilgrim's Pride Corp. that has a broiler output twelve to thirteen times that of Claxton. It is possible that in the approximately 13 million documents in the possession of the DOJ there may be evidence of more extensive industry collusion. Tyson Foods independently determined irregularities conducted by employees in marketing chicken and settled with the DOJ. The Company terminated those responsible who were subsequently indicted.

 

The indictment noted "Claxton participated in a continuing network of supplies and co-conspirators, an understood purpose of which was to suppress and eliminate competition through rigging bids and fixing prices and price-related terms for broiler chicken products sold in the United States".  If convicted, Claxton may be subject to a maximum fine of $100 million although this may be increased if documentation shows that the company derived excessive benefit from their activities.  Penalties paid by Tyson Foods, Pilgrim's Pride Corp. and civil settlements by these integrators and also by Fieldale Farms have amounted to hundreds of millions of dollars. Defendants in the civil case encompass almost the entire the entire chicken industry in addition to AgriStats Inc. that published benchmark production parameters and costs that Plaintiffs maintain were used by integrators in some form of indirect collusion. This contention has yet to be validated but will be the subject of evidence in upcoming trials.


 

Olymel LP Receives Investment Grants

05/21/2021

Olymel LP will receive $115 million from the Government of the Province of Quebec to support expansion in the Province.  The Ministry of Economy and Innovation has advanced $55 million through the Fund for the Growth of Quebec Enterprises together with $60 million from Investissement Quebec.  Pierre Fitzgibbon, Minister of Economy and Innovation for Quebec stated, "Olymel's projects fit exactly with the vision of the Province by consolidating 10,000 jobs here in addition to taking this leading Company to a higher technological level".

 

Olymel, a cooperative will apply funds to improve efficiency and install new equipment and upgrade the IT management system. Olymel will add a second shift to its Ange-Gardien pork plant.

 


 

U.S. Traders and Perdue Farms Import Soybeans from Brazil

05/20/2021

According to shipping sources Brazil will supply the U.S. with 208,000 metric tons (7.6 million bushels) of soybeans this month.  It is understood that Perdue has chartered three shipments with Glencore and Bunge also importing consignments of soybeans from Brazil. Recent sharp increases in CME soybean prices have created incentives for crushers to import beans.  The previous major imports occurred in 2014 when one million metric tons (36.7 million bushels) were purchased.  Additional shipments will take place providing the relative landed cost is lower than purchase from domestic sources.

 

At close of trading on May 20th both CME U.S. soybeans and Santos soybeans were quoted at $561 per metric ton for July delivery. On May 13th soybeans were priced at $593 per metric ton for July Delivery


 

South Africa Impacted by Food Inflation and a Declining Economy

05/20/2021

According to USDA-FAS-GAIN Report SF2021-0031 released May 9th, authorities in South Africa are concerned over the trajectory of food price inflation.  Indices have shown an increase from 3.4 percent in 2019 to 4.6 percent in 2020 with a projected 5.4 percent rate in 2021.

 

The increase in the price of food reflects the general inflation in the economy as denoted by the Consumer Price Inflation Index. Factors leading to inflation in food prices include electricity rates that have increased by 15 percent, minimum wage levels up by 16 percent, higher crude oil prices amounting to 30 percent, and an escalation in commodities including vegetable oils and protein. In March 2021, the Bureau for Food and Agricultural Policy documented a 6.7 percent increase in the price of meat including beef, pork, chicken, and low-value meat products; 7.2 percent for dairy and eggs, and 13.4 percent for vegetable oils.

 

The economic situation is denoted by the  4.1 percent decrease in GDP and the declining value or the SA Rand, (down 29.9 percent against the US$) both over the past 12 months, 32 percent documented unemployment and a  negative 9.2 percent budget balance 

 

The ruling African National Congress Administration is concerned over the high cost of food, especially for the lower income demographic.  The nation operates a Food Price Monitoring Committee with representatives from the Ministry of Agriculture, Land Reform and Rural Development in addition to diverse agencies to track food prices.  The Competition Commission monitors any unfair or anti-competitive pricing including excessive margins imposed by retailers,that were apparent during COVID restrictions.

 

Concurrent with attempts at stabilizing food prices, the Government has increased social support for the elderly, the disabled and children in addition to a social relief distress grants to the unemployed.

 

The situation in South Africa probably reflects the situation in most nations achieving intermediate development with economies that rely on a mix of agriculture, industry and exploitation of natural resources. The USDA Post in Pretoria, the administrative capital of the Republic of South Africa, considers that food inflation may impact U.S. agricultural exports from South Africa in 2021. Chicken exports to South Africa will be constrained by protective tariffs and the deteriorating economic situation.


 

Lightlife Introduces Two New Plant-Based Chicken Products

05/20/2021

Lightlife a brand of Greenleaf Foods SPC, a subsidiary of Maple Leaf Foods has announced the release of two vegetable-based chicken products.  These comprise breaded chicken tenders and fillets with a claimed similar appearance to products prepared from real chicken. 

 

Jitendra Sagili, chief of R & D and Food Technology at Greenleaf Foods stated, “Breakthrough innovation in plant-based chicken that offers the texture, color and breading consumers expect is challenging but we are proud of how these products satisfy consumer expectations.” 

 

Products will be available at Sprouts Farmers Market in June followed by other retailers.  Lightlife is used by KFC in their plant-based sandwich available at 600 locations in Canada.

 

Dan Curtin, president of Greenleaf Foods stated, “These new products deliver on the Lightlife commitment to offer consumers the mouth-watering plant-based variety and simplicity they deserve.”

 


 

Romer Labs Introduces RapidChek™ Protein Assay

05/20/2021

Romer Labs has introduced a new RapidCheck™ protein assay to confirm that surfaces and equipment have been cleaned.  The test kit comprises strips that are impregnated with chemicals that react in the presence of amino acids or peptides.  In the presence of protein and degradation products, strips will turn from yellow to blue.  The detection limit is 3 micrograms and the result is available within 30 seconds.  Reagents in the strips are nontoxic.

 


 

JBS to Expand Broiler Complex in Parana State

05/20/2021

JBS S.A. of Brazil has announced an intended investment of $350 million over a five-year period to increase production in their Rolandia Complex located in the state of Parana.  The expansion involving prepared foods and upgrades including mechanization will increase employment to 3,700 from the current 2,600 and will create opportunities for 150 broiler growers.


Expansion of JBS Plant in Perana State, Brazil

 

U.S. Beef Checkoff System under Pressure

05/19/2021

Congressional legislators from twelve states have addressed a joint letter to Tom Vilsack, Secretary of Agriculture, calling for a referendum on the Beef Checkoff program. In operation for 35 years the program has received criticism from ranchers who object to the compulsory levy of $1 per animal sold without perceiving a benefit.  Farmers also complain that there is minimal representation in deciding on promotional expenditure coupled with wastage of funds and mismanagement. To date, R-CALF has organized a petition to force a referendum on the continuation of the Beef Checkoff program.

 

The current impasse has implications for other commodity checkoff programs. To be accepted and receive the support of their constituencies producers must recognize that their contributions support demand and hence prices. We are fortunate that the AEB has strong producer participation and operates with transparency advancing consumer education, promotion, product development and research.

 


 

Olymel Workers Strike at Quebec Plant

05/19/2021

Workers at the Olymel hog plant, located in Vallee-Jonction, Quebec, commenced a strike on April 28th.  Hogs have accordingly been diverted to other Olymel plants in Quebec. 

 

The striking employees are demanding a pay raise of 35 percent with immediate effect increasing to 51 percent above current wages within 40 months.

 

A spokesman for the Olymel cooperative has rejected the initial demand as it would “put Olymel out of the market at that plant and we cannot afford that kind of raise.”  Meetings between the cooperative and union are in progress although the plant has closed. 

 

The plant has a nominal capacity of 37,000 hogs per week. Olymel is consigning 20,000 hogs per week to U.S. packers to compensate for the work stoppage.

 


 

Argentine Government Bans Export of Meat

05/19/2021

Faced with food price inflation exceeding 20 percent in 2021, the Government of Argentine has imposed a ban on export of beef for a thirty-day period.  This desperation move by the socialist government would deprive Argentina of foreign exchange through exports and will impoverish cattle farmers and cost jobs in the packing industry.  Observers are concerned that the thirty-day moratorium will be extended.  In 2006, faced with a similar situation the Peronista government also imposed a “temporary” ban on exports that extended over nine years.

 

In response to the Government action the Liason Committee for Agricultural Entities announced  cessation of all cattle trade, effectively a strike, for a ten-day period. Meat packing plants are closing displacing workers with the potential for further social unrest.

 


Closed Abattoir in Argentina

The action in Argentina impacted Marfrig of Brazil that operates in Argentina as Minerva, and representing ten percent of Marfig sales. Minerva intends supplying international customers from plants in Paraguay and Brazil. JBS S.A. of Brazil was also affected with both producers down three percent on the Bovespa on May 18th.

 

Argentina is a major beef exporter to China and the E.U. with sales exceeding $3.5 billion in 2020.


 

Namibia Bans Poultry Imports from South Africa

05/19/2021

Following outbreaks of H5N8 highly pathogenic avian influenza in South Africa, Namibia has banned importation of all poultry products from this exporter.  The decision by the Ministry of Agriculture on May 17th follows previous action by Namibia and Botswana that banned imports in 2017 when avian influenza resulted in severe mortality in South Africa and Zimbabwe.  Namibia will allow importation of poultry products in sealed containers that transit through South Africa.


Multiple outbreaks of HPAI in South Africa

 

Demand for processed chicken amounts to 3,000 metric tons per month with approximately 60 percent produced locally and the remainder imported mainly from South Africa.  Given the embargo, Namibia offers an export opportunity for the U.S. in competition with Brazil.  Currently the U.S. supplies Angola, the northern neighbor of Namibia with leg quarters. During the 1st Quarter of 2021 Angola imported 41,900 metric tons of broiler parts from the U.S. valued at $29 million.


 

Walmart Reports on Q1of 2022

05/18/2021

In a press release dated May 18th 2021 Walmart Stores Inc. (WMT) announced results for the !st Quarter of FY 2021 ending April 30th 2021.

 

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

 

1st Quarter Ending April 30th

2021

2020

Difference (%)

Sales:

$138,310,000

$134,622,000

+27.4

Gross profit:

$35,038,000

$35,596,000

-1.6

Operating income:

$6,909,000

$5,224,000

+32.3

Pre-tax Income

Net Income

$3,844,000

$2,730,000

$5,396,000

$3,990,000

-28.8

-31.6

Diluted earnings per share:

$0.90

$1.40

-35.7

Gross Margin (%)

25.3

26.4

-4.2

Operating Margin (%)

5.0

3.9

+28.2

Profit Margin (%)

2.0

3.0

-33.3

Long-term Debt:

$57,005,000

$63,149,000

-9.7

12 Months Trailing:

Return on Assets (%)

6.9

Return on Equity (%)

16.2

Operating Margin (%)

4.8

Profit Margin (%)

2.4

Total Assets

$236,581,000

$232,892,000

-9.7

Market Capitalization

$399,500,000

 

52-Week Range in Share Price: $117.01 to $ 153.66 50-day Moving average $139.27

Market Close 17th May pre-release $138.93. Noon May 18th post-release $142.04 (+2.3%)

Forward P/E 26.0 Beta 0.5

 

Segment Performance:

Walmart Stores U.S. posted revenue of $93.2 B with an operating income of $5.5 B

 

Walmart Int. posted revenue of $27.3 B with an operating income of $1.2 B

 

Sam’s Club posted revenue of $16.7B B with an operating income of $0.6 B


Doug McMillon CEO

 

E-Commerce sales advanced by 37 percent compared with Q1 2021

 

Walmart U.S. generated a growth in same-store sales of 6.0 percent; Sam’s Stores 7.2 percent

 

Walmart operates 10,500 stores under 48 banners in 24 nations with 2.2 million employed


 

Walmart Reports on Q1of 2022

05/18/2021

In a press release dated May 18th 2021 Walmart Stores Inc. (WMT) announced results for the !st Quarter of FY 2021 ending April 30th 2021.

 

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


Doug McMillon CEO

1st Quarter Ending April 30th

2021

2020

Difference (%)

Sales:

$138,310,000

$134,622,000

+27.4

Gross profit:

$35,038,000

$35,596,000

-1.6

Operating income:

$6,909,000

$5,224,000

+32.3

Pre-tax Income

Net Income

$3,844,000

$2,730,000

$5,396,000

$3,990,000

-28.8

-31.6

Diluted earnings per share:

$0.90

$1.40

-35.7

Gross Margin (%)

25.3

26.4

-4.2

Operating Margin (%)

5.0

3.9

+28.2

Profit Margin (%)

2.0

3.0

-33.3

Long-term Debt:

$57,005,000

$63,149,000

-9.7

12 Months Trailing:

Return on Assets (%)

6.9

Return on Equity (%)

16.2

Operating Margin (%)

4.8

Profit Margin (%)

2.4

Total Assets

$236,581,000

$232,892,000

-9.7

Market Capitalization

$399,500,000

 

52-Week Range in Share Price: $117.01 to $ 153.66 50-day Moving average $139.27

Market Close 17th May pre-release $138.93. Noon May 18th post-release $142.04 (+2.3%)

Forward P/E 26.0 Beta 0.5

 

 

Segment Performance:

Walmart Stores U.S. posted revenue of $93.2 B with an operating income of $5.5 B

Walmart Int. posted revenue of $27.3 B with an operating income of $1.2 B

Sam’s Club posted revenue of $16.7B B with an operating income of $0.6 B

E-Commerce sales advanced by 37 percent compared with Q1 2021

Walmart U.S. generated a growth in same-store sales of 6.0 percent; Sam’s Stores 7.2 percent

Walmart operates 10,500 stores under 48 banners in 24 nations with 2.2 million employed


 

U.S. Chicken Exports to Bahrain Acceptable in 15 KG Packages

05/17/2021

According to USDA-FAS-GAIN Report BA2021-002 released on May 7th, officials in Bahrain will now allow 15 kg. packages of bulk leg quarters from the U.S.  Since September 2020, the U.S. has been exporting in accordance with a negotiated grace period.  Previously authorities in Bahrain mandated three by five kg. packages in place of the single 15 kg. package. 

 

The authority in Bahrain also agreed that any changes in packaging or other requirements would be conveyed both through the World Trade Organization and also directly to the exporting nations concerned.  The Bahrain Directorate requested that “plastic bags be tightly sealed and fully protected by a carton to assure the presentation and quality of bulk chicken meat products.

 


 

Tyson Foods Establishes Relationship with Dada Group of China

05/17/2021

Following a twenty-year presence on the market in China, Tyson Foods has entered into a strategic partnership with the Dada Group that operates a popular retail online platform.  The JDDJ enterprise will undertake distribution of Tyson brands of fresh meat online.  Tyson is in a position to supply products both through domestic production in China and sourcing from the U.S. and Asian nations.  The Dada Group will provide logistic support and market intelligence necessary for Tyson to expand its brand identity and increase sales in a market with infinite potential.

 

According to a May 11th release by the Dada Group, the agreement was signed by Jun Xue, Sales General Manager for Tyson Foods China and Wenqi Yang head of Brand Business JDDJ.  Xue stated, “Tyson has consistently provided secured and superior fresh meat products for Chinese consumers.”  He added, “The Healthy China strategy is one of the key parts of China’s 14th Five- Year plan and dovetails with Tyson’s commitment to improve the nutritional diet of Chinese consumers.”  Yang commented, “Tyson Foods has distinct advantages in products and supply chain technology.  The strategic cooperation will bring diversity to the JDDJ eco-system with high-quality resources.” 

 

The Dada Group is traded on NASDAQ Global Market under the ticker symbol DADA.


 

Vietnam Restoring Pork Production

05/17/2021

According to USDA-FAS GAIN report VN 2021-0042 released on May 11th, authorities in Vietnam controlled African swine fever (ASF) more effectively in 2020 than in 2019.  Apparently close to 90,000 hogs were culled or died of ASF in 2020 compared to six million the previous year.  At the end of 2020 the national hog population comprised 27 million, close to 90 percent of the pre-ASF level.

 

Through April 2021, small-scale outbreaks were reported, confirming the reality that ASF infection is endemic in the nation.  The infection will persist given production procedures in small units with extensive dealing and widespread transport of live hogs.  Disposal of dead animals and deficiencies in biosecurity will contribute to persistence of infection. 

 


Imported breeding gilts

 

In an attempt to maintain the supply of pork, Vietnam allowed importation of 500,000 live hogs for slaughter from Thailand. To restock breeding farm successive importations of sows and boars  from the E.U. and the U.S. were made.

 

In a March 2021 report Rabobank Group predicted a gradual increase in pork production, but the swine herd will not be fully restored until 2025.  This forecast presumes the introduction of an effective and safe vaccine, as yet unavailable although the Department of Agriculture expects a domestic vaccine to be available in 2021.  This appears to be an unlikely objective given the slow rate of development of vaccines in the EU, the U.S. and China.  Recently, researchers at the USDA-ARS Laboratory on Plum Island adapted an ASF virus to grow on a cell line facilitating the eventual commercial production of a vaccine.  Given the superior facilities funding and resources of China and the U.S. it is questioned how Vietnam could produce and field test an effective and safe gene-deleted vaccine this year.

 

As with China, African swine fever has resulted in a marked change in the structure of pork production.  Large companies including New Hope, the DeHeus Group of the Netherlands and Japfa Comfeed have established breeding and production installations with a high level of biosecurity.  Production from commercial complexes will eventually supplant family and village production.

 

It is inevitable that with restoration of production, imports of pork will decline from a peak of 252,000 metric tons in 2020 that represented a 38 percent increase over 2019.  Rabobank Group forecast a 10 to 20 percent decline in imports during 2020.

 

Success in controlling ASF in Vietnam will influence importation of broiler leg quarters from the U.S.  During the first quarter of 2020, Vietnam imported 60,136 metric tons of broiler parts including feet.  For the corresponding first quarter of 2021, imports declined by 49 percent to 30,577 metric tons valued at $27.3 million.


 

Tyson Foods Sells Pet Treat Operation to General Mills

05/17/2021

In a company release, Tyson Foods announced sale of their pet treat business to General Mills for $1.2 billion.  The cash transaction includes a manufacturing facility in Iowa.  The pet treat business generated $240 million in net sales for fiscal 2021 including brands Nudges™, Top Chews™, and True Chews™ brands.

 

 

Bethany Quam, Group President for the Pet Segment at General Mills stated, "pet food is a high-growth category fueled by the humanization of pets, a trend that has only increased during the pandemic".  She added, "by adding these trusted pet treat products to our portfolio we are strengthening our position in this attractive category".


 

Memphis Meats Changes Name to Upside Foods

05/17/2021

Memphis Meats, an early developer of cell-cultured meat, has changed its name to Upside Foods.  Uma Valeti, CEO and Founder, stated “Our team introduced the world to cultured meat and the evolution to Upside Foods communicates our passion and potential to make our favorite foods healthier for the planet.”  He added “Our new name showcases the work we are doing to make eating meat a force for good.  We cannot wait for consumers to try our Upside chicken soon.”

 

Upside Foods and its progenitor Memphis Meats was established in 2015 and has yet to market a product.  The company intends producing a chicken substitute in a pilot plant located in the San Francisco Bay area.

 

Although Memphis Meats was an early entrant to research and development, it is noted that considerable progress has been made in Israel and the Netherlands by competitors all of whom have attracted support from venture capital companies and from established meat and poultry producers.  To maintain venture capital funding the company must soon provide an assurance that it is able to produce organoleptically acceptable products at prices that are competitive with conventional beef, pork, and poultry.

 

 To date, plant-based alternatives are more expensive than real product and none of the existing manufacturers have succeeded in attaining profitability. The U.S. cell-cultured meat developers have nothing to offer for commercial consumption. The question of Federal approval with jurisdiction split between the FDA and USDA has yet to be finalized.


 

Texas to Regulate Labeling of AltMeat

05/17/2021

The Texas House of Representatives is considering House Bill 316 that would place restrictions on the labeling of meat alternatives.  Descriptors including “meat”, “pork”, “poultry”, or “beef” would be prohibited from the label of any food product derived from plants, cell culture or insects.  The claimed justification relates to “informing consumers of the origin of products”.  The Texas meat labeling bill was heavily supported by the Texas and Southwestern Cattle Raisers Association, the Texas Poultry Federation, and the Texas Pork Producers Association.

 

Several states have enacted similar legislation including Arkansas, Missouri, and Mississippi, but all are undergoing legal challenge and the question of free speech considerations and constitutionality will ultimately be decided by federal courts.

 


 

Jennie-O to Market Hybrid Turkey-Vegetable Protein Burgers

05/17/2021

Following the lead of Tyson Foods, Jennie-O Turkey Store is introducing a range of burgers comprising turkey meat blended with vegetable components including black beans, rice, and peppers.

 

Ryan Moorlag, Brand Manager at Jennie-O, stated “We know that people are becoming increasingly interested in adding more plant-focused foods to their diets.”  He added, “Our new turkey burger blends make it easy to combine plant-based ingredients with lean meats”.  The Jennie-O turkey burger blend will be marketed as a package of four quarter-pound patties.  Products will be sold in freezer aisles at a suggested retail price of $6.99 to $7.99.

 


 

Crop Progress

05/17/2021

Status of 2021 Corn and Soybean Crops

 

The USDA Crop Progress Report released on May 17th documented corn and soybean planting to date compared to the 5-year average. Corn planting is 12 percent ahead of the 5-year average with 80 percent completed through this past week. Soybean planting is 24 percent ahead of the five-year average, advancing 19 percent this past week to 61 percent completed. Corn and soybean emergence parallels the rate of planting.

 

U.S. average subsoil and surface moisture levels were generally stable over the past two weeks but lower than the corresponding weeks in 2020 due to drought in Western states and the Dakotas*. Topsoil moisture in Iowa is at the lowest level among the major corn and soybean-producing states this week at 34 percent in the “Very Short” and “Short” categories and is cause for concern, although the value has improved from 55% over two weeks.

 

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

 

Reference is made to the May 12th WASDE Report #612 accessible under the STATISTICS tab for projected 2021 acreage and yields. This data will be updated after Report #613 is released in mid-June when acreage and projected yields have firmed.

 

 

WEEK ENDING

 

Crop

May 9th

May 16th

5-Year Average

Corn Planted (%)

Corn Emerged (%)

67

20

80

41

68

35

Soybeans planted (%)

Soybeans Emerged (%)

42

10

61

20

37

12

 

Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture %: Past Week*

13

21

57

9

Past Year

4

14

64

18

Subsoil moisture %: Past Week

14

23

55

8

Past Year

4

12

69

15

* States with categories of “Very Short and “Short” Topsoil moisture combined (with previous week in parentheses):-

 

NM 89% (stable 18%)

SD 63% (deteriorated 57%)

ND 81% (deteriorated 80%)

TX 39% (improved 43%)

CA 75% (stable 75% but low snow pack required to support irrigation)

WY 47% (improved 53%)

OR 83% (deteriorated 71%)

 

In contrast the major corn and soybean-producing states (KS, OH, IL, IN, IA, PA) have an average of 14% in the “Very Short” and “Short” categories with a range of 3% for OH to 34% for IA. A late frost may have delayed germination in some areas of these states


 

Chipotle Mexican Grill to Increase Wage Rates

05/15/2021

In recognition of the shortage in available qualified labor, Chipotle Mexican Grill has announced that average hourly wage rates will be raised to $15 by the end of June.  Starting wages range from $11 to $18 per hour depending on location.  Employees are eligible for a $200 referral bonus.  Chipotle has plans to open 200 restaurants in 2021 and accordingly will require 20,000 new employees.


 

Saudi Arabia Suspends Imports from Plants in Brazil

05/15/2021

According to Reuters, Saudi Arabia summarily banned imports effective May 23rd from 11 broiler plants in Brazil without providing justification.  It is understood that seven of the plants were operated by JBS S.A.

 

The Government of Brazil will respond to the suspension.  The ABPA an association representing protein processors and exporters in Brazil supports the government response since they are unaware of the motivation for the unilateral decision made by authorities in Saudi Arabia.


 

Grubhub Introduces Direct™ Option for Independent Restaurants

05/15/2021

Grubhub Direct was created to apply expertise and technology to assist independent restaurants to develop ordering and delivery.  Grubhub Direct will not incur commissions or marketing fees on orders placed.  Restaurants will pay a delivery fee if Grubhub drivers fulfill orders.

 

Grubhub Direct will assist restaurants with website design, provide customer relationship management including maintaining databases and order history and will manage menus and receive, confirm and cancel orders.

 

Matt Maloney, founder and CEO of Grubhub stated, "we are constantly listening and learning from our independent restaurant partners, and we have heard them".  He added, "that is why we are opening our pipes and allowing restaurants leverage our technology to grow their own brands and communities online”.

 

Grubhub and competing delivery services have come under intense criticism from restaurants, regulators, customers and workers over inequities in pay and high charges. Despite fees paid by restaurants Grubhub is not profitable having posted a twelve-month trailing operating margin of -7.5 percent and a profit margin of -9.9 percent. On June 9th 2020 Just Eat Takeaway announced the acquisition of Grubhub in a $7.3 billion transaction.


 

Questions Over Closing of Cofeed Service in China

05/15/2021

According to a May 13 report by Thomson Reuters Beijing Tianxia Liang Chang Technology Company founded in 2002, and trading as Cofeed ceased operating on April 29th.  Cofeed was a significant provider of data relating to commodities including soybean and soybean meal imports, inventory, crushing volumes, margins and corn pricing used by international traders.

 

It is understood that officers of the Public Security Bureau were responsible for sealing doors at company locations and accordingly the central government must have been involved in the decision to curtail operations.  The motive for this action is unknown but probably relates to a real or perceived disadvantage for domestic importers including state-operated trading enterprise Cofco that competes with traditional independent grain traders including ADM, Bunge, Cargill and Dreyfus.


 

Jack in the Box Reports on Q2 FY 2021

05/14/2021

On May 12th Jack in the Box (JACK), reported on the 2nd quarter of fiscal 2021 ending April 11th. For the period, net profit increased by 213 percent compared to the corresponding quarter in FY 2020 to $35.9 million.  Revenue increased by 18.9 percent to $257,217 million. Diluted EPS increased by 216 percent to $1.58.

 

Same-store sales for Company units increased by 14.5 percent attained through a 19.9 percent increase in transaction value despite a 5.4 percent decrease in visits. Franchisee stores posted a 21.3 percent increase in sales.

 

In commenting on results, Darin Harris, CEO, stated, "consumers continue to embrace the Jack in the Box iconic all-day menu and continuous menu innovations, driving growth across every day-part. A shift toward our core premium entrees, combined with an increase in items per order reflecting larger parties, fueled a nearly-20 percent increase in average check. Our performance was strong across all regions throughout the quarter, including in Texas where pandemic dine-in restrictions were lifted much earlier than in our other large markets. Stimulus payments also contributed to our strong performance during the last four weeks of the quarter." Harris concluded, “We are off to a good start through the first four weeks of the third quarter, giving us confidence that our key strategies continue to resonate with guests and position us to maintain momentum while we work closely with our franchisees to grow.”

 

JACK has a market capitalization of $2.54 billion.  The company has traded over the past  52-weeks in a range of $61.00 to $124.53 with a 50-day moving average of $116.34. On a twelve-month trailing basis, the company posted an operating margin of 25.1 percent and a profit margin of 14.4 percent.  The company achieved a return on assets of 9.4 percent.


 

JBS S.A. Reports on Q1 of FY 2021

05/13/2021

In a press release dated May 12th JBS S.A. (JBSAY) announced results for the 1st quarter of FY 2021 ending March 31st.     

 

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as US$ x 1,000 except EPS. Conversion used : BRL5.4=US$1)


Gilberto Tomazoni Global CEO

1st Quarter Ending March 31st.

2021

2020

Difference (%)

Sales:

$13,935,000

$10,459,000

+33.2

Gross profit:

$2,057,000

$1,346,000

+52.8

Operating income:             

$958,000

$411,900

+132.6

Pre-tax Income

Net Income

            $645,000

           $378,000

  $(1,257,000)1

     $(1,099,000)

+151.3

+134.5

Diluted earnings per share:

$0.15

Neg.

-

Gross Margin (%)

14.8

12.8

+15.6

Operating Margin (%)

6.8

3.9

+74.4

Profit Margin (%)

2.7

-10.5

+125.7

Long-term Debt:

$14,757,983

      $14,707,849

          +0.4

12 Months Trailing:

 

 

 

           Return on Assets    (%)

9.2

 

 

           Return on Equity    (%)

12.3

 

 

           Operating Margin   (%)

7.9

 

 

           Profit Margin          (%)

1.7

 

 

Total Assets

$30,867,957

      $30,333,667

          +1.7

Market Capitalization

$14,920,000

                    

          

Note 1. Finance charge of $1,683million

 

52-Week Range in Share Price:  $6.66  to  $13.12     50-day Moving average  $11.42

Market Close: 12th May pre-release $11.70. Market close  May13th  $11.58

Forward P/E 8.2                   Beta 0.8

 


In commenting on 1st quarter results Gilberto Tomazoni Global CEO commented on advances in sustainability and future goals and the impact of COVID and the Company response. He addressed operations in North America stating “the USA turned in an exceptional performance, with record numbers in comparison with all previous first quarters, driven by strong domestic demand from a gradual resurgence of the foodservice sector and by growth in export demand, led by the Asian market”. He added “Pilgrim’s Pride also had a sound first quarter, following the recovery in demand in the United States. The foodservice business is improving and we have maintained pace in the retail sector. The diversified portfolio and global consolidated operations have enabled us to weather the market challenges that the pandemic has presented.”

 

The Pilgrims Pride subsidiary (PPC) posted net revenue of $3,314 million  generating an EBITDA of $351 million  representing a margin of 11.7 percent

 

During the quarter JBS SA purchased vegetable protein producer Vivera in the Netherlands for $400 million. JBS SA is in negotiations with Conagra Brands to acquire Hebrew National™, Egg Beaters™ and other branded products for $700 million.


 

Kroger Issues Small Business Resource Guide

05/12/2021

Kroger has made available for free download, a small-business resource guide to encourage diversity among suppliers.  The guide is derived from the Kroger Framework for Action: Diversity, Equity and Inclusion.  This program was introduced in 2020 to encourage sourcing from minority individuals and companies.

 


Rodney Mc Mullen CEO The Kroger Company

The program has the support of Rodney McMullen, chairman and CEO who stated, "in 2020 Kroger achieved $4.1 billion in diverse supplier spend, representing an increase of 21 percent versus a year ago and built on our commitment to reach $10 billon in diverse supplier spend by 2030".

 

Kroger has joined with Proctor and Gamble to establish an accelerator providing historically marginalized entrepreneurs access to resources to start and run successful businesses.


 

Giant Company to Open Four New Locations in Philadelphia

05/12/2021

The Giant Company, a subsidiary of Ahold Delhaize has announced that it would add four more stores in Philadelphia raising their total in the metro area to ten locations.

 

Nicholas Burtrem President of the Giant Company confirmed the commitment to Philadelphia stating, “Philly families have wholeheartedly embraced Giant, Giant Heirloom Market and Giant Direct and that has only fueled our team to dream bigger and more boldly as we shape our plans for tomorrow.  We are excited about our future in Philadelphia and to be expanding across the city with store designed for both families and commuters that meet the needs of each unique neighborhood.”

 


 

Tyson Foods Comments on Labor Shortage

05/12/2021

Donnie King, COO of Tyson Foods, and a broiler industry veteran, commented on labor shortages during the Tyson Foods conference call following release of Q1 results*.  Non-availability of labor and absenteeism come at a difficult time for the industry as demand is increasing from both retail and food service segments of the market.  The problem is common to all producers with Tyson Foods, Pilgrim’s Pride and Sanderson Farms all noting problems in obtaining adequate workers.

 

Dean Banks, CEO of Tyson Foods stated, “We simply have been unable to get people consistently back to work”.  The Company has provided COVID vaccination, health centers, has raised wages and provided attendance bonuses.  Tyson Foods is also evaluating mechanization and automation as long-term strategies. 

 

The concentration of the broiler industry in the southeast resulted in disruption of production during mid-to-late February following a period of severely cold weather. Fortunately the effects on both chick placement and grow-out worked through the chain of production by early May. It is understood that to fulfill contracts, Tyson Foods is purchasing raw product from other producers to be converted into further-processed items for the QSR segment of the market.

 

(*See Report on TSN Q1 financials posted in the May 12th Edition, retrievable by entering “Tyson” in the SEARCH block)


 

Blue Apron Holdings Reports on Q1

05/12/2021

On May 6th, Blue Apron Holdings (APRN) announced results for the first quarter of fiscal 2021 ending March 31st.  The company lost $15.7 million on revenue of $129.7 million with a negative EPS of $(0.88).  Comparable values for Q1 2020 were a net loss of $20.2 million on net revenue of $101.9 million with a negative EPS of $(1.51).  The company posted total assets of $201.7 million and carries long-term debt of $28.1 million. For the most recent quarter, orders increased to 2.1 million with 391,000 active customers.  Average revenue per customer was $331 over 5.4 orders per quarter valued at a unit tab of $61.63. 

 

In commenting on the quarter, CEO Linda Kozlowski stated, "the first quarter bought another period of year-over-year improvements in all of our key customer metrics in particular, strong average order value and orders per customer drove a 22 percent improvement in average revenue per customer to an all-time quarterly record".  She added, "we have focused on attracting and retaining high-value customers through ongoing production innovation and added flexibility as well as more efficient marketing". All well and good but the stark reality is that Blue Apron has yet to post a profit in any quarter since their IPO and it is doubtful given the recovery of the economy and restoration of dining out whether this company can ever justify its potential.

 

Blue Apron Holdings has a market capitalization of $79.4 million and has traded over a fifty-two-week period in a range of $4.13 to $15.0 with a 50-day moving average of $6.18. On a trailing twelve-month basis operating margin is -7.4 percent and profit margin -10 percent.  The company return on assets is -8.8 percent and on equity -70 percent.  As of April 15th 14 percent of the float was short.


 

COVID Mutant in India Declared a ‘Variant of Concern’ by WHO

05/12/2021

Dr. Maria Van Kerkhove a technical lead for COVID with the World Health Organization has announced that a triple-mutant COVID variant that emerged in India will be of pathogenic concern.  The variant designated B.1.617 shows high infectivity and may be partly refractory to some vaccines.

 

The World Health Organization is evaluating ten coronavirus variants including B.1.617 to determine their epidemiologic significance.  Variants are labeled “of concern” if they demonstrate higher levels of transmissibility or pathogenicity.  The B.1.617 variant is believed to be responsible for the current surge in incident cases in India with as many as 400,000 new cases diagnosed daily during second week of May.  The WHO is concerned over the B.1.1.7 variant first detected in the U.K. that is now prevalent in the U.S.  Other variants of concern are the B.1.351 that originated in South Africa and the P.1 variant in Brazil.


 

Advance in the Development of an African Swine Fever Vaccine

05/12/2021

A team of USDA-ARS scientists at the Plum Island Animal Disease Center, NY. have achieved a breakthrough in developing an effective vaccine against African swine fever.  The team under the direction of Dr. Douglas Gladue has adapted a candidate vaccine strain to replicate in a cell line.  Previously, fresh porcine cell tissue culture was necessary to maintain the virus.  By growing the virus candidate in a continuous cell line, it will be possible to manufacture vaccines on a commercial scale to protect herds.

 

African swine fever has caused considerable losses in China and adjacent nations in Asia, and in the Russian Federation and Eastern Europe.  The disease has also impacted trade and indirectly contributed to increased production of white feathered broilers in China and pork exports to that nation from the EU and the U.S.

 

 There is no available approved vaccine for African swine fever despite extensive research.  There is evidence that non-approved vaccines comprising gene-deleted variants of the wild virus have been developed clandestinely in China and have been deployed, complicating the issue of diagnosis and eradication.


 

China Purchases New Crop Corn

05/12/2021

China has committed to the purchase of 3,060,000 tons (120.6 million bushels) of U.S. new crop corn to be delivered early in the 2021-2022 market year beginning in September.  The three purchases commenced on May 7th with follow-ups on May 10th and 11th. On May 7th China cancelled an order of 280,000 metric tons (11 million bushels) of old crop corn.


 

Hybrid Turkeys Appoints Nutritionist

05/12/2021

Hybrid Turkeys has appointed Hugo Paysan as a nutritionist for their turkey business unit of Hendrix Genetics.  In his role he will provide nutritional and technical support to the Europe, Middle East, and Africa region.

 

Paysan graduated from the ISARA Institute in Lyon, France with a degree in Agronomy and Food Science.  He subsequently completed a Master’s degree in Genetics and Animal Nutrition at the Poznan University of Life Sciences, Poland.  He has gained experience in the areas of feed additives and the economics of livestock production.  He will be responsible for feed formulation for pedigree farms in the E.U. and will, in addition, provide support for Hendrix turkeys


 

Beyond Meat Reports on Q1

05/12/2021

On May 6th, Beyond Meat Inc (BYND) reported on results for the first quarter of fiscal 2021 ending April 3rd. For the period, the company posted a net loss of $(27,266) on revenue of $108.1 million with a negative EPS of $(0.43).  Comparable values for Q1 ending March 28th were a profit of $1.8 million on net revenue of $97.1 million with an EPS of $0.03. Of total revenue, the U.S. accounted for 74 percent of which 79 percent was from retail and the remainder food service.

 

Comparing Q1 2021 with 2020 it is noted that although revenue increased by 11.5 percent, gross margin declined from 38 percent to 30 percent for the most recent quarter, suggesting an inability to achieve economies of scale or to constrain the costs of raw materials.  The company increased research and development expenses from $6.2 million to $15.9 million and SGA at $39.0 million showed a disproportionate increase relative to revenue. Beyond Meat posted total assets of $1.48 billion including cash and cash equivalents of $1.1 billion.  The company carries long-term liabilities of $1.1 billion.

 

Beyond Meat has a market capitalization of $6.6 billion and has traded over a 52-week period in a range of $100.82 to $221.00 with a 50-day moving average of $130.26.

 

The eye-watering forward P/E of 666 is inconsistent with the fundamentals of the company and . On a trailing twelve-month basis operating margin was -13.9 percent and profit margin -19.6 percent.  The company generated a negative return on assets of -3.7 percent and -25.0 percent on equity.  Prospects for the company as evaluated by institutional and professional investors is denoted by the fact that effective April 15th, 24.4 percent of the float was short.


 

US Foods Reports on Q1

05/12/2021

In a May 10th release, US Foods Holding Corp (USFD) announced results for the first quarter of fiscal 2021 ending April 3rd. As with all food-service providers the Company was severely impacted by COVID-related shutdowns. For the period, the company posted a net loss of $24 million on sales of $6,295 million with a negative EPS of $(0.18). For the comparable first quarter of 2020 ending March 28th, US Foods posted a loss of $132 million on net sales of $6,339 million with a negative EPS of $(0.60). The company posted a decrease in total case volume of 0.9 percent from Q1 2020, but independent restaurant case volume increased by 8.1 percent.

 

In commenting on Q1 results, Pietro Satriano, CEO stated, "during the first quarter we saw a meaningful recovery in case volume with our restaurant and hospitality customers.  This momentum has continued into the early part of the second quarter as restrictions on in-person dining continue to be lifted in markets across the country".  He added, "over the last twelve months, our scaled and differentiated strategy has allowed us to gain market share with both large and small customers as operators continue to use our technology, innovative products and consultative services to help them manage their business".

 

US Foods Holding Corp posted total assets of $13.0 billion of which 50 percent comprised goodwill and intangibles.  The company carries long-term debt of $5.6 billion.

 

US Foods Holding company has a market capitalization of $8.5 billion.  The company has traded over a 52-week period in a range of $15.60 to $42.10 with a 50-day moving average of $38.91.  On a trailing twelve-month basis, operating margin was 0.5 percent with a negative profit margin of -1.0 percent.  The company has generated a return on assets of 0.6 percent and a negative return of -5.8 percent on equity.


 

Shallow Parana River Impeding Argentine Commodity Exports

05/10/2021

Low water level in the Parana River is causing export elevators to reduce the quantity of           soybeans, soybean meal and corn loaded into vessels.  This represents a reduction of between five and seven thousand tons per cargo.  Generally for every foot of depth, Panamax bulk vessels can carry approximately 2,000 tons of additional cargo.  At present, at the Port of Rosario, the Parana River is a little less than 3-feet above the zero level of 34 feet.  Dry weather in Southern Brazil has reduced outflow through the Parana that is shallower than normal and with prospects for further deterioration.

 

During past months, the Port of Rosario has been impacted by labor unrest in both soybean crushing plants and in the port.  The problems relating to channel depth have added to the financial woes of Argentine that will now be required to fund extensive dredging to ensure continued navigability of the Parana.

 

The 2020-2021 Argentine soy crop will amount to 45 million tons and the corn crop 50 million tons. To date 33 percent of the soy crop has been harvested and 20 percent of the corn.


 

Tyson Foods Inc. Reports on Q2 of FY 2021

05/10/2021

In a press release dated May 10th Tyson Foods Inc. (TSN) announced results for the 2nd  Quarter of Fiscal 2021 ending April 3rd.           

 

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 $ x 1,000 except EPS)

 

 2nd Quarter Ending

April 3rd 2021

March 28th 2020

Difference (%)

Sales:

$11,300,000

$10,800,000

+3.8

Gross profit:

$1,253,000

$1,021,000

+22.7

Operating income:             

$720,000

$515,000

+39.8

Pre-tax Income

Net Income

         $624,000

        $476,000

$505,000

$376,000

+23.6

+26.6

Diluted earnings per share:

$1.30

$1.03

+26.2

Gross Margin (%)

11.0

9.4

+17.0

Operating Margin (%)

6.4

4.7

+36.1

Profit Margin (%)

4.2

3.5

+20.0

Long-term Debt:

$9,784,000

      $10,791,000

                  -9.3

12 Months Trailing:

 

 

 

Return on Assets

6.7

 

 

Return on Equity

13.4

 

 

Operating Margin

8.7

 

 

Profit Margin

4.7

 

 

Total Assets

$34,474,000

      $34,456,000

                 <0.1

Market Capitalization

$28,280,000

 

          

 

52-Week Range in Share Price  $55.28  to  $79.77 50-day moving average $76.97

Market Close:  May 7th pre-release  $78.78. May 10th 13H00 post release $77.57

Forward PE: 13.8      Beta 0.8

 

The Chicken Segment generated 31 percent of sales revenue but contributed 0.9 percent to operating margin. Low operating margin was attributed to legal settlements, COVID expenses, weather disruptions and escalation in feed cost.

 

In commenting on Q2 results Dean Banks, President and CEO stated “We’re grateful for our team members’ continuing efforts and resilience, and for the collaboration and support we’ve received from our customers as we navigate these challenging times,” He added “We delivered a very strong performance in a complex operating environment with continued success in retail and improvements in foodservice as the industry is recovering. We generated adjusted operating income growth of 32 percent for the first half of fiscal 2021, driven by solid results in Beef and Prepared Foods.

 

Banks noted “substantial inflation across our supply chain, which will likely create margin pressure during the back half of the year. We will remain focused on the factors we can control and will continue to work diligently for a full recovery of our Chicken business, while delivering strong results in other areas of our company. Our long-term outlook is bright as global protein consumption continues to grow, and we expect our investments in capacity expansion, product innovation and technology to create sustainable shareholder value.”

 
In reviewing performance in the Chicken Segment over the half-year, Banks clarified “Sales volume decreased during the second quarter and first six months of fiscal 2021 due to lower production throughput associated with COVID-19, disruptions due to severe winter weather, decline in hatch rate and a challenging labor environment. Average sales price increased in the second quarter and first six months of fiscal 2021 due to favorable sales mix and overall market conditions. Operating income decreased in the second quarter and first six months of fiscal 2021 primarily due to a $320 million loss from the recognition of a legal contingency accrual in the first quarter as well as $125 million and $140 million of higher feed ingredient costs in the second quarter and first six months of fiscal 2021, respectively. Operating income was further impacted in the second quarter and first six months of fiscal 2021 by production inefficiencies and direct incremental expenses related to COVID-19 and disruptions due to severe winter weather. Additionally, operating income in the second quarter and first six months of fiscal 2021 was impacted by $40 million and $110 million, respectively, of incremental net derivative gains as compared to the second quarter and first six months of fiscal 2020.


 

Kemin Industries Acquires Bio-Cide International

05/10/2021

Kemin has purchased the assets and technology of Bio-Cide International based in Norman, OK. Dr. Chris Nelson, president and CEO of Kemin Industries stated, "Kemin and Bio-Cide share a deep dedication to scientific excellence, industry-leading technology and established safety practices.  As two family-owned companies we also share commitment to our employees, our customers and to the betterment of our communities".  The portfolio of Kemin antimicrobial food safety products include:-

  • Oxine® and Pro-Oxine® used for food-processing equipment and animal health applications
  • A range of agents used to extend shelf-life and improve quality of red meat, poultry, fruit and vegetables
  • Purite® a preservative for over-the-counter eye-care products

 

Dr. Neeraj Khanna, President and CEO of Bio-Cide stated, "we believe that the integration of the two companies will result in a quantum leap for the ability of Bio-Cide to grow, prosper and support its current and new customer base".

 

The Bio-Cide products align with Kemin Animal Nutrition and Health, the Human Nutrition and Health and the Food Technologies business units.


 

Hamlet Protein AviStart™ Evaluated in Starter Diets

05/10/2021

A recent replicate-pen trial demonstrated that including five percent AviStart in broiler starter diets for the first 14-days provided equivalent performance to that achieved with three percent meat and bone meal in diets through a 40-day growing period.  Equivalent results were obtained with a corn-soybean meal diet supplemented with three percent corn gluten meal through 42 days or a similar basal diet containing three percent DDGS through 42 days.  Return on investment favored Hamlet Protein AviStart™ when fed during the 14-day starter period.

 

Hamlet Protein AviStart™ comprises a heat and enzyme-treated high quality soybean meal devoid of anti-nutritional factors and contributes to the growth rate and feed conversion efficiency of monogastric livestock including chicks, poults and piglets.


 

Tyson Foods to Open Health Centers for Employees and Their Families

05/10/2021

In Conjunction with Marathon Health, Tyson Foods will open seven Health Centers to contribute to the wellbeing of staff.  The Tyson Foods, We Care workplace safety program provides on-site occupational health nurses at plant locations.  The Centers will concentrate on providing early detection of chronic conditions and will provide guidance on lifestyles that promote health. 

 

Locations will be operational in New Bern, TN; Green Forest, AR; Lexington, NE; Wilkesboro, NC; Center, TX; Storm Lake, IA; and Garden City, KS.  The New Bern, TN facility is in operation and the remaining six will be inaugurated between mid-May and early summer.

 

Tyson Foods requires fulltime employees to have either company-sponsored healthcare coverage or be covered through a member's plan.


 

Publix Reports on Q1

05/10/2021

Publix, a family owned and controlled company, publishes limited data relating to financial performance.  For the three months ending March 27th, revenue amounted to $11.7 billion, a 3.9 percent increase from the corresponding quarter of 2020.  Net earnings for the three months amounted to $1.5 billion compared to $667 million in Q1 of 2020. 

 

Publix calculates a hypothetical stock price established on May 1st at $61.30.  Publix stock is not publicly traded and is available to current associates and members of the Board of the Directors. 

 

In brief comments on performance during the quarter, CEO, Todd Jones thanked associates for their efforts since the onset of COVID and he committed the company to continuing to provide service to customers.


 

Live Weight Broiler Production in the U.S. Increased Two Percent in 2020

05/10/2021

According to USDA data, total U.S. broiler production on a live-weight basis amounted to 59.406 billion pounds.  This was two percent more than the 5.259 billion pounds produced in 2019.  In 2020, 9.222 billion birds were harvested, 0.5 percent more than in 2019 indicating an increase in average live weight.  The top five broiler producing states in 2020 with live weight produced were:

 

  • Georgia (8,083 billion pounds - down 2.6 percent from 2019)

 

  • North Carolina (7,883 billion pounds - up 6.2 percent)

 

  • Arkansas (7,348 billion pounds - down 1.0 percent)

 

  • Alabama (6,605 billion pounds - up 5.8 percent)

 

  • Texas (4,636 billion pounds - up 4.1 percent)

 

 


 

Bunge Reports on First Quarter Results

05/10/2021

On May 4th, Bunge Limited (BG) reported on the first quarter ended March 31st 2021.  For the  period, net income was $831 million on revenue of $12.96 billion with an EPS of $5.52.  Comparative figures for Q1 of FY 2020 were a net loss of ($207) million on sales of $9.17 billion with negative a EPS of $(1.46).

 

The Company posted total assets of $24.53 billion and carries long term debt of $4.34 billion.  In commenting on results Greg Heckman, CEO, stated “Our outstanding results in the first quarter reflected the fundamental strength of Bunge’s platform and the benefits our integrated global approach to the farmers and end customers.”  He added, “Working together across value chains our teams are capturing opportunities while effectively adapting to dynamic market environments.”

 

 In reviewing company segments, the following data was extracted from the report:

 

  • Agribusiness generated an EBITA of $836 million on net sales of $9,791 million including
  • Processing generated an EBITA of $729 million
  • Merchandising generated an EBITA of $107
  • Refined and Specialty Oils generated a segment  EBITA of $308 million on net sales of $2,726 million
  • Milling generated an EBITA of $12 million on net sales of $390 million
  • The Sugar and Bioenergy segment generated an EBITA of $20 million on sales of $54 million

 

The company forecast full-year 2021 adjusted EPS of approximately $7.50 per share.

 

Bunge Limited has a market capitalization of $12.27 billion.  The company has traded over the past 52-weeks in a range of $32.68 to $89.23 with a 50-day moving average of $80.72 and a forward P/E of 13.9.  On a 12-month trailing basis, the company posted an operating margin of 3.4 percent and profit margin of 2.8 percent.  The company generated a return on assets of 4.2 percent and 17.9 percent on equity.


 

Maple Leaf Foods Reports First Quarter Results

05/10/2021

In a press release dated May 5th, Maple Leaf Foods (MFI) reported on the first quarter of Fiscal 2021 ending March 31st.  For the period, sales (all figures in US$) attained $863,528 million, three percent lower than the corresponding first quarter of 2020.  Net income was $39,107 million compared to a net loss of $(3.04) million in Q1 2020.  EPS attained $0.31 compared with a loss of $(0.02) in Q1 2020.  In reviewing the two production segments, Meat Products posted sales of $830 million with an adjusted operating earnings of $65 million.  The Plant Protein segment attained sales of $34.9 million and lost $(24) million. Maple Leaf Foods has assets of $3.412 billion and carries long-term debt and lease obligations of $921 million.

 

 In commenting on results, Michael H. McCain, President and CEO, stated “Maple Leaf remains committed to delivering shared value and to building an enduring company with a vision to be the most sustainable protein company on earth.” He added, “As we cross the one-year mark of the COVID-19 pandemic I continue to be inspired by our dedicated front-line team members who come into work each day to produce the food we all need to stay healthy.”

 

The report highlighted the 3.3 percent increase in sales of the Meat Protein group compared to an 8.1 percent decline in Plant Protein group sales. During the quarter, capital expenditures amounted to $152 million, most of which was required for the London, Ontario poultry plant.

 

Maple Leaf Foods has a market capitalization of $2.72 billion and has traded over a 52 week period in a range of $19.02 to $25.23 with a 50-day moving average of $21.04.  On a trailing 12- month basis, operating margin was 5.8 percent and profit margin 2.6 percent.  The company generated a return on assets of 4.2 percent and 5.8 percent on equity. Approximately 40 percent of the float is held by insiders and 27 percent by institutions.


 

Providing Poults with a Good Start

05/08/2021

A recent edition of Hybrid Turkeys The Flock publication included an article by Hatchery Specialist Dr. Juan Lopez. A summary of his recommendations to optimize livability relating to incubation and brooding is provided for the benefit of subscribers by clicking on to the Link below.

 

Click here - http://www.chick-news.com/View_Single_Post.aspx?Site_Copy_ID=242218


 

Cargill Vaccinates 80 Percent of Plant Employees at Alberta, Canada Packing Facility

05/07/2021

Cooperation between Cargill Inc. and the Provincial Alberta Health Service allowed the company to administer 1,620 doses of COVID vaccine in a one and half day period at the High River, Alberta, beef processing plant.  Recipients represented more than 80 percent of employees.  A number of workers had already received vaccines previously and others will be vaccinated to provide protection for the facility and the community.  Similar vaccination programs will be implemented in both red meat and poultry processing plants in the Calgary area in the coming week.


 

Farmers Opposed to Administration Tax Proposal

05/07/2021

The Administration proposal to impose higher taxes on corporations and investors would deprive farmers of a tax concession on capital gains when selling land.  Currently, if farmers sell productive land and apply the proceeds towards the purchase of other real estate, they are exempt from capital gains.  Farmers maintain that the removal of the tax break would hamper flexibility in diversifying crops and would obstruct consolidation necessary to achieve efficiency.  In a May 6th article in The Wall Street Journal, Will Parker notes that farmers own approximately 40 percent of land area in the Continental U.S.


 

Butterball Posted Loss for Q1

05/07/2021

The most recent quarterly financial data for Butterball LLC was derived from the SEC10-Q filing by Seaboard Corporation. This document covered the first quarter of Fiscal 2021 ending April 3rd.  Butterball posted sales of $341 million, up 7.3 percent from the corresponding first quarter of fiscal 2020.  Operating loss increased to $16 million compared to $7 million in Q1 of 2020. The net loss recorded was $11 million down 15.3 percent from the $13 million loss in Q1 2020.  Total assets invested Butterball amounted to $1.08 million up from $993 million in Q1 2020.


Jay Jandrain CEO

 

The Seaboard 10-Q notes that losses during Q1 were attributed to higher feed and plant production costs despite an increase in sales volume and price.  The report noted a decrease in value-added product sales contributing to a weak sales mix with low margins.  Based on uncertainties and volatility of the commodity grain market, the Management of Butterball was unable to provide a projection of profitability during 2021.


 

 
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