Egg Industry News


More Woes for Chipotle

08/09/2018

The local health department responsible for Powell, OH. is investigating an outbreak of presumed norovirus foodborne infection associated with a Chipotle Mexican Grill restaurant. According to the Business Insider and other media reports, the restaurant received reports of illness on Sunday and Monday July 28th and 29th concurrently with almost 100 reports on the website <iwaspoisoned.com>.

 

On investigation it was disclosed that two of five staff members called in sick on Sunday and Monday but there is no information as to whether they were infected at the store or were in fact the source of infection.

 

The restaurant was closed on Monday July 30 for thorough decontamination but opened the following day.

 

News of the outbreak impacted share price on Friday July 27 CMG opened at $474 and closed on Monday at $465 but had sunk to $433 by the Tuesday close before subsequently recovering.

 

As noted previously Chipotle is at higher risk for foodborne infections than conventional QSRs because a high proportion of the food is served uncooked.  In addition there is considerable manual handling both in preparation and in serving.  Since the series of outbreaks of foodborne infections in 2016 and 2017 involving norovirus, E. coli and Salmonella the company introduced appropriate preventive measures both in the food chain and in operations, guided by a professional food scientist.  If in fact the outbreak is attributed to norovirus, greater attention should be paid to the health of workers who must be encouraged to report illness.

 

The innovations introduced by newly appointed president and CEO Brian Niccol and his immediate management team have probably not worked their way through the system to the level of store managers. They may still be operating with procedures and under a culture prevailing under the mismanagement of the previous CEO, Steve Ells.

 

In addition to the Powell OH problem, negative publicity was generated by the “free guacamole” promotion which generated consumer disaffection on Tuesday July 31.  The app which allowed customers to claim guacamole dressing at no cost failed at intervals during the day.


 

Southern California END Outbreaks continue into August

08/09/2018

To date USDA-APHIS have reported on 76 specific cases of Exotic Newcastle disease. All have involved “backyard, exhibition and hobby flocks” and no mention has been made of “fighting cocks” which are highly mobile and were involved in the 2003 outbreak.

San Bernardino County has registered 63 cases followed by Los Angeles county (7) and Riverside (7). It is emphasized that no commercial poultry have been infected.

The infection has been recognized since late May without any definitive report from either the USDA-APHIS or the California State Veterinarian concerning the epidemiology of the outbreak. The following questions are relevant:-

  • Characterization of the virus with respect to origin?
  • How and when the virus was introduced?
  • Mechanism of dissemination of the virus?
  • The possible role of wild birds of diverse species in infection?
  • Contamination of feed purchased by owners of affected small flocks?
  • Common temporal, spatial and operational factors among cases?
  • How cases are identified and diagnosed?
  • Action taken to date to control infection?
  • Prospects for eradication in the backyard population of galliform birds?
  • The effect of vaccination and the immune status of affected farms?
  • When the outbreak will be controlled? Eradicated?

Answers to these questions are necessary to guide the commercial poultry industry in planning and implementation of control measures. Simply advising “enhanced biosecurity” is paying lip service to a potentially serious problem. Structural and hence Operational biosecurity is woefully inadequate on many poultry farms in California as denoted by cases of coryza and mycoplasmosis


 

Costco Wholesale Corporation Reports July Sales Results

08/09/2018

On August 8th Costco Wholesale Corporation (COST) reported net sales of $10.59 billion for the retail month of July extending over four weeks ended August 5th, 2018. This figure was an increase of 10.1 percent from $9.62 billion recorded in the corresponding month of 2017.  For the first forty-eight weeks of fiscal 2018, the Company reported net sales of $127.40 billion, an increase of 12.1 percent from $113.70 billion in YTD 2017.

Comparable sales excluding fuel sales were:-

 

 

 

 

 

 

 

4 Weeks

 

48 Weeks

         

 

Retail Month

 

Fiscal Year

 

U.S.

6.6%

 

7.4%

             

Canada

5.0%

 

4.1%

 

Other International

7.1%

 

7.3%

 

 

 

 

 

 

Total Company

6.4%

 

6.8%

 

E-Commerce

 

 

 33.1%

 

Costco currently operates 757 warehouses, including 526 in the United States and Puerto Rico, 99 in Canada, 38 in Mexico, 28 in the United Kingdom, 26 in Japan, 14 in Korea, 13 in Taiwan, nine in Australia, two in Spain, one in Iceland, and one in France. Costco also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, and Taiwan.


 

Amazon Prime orders to be delivered to customers at Whole Foods stores

08/09/2018

Amazon has announced that a “click-and-collect” delivery system initiated in Virginia Beach, VA.and Sacramento, CA. as a test will be extended to all Whole Foods locations. Amazon has introduced the system to counter the equivalents established by Walmart and by subsidiary banners operated by Kroger.

Available to Amazon Prime members the service will incur a fee of $5 per order if required within 30 minutes or will be free if fulfilled in an hour or more.

Nielsen has determined that 15 percent of groceries and beverages ordered on-line are delivered to customers’ vehicles. The Store pick-up model obviates the cost of home delivery which is excessive in other than high-density urban settings.


 

Aramark Reports on Q3 of FY 2018

08/09/2018

In a press release dated August 7th Aramark Inc. announced results for the Third Quarter of Fiscal 2018 ending June 29th 2018.

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)

3rd Quarter Ending June 29th/June 30 th.

2018

2017

Difference (%)

Sales:

$3,971,605

$3,593,277

+10.5

Gross profit:

$446,801

$3,609

+23.8

Operating income:

$188,153

$154,679

+21.6

Net Income

$72,577

$65,295

+11.2

Diluted earnings per share:

$0.29

$0.26

+11.5

Gross Margin (%)

11.2

10.0

+12.0

Operating Margin (%)

4.7

4.3

+9.3

Profit Margin (%)

1.8

1.8

-

Long-term Debt:

$7,788,335

$5,190,331

+50.1

12 Months Trailing:

     

Return on Assets (%)

3.9

   

Return on Equity (%)

19.5

   

Operating Margin (%)

4.9

   

Profit Margin (%)

3.3

   

Total Assets

$13,665,540

$11.006,229

+24.1

Market Capitalization

$9,760,000

   

52-Week Range in Share Price: $36.28 to $46.09

Market Noon August 8th. $39.63

Forward P/E: 15.4

Beta 0.7

Operating segment achieved the following sales and contributions:-

 

Segment % sales % Operating Margin

Food Service U.S. 62.9 71.7

Food Service International 23.5 24.5

Uniforms 13.6 1.5

On commenting on results, Eric J. Foss, Chairman, president and CEO stated "we reported record performance driven by broad-based results across the globe. Our focus on delivering an enhanced customer experience drove strong revenue growth. Our productivity initiatives are working well, which led to solid margin expansion, along with double-digit operating income and EPS growth,"

He affirmed full-year Adjusted EPS outlook of $2.20 to $2.30, with approximately 3.5% revenue growth in legacy operations."

Foss concluded: "Aramark benefits from a proven, resilient business model and robust financial flexibility. Looking beyond 2018, we are confident in our ability to continue generating sustainable shareholder value by executing against our clear and focused strategy."

It is noted that Aramark which services universities and businesses has been in the forefront of promoting flock welfare and committed early to sourcing eggs from non-caged flocks.


 

Department of Justice Settles with Rose Acre Farms over 2012 Dispute

08/09/2018

According to press reports, the Department of Justice and Rose Acre Farms Inc. have reached agreement over a dispute over employment of work-eligible aliens dating back to 2012.  The complaint alleges that between mid-2009 and late-2011, the Company required work-authorized non-U.S. citizens to present a Permanent Resident Card or Employment Authorization Document to prove eligibility for employment. It is understood that the company was acting with prudence at the time to ensure that they did not employ ineligible workers.

It appears Kafkaesque that an apparent deviation from regulations which are frequently arcane resulted in a case extending over six years for events which took place nine years previous to the settlement.

Since the time of the alleged unfair immigration-related employment practices, regulations have undergone numerous changes, including the introduction of E-verify, still a work in progress.


 

USDA Weekly Egg Price and Inventory Report, August 9th 2018.

08/09/2018
  • Hen Numbers in Production Increased by 0.5 million to 318.2 Million as Molted Hens and Late-February Chick Placements Approached Peak.
  • Shell Inventory Down by 5.6 Percent Confirming Market Stabilization After 2.8 Percent Fall Last Week.
  • Generic Prices for Extra Large and Large Were Unchanged Compared to Previous Week.

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on August 6 th the Midwest wholesale prices for Extra Large and Large sizes were respectively unchanged at 98 and 96 cents per dozen respectively. Mediums were higher by 18.6 percent compared to the past week. The progression of prices during 2018 is depicted in the USDA chart reflecting three years of data, updated weekly.

The August 6th USDA Egg Market News Report (Vol. 65: No. 32) documented a USDA Combined Region value rounded to the nearest cent, of $1.04 per dozen delivered to warehouses effective August 2nd This price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $0.96 per dozen. At the high end of the range, price in the South Central and Southeast Regions attained $1.10 per dozen. The USDA Combined Price last week was 42 cents per dozen below the three-year average and 18 cents per dozen above the corresponding week in 2017.


 


Post Holdings Reports on Q3 of FY 2018

08/08/2018

On August 2nd Post Holdings (POST) reported Results for Q3 of FY 2018 ending June 30th. The company operates five segments (Consumer Brands; Weetabix; Private Brands, Refrigerated Foods and Active Nutrition). Results for Michael Foods which produces and processes eggs in the Midwest and Northwest regions is included in the Refrigerated Foods segment.

For Q3 of FY 2018, POST generated net earnings of $94.5million (EPS of $1.29) on revenue of $1,609 million. Comparative values for Q3 of FY 2017 were a loss of $62.8 with an EPS of $(0.93) on revenue of $1,272 million.

The Refrigerated Foods segment achieved revenue of $613 million representing 38 percent of total company revenue and contributed $56.5 million to operating profit. Individual sales and margin values for Michael Foods, involved in shell eggs and processing, were not disclosed. The Company report noted that foodservice sales for eggs increased 6.6 percent in volume compared to Q3 of FY 2017 but retail egg sales declined by 7.4 percent, presumably reflecting lower unit price. A $3.5 million loss associated with unfulfilled sales and margin was recorded as a result of a fire in the Klingerstown, PA. processing plant and the need to boil water in the Lenox, IA. facility operated by Michael Foods.


 

REVIEW OF JULY PRODUCTION STATISTICS AND COSTS.

08/08/2018
  • July 2018 USDA Ex-Farm Benchmark Price up 24 Percent from June Consistent with Demand.

  • Production Cost Down 0.9 Percent with Feed Lower by 1.9 Percent.

  • Positive Nest-run Margin Increased to 32.2 Cents per Dozen

 

INTRODUCTION.

Summary tables for the latest USDA July 2018 statistics and prices made available by the EIC on August 6th are arranged, summarized, tabulated and discussed in comparison with values from the previous July 9th 2018 posting reflecting June 2018 data.

COSTS & REVENUE

Parameter

JULY 2018

JUNE 2018

5-Region Cost of Production ex farm (1st Cycle)

61.49 c/doz

62.22 c/doz

Low

55.78 c/doz (MW)

56.94c/doz (MW)

High

77.81 c/doz (CA)

78.89 c/doz (CA)


 


Henning Companies Establishes New Web-Site

08/08/2018

Henning Companies a Sponsor of EGG-NEWS and CHICK-NEWS has release a new version of their corporate web-site. The scope and achievements of the company founded in 1924 are documented. Recent projects of interest to the U.S. and international poultry industries include:

  • An in-line cage-free egg production complex including packing plant in the Midwest
  • A turkey hatchery with an area of 86,000 square feet
  • A protein recycling plant applying an enzymatic digestion process to convert hens to a pet-food ingredient

 

The Henning Companies new web-site www.henningcompanies.com can be accessed by clicking on to the logo on the right side of the WELCOME page.


 

Status of 2018 Corn and Soybean Crops

08/06/2018

The USDA Crop Progress Report released on August 6th documented complete emergence of the 2018 corn and soybean crops. Corn is denting at 12 percent of the crop and at double the 5-year average. Soybeans planted early are blooming consistent with good soil moisture and climate conditions, leading the 5-year average by six percent. Approximately 75 percent of the soy crop is setting pods, 17 percent ahead of the 5-year average. EGG-NEWS and CHICK-NEWS will report on the progress of the two major crops as monitored by the USDA through the end of harvest in October.

WEEK ENDING

Crop

July 29th

August 5th

5-Year Average

Corn Emerged %

Corn Silking %

Corn Dough %

Corn Dent %

100

91

38

-

100

96

57

12

100

92

37

6

       

Soybeans Emerged %

Soybeans Blooming %

Soybeans Setting Pods

100

86

60

100

92

75

100

77

58

       

 

Crop Condition

V. Poor

Poor

Fair

Good

Excellent

Corn 2018

Corn 2017

3

4

7

9

19

27

50

47

21

13

Soybeans 2018

Soybeans 2017

3

3

7

9

23

28

51

50

16

10

 

Soil Parameter

V. Short

Short

Adequate

Surplus

Topsoil moisture: Past Week

14

28

53

5

Past Year

16

28

52

4

Subsoil moisture: Past Week

13

29

54

4

Past Year

13

28

55

4

 


 

U.K. Supermarket Offers “Free-Choice” Eggs

08/06/2018

Morrisons Supermarket is stacking eggs on racks allowing customers to pick eggs based on size, color and speckles.  Customers are encouraged to bring their own egg cartons and to purchase in quantities ranging from a single egg to a tray of 30.  Free-range eggs are offered at $4.25 per dozen.  The traceback system in the U.K. is based on individual stamping of eggs with a code indicating country of origin, housing system, farm of origin and a use-by date.  If the system were to be applied in the U.S., trace-back information including the date of pack and plant of origin would not be available.

 

The egg buyer at Morrisons commented, “Some customers told us they wanted to select their own eggs, to ensure none were cracked and to buy the exact amount they needed.”  He added, “We thought that reintroducing a traditional “pick-your-own” local egg stand would help to do this.  In trials customers told us they loved selecting their own eggs, and found it has cut down on waste in their homes.”  The program has been introduced into 200 stores across the U.K.


 

Bunge Posts Loss for Q2

08/06/2018

In an August 1st release Bunge Ltd reported an unexpected loss for the second quarter of fiscal 2018.  The company lost $21 million or $(0.15) cents per share for the period ending June 30th on net sales of $12.15 billion.  Corresponding values for the second quarter of fiscal 2017 were a profit of $72 million or 51 cents per share on sales of $11.65 billion.  The loss arose from a $125 million negative trade on soybean hedges and $24 million loss from currency hedges in Brazil. Bunge shares fell three percent to $67.13.  The 52-week range is $63.87 to $83.20.  Currently Bunge trades with a forward P/E of 12.0.

 

CEO Soren Schroder stated, “It was not what we would have expected given this is a peak quarter in South America.” He added “the soy crushing environment continues to evolve positively and second quarter results in Oilseeds were within the range of our expectations.”  He concluded, “While total company performance in the second quarter came in below our estimates, we expect a strong second half driven by another step in performance in soy crushing as we have committed most of the open capacity for the balance of the year at very attractive margins.”


 

Farm Bill Languishes in the Senate

08/06/2018

The Senate has not yet determined the composition of the conference committee to consider the 2018 Farm Bill which expires in September.  The existing Farm Act will have to be extended by special resolution.  The House is in adjournment for the summer recess but has appointed the members who will meet to reconcile the two bills.

 

There will be delays in finalizing the Senate version of the Bill.  Contentious items include a waiver on some regulations relating to service hours for truckers conveying agricultural products and photo identification for SNAP recipients when making food purchases. 

 

Previously the SNAP amendment to require recipients to either seek or be in employment failed as anticipated.  The House version contains a work requirement.


 

ENC Appointment

08/03/2018

Katie Hayes, RDN, has joined the ENC as Director of Nutrition Communications. Katie has more than a decade of marketing and communication experience developing and implementing food and nutrition communications programs for leading brands and commodity groups.

Katie is also no stranger to the ENC having previously worked on the ENC account while at Edelman Public Affairs 
Katie can be reached at khayes@aeb.org


 

Effective recalls with Ovotrack during E.U. fipronil crisis

08/03/2018


During the 2017 fipronil contamination crisis, table eggs and egg products containing the unapproved insecticide were distributed to customers in at least 15 nations. This resulted in damage to the E.U. egg industry valued at millions of dollars for direct and consequential costs and claims.

Many of our clients in The Netherlands and Belgium were forced to recall eggs. The Ovotrack system was able to expeditiously identify affected product in the supply chain to facilitate precise recalls. More importantly the Ovotrack system clearly differentiated product from farms unaffected by contamination despite being packed in a common off-line plant with suspect and contaminated nest-run eggs. 

For information on Ovotrack click on to the company logo on the right side of the WELCOME page.


 

WEEKLY COMMODITY REPORT

08/03/2018

According to the July 12th 2018 WASDE Report #579, 81.8 million acres of corn will be harvested in 2018 to yield 14.23 Billion bushels. The soybean crop is projected to attain 4.31 Billion bushels from 88.3 million acres harvested.

Quarterly corn and soybean stocks were estimated by USDA in a release on June 29th to total 5.3 Billion bushels (36.2 percent of 2017 harvest) and 1.2 Billion bushels (27.3 percent of 2017 harvest) respectively.

The following quotations for the months as indicated were posted by the CME at noon on August 3rd together with values for the corresponding week in parentheses.

COMMODITY

 

Corn (cents per bushel)

Sept.'18 369 (361)*

Dec. '18 384 (375)

Soybeans (cents per bushel)

Aug. '18 882 (870)*

Nov. '18 897 (885)

Soybean meal ($ per ton)

Sept. '18 333 (333)*

Dec. '18 331 (332)

*2018 crop

Changes in the price of corn, soybeans and soybean meal were:-

COMMODITY CHANGE FROM PAST WEEK

Corn: Sept. quotation up 8 cents per Bu. (+2.2 percent)

Soybeans: Aug. quotation up 12 cents per Bu. (+1.4 percent)

Soybean Meal: Sept. quotation unchanged ( 0 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 0.40 cent per dozen

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

Increases in the prices of soybeans and hence soybean meal this week are attributed to the promise of exports to the E.U. despite the reluctance of the trading block to import GM product. Five nations in the E.U. have an outright ban on introduction of GM ingredients and any food product marketed in the E.U. would have to be labeled as to GM content. Temporary optimism during the past two weeks should be viewed against the reality of resumption of Southern hemisphere soybean exports from Brazil and Argentina coupled with a cessation of U.S. shipments to China resulting from imposition of retaliatory tariffs which took effect on June 6th. Effectively exports to China ceased weeks ago.

See WASDE posting summarizing the July 13th USDA-WASDE Report #579, accessed under the STATISTICS tab, documenting price projections and quantities of commodities to be produced, used and exported during the 2018 season.


 

Passing of Donald McQ. Shaver

08/02/2018

Donald Shaver passed away on July 28th 2018 in his 98th year in Kitchener Ont. Canada. His distinguished career extended from depression era chicken farmer, military hero, visionary for the World’s poultry industry, successful businessman, corporate director and philanthropist.

He is best known for establishing and building Shaver Poultry Breeding Farms serving as Chairman, prime deal-maker and salesperson distributing stock to 80 nations. He continued to operate the business as CEO after the majority of shares were acquired by Cargill but retired in 1985. He then became Chairman of the Canada Development Investment Corporation retiring for a second time at 88 years of age in 2008.

During WWII he volunteered and served in the Canadian Armoured Corps seeing action in North Africa, Italy and Western Europe. He was the youngest colonel in the Canadian Army and a recipient of campaign medals and distinctions. He was awarded the Order of Canada for his contributions to agriculture, commerce and philanthropy.

His name and inheritance live on in the Shaver brand now bred and distributed by Hendrix-Genetics.

 


 

STOP PRESS

08/02/2018

The following items will be reviewed in greater detail in forthcoming editions of EGG-NEWS and CHICK-NEWS:

  • Pilgrim’s Pride Corp. posts reduced EPS of $0.43 for Q2 2018 compared to $0.93 in Q2 2017.
  • Maple Leaf Foods Posts EPS of $0.21 for Q2 2018 approximating Q2 of 2017. Commits to Controlled Atmosphere Stunning.
  • Farm Bill stalled in Senate. Members of the Conference Committee not yet designated, rancor of SNAP details.
  • West Liberty Foods to shutter Jay, OK plant processing specialty broilers and cut back on Free Ranger breeding facility in Arkansas.
  • Case numbers in Chipotle Powell OH outbreak presumed to be norovirus rises to unofficial 400. After fall of 7.5 percent in share price on Monday 31st July, recovery at close on August 2nd following decontamination of the affected premises.

 

Iowa Senator Responds to Dr. Peter Navarro

08/01/2018

On July 19th, Dr. Peter Navarro, Advisor on Trade to the Administration, stated in an interview on CNBC that the effect of tariffs was merely a “rounding error”.  Hours later, President Trump tweeted that “tariffs are the greatest” and concurrently advised that a $12 billion aid package would be made available to farmers affected by the “temporary situation.”

On Thursday 26th July, Senator Joni Ernst (R-IA) released the following statement “Mr. Navarro, America’s farmers are caught in the crosshairs of this game of chess. Offhand comments like the ones you made disregard the people whose livelihoods depend on global trade. In Iowa alone, more than 456,000 jobs are supported by trade, and these new tariffs are threatening $977 million in state exports. That is no rounding error. Those are real people – Iowans – who are waiting for terms to be negotiated for new deals to be finalized. We need to lessen the pressure on these hard-working farmers and let them sell their goods.” Ernst concluded “Farmers are optimistic, but we can’t take optimism to the bank.”


 

Beth Ford to Succeed Chris Policinski at Land O’ Lakes

08/01/2018

Beth Ford, Chief Operating Officer for Land O’ Lakes Business has been named president and CEO effective August 1st. she will succeed to the position following the retirement of Chris Policinski.

Ms. Ford joined Land O’ Lakes in 2011 as Executive Vice President of Supply Chain and Operations and then advancing to be the head of the company’s Dairy Foods and Purina Animal Nutrition businesses.


 

Retirement of Bruce Lackey

08/01/2018

After serving the Midwest Farm Association for 40 years mostly as the GM, Bruce Lackey has retired.  He was honored at a recent event at which his contribution to the purchasing cooperative was recognized. He was succeeded as GM in 2016 by Pat Anderson.


 

Sad Passing of Dr. John Brake

08/01/2018

Dr. John Brake, William Neal Reynolds Professor in the Prestage Department of Poultry Science, North Carolina State University passed away following a cardiac event on Tuesday July 31st in his hometown of Raleigh.

John earned his baccalaureate, Masters and Doctoral degrees at North Carolina State and devoted his entire career to teaching, research and service to the industry. He specialized in the interaction of management and nutrition of breeding stock and published widely on aspects of embryonic development and broiler growth and skeletal development.

He was an excellent mentor with the ability to motivate students and to guide their research. His indirect contributions to the World’s industry is measured by the achievements of graduates at both the Masters and Doctoral levels in their subsequent careers.

John was a popular speaker at industry meetings and served as a consultant to primary breeders and integrators where his knowledge and experience contributed to improved performance.

A memorial service will take place on Sunday, August 27th At the West Raleigh Presbyterian Church.

He will be sadly missed by his colleagues, friends, students and the poultry industry. Condolences are extended to his widow Audrey, Alston and his family


 

Product Deterioration Results in Recall

08/01/2018

Kraft Heinz Food Company is recalling over 100,000 jars of Taco Bell branded salsa with cheese. The product had undergone “product separation” which may have lead to proliferation of pathogens including Clostridium botulinum.

No cases of botulism have been reported and the recall is regarded as a precaution.


 

US Foods Reports on Q2 of FY 2018

07/31/2018

In a press release dated July 30th US Foods Holding Corp. (USFD) announced results for the Second Quarter of Fiscal 2018 ending June 30 th 2018.

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

June 30th.

2018

2017

Difference (%)

Sales:

$6,158,000

$6,159,000

<0.1

Gross profit:

$1,114,000

$1,054,000

+5.7

Operating income:

$205,000

$127,000

+61.4

Net Income

$126,000

$65,000

+93.9

Diluted earnings per share:

$0.58

$0.29

+100.0

Gross Margin (%)

18.1

17.1

+5.8

Operating Margin (%)

3.3

2.1

+57.1

Profit Margin (%)

2.1

1.1

+91.0

Long-term Debt:

$3,498,000

$3,648,000

-4.1

12 Months Trailing:

     

Return on Assets (%)

4.1

   

Return on Equity (%)

17.9

   

Operating Margin (%)

2.5

   

Profit Margin (%)

2.0

   

Total Assets*

$9,135,000

$9,037,000

+1.1

Market Capitalization July 31st

$7,250,000

   

52-Week Range in Share Price: $25.43 to $38.46

Market Close Friday 27th pre-acquisition announcement $40.61

Noon Tuesday 31st post release $33.53.

Forward P/E: 14.5

In commenting on Q2 performance Chairman and CEO Pietro Satriano stated "our focus on improving profitability across our customer base is continuing to deliver positive results, with gross profit per case expanding $0.16 from the prior year," He added "adjusted EBITDA grew a solid 4.9% for the quarter. While our volume growth with independent restaurants was solid, it fell below our expectation, mostly due to some operational challenges. We are working diligently to address these and we expect to see accelerating volumes in the second half of the year."

In a conference call Satriano commented on the increasing cost of transport due to escalation in labor and fuel costs and problems with reliability of trucking companies.

USFD fell 17 percent on Monday 30th July following the announcement of acquiring five food distribution businesses from Service Group of America for $1.8 billion. This transaction adds to the previous three competitors purchased in 2017.

The Company projected lower growth in EPS to a range of $2.00 to $2.10 representing a 5 to 7 percent growth for 2018. Sales growth was projected to be at one percent, attaining $24 billion in 2018.

USFD is the second largest food distributor in the U.S. serving 250,000 customers through 60 locations, competing with Sysco and Performance Foods.


 

AEB Truck Graphics

07/31/2018

AEB has available for order truck graphics featuring the “How do You Like Your Eggs” theme.

 

Details available from arichardson@aeb.org


 

CDC Reports on 2018 Foodborne Outbreaks

07/31/2018

According to a July 20th release from the CDC, 2018 to date has witnessed an upsurge in foodborne disease outbreaks. Together with other federal agencies, the CDC is involved in the following situations:-

  • Vibiro infection attributed to crab meat imported from Venezuela

  • A presumptive norovirus outbreak associated with a burrito chain in Ohio

  • Salmonella associated with raw turkey. Salmonella Reading which appears to be widely distributed in the turkey industry is responsible for outbreaks in consumers and pets.

  • Cyclospora infection linked to salads served by a large QSR chain.

  • Cyclospora linked to fresh-produce vegetable trays. This outbreak is apparently separate from the QSR cases.

  • Salmonella infection linked to a cereal brand.

  • The limited outbreak of Salmonella Braenderup attributed by the FDA to an egg complex in North Carolina with 57 cases reported over a six-month period.

Introduction of database systems including FoodNet to monitor and link infections among state and regional diagnostic laboratories contribute to early recognition of outbreaks. Extensive use of PCR and whole genome sequencing by the CDC and the FDA facilitate identification of vehicles and the source of pathogens in foods including proteins, produce and fruit produced or processed in the U.S.


 

Merck Posts Q2 FY2018 Financial Results

07/31/2018

Multinational bio-pharmaceutical company Merck Inc. posted results for the second quarter of FY 2018 ending June 30, 2018. The Company generated a net profit of $1.72 billion, 12 percent less than the $1.95 billion posted for the corresponding quarter in fiscal 2017.  Net sales declined by 5.4 percent to $10.47 billion.  Earnings per share declined by 3.3 percent to $0.63.

 

The Merck Animal Health segment attained sales of $1.09 billion ($955 million in Q2 2017) representing an increase of 14 percent.  Approximately 58 percent of sales were to the livestock sector including a comprehensive range of poultry biologics with the remainder to companion animals.  The Animal Health segment contributed $450 million to company operating profit representing a margin of 41.2 percent on sales.  Comparative figures for Q2 2017 were a $395 million contribution and 41.4 percent of sales.  The 14 percent increase in sales value in Q2 2018 was evenly divided between companion and livestock products.

Merck assigned 21.7 percent of revenue on research and development including a $344 million charge for the purchase of Viralytics.  The corresponding expenditure on R&D in Q2 of 2017 was 17.9 percent.

The company provided 2018 guidance comprising net sales in the range of $42.0 billion to $42.8 billion and EPS projected to be from $2.51 to $2.59.

Merck has traded in a range of $52.80 to $66.40 over the past 52 weeks. Following release of Q2 results, share price fell to $63.20 by noon on Friday July 27th.  Merck has a market capitalization of $170 billion and trades with a forward PE of 13.9.  The company has an operating margin of 17.9 percent and generates a net margin of 3.9 percent.  Return on assets over the past 12 months attained 5.0 percent and the return on equity was 4.3 percent.


 

Iowa State to be a Reference Center for Antimicrobial Resistance

07/31/2018

Iowa State University was selected by the Task Force on Antibiotic Resistance in Production Agriculture to be a co-participant in a research and educational institute dealing with antimicrobial resistance.  The Task Force is a joint initiative by the Association of Public and Land-grant Universities and the Association of American Veterinary Medical Colleges.

 

Dr. Paul Plummer of Iowa State University quoted in the Des Moines Register on July 26th stated, “This new institute provides a great resource for the entire country as we work to build strong, collaborative research and educational programs to mitigate risk.”


 

Prairie Chickens Thriving

07/31/2018

While not in fact a “chicken” the so-called lesser prairie chicken (Tympanuchus pallidicinctus), listed as an endangered species on the Federal list in 2014, has demonstrated an encouraging increase in population.  In 2018 there were 38,000 birds up from 30,000 as estimated during the previous year according to the Western Association of Fish and Wildlife Agencies.  Various organizations have filed briefs petitioning the U.S. Department of the Interior to re-list the bird after the endangered designation was overturned by a Texas judge in 2015.

 

It is not known whether this species is susceptible to diseases of commercial poultry but based on quail, pheasants and turkeys which are closely related, it is presumed that they will be susceptible to a number of viral and bacterial pathogens.  Obviously commercial poultry should not be allowed to cohabitate on pasture frequented by free-living ground birds.  Chickens and turkeys belong in barns protected against predators, parasites and pathogens.


 

American Humane Receives Four-Star Rating from Charity Navigator

07/30/2018

Dr. Robin Ganzert, President of American Humane announced that Charity Navigator has awarded the organization a “Four-Star” rating. AH now joins less than five percent of charities meeting or exceeding the Charity Navigators exacting standards.

Dr. Ganzert noted “donors are increasingly demanding efficiency, transparency and accountability to ensure that non-profit organizations are providing vital, lifesaving services and serving as good stewards of valuable philanthropic dollars”.

American Humane is responsible for extensive animal rescue activities including abandoned pets, assistance following natural disasters, the farm welfare program and reuniting military dogs with their handlers.

In addition to the Charity Navigator “Four-Star” award, AHA is recognized by the Better Business Bureau and the Wise Giving Alliance to accredited charities. This distinction requires twenty standards for accountability including covenants, oversight, fundraising and financial reporting.

American Humane has been named a top-rated charity with an “A” rating by the American Institute of Philanthropy Charity Watch and as a top-rated charity by Great Nonprofits. AHA has earned a Gold Level seal from GuideStar for demonstrating a commitment to nonprofit transparency and accountability. The Pet Philanthropy Circle recently named American Humane as the Outstanding Animal Welfare Organization of the Year.

American Humane spends 91 cents of every dollar collected on programs which benefit pets, livestock and children.

The credentials and recognition earned by American Humane stand in sharp contrast to the HSUS which was embroiled in scandals relating to fiscal mismanagement long before the firing of the flamboyant CEO, Wayne Pacelle and various underlings due to sexual harassment and coercion.

For further information on American Humane access www.americanhumane.org  


 

WTO Director-General Refutes Administration Claim

07/30/2018

In an interview on CBS This Morning presidential advisor Larry Kudlow commented that the “WTO is broken”.  This elicited a response from the director-general Robert Azevedo who refuted the baseless claim on CNBC with the statement, “The WTO is functioning quite well.”  Azevedo acknowledges “room for improvement” but claims that the WTO was instrumental in the global recovery after the 2009 worldwide fiscal crisis.  “We would have seen many more protectionist measures in place, had it not been for the WTO.”  He added, “The global economy would have had a much harder time recovering.”

There is no question that reforms to the WTO charter are necessary. The dispute resolution system is sclerotic and the requirement that all 164 nations must agree unanimously on issues has led to an impasse on progress as some nations including India and South Africa are holding industrialized nations to ransom.

EGG-NEWS will post a commentary on the WTO in relation to the U.S. in an upcoming edition.


 

United Natural Foods to Buy Supervalu

07/30/2018

United Natural Foods a distributor of natural and organic items has offered shareholders of Supervalu $32.50 per share representing a 65 percent premium in a $2.9 billion transaction.

United Natural Foods is a major supplier to Whole Foods Market now owned by Amazon.  Steve Spinner, United Natural Foods CEO stated, “Combining our leading position in natural and organic foods with the Supervalu presence in fast-turning products makes us the partner of choice for a broader range of customers.”


 

Chef’d Resurrected

07/30/2018

True Food Innovations has purchased the assets of bankrupt Chef’d which will resume trading under its former name but without burdensome licensing agreements.  Although there is a demand for meal kits especially through retail, both meal-kit startups and established companies including Blue Apron Holdings and HelloFresh are unprofitable.

 

Chef’d was founded in 2015 and received funding from suppliers including Campbell Soup Company and Smithfield Foods.

 

During the second quarter of 2018 Chef’d recorded a precipitous drop in sales and CEO Kyle Ransford terminated operations leading to liquidation.

 


 

DHA Supplementation During Pregnancy Benefits Lean Body Mass in Progeny

07/29/2018

A recent study demonstrated the benefits of docosahexaenoic acid (DHA) supplementation during pregnancy on a range of parameters dealing with lipid metabolism in the mother and on progeny.

 

The Kansas University DHA Outcomes Study involving 154 offspring of participating women were evaluated for standard parameters reflecting growth and body composition.  Subjects received either a 600 mg per day supplement of DHA comprising corn and soybean oil or a placebo.  Maternal DHA content of red blood cells correlated with a higher fat-free mass in offspring through 5 years of age.  The association was independent of maternal, prenatal or dietary factors.

 

Eggs from hens fed diets supplemented with DHA can in theory supply daily requirement during pregnancy and lactation.

 

*Carlson, S.E. et al Intrauterine DHA exposure and child body composition to 5 yrars: exploratory analysis of a randomized controlled trial of prenatal DHA supplementation The American Journal of Clinical Nutrition 107: 35-42 (2018)


 

USPOULTRY Awards Recruiting Grant to Texas A&M

07/29/2018

Texas A&M University Department of Poultry Science received a $34,000 recruiting grant from the USPOULTRY Foundation.  The gift was made possible from an endowing gift by Tyson Foods.

 Dr. David Caldwell, Department Head noted, “The financial support we receive annually from the USPOULTRY Foundation maintains a strong undergraduate program in poultry science.  Continuous efforts in investment in undergraduate recruiting are critical to our viability as an independent poultry science department.”  He added, “The programs we have developed to recruit and train students with interest in a career in the poultry industry would not be possible without the support of the USPOULTRY Foundation and companies like Tyson Foods.”

 

USPOULTRY Foundation has awarded recruiting grants totaling $282,000 for the 2017-2018 school year to 35 U.S. colleges and universities with either a poultry science department or a designated poultry studies program.


 

Evaluation of Free-Range Housing

07/29/2018

The Council for Agricultural Science and Technology (CAST) recently released issue paper IP 61 co-authored by Dr. Jacqueline Jacob and Dr. Anthony Pescatore.

 

The important conclusions from the review are that the advantages of free-range production relate to consumer perception rather than any benefit to the flocks. The principal take-away messages are:

  • Greater space does not necessarily enhance welfare.  Flocks on free range systems have higher mortality than when confined to barns.  Predator loss, exposure to pathogens and parasites, inclement weather all detract from “welfare”.
     
  • Outside access does not enhance nutritional value.  There is no nutrient that can be obtained from pasture that cannot be incorporated in eggs from flocks fed a balanced or supplemented diet.
     
  • Food safety is inferior on pasture compared to confined systems.  It is impossible to decontaminate pasture infected with Salmonella.  Although there is no appreciable difference between clean eggs laid on pasture and those from cages or barns, eggs with heavy fecal contamination from either system will have a higher probability of internal contamination as a result of shell penetration by motile bacteria.
     
  • Flocks on pasture are susceptible to ingestion of toxic compounds which may be deposited in the egg.  Backyard chickens in urban areas have lead levels which in some cases exceed accepted tolerance values.
     
  • Flocks with outside access are susceptible to infections carried by free living birds.  These include avian influenza, Newcastle disease, colibacillosis, pasteurellosis and erysipelas. The last two infections are re-emerging as important conditions which almost disappeared in egg-producing flocks after confinement systems were introduced.
     
  • Pasture management is non-sustainable, requiring extensive land which could be used for crop production or other livestock, and requires more energy and labor for the same quantity of eggs produced in barns.
     
    The differential in cost between eggs derived from flocks held on pasture and those in barns cannot be justified by any quantifiable improvement in either welfare or product quality.  An affluent minority of consumers is apparently willing to pay a $3 to $4 differential for what they perceive as advantages. This market is limited as evidenced by the small proportion of flocks reared on pasture and a virtual plateau in expansion in this segment of egg production.
     

 

AVEP Lists Problem Areas in Egg Production

07/29/2018

The Association of Veterinarians in Egg Production recently concluded a survey involving 29 poultry health professionals representing primary breeder companies, consultants and veterinarians employed by egg production companies.

  • The top ranking research priorities included the potential for Groups B and C Salmonella infection in consumers with specific reference to egg washing and sanitation; infectious bronchitis including the variants responsible for false layer syndrome; mass euthanasia of flocks exposed to catastrophic infections; control and prevention of avian influenza and colibacillosis.
  • Currently the specific diseases of concern include infectious bronchitis variants, avian influenza, and colibacillosis.
  • Management issues include smothering, floor-eggs and cannibalism.
  • Welfare concerns include emergency euthanasia and disposal of cockerels, beak treatment and keel deformities especially in aviary-housed flocks.

 

UEP Schedule for 2018 Area Meetings

07/26/2018


 

McDonald’s Corp. Reports on Q2 of FY 2018

07/26/2018
In a press release dated July 26th McDonald's Corp. (MCD) announced results for the 2nd Quarter of Fiscal 2018 ending June 30th 2018.
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)
Steve Easterbrook

2nd Quarter Ending July 30th.

2018

2017

Difference (%)

Sales:

$5,353,900

$6,049,700

-11.5

Gross profit (Company Stores):

$464,400

$666.600

-30.3

Operating income:

$2,262,300

$2,295,100

-1.4

Net Income

$1,496,300

$1,395,100

+7.3

Diluted earnings per share:

$1.90

$1.70

+11.8

Gross Margin Company Stores (%)

17.9

18.6

-3.8

Operating Margin (%)

42.3

37.9

+11.6

Profit Margin (%)

27.9

23.1

+20.7

Long-term Debt:

$29,536,400

$25,878,500

+14.1

12 Months Trailing:

     

Return on Assets (%)

16.0

   

Return on Capital Invested (%)

16.8

   

Operating Margin (%)

37.9

   

Profit Margin (%)

24.0

   

Total Assets

$33,803 700

$31,023,900

+9.0

Market Capitalization

$122,598,000

   

52-Week Range in Share Price: $146.84 to $158.89

Market Close Wed. 25th $158.90 Close Thur. 26th $156.14

Forward P/E: 19.0

MCD posted a 4.0 percent growth in comparable store sales compared with the corresponding quarter in 2017. Company-owned stores generated 48.5 percent of revenue (59.0 percent Q2 FY 2017). Approximately 37 percent of sales were in the U.S.

MCD operated a total of 37,406 stores at the end of Q2, either franchised or company-owned.

In commenting on results for the second Quarter of FY 2018 president and CEO, Steve Easterbrook stated "We are seeing good performance across our business as our customers tell us that they value and appreciate the moves we're making to elevate the McDonald's experience." He added "We're pleased with the results of our international business and the progress we're making in the U.S. on executing on our Velocity Growth Plan priorities. We've now marked 12 consecutive quarters of positive comparable sales, and we are confident that we're executing the right strategy to achieve long-term, profitable growth."


 

The House to Expedite the 2018 Agricultural Guest Worker Act

07/24/2018

The House will consider the Agricultural Guest Worker Act in combination with the Legal Workforce Act with the intent of submitting legislation to a bipartisan vote during August. The objective is to replace the current H-2A Agricultural Guest Worker Program with a new H-2C program to be administered by the Department of Agriculture. Both seasonal and year-round agricultural workers will be included in the program. An important provision of the proposed H-2C program is application of E-Verify which can confirm that applicants are work-eligible. Current undocumented aliens employed in the U.S. will be able to participate in the H-2C program subject to eligibility.

The House Judiciary Committee Chairman, Representative Bob Goodlatte (R-VA) has been in the forefront of promoting the legislation and he is assisted by co-sponsors Representatives Collin Peterson (D-MN), Lamar Smith (R-TX) and Ken Calvert (R-CA) among others.

In commenting on the program, Representative Goodlatte stated “When not enough Americans can be found to fill jobs, the Bill ensures that American farmers have access to a reliable workforce to fill positions needed to keep their farms afloat.” He added “We needed an ag-worker program that respects our nation’s immigration laws and keeps American agriculture competitive. This bill takes important steps to cut red tape and institutes a flexible program that accounts for the different labor needs of various producers.”

The H-2C program is supported by over 200 industry groups including the American Farm Bureau Federation, which has considerable influence in Washington.


 

Value of Export of U.S. Shell and Egg Products.

07/24/2018

Intensified cooperation between USAPEEC and the American Egg Board under the guidance of CEO and president, Anne L. Alonzo will hopefully contribute to a higher volume of exports.

Jim Sumner, President of the USAPEEC was a keynote speaker at the recent AEB Board Meeting in Chicago. As reported in the July 23rd edition of MondayLine, Sumner noted that “The entire egg industry benefits from exports.” He urged current AEB members to consider export trade.

Based on USDA-FAS data, combined exports of shell eggs and egg products represent the equivalent of between 10 and 12 million hens in constant production. Exports are an important stabilizing factor in establishing a balance between total supply and domestic demand. The impact on prices of shell eggs was evidenced in the E.U. in 2017 following embargoes associated with outbreaks of HPAI and the fipronil crisis.


 

USDA Reports on GM Corn and Soybean Planting

07/23/2018

Despite claims for increasing consumption of non-GMO foods, the volume of improved GM corn and soybeans planted in the U.S. remains fairly constant at a high level. This implies that if more non-GMO eggs, broilers and turkeys are produced, feed ingredients will have to be imported.

The GM or organic status of imported consignments of ingredients is always speculative despite documentation which is simple to fabricate. In the absence of a block chain system, there can be no certainty as to the actual status of an ingredient, especially if derived from Eastern Europe, China or India.

USDA reported that 92 percent of corn planted in 2018 comprised GM cultivars. Farmers benefit from “stacked gene” varieties which are resistant to insects and herbicides such as glyphosate. Approximately 94 percent of soybeans were planted to GM cultivars resistant to herbicides. 


 

Kroger Introduces Wellness App

07/23/2018

The Kroger Company has introduced a mobile app, OptUp as a component of the Wellness Your Way platform. The objective is to encourage shoppers to review nutritional information and purchase food items with a health-related content.

The technology establishes dietary standards as selected by Kroger dietitians. Products are scored between 0 and 100 and coded by color. Products falling in the “green” category are low in saturated fat, sugar, sodium and calories and are high in fiber and protein. Products falling into the “yellow” category score 36 to 70 and those between 0 and 35 are designated “red”. The system will track an average score of a basket purchase or determine a mean score over a period of eight weeks.

The app will also allow personalized recommendations concerning products and incorporates a scanning feature to download nutritional information. Yael Cosset, Chief Digital Officer for Kroger stated “OptUp is collaboration among health, tech. and digital teams with the data-driven app creating a more transparent and educational experience for our customers continuing our commitment to helping Americans shop, eat and live healthier on their terms”.

The question remains as to whether consumers will make use of the benefit over a prolonged period after the novelty wears off and whether they will in fact derive any quantifiable health benefit from the guidance provided by the app.


 

Drug Resistant Typhoid Emerges in Pakistan

07/23/2018

A multiple drug resistant Salmonella Typhi has emerged in Pakistan according to the National Institute of Health. At this time only azithromycin is effective against the strain.  The WHO estimates that typhoid infects 22 million worldwide each year with 200,000 fatalities.

 

The present epidemic emerged in Hyderabad and is prevalent in the Karachi metropolitan area.

 

Dr. Myron Levin of the University of Maryland noted that, “It is only a matter of time before S. Typhi develops resistance to azithromycin.  If that happens the remaining effective drugs which require hospitalization with intravenous administration will cost thousands of dollars per patient and will be impractical for a nation such as Pakistan. Pakistan has initiated a vaccination program funded in part by the Bill and Melinda Gates Foundation using a Swiss-sourced vaccine.

 

The emergence of the multi drug resistant Salmonella Typhi is attributed to inappropriate and extensive use of antibiotics.  It is presumed that drug resistance was acquired by plasmid transfer from E.coli and is associated with improper disposal of human waste.  Two cases of Salmonella Typhimurium XDR have been diagnosed in the U.S. in travelers returning from Pakistan.


 

Liphatech Appoints Northeast District Sales Manager

07/23/2018

Jared Rottmund has been appointed to the Agriculture Division of Liphatec as Northeast District Sales Manager.  He will represent the full line of Liphatech Animal Health rodent control products in the New England and the Atlantic states.  Jared has considerable experience as a regional sales manager with animal health and nutrition products.  He will work closely with field product distributors marketing the full Liphatech Rodenticide Rotation to the poultry and swine industry.


 

Undersecretary of Agriculture for Research Nominated

07/23/2018

Dr. Scott Hutchins an entomologist with both academic and corporate experience has been nominated for the position of Undersecretary of Agriculture for Research, Education and Economics. The position has been vacant since the previous Acting Undersecretary and nominee Sam Clovis withdrew his name from consideration.

 

Hutchins earned a doctoral degree in entomology from Iowa State University. He is a former president of the Entomological Society of America serving in 2006 and 2007 and holds an Adjunct Professorship at the University of Nebraska in Lincoln. 

 

Dr. Hutchins is currently employed by Corteva, a spinoff from Dow Chemical Company and previously with Dow AgroSciences since 1987.  He has been involved in research on insect control with a specific interest in integrated pest management.

 

The current president of the Entomological Society of America, Dr. Michael Parrella, Dean of the College of Agriculture and Life Sciences at the University of Idaho noted, “Dr. Scott Hutchins is an ideal candidate for the role of USDA Undersecretary.  His credentials in both science and leadership are hard to match and he knows first-hand the value of research, government and industry working together to support agriculture and serve the society.

 

The nomination although late in the current Administration contrast sharply from the nomination of Dr. Sam Clovis who had not earned any formal scientific qualification but was politically active operating a regional conservative talk show.


 

Cal-Maine Reports on Q4 and FY 2018

07/23/2018

In a press release dated July 22nd Cal-Maine Foods announced results for the 4th Quarter and Fiscal 2018, ending June 2nd 2018.

The FY 2018 results posted by CALM incorporated a tax benefit of $43 million equivalent to $0.89 in EPS. The 3rd Quarter of FY 2017 included a legal settlement of $80 million.

The following table summarizes the results for Q4 compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

4th Quarter Ending.

June 2nd 2018

June 3rd 2017

Difference (%)

Sales:

$443,095

$274,584

+61.4

Gross profit:

$141,216

$12,006

+1,076.2

Operating income:

$93,561

$(33,011)

+383.4

Net Income

$71,767

$(24,471)

+393.3

Diluted earnings per share:

$1.48

$(0.51)

+390.2

Gross Margin (%)

31.9

4.3

+641.8

Operating Margin (%)

21.1

neg

-

Profit Margin (%)

16.2

neg

-

Long-term Debt: June 2nd '18/ June 3 rd '17

$2,554

$6,113

-58.2

12 Months Trailing:

     

Return on Assets (%)

3.1

   

Return on Equity (%)

3.3

   

Operating Margin (%)

4.2

   

Profit Margin (%)

2.2

   

Total Assets June 2nd'18/June 3rd '17

$1,150,447

$1,033,094

+11.4

Market Capitalization

$2,190,000

   

52-Week Range in Share Price: $33.46 to $52.30

Market Open (post-release) July 23rd $43.95. Noon $45.05

Forward P/E: 22.6

For FY 2018 CALM generated net earnings of $125.9 million {$(74.3) million FY 2017} on revenue of $1,503 million ($1,075 million FY 2017) EPS attained $2.60 {$(0.40) FY 2017}


 


OECD-FAO Agricultural Outlook 2018-2027

07/22/2018

The Food and Agriculture Organization has issued the 14th edition of the Agricultural Outlook projecting the production of major commodities and livestock.

 

The Outlook emphasizes the impact of diminished water and arable land as restraints to future production.  Producing nations with adequate resources including the U.S., Brazil, and Argentina will continue to export with their customers comprising nations with limited natural resources.


 

Meat-Based Diets Contribute to Improved Growth in Infants

07/22/2018

A recent article in The American Journal of Clinical Nutrition* demonstrated that protein from animal products was superior to milk-based formula with respect to weight gain and fat deposition in infants.

 

The study compared two groups of 32 infants with respect to development scores based on weight-for-age and length-for-age.  The subjects were fed either milk-based or meat-based supplements.  Over a 12-month period, subjects receiving protein from meat products showed an improved length-for-age z score and a weight-for-length z score.  Insulin-like growth factor-1 and insulin-like growth factor-binding protein-3 increased over time independently of treatments.

 

It was concluded that the source of protein plays an important role in determining growth and fat deposition.  The trial was conducted with meat-based protein.  The ideal amino acid composition of eggs suggests that a similar trial would demonstrate the benefits of egg-based protein in infant formulas to promote growth.

 

*Tang, M. et al A meat-or dairy-based complementary diet leads to distinct growth patterns in formula-fed infants: A randomized controlled trial. The American Journal of Clinical Nutrition 107: 734-742 (2018)


 

Multistate Outbreak of Cyclospora

07/22/2018

The Centers of Disease Control and Prevention has confirmed 200 cases of Cyclospora infection in five states attributed to vegetable trays containing carrots, cauliflower, and broccoli packaged by Del Monte Fresh Produce.  Cyclosporiasis is caused by Cyclospora cayetanensis.  The parasite causes mild enteritidis characterized by stomach cramps and watery diarrhea.

 

The outbreak is apparently not linked to a separate outbreak of cyclosporiasis attributed to lettuce contained in salads served by a large QSR chain in the Midwest.


 

Food Inflation Reverses Previous Trends

07/22/2018

The Consumer Price Index Report for May recorded an unadjusted 12-month increase of 1.2 percent in the all-food category.  Although the index for meats, poultry, fish and eggs declined 0.7 percent, indexes for dairy and related products showed increases.

 

In contrast the Kentucky Farm Bureau Market Basket Survey increased 1.3 percent during the first quarter followed by a 2.2 percent escalation in the second quarter taking into account typical products purchased by consumers. Pork rose by 4 percent followed by chicken at 3.7 percent.  Most of the categories were at or below a 2 percent increase.

 

It is estimated that consumers spent 7 percent of their disposable income on food, a considerably lower proportion compared to many industrialized countries and all developing nations.


 

McDonald’s Recalls Salads

07/22/2018

As a result of outbreaks of cyclosporiasis, McDonald’s Corp has ceased serving salads in 3,000 locations in 14 states mostly in the high plains and Midwest.  The Illinois Department of Health has confirmed 90 cases of cyclosporiasis since mid-May and the Iowa Department of Public Health has documented 15 cases.

 

Cyclosporiasis is a treatable infection associated with contaminated water, fruit and produce.  Infection is characterized by watery diarrhea of variable duration.

 

McDonalds’s and other QSRs are obviously evaluating the prevalence of infection on green produce and have changed supply chains in an attempt to reduce the probability of contamination.

 

The previously reported outbreak of cyclosporiasis associated with trays of cut vegetables packed and distributed by Dole is considered to be epidemiologically unrelated to the Midwest outbreaks.


 

AEB Posts Income and Expenditures for Fiscal 2017

07/22/2018

The AEB issued an annual report reflecting revenue and operating expenses for the year ending December 31, 2017.

 

Income amounted to $23,958,014, fractionally more than in 2016. A total of 99 percent of revenue is derived from check-off assessments.

 

In reviewing expenditure, total expenses of $21,863,136 were assigned to the following categories in descending order:

 

  • Advertising consumer marketing = 42.2%
  • Egg Nutrition Center = 14.3%
  • Good Egg Project = 11%
  • Egg product marketing = 10.6%
  • Food service promotion = 10.3%
  • Collections, compliance and administration = 5.0 %
  • State support and material distribution = 3.0%
  • Board meetings and USDA = 2.8%
  • Special projects = 0.8 %
     
    AEB transferred $2,094,905 to the reserve representing accumulated revenue over operating expenses.

 

Anne Alonzo Honored by Hispanic Media

07/21/2018

 

AEB President & CEO Anne Alonzo was named to the ‘Who’s Who’ of Hispanics in Chicago by Negocios Now at a special gala. Additionally, Anne was selected to receive the Remy Martin Corporate Excellence Award, which includes a beautiful plaque and $1,000 donated to an organization of her choice.


 

American Egg Board Circulates Video on Achievements

07/21/2018

EGG-NEWS is proud to publicize the activities of the AEB in promoting egg consumption through activities including the “Incredible Egg” website, emphasizing inherent nutritional benefits from babies to the elderly and versatility to food service providers.

The whimsical but factual video presentation is worth watching.

 

Click here for AEB's video

 


 

Hy-Line International Completes Joint Venture Hatchery with Huayu Agriculture Science and Technology in China

07/20/2018

A new hatchery established as a joint venture between Huayu Agriculture Science and Technology and the EW Group, the  holding company for Hy-Line International was recently completed and is producing 200,000 pullet chicks on a five-day per week cycle.

 

The hatchery is located in Handan 250 miles southwest of Beijing representing an investment of $23 million. The facility represents a profound change in structure for the egg industry in China.  Although the Nation claims 1.2 billion hens, until five years ago most were in family-operated units of 10,000 to 20,000 hens.  Recently a number of in-line units in excess of 2 million birds have been erected.  Average flock size is now in the region of 20,000 to 40,000 hens and this segment is expected to grow in importance.

 

Factors which have influenced consolidation in the E.U. and the Americas are now influencing industry structure in the People’s Republic of China. Problems in controlling disease through enhanced biosecurity, marketing considerations, difficulty in acquiring quality feed and working capital have all contributed to the demise of small farms with growth of larger units.  Efficiency of scale is important given the increasingly competitive nature of the egg industry now supplying supermarkets which demands high quality standards and low prices.

Jonathan Cade


 

EPIC Provisions Launches Protein Bars Containing Egg Products

07/20/2018

EPIC Provision of Austin, TX. a subsidiary of General Mills since 2016, has launched a range of protein bars incorporating egg whites from cage-free hens.  The products are certified non-GMO and each bar contains 12 grams of protein.  Four flavor varieties are available.

 

EGG-NEWS deprecates the use of the term “clean-protein” in the company press release.  This implies that competitors may be incorporating “dirty-protein” in food items.  The appellation “clean” is a misnomer intended to appeal to the misinformed “worried-well” demographic.  All food products marketed in the U.S. must conform to FDA requirements relating to safety and freedom from toxic compounds and bear approved labels. 

 

Feed additives to prevent oxidation or preserve shelf life are approved by the FDA and are beneficial in their effect.  There is no difference in nutritional quality or safety between conventional, certified organic or non-GMO ingredients despite claims to the contrary.  The choice of products derived from pasture-raised hens is a personal decision with the affluent willing to pay for the sentiment.


 

Cargill Reports on Q4 and FY 2018

07/18/2018

In a press release issued on July 12th, Cargill Inc. reported on the 4th Quarter and Fiscal Year ended May 31st 2018.

For the quarter, the company generated net earnings of $711 million ($347 million Q4 FY 2017) on revenues of $30.4 billion, 7 percent higher than the corresponding quarter in 2017.

For the full year, net earnings attained $3.1 billion, a 9 percent increase over FY 2017 on revenue of $114.7 billion, 5 percent higher than FY 2017.

In commenting on results, David MacLennan, Chairman and CEO of Cargill stated “Our strong results show we are creating the connections the world needs for vibrant food and agriculture both today and tomorrow.” He added “Cargill has always moved food from where it is produced to where it is needed. Today, we are pioneering new capabilities and partnerships to invest for the future.”

 In reviewing specific operating segments, the report noted a “steady expansion in value-added egg products”. Cargill is currently a leading pasteurizer and further-processor of egg products in the U.S. functioning as an important intermediary between large in-line breakers and the QSRs and the food service segments of the industry representing end users.

The Animal Nutrition and Protein segment surpassed last year’s strong results for both Q4 and FY 2018. Additional earnings were obtained from feed additives, micronutrients and premixes. During FY 2018, Cargill acquired Pollos El Bucanero in Columbia and formed a joint venture in the U.K. creating Avara Foods in addition to a joint-venture processing plant in the Philippines in partnership with Jollibee Foods. It is anticipated that the company may reenter the broiler production segment having made a bid for Keystone Foods, which will be divested by parent company Marfrig of Brazil.

During fiscal 2018, U.S. investments included the acquisition of Diamond V in addition to Delacon in Austria and Integral Animal Nutrition in Brazil.

In the Food Ingredients and Application Segment, the company was negatively impacted by lower ethanol prices, especially during the 4th quarter. A joint venture was initiated with Puris to produce plant-based proteins.

The Origination and Processing segment improved on 2017 results by strengthening trading activities and upgrades to the supply chain. During the year, a new biodiesel facility was initiated and oil-seed crushing plants were expanded in Brazil and the U.S.


 

Incredibles 2 Increases Traffic to AEB Website

07/18/2018

Traffic to the IncredibleEgg.org website has increased 45 percent from May 24th when Incredibles 2 content went live through to July 6th. A total of 971,000 relevant visits were logged for the site with 214,000 landing page total visits.

The efforts of the American Egg Board are to be commended. It is however cautioned that the objective is to increase consumption of eggs and not necessarily generate interest in websites. The true benefit of the promotional endeavor will hopefully be reflected in increased per capita consumption.


 

Henning Companies Contribution to Habitat for Humanity

07/18/2018

As a result of floods in Des Moines, the Birdland area was severely affected with two-thirds of 270 homes damaged or destroyed. Following reconstruction of a levy, Habitat for Humanity is now able to provide the impacted community with 23 new homes.

As a sponsor of Habitat for Humanity, Henning Companies donated $10,000 and 219 volunteer hours to the project.

Over the course of three days, 31 volunteers from Henning Companies worked together to construct homes and restore the neighborhood.


 

2018 Center of Excellence Scholarships

07/18/2018

The Midwest Poultry Consortium awarded 35 scholarships to students in the 2018 Center of Excellence internship program. The total value of awards amounted to $280,000.

The Center of Excellence program provides students with an opportunity to evaluate a future career in some aspect of poultry production through summer courses and internships.

Henning Companies is a sponsor of the Center of Excellence Scholarship initiative and is represented on the Board of the Midwest Poultry Consortium by Lisa Henning Beohm.


 

Healthy Choice® Brand Power Bowls Introduced

07/18/2018

Conagra Brands has introduced four Power Bowls in their range of breakfast offerings.

The varieties include:

  • Unwrapped Burrito Scramble comprising turkey sausage, egg whites, black beans and vegetables.
  • Turkey Sausage and Egg White Scramble.
  • Roasted Red Pepper and egg white Shashuska, a Middle-East themed vegetarian bowl combining egg whites, peppers, cheese, onions and leafy greens.
  • Pesto and Egg White Scramble, containing egg whites, kidney beans and Parmesan cheese.

Power Bowls provide 190 calories, 15 grams of protein and 5 grams of fiber per bowl.

The new Power Bowls join plant-based Power Bowls, expanding the vegetarian options offered by the Conagra Brands.


 

Honey Smacks Recall Considered Incomplete

07/18/2018

Despite recalling 1.3 million cases of Honey Smacks cereal in more than 30 states, the FDA has determined that potentially contaminated product is still being sold, posing a risk for further cases of salmonellosis.

According to the Centers for Disease Control, 100 cases have been diagnosed in 33 states. Despite the voluntary recall initiated by Kellogg in mid-June some product is still on shelves, and the Agency has issued a blanket recommendation to discard any Honey Smacks on hand. In contrast to produce, fruit, dairy and eggs, boxed cereals have a long shelf-life and represent a greater danger of incident cases than perishables following a recall.


 

Walmart to Establish Jet.com Center in the Bronx

07/16/2018

Walmart will increase its presence in a major metropolitan area by establishing a distribution facility in the Bronx.  The unit will be operated by subsidiary Jet.com purchased by Walmart in 2016.

 

Simon Belsham president of Jet.com noted in an interview with The Wall Street Journal, “This is another building block that is part of Jet.com’s strategy focused on urban centers.”  The founder of Jet.com, Marc Lore currently heads all Walmart E-commerce business and is positioning Walmart to compete directly with Amazon.com by offering one- and two-hour delivery through Prime Now in affiliation with Whole Foods Market.

 

The affiliation with Walmart will allow Jet.com to deliver food and merchandise to customers in the New York metropolitan area.  If successful the model will be extended to as many as 100 cities by mid-2019.

 

 

 

 


 

Third North Carolina Hog-Nuisance Trial Underway

07/16/2018

A third trial in a federal court in Raleigh, NC is underway following two adverse verdicts against Smithfield Foods, a subsidiary of the WH Group of China.  In this case, the plaintiffs represent a class comprising neighbors of a farm in Pender County.  Murphy-Brown a subsidiary of Smithfield Foods is the defendant since it owns the flocks raised by contract farmers in the county.

 

The initial case resulted in a $51 million judgment against Smithfield in April followed by a $25 million judgment in June.

 

The secession of lawsuits filed has the potential to severely impact hog production in eastern North Carolina which is the backbone of state agriculture following the waning of tobacco cultivation.  EGG-NEWS has reported on demonstrations supporting hog farmers in which the Lt. Governor and Commissioner of Agriculture criticized nuisance lawsuits.

 

Opponents of hog production maintain that alternative technology is available to displace lagoons with spraying over pasture. This is the major source of complaints specifying odor and potential contamination of ground water.  The major integrators following extensive consolidation which took place in the 2000’s maintain that biodigesters would be prohibitively expensive.


 








































































































































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