Egg Industry News

 

Companies to be Impacted by Whole Foods Takeover

Jun 23, 2017

    

The fallout from the seismic news of the intended acquisition of Whole Foods Market by Amazon will have repercussions in the food distribution sector. Companies which stand to lose include:-

Sprouts Farmers Market – Although this company has outperformed Whole Foods market over the past three years, Sprouts will face increased opposition from a restructured Whole Foods Market. Shareholders in the company may however benefit from a takeover with either Kroger or Wal-Mart as possible white knights.

  

United Natural Foods. This company has been a supplier to Whole Foods Market. The sweetheart relationship was questioned when Jana Partners acquired a shareholding earlier this year. Amazon has the in- house capability to replace United Natural Foods.

Blue Apron. Poised for an IPO, Blue Apron may well be affected by the overwhelming sourcing and distribution capabilities of Amazon following the acquisition. Home delivery of meal kits has increased in popularity, but there is evidence that the interest in preparing in-home gourmet meals has plateaued.

Instacart. Previously Instacart has teamed with Whole Foods Market to facilitate sales in excess of $200 million in 2016. Obviously Amazon will supplant Instacart using its own resources. Instacart will in all probability enhance internet sales for other customers including Publix, H.E.B., Costco and others. Deprived of the Whole Foods Market business, Instacart may well be vulnerable to acquisition by Amazon.

Wal-Mart Stores. Recognizing the need to participate in E-commerce, Wal-Mart has made a number of strategic acquisition and is offering grocery pick-up through a number of formats.

Costco Wholesale. Whole Foods Market was a leader in promoting organic and natural products to an affluent demographic. Costco, recognizing the trend, introduced similar lines to Whole Foods Market but at a substantially lower price becoming the largest retailer of organic foods in the U.S. If Amazon manages to reduce prices on organic and natural items, the advantage enjoyed by Costco will be eliminated.

   
 

USDA Weekly Egg Price and Inventory Report, June 22nd 2017.

Jun 23, 2017

    

Hen Numbers Stable and Prices Remain at Low Pre-Memorial Day levels.

OVERVIEW

According to the USDA Egg Market News Reports posted on June 19th the Midwest wholesale prices for Extra Large and Large sizes was unchanged from the previous week. The market will be influenced by hen inventory on the supply side of the equation. The progression of prices during 2017 is depicted in the USDA chart reflecting three years of data, updated weekly.

  

The June 19th USDA Egg Market News Report documented a USDA Combined Region value of $0.61 per dozen delivered to warehouses. This price lags Midwest Weekly values by one week, and is compared to a trailing 18-month peak price of $2.20 per dozen in late November 2015.  The USDA Combined range for Large, in the Midwest was $0.56 per dozen. At the high end of the range, the price in the Northeast Region, attained $0.64 per dozen.

The current USDA Combined Price was approximately 67 cents per dozen below the three-year average. During the first Quarter of 2016 the average was inflated by the rise in prices attributed to the post-HPAI shortage of all eggs but the price dropped 15 cents per dozen during the first two weeks of April 2016.

Hen numbers this week were stable for the second week after successive declines over the previous three weeks. The population is at a high level relative to demand with approximately 298.2 million hens in production. Hens-in-lay decreased from 303 million in early December 2016. The total egg-flock comprises 306.2 million including hens in molt and small flocks

Generic shell-egg stock rose by 0.1percent compared to a fall of 5.4 percent for the previous week confirming fluctuation between demand and production. Dried-egg inventory amounted to 28.0 million pounds (12,723 metric tons) as of May 31st 2017. This is extremely high, as is the National stock of frozen egg products reported on June 22nd confirming a stock of 39.5 million pounds (17,936 metric tons) on May 31st down from 41.2 million pounds on April 30th.  

   
 

USDA Projections for 2017 and 2018 Egg Production

Jun 23, 2017

    

The USDA Economic Research Service issued an updated June 15th record of egg production in 2016 an update for 2017 and a forecast for 2017. Values are compared to 2015 which was impacted by the Spring outbreak of HPAI in the upper-Midwest.

 

Parameter

2015 (actual)

2016 (actual)

2017 (forecast)

Difference ‘16-‘17

EGGS

 

 

 

 

Production (m. dozen)

6,938*

7,435

7,642

+1.6%

Consumption (eggs per capita)

         256*

          275

           276

+0.4%

New York price (c/doz.)

         182*

            86

             87

+4.6%

Source: Livestock, Dairy and Poultry Outlook – June 16th 2016

*Impacted by Spring 2015 HPAI outbreaks. Consumption in 2014, 267 eggs per capita

Subscribers to EGG-CITE are referred to the postings depicting weekly prices, volumes and trends and the monthly review of prices and related industry statistics.

   
 

Herbruck’s Poultry Ranch Seeking Truck Route Permit

Jun 23, 2017

    

Herbruck’s Poultry Ranch intends to erect a cage-free complex in Franklin County, PA which will hold 2.4 million hens in eight houses.

Traffic studies for the proposed complex were initiated eight months ago and the truck route will have to accommodate trailers 102 inch wide. 

 

At issue is a sharp turn in Mercersburg which cannot be assured with safety.  Options available to Herbruck’s include using 96 inch wide trailers, making changes to the intersection at Pennsylvania Route 16 and Park Street or to upgrade a Township Road to handle heavy vehicles.

The Pennsylvania Department of Environmental Protection is currently reviewing a permit application including a CAFO permit and tanks to store water from the egg packing plant.

Montgomery Township has issued an extension to allow Herbruck’s to obtain the necessary transport and environmental permission to proceed with the project which was announced just over a year ago.

   
 

Eggland’s Best Named “Most Trusted Egg” for Third Year Running

Jun 23, 2017

    

In a press release, Eggland’s Best announced that BrandSpark International has named Eggland’s Best as America’s Most Trusted egg for the third consecutive year.  The award was based on contributions from 10,000 shoppers in an annual survey.

Robert Levy, President of BrandSpark International stated, “America's top brands such as Eggland's Best have established trust by repeatedly exceeding consumer expectations and creating a superior product experience.” 

  

Charlie Lanktree, President and CEO of Eggland’s Best noted, “Eggland's Best is extremely proud to be recognized as America's Most Trusted.  He added, “At Eggland's Best, our goal is to consistently deliver a superior egg to our customers, and EB provides better taste, nutrition, and freshness."

   
 

Lohmann Patent Claim Against Novogen Dismissed

Jun 23, 2017

    

A high court in France (Paris Tribunal de Grand Instance) has dismissed the patent infringement suit brought by Lohmann Tierzucht against Novogen. At issue is the application of technology to identify the gene associated with “fish taint” in eggs derived from specific laying strains producing brown-shelled eggs.

A defective FMO3 gene is associated with accumulation of trimethylamine in yolk when hens are fed diets containing canola meal or fish meal. Over the period 2010 through successive years Lohmann Tierzucht was successful in eliminating fasmilies carrying the defective gene thereby preventing the occurrence of the problem.

  

Novogen was awarded a nominal $130,000 for costs against Lohmann Tierzucht although the court dismissed a counter-claim alleging unfair competition

According to reports, Lohmann Tiercucht has entered an appeal against the decision.

Litigation has been in progress since 2014.

   
 

Lidl Opens First U.S. Stores

Jun 23, 2017

    

Shoppers waited in line for the Lidl store in Virginia Beach to open on June 15th according to Supermarket News. The company offered specials to attract customers and generally shoppers were pleased with selection and the store layout. It remains to be seen whether the deep discount model will retain curious trial consumers.

 

Brendan Proctor CEO of Lidl U.S. noted “It’s not about whether our model works in a market, it’s about what we have to do to adapt to the market. Today is the day we start that work.” He added “We will study the shoppers coming through today and the products they are purchasing and the volumes in which they are purchasing them.

This will be the first learning for us as to what customer’s see as our strengths and on that we’ll start work.” The initial nine stores are approximately 36,000 square feet in extent with 21,000 square feet of selling space.

As with Aldi, private label packaging will predominate. Initial offerings were cheaper than competitors at nearby Kroger, Sprouts Farmers Market and Publix stores although similar to Aldi.

Innovations in the store include a bakery and an aisle providing shoppers with 80 percent of weekly convenience products including bread, dairy and refrigerated meat. This allows customers to enter the store, purchase what they need and get to the checkout according to Proctor.

   
 

AEB to Promote Eggs to the Caribbean Market

Jun 23, 2017

    

In a June 15th press release, the American Egg Board and the USA Poultry and Egg Export Council released a report on the potential for sale of shell eggs and egg products to the market in the Caribbean. Potential market segments in include food service, retail and distributors.

Ann Alonzo president and CEO of the AEB stated “We are pleased to present the results of the Caribbean market research, building on our recent efforts and successes to support egg producers interested in increasing demand for U.S. eggs and egg products outside the United States.

  

Ann Alonzo

In 2016, exports to the region attained a value of $27 million representing 13 percent of the total value of eggs exported. The volume of 33 million dozen represents the output of constant flock of 1.4 million hens.

The AEB and USAPEEC will host a Reverse Trade Mission for ten buyers from the Caribbean attending the American’s Food and Beverage Show to be held September 24th through 26th in Miami.

   
 

FSNS to Open Laboratory in Boise, Idaho

Jun 23, 2017

    

Food Safety Net Services (FSNS) has announced the imminent opening of a laboratory in Boise ID. This is the eleventh full-service laboratory located for the convenience of customers.

Further information can be obtained from the FSNS website by clicking on their logo on the left side of the Welcome Page or from info@fsns.com.

  

   
 

Hendrix Genetics Hatchery to Open August 15th 2017.

Jun 23, 2017

 

    

The opening of the new Hendrix Genetics hatchery in Grand Island, NE is set for August 15th. This large-scale hatchery represents a $10 million investment with state-of-the-art incubation equipment and biosecurity standards.

The new hatchery will serve the U.S. market with a potential output of 24 million day-old chicks annually under the Dekalb®, ISA®, Bovans®, and Shaver® brands. Hendrix Genetics Layers also operate hatcheries in Ephrata, PA. and Blackstone, VA.

  

The opening will feature guided tours of the facility, followed by a luncheon. The management team will be available to answer questions about the facility and the installations.

With this newest hatchery, Hendrix Genetics is strengthening their global supply of layer strains to serve the U.S. market with safe, high-quality pullet chicks.

   
 

EggsCargo® System Jumbo Trays Now Available

Jun 23, 2017

    

Based on the number of non-confined housing and advancing age of flocks Twinpack Special Products now offers egg trays compatible with the EggsCargo® System suitable for Jumbo and Extra Large product to accommodate eggs of up to 90g .

 

In the U.S. Jumbo eggs weigh in excess of 71g corresponding to 1.9 lbs per dozen.

For additional information click the Twinpack Special Products logo on the right side of the Welcome page.

   
 

South Africa Reports HPAI

Jun 23, 2017

    

Astral Foods Ltd. a leading broiler producer in the Republic of South Africa has released a statement confirming isolation of H5N8 avian influenza virus on a parent breeder complex in Villiers in the Orange Free State Province. The diagnosis of H5N8 influenza was confirmed by the Onderstepoort Veterinary Institute analogous to the NVSL in Ames, IA.

It is understood that the operation comprises 12 units with a total of 285,000 breeders which was quarantined on suspicion of infection following sharply ascending mortality. Depletion of the complex is in progress. Gary Arnold, Managing Director of Astral Foods assured stakeholders that “everything is being done to contain the incident” The probabilities of spread are high given the proximity of farms to the N3 National highway and the Vaal River.

  

It is noted that Irvines’ Poultry Farm near Harare, Zimbabwe was infected two weeks ago, also with H5N8 HPAI. Given the 800 mile distance between the two locations it is reasonable to assume that wild birds are disseminating virus. It is also highly probable that undetected infection is present in small subsistence units and backyard chickens in both nations given the absence of routine surveillance structure and the capabilities of veterinary field services in South Africa and Zimbabwe.

Based on experience with Newcastle Disease in the 1970s it is highly probable that HPAI will become seasonally or permanently endemic requiring a program of suppression using vaccines.

   
 

Traditional Supermarkets Experience Bad Week

Jun 23, 2017

    

Mainstream supermarkets have experienced a stressful week. The Thursday evening June 15th announcement by Amazon that it intends acquiring Whole Foods Market was the dominant news item sending down the shares of virtually all supermarket chains including Kroger.

The second concern was the unveiling of plans by Aldi to increase their presence in the U.S. to 2,500 locations by 2022. According to Heather Haddon in The Wall Street Journal, the chain would rise to third-ranked on store count.

 

The opening of the first ten Lidl stores was a further blow to traditional supermarkets facing competition from the deep discounters with efficient stores, limited range and a concentration on private label brands.

According to news reports, Wal-Mart Stores has been working on a defense against the inroads by deep discounters by investing in lower prices. Quoted in the WSJ article, a spokesperson for Wal-Mart Stores noted that although they will be committed to low prices, they are also upgrading  quality, freshness and assortment having raised wages and improved training of workers to enhance the buying experience.

The following table indicates the share prices of the designated companies on Thursday June 15th at close of trading before the Amazon announcement and at close of trading on Thursday 22nd

Company      Thursday 15th        Thursday 22nd         Difference (%)

Wal-Mart          $78.90                   $75.52                   -4.2

Kroger              $24.45                   $22.55                   -7.7

Target               $55.36                   $50.65                   -8.5

Costco              $180.08                $159.79                 -11.3

Dollar Tree       $73.02                   $67.69                   -7.3

Whole Foods    $33.06                   $43.20                 +30.7

S&P Index         2,342                      2,434                  +0.1            

   
 

Bonuses for Grocery Executives Cut

Jun 23, 2017

Rodney McMullen

    

According to an article in The Wall Street Journal, Heather Haddon reported that virtually all food retailers have reduced incentive bonuses to their CEOs.

Rodney McMullen, CEO of Kroger received incentive pay of $720,000 for FY 2016 compared to $3 million in FY 2015.

Whole Foods Market did not award bonuses to executives reflecting declining sales and profitability. Other stores including Sprouts Farmers Markets, Publix, SuperValu and Village Supermarkets have either eliminated or reduced payments consistent with the decline in same-store sales and revenue.

Haddon reported that the CEOs of the ten largest U.S. supermarket chains received $6.6 million in performance-based pay, down 40% from $11 million in 2015.

   
   
 

FDA Places Sanctions on Florida Feed Mill

Jun 23, 2017

    

The Food and Drug Administration issued an injunction against family-owned Syfrett Feed Company operating in Okeechobee, FL as a result of deviation from accepted good manufacturing practice.

A series of investigation following the death of a number of horses consuming feed produced by the plant led to a series of on-site inspections.

  

Defects noted included:

  • rodent infestation of the company warehouse,
  • failure to name additive ingredients on medicated feed labels,
  • failure to provide directions for use on labels,
  • deficiencies in control of possible cross-contamination in manufacturing feeds
  • inadequate procedures to identify, store and control inventory of drugs for medicated feeds.

Inspections by the FDA took place between 2014 and 2016 and it is evident that the company failed to correct deficiencies identified in early audits since warning letters were issued after each review.

Death or required euthanasia of horses as a result of toxicity usually involves inadvertent inclusion of ionophores in feed. Although the report in the Journal of the American Veterinary Medical Association detailing the case did not provide a specific diagnosis, it may be presumed that cross-contamination of horse feeds occurred if the mill in fact included ionophores in feeds for other species, given the deficiencies in operation identified in inspections.

   
 

Hickman’s Family Farms Certified by American Humane

Jun 23, 2017

 

    

Hickman’s Family Farms has received accreditation from the American Humane Certified Program.

To qualify as an American Humane Certified producer, Hickman's Family Farms had to meet the program's rigorous requirements, which include meeting science-based standards covering all aspects of operation from adequate space to appropriate temperature, air quality, nutrition and health programs.

In addition, they voluntarily agreed to undergo rigorous annual audits to ensure maintenance of standards.

  

Robin Ganzert

"We believe that all animals–those in our homes, those in service to our country, and those on our nation's farms and ranches–deserve humane treatment," said Dr. Robin Ganzert, president and CEO of American Humane. "By becoming an American Humane Certified producer, Hickman's Family Farms helps assure their consumers that the food on their plates was raised humanely and under the science- and evidence-based protections established by American Humane”.

"Our family is now celebrating the 73rd year providing fresh eggs to our customers," said Clint Hickman, vice president of Hickman's Family Farms. "Our Grandmother Nell Hickman started our business with the goal of taking care of her hens as she took care of her family. We are very happy to earn the American Humane Certified certification. We view this as another step in verifying that the care and welfare of our hens is of utmost importance to not only our customers, but also to our family, employees and the communities in which we live."

   
 

Western Ohio Supermarket Competition Lowers Price of Eggs

Jun 23, 2017

    

Intense competition in Southwestern Ohio has led to major supermarkets resorting to offering “loss leaders” on milk and eggs. In Florence, OH. Supermarket News reported eggs ranging from 39 cents to 44 cents per dozen at Kroger, Walmart and Aldi stores. In other areas of Ohio eggs are priced below $1 per dozen.

Kroger is in price competition with Walmart and deep discounter Aldi and is intent on lowering prices to retain customer loyalty.

  

Sharp reductions in price will stimulate purchase of eggs. As noted in the weekly review of egg prices posted on EGG-CITE, supermarkets have taken advantage of low wholesale prices which have not been passed on to consumers. By maintaining high margins on eggs through the past four months, food retailers have artificially restricted consumption to the detriment of the shell-egg segment of the industry.

   
 

NCC Statement on Possible Importation of Chicken from China

Jun 23, 2017

    

Mike Brown, president of the National Chicken Council issued a statement on Friday June 16th concerning the proposed importation of chicken from China:-

 NCC and our members support free and fair trade. In order to be effective, free trade must operate as a two-way street and any country that is able to meet the stringent food safety standards set by the USDA should be able to compete in the marketplace free of protectionism and artificial trade barriers.

  

The NCC does not believe that the decision to allow importation of chicken from China will have any material impact given the prediction of low volume. The NCC statement continued:-

 FSIS still must take a number of steps, the first of which will be the publishing of the proposed Rule in the Federal Register along with a comment period before it can make a final determination as to whether China is equivalent and thus eligible to export poultry to the United States that was slaughtered and cooked in Chinese establishments.

It is difficult to envisage how export of chicken from China to the U.S. could occur given the frequent reports of outbreaks of avian influenza with diverse strains which suggests an endemic status. This would disqualify chicken raised and slaughtered in other than a disease-free Region as defined by the OIE.

China has not imported chicken from the U.S. since the beginning of 2015 due to claimed concerns over avian influenza. China has never recognized the World Organization for Animal Health principle of Regionalization. Procedures in China to lift bans are circuitous and non-transparent. This effectively result in interminable delays, deliberately imposed in anticipation of a new cycle of bans should isolation of a low-pathogenicity strain in wild birds or limited outbreak in a non-commercial backyard farm be identified by surveillance. 

   
 

Food Safety Net Services Announces New Personnel and Executive Promotions

Jun 23, 2017

    

In a June 19th press release Food Safety Net Services (FSNS), announced six executive management promotions and the appointment of Joel Haag as Vice President of Purchasing and Distribution.

 

Lori Ernst, Jeff Carpenter and Randal Garrett have been promoted to Senior Vice Presidents. John W Bellinger, CEO, stated “Lori, Jeff and Randal are the leaders of FSNS and we are so fortunate to have each of them directing the future of our company,” Lori Ernst will manage FSNS Certification and Auditing. Jeff Carpenter will be responsible for Strategic Alliances. And Randal Garrett will manage Operations.

Additional promotions include Tim Santy advancing to Vice President of Operations, Scott Edwardsen will move to Vice President of IT, and Gennadiy Liberzon will become Vice President of Accounting and Finance. “These three individuals have a combined 24 years of service with FSNS,” said Bellinger. “Their contributions have been instrumental in the growth of the company, and their expertise in the food safety industry is invaluable.”

Joel Haag, an industry veteran with over 20 years purchasing experience will serve as Vice President of Purchasing and Distribution. Joel will enable the company to continue to manage costs and distribution strategies.

Food Safety Net Services (FSNS), headquartered in San Antonio, Texas, is a national network of ISO 17025 accredited testing laboratories open 24/7, 365 days a year. FSNS provides expert technical resources that assist companies with implementing food safety and quality programs that deliver critical information needed to continually improve process controls. Additional services include GFSI, SQF and PAACO, approved auditing and certification capabilities. For more information, click the FSNS logo on the left side of the Welcome page.

   
 

Status of 2017 Corn and Soybean Crops

Jun 23, 2017

    

The USDA Crop Progress Report released Monday June 19th  recorded progress in corn and soybean planting and emergence similar to 2016 as expressed in the table below:-

  

                                                                            WEEK ENDING

Crop

June 11th

June 18th

5-Year Average

Corn Planted

         100

         100

          100

Corn Emerged

           94

           98

            98

Soybeans planted

           92

           96

            93

Soybeans emerged

           77                          

           89

            84

                   

Crop

V. Poor

Poor

Fair

Good

Excellent

Corn Condition

     2         

   6

 25

  57

     10

Soybean Condition

     1

   5

 28

  59

       9

 

Parameter

v. Short

Short

Adequate

Surplus

Topsoil moisture:  Past Week

8

18

68

 6

                              Past Year

5

21

65

 9

Subsoil moisture:  Past Week

5

   17

72

 6

                              Past Year

4

18

70

 8

 
   
 

CME Prices

Jun 23, 2017

    

On Friday June 16th close of trading on the CME, the following rounded quotations for corn, soybeans and soybean meal were recorded, together with the bracketed value for the previous week.

   

COMMODITY

 

Corn (cents per bushel)

July ’17   384  (389)    

Sept. ’17  342  (397)  

Soybeans (cents per bushel)

July ’17   940  (943)    

Sept. ’17   946 (964)  

Soybean meal ($per ton)

July ’17   301  (308)

Sept’17    305  (305) 

 

Changes in the price of soybeans and soybean meal this week were:-

  • Corn:                     July quotation down by 5 cents.                (-1.2 percent)
  • Soybeans:            July quotation down by 3 cents                 (-0.3 percent)
  • Soybean Meal:   July quotation down by $7/ton                  (-2.2 percent)                                  

 

For each 10 cent per bushel change in corn :-

  • The cost of egg production would change by 0.45 cent per dozen
  • The cost of broiler production would change by 0.25 cent per pound live weight

 

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

  • The cost of egg production would change by 0.40 cent per dozen
  • The cost of broiler production would change by 0.25 cent per pound live weight

 

See posting on the May edition of CHICK-CITE (enter WASD in SEARCH block) summarizing the May 10th USDA-WASDE Report #565, for a review of price projections and quantities of commodities produced during the 2016-17 season.

   
 

Export of Shell Eggs and Products, January-April 2017.

Jun 23, 2017

    

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing the first four months of 2017 with the corresponding period in 2016:-

 

  

U.S. EGG EXPORTS FOR JANUARY-APRIL 2017 COMPARED WITH THE CORRESPONDING MONTHS IN 2016

    PRODUCT

  Jan.-April 2016  

Jan.-April 2017

   Difference

Shell Eggs

 

 

 

Volume (m. dozen)

  41.6     

     36.3

 - 5.3      (-12.7%)

Value ($ million)

  41.9

     35.4

 - 6.5      (-15.5%)

Unit Value ($/dozen)

    1.01

      0.97

  -0.04    (- 3.9%)       

Egg Products

 

 

 

Volume (metric tons)

   6,941

 14,318

 +7,377   (+106.3%)

Value ($ million)

     21.0

     37.3

    +16.3   (+77.6%)

Unit Value ($/metric ton)

   3,026

   2,605

    -421     (-13.9%)

Source USDA-FAS/USAPEEC

   
 

DeCoster Requesting Incarceration in New Hampshire

Jun 23, 2017

Jack DeCoster

    

Following rejection of an appeal against incarceration , Austin “Jack” DeCoster has requested that he serve his three-month prison term in a Federal prison in Berlin, New Hampshire in place of either a county jail in Iowa or the Federal prison in South Dakota. 

Jack DeCoster has requested a delay in reporting to prison to undergo examinations for age and metabolic related conditions.

He based his application on a deteriorating health status and the fact that he has relocated to Turner, ME to be close to his church community.  It must be remembered that Decoster, characterized in a Maine Today report on June 9th as “notorious” is extremely religious, a preoccupation which he has managed to integrate with a history of abusing workers, exploiting suppliers, despoiling the environment and demonstrating a lack of concern for public health.

  

It is a matter of record that in 1996 the Turner, ME. complex, still owned by DeCoster, but leased to a Hillandale Farms entity, paid a penalty of $2 million and settled claims by workers amounting to $3.2 million.  Apparently his piety does not preclude “cheating contractors, not paying bills, hiring illegal immigrants and breaking environmental laws” as noted by then Iowa Governor Terry Branstad.

The 2010 outbreak of SE precipitated by the management practices and willful neglect exercised at his Wright County, IA complex resulted in fines of $6.8 million for his company Quality Eggs (an obvious oxymoron) and a fine of $100,000 for himself and his son Peter in addition to the jail term.

   
 

World Food Prices Rising According to UN-FAO

Jun 23, 2017

    

Food deflation appears to be coming to an end according to the UN Food and Agriculture Organization (FAO).  The Agency noted that their Food Price Index rose to 0.2 percent in May  to a level of 172.6 which is ten percent higher than May 2016.  Prices of cereals, vegetable oils, dairy and meat all rose. Intensive aquaculture has restrained price increases for fish in many areas where extensive production has been introduced.

  

It is anticipated that bountiful supplies of oilseeds will result in stable prices for this class of commodities and that declining demand for meat in China will reduce total world output of protein.

   
 

USDA - WASDE FORECAST #566, June 9th 2017

Jun 23, 2017

    

Overview

The June 9th 2017 USDA WASDE projections for the 2017 corn and soybean crops reflected planting intentions and yields. Harvest areas for corn and soybeans were unchanged from May at 82.4 million acres (86.7 million in 2016) and 88.6 million acres (82.7 million in 2016) respectively.

The USDA projected corn and soybean yields are 170.7 bushels per acre (174.6 bushels in 2016) and 48.0 bushels per acre (52.1 bushels in 2016). Ending stock for corn was unchanged from May and projected to be 2,110 million bushels (2,320 million in April WASDE Report) and for soybeans up 15 million bushels to 495 million bushels (445 million in April 2017 WASDE Report).

  

Corn

The projection of the corn harvest was unchanged from May attaining 14,065 million bushels, down 7.1 percent from 2016. None of the major categories of use were appreciably changed. The projected USDA range in farm price incorporated an 80 cent per bushel spread as is normal for a mid-year report with many uncertainties relating to weather ahead. Price was unchanged from the May WASDE Report at 300 to 380 cents per bushel. At noon on June 9th, CME quotations for July and September 2017 corn were 389 cents and 372 cents per bushel respectively.

The RFS for 2016 was belatedly determined to be 18.11 billion gallons by the EPA on November 30th 2015 (See Editorial in CHICK-CITE). The value was four percent higher than the May 2015 proposal of 17.4 billion gallons. The RFS declared by the EPA is currently the subject of litigation. It is doubtful that the incoming Administration will alter existing RFS levels given support of the Midwest agricultural sector to the 2016 election outcome and subsequently reinforced by Administration assurances to Corn-State legislators in early January 2017.

A wild card will be the influence of the incoming EPA Administrator and the Secretary of Energy, both of whom favor the oil and refining industries of their home states. Both officials have historically opposed the RFS. Business associates of the President-elect have recently commented negatively on the system of Renewable Identification Numbers (RINs) which affect the profitability of many domestic refineries. For 2017, USDA raised diversion of corn to ethanol by 50 million bushels to 5,500 million bushels or 33.5 percent of the harvest.

   
 

USDA Weekly Egg Price and Inventory Report, June 15th 2017.

Jun 16, 2017

    

Hen Numbers Stable but prices fall back to pre-Memorial Day levels.

OVERVIEW

According to the USDA Egg Market News Reports posted on June 12th the Midwest wholesale prices for Extra Large and Large sizes fell 11 percent from the previous week.

The market will be influenced by  hen inventory on the supply side of the equation. The progression of prices during 2017 is depicted in the USDA chart reflecting three years of data, updated weekly.

  

The June 12th USDA Egg Market News Report documented a USDA Combined Region value of $0.68 per dozen delivered to warehouses. This price lags Midwest Weekly values by one week, and is compared to a trailing 18-month peak price of $2.20 per dozen in late November 2015.  The USDA Combined range for Large, in the Midwest was $0.63 per dozen.

At the high end of the range, the price in the Northeast Region, attained $0.70 per dozen. The current USDA Combined Price was approximately 75 cents per dozen below the three-year average. During the first Quarter of 2016 the average was inflated by the rise in prices attributed to the post-HPAI shortage of all eggs but the price dropped 15 cents per dozen during the first two weeks of April 2016.

Hen numbers this week were stable for the second week after successive declines over the prevs three weeks. The population is at a high level relative to demand with approximately 298.2 million hens in production. Hens-in-lay increased from 303 million in early December 2016. The total egg-flock comprises 306.2 million including hens in molt and small flocks

Generic shell-egg stock fell by 5.4 percent compared to a rise of 3.9 percent for the previous week confirming fluctuation between demand and production. Dried-egg inventory amounted to 28.0 million pounds (12,723 metric tons) as of May 31st 2017. This is extremely high, as is the National stock of frozen egg products reported on May 22nd confirming a stock of 41.2 million pounds (18,176 metric tons) on April 30th.  

   
 

Livestock Organizations Request Re-hearing from EPA

Jun 16, 2017

    

Virtually all livestock organizations including the National Pork Producers Council, the U.S. Poultry and Egg Association, the American Farm Bureau Federation, National Cattlemen’s Beef Association, United Egg Producers and the National Producers Federation have petitioned the EPA for a re-hearing to provide an exemption from the Comprehensive Environmental Response Compensation and Liability Act (CERCLA) and the Emergency Planning Community Right to Know Act (EPCRA).

  

Previously the Environmental Protection Agency (EPA) provided exemptions with respect to CERCLA reporting by livestock operations.  Subsequently the U.S. Court of Appeals for the District of Columbia Circuit rejected the exemption which effectively imposes onerous reporting requirements on livestock operations which are inappropriate and have no environmental benefits.

   
 

DeCoster Requesting Incarceration in New Hampshire

Jun 15, 2017

Jack DeCoster

    

Following rejection of an appeal against incarceration , Austin “Jack” DeCoster has requested that he serve his three-month prison term in a Federal prison in Berlin, New Hampshire in place of either a county jail in Iowa or the Federal prison in South Dakota. 

Jack DeCoster has requested a delay in reporting to prison to undergo examinations for age and metabolic related conditions.

He based his application on a deteriorating health status and the fact that he has relocated to Turner, ME to be close to his church community. 

It must be remembered that Decoster, characterized in a Maine Today report on June 9th as “notorious” is extremely religious, a preoccupation which he has managed to integrate with a history of abusing workers, exploiting suppliers, despoiling the environment and demonstrating a lack of concern for public health.

  

He based his application on a deteriorating health status and the fact that he has relocated to Turner, ME to be close to his church community.  It must be remembered that Decoster, characterized in a Maine Today report on June 9th as “notorious” is extremely religious, a preoccupation which he has managed to integrate with a history of abusing workers, exploiting suppliers, despoiling the environment and demonstrating a lack of concern for public health.

It is a matter of record that in 1996 the Turner, ME. complex, still owned by DeCoster, but leased to a Hillandale Farms entity, paid a penalty of $2 million and settled claims by workers amounting to $3.2 million.  Apparently his piety does not preclude “cheating contractors, not paying bills, hiring illegal immigrants and breaking environmental laws” as noted by then Iowa Governor Terry Branstad.

The 2010 outbreak of SE precipitated by the management practices and willful neglect exercised at his Wright County, IA complex resulted in fines of $6.8 million for his company Quality Eggs (an obvious oxymoron) and a fine of $100,000 for himself and his son Peter in addition to the jail term.

   
 

World Food Prices Rising According to UN-FAO

Jun 15, 2017

    

Food deflation appears to be coming to an end according to the UN Food and Agriculture Organization (FAO).  The Agency noted that their Food Price Index rose to 0.2 percent in May  to a level of 172.6 which is ten percent higher than May 2016. 

Prices of cereals, vegetable oils, dairy and meat all rose. Intensive aquaculture has restrained price increases for fish in many areas where extensive production has been introduced.

  

It is anticipated that bountiful supplies of oilseeds will result in stable prices for this class of commodities and that declining demand for meat in China will reduce total world output of protein.

   
 

Outbreak of H5N8 Avian Influenza in Zimbabwe  

Jun 15, 2017

    

Authorities in Zimbabwe which neighbors the republic of South Africa, Mozambique, Zambia and Botswana reported an outbreak of H5N8 highly pathogenic avian influenza on a large commercial farm east of the capital Harare. It is understood that close to one million birds have either died or are being depleted nationwide.

There is no epidemiologic evidence of how the virus entered the nation, but migratory birds are suspected in transcontinental spread. Accordingly, surveys of both indigenous and migratory birds would be appropriate.

  

The major issue is whether the infection can be contained. Given the socio-economic conditions in of Zimbabwe, it is doubtful whether the Department of Agriculture could mount an effective campaign with compensation.

If in fact the disease has been introduced by migratory birds, there is every likelihood that it may extend southward to the Republic of South Africa which has a large poultry population divided between commercial operations with high biosecurity and a very extensive subsistence poultry population which could support an endemic status if the virus is introduced.

   
 

Alltech Bioscience Center in Ireland Receives Prestigious Award

Jun 15, 2017

    

The Alltech Bioscience Center in Dunboyne, Co. Meth has been named Agricultural Laboratory of the Year by Irish Laboratory Awards. This distinction is based on demonstrating excellence, best practices and innovation.

  

The Alltech European Bioscience Center conducts research on cellular biotechnology and employs over 20 scientists involved in aspects of yeast cell wall architecture, trace element metabolism, biomarkers and dynamics of microbiota.

Richard Murphy, Director of Research at Alltech, noted “We strive for success, our innovative solutions and cutting-edge technology deliver for our customers and farmers and so this award is a tremendous achievement for us as a research team.”

   
 

Food Sovereignty in Maine

Jun 15, 2017

    

On Wednesday, May 31st, the Maine House passed LD 725, an Act to recognize local control regarding food and water systems. The Act was subsequently endorsed by the Maine Senate.

While the strong streak of independence characteristic of Maine might well be recognized in law, the legislation when enacted will have profound public health implications.

  

To date, eighteen Maine towns have declared food sovereignty by enacting local ordinances giving residents the right to produce, sell and consume foods of their own choosing.

Proponents of “food sovereignty” demand exemption from state licenses and inspections applied to the food chain. The principle of “food sovereignty” also claims exemption from state and Federal oversight. This would be retroactive and contrary to principles of public health.

It is hoped that this trend will not spread to adjoining states in New England or to other regions in the U.S. following tolerance of distribution of raw milk, now allowed in 21 states.

   
 

Highlights of Cal-Maine Comments at the 2017 Stephens Spring Investment Conference

Jun 15, 2017

    

Cal-Maine represented by Dolph Baker, Chairman, President and CEO accompanied by senior executives commented on the state of the egg industry in a June 6th presentation at the 2017 Stephens Spring Investment Conference.

In introductory comments, Baker outlined events of the last three years noting the fluctuation in egg prices resulting from depletion of hens during the 2015 HBAI outbreak and the subsequent drop in unit revenue following repopulation. He alluded to the stable and relatively low cost of feed as a saving grace.

  

Commenting specifically on Cal-Maine Baker noted:

  • The company has a reserve of cash as noted in the balance sheet to be used to purchase competitors. The company is obviously not currently leveraged with respect to debt but subject to a suitable opportunity, Cal-Maine is not adverse to assuming debt to effect a strategic acquisition.
  • Baker observed that despite the low price of generic shell eggs, his Company has managed to withstand prolonged low prices based on inherent efficiency, scale of operation and a commitment to specialty eggs which generate higher margins than undifferentiated generics. The approach by Cal-Maine can be summarized in a comment that “egg men can be creative.”
  • Cal-Maine sees continuing consolidation at a slow and steady rate based on a depressed market.

A ray of optimism was expressed by Cal-Maine executives in that they believe the market has bottomed and following seasonal trends, an improvement in pricing should be obtained in late July through the beginning of August. Retail demand has continued at a strong level partly due to food price deflation at the supermarket level. In contrast, food service has been depressed as evidenced by declining same-store sales recorded by QSRs and casual dining restaurants as more consumers prepare and eat  food at home.

Quarterly reports issued by Cal-Maine, the only pure-play public traded egg company are reviewed on release by EGG-CITE with postings documenting results and incorporating company comments.

   
 

Heritage Foundation Slams RFS

Jun 15, 2017

    

In a recent comprehensive report the conservative Heritage Foundation adopted a negative perspective on the biofuels industry.

The program of diverting corn to ethanol is regarded as “a case study in the unintended consequences of government intervention.” Heritage Foundation calculates that over 30 years, the biofuels policy has diverted $35 billion in taxpayer money to row-crop agriculture and refiners.

  

The Foundation considers that bioenergy policies have hurt taxpayers, the energy industry, the environment and especially the disadvantaged both in the U.S. and developing nations.

The Foundation quotes the United Nations Intergovernment Panel on Climate Change which has ascribed adverse environmental consequences to biofuels. It must be remembered that fermenting corn produces ethanol, distillers’ solubles and carbon dioxide in equal parts and requires extremely large volumes of water and energy to produce a grain-based biofuel.

The Heritage Foundation advises Congress to repeal energy programs in the Farm Bill incorporated in Titles VIII and XI. It suggests that the renewable fuel standard (RFS) be repealed and that free-market supply and demand factors should determine the quantity of ethanol used to dilute gasoline.

The myth of cellulosic ethanol is evidenced by the fact that in 2010 the U.S. produced 6.5 million gallons of fuel from cellulose, most of which was from municipal waste. Government estimates for the same year amounted to 100 million gallons denoting the technological and financial restraints to cellulosic ethanol.

Alternative energy sources are available including natural gas and oil at a lower cost than when the biofuels program was initiated almost as a panic measure. Unfortunately in the intervening decades, the diversion of corn to ethanol has developed its own momentum and is strongly supported by corn-state legislators who benefit politically and financially from the RFS.

   
 

Colorado Jury Vindicates Organic Operation

Jun 15, 2017

    

EGG-CITE has previously posted on the legal travail of Edwin Hostetler and his cooperative the Western Slope Layers.

A neighbor complained that dust emanating from the small organic operation in Delta County, CO., approved for construction in an agricultural-zoned area was deleterious to her health.

The neighbor sued Delta County for granting the permit and in 2015 the Colorado Court of Appeals upheld the County Commissioners determination to grant the permit. Subsequently the Colorado Supreme Court refused to hear the case.

  

A local jury determined that none of the claims made by the neighbor were valid and the rights of the Hostetler’s and Western Slope Layers were upheld.

This case has significant implications since case law now establishes a burden of proof on plaintiffs to demonstrate that annoyance, discomfort and medical conditions associated with dust and contaminants are responsible for damages.

It is understood that legal expenses in this case were extremely high and the burden on the Hostetler’s was partly relieved by contributions from other farmers and farming organizations.

   
 

USDA Weekly Egg Price and Inventory Report, June 8th 2017.

Jun 9, 2017

    

Hen Numbers and prices stable.

OVERVIEW

According to the USDA Egg Market News Report (Vol. 64: No. 23) posted on June 5th the Midwest wholesale prices for Extra Large and Large sizes were unchanged from the previous week. The market will be influenced by lower hen inventory on the supply side of the equation. The progression of prices during 2017 is depicted in the USDA chart reflecting three years of data, updated weekly.

  

The June 5th USDA Egg Market News Report documented a USDA Combined Region value of $0.68 per dozen delivered to warehouses. This price lags Midwest Weekly values by one week, and is compared to a trailing 18-month peak price of $2.20 per dozen in late November 2015.  The USDA Combined range for Large, in the Midwest was $0.63 per dozen.

At the high end of the range, the price in the Northeast Region, attained $0.70 per dozen. The current USDA Combined Price was approximately 75 cents per dozen below the three-year average. During the first Quarter of 2016 the average was inflated by the rise in prices attributed to the post-HPAI shortage of all eggs but the price dropped 15 cents per dozen during the first two weeks of April 2016.

Hen numbers this week were stable after successive declines over the past three weeks. The population is at a high level relative to demand with approximately 298.2 million hens in production. Hens-in-lay increased from 303 million in early December 2016. The total egg-flock comprises 306.2 million including hens in molt and small flocks

Generic shell-egg stock fell by 3.6 percent compared to a rise of 1.5 percent for the previous week confirming fluctuation between demand and production. Dried-egg inventory amounted to 29.0 million pounds (13,182 metric tons) as of April 30th 2017. This is extremely high, as is the National stock of frozen egg products reported on May 22nd confirming a stock of 41.2 million pounds (18,176 metric tons) on April 30th

   
 

CME Prices

Jun 9, 2017

    

On Friday June 9th at noon on the CME, the following rounded quotations for corn, soybeans and soybean meal were recorded, together with the bracketed value for the previous week.

 

COMMODITY

 

Corn (cents per bushel)

July ’17   389  (372)    

Sept. ’17  397  (380)  

Soybeans (cents per bushel)

July ’17   943  (923)    

Sept. ’17   964 (926)  

Soybean meal ($per ton)

July ’17   308  (303)

Sept’17    311  (305) 

 

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

  • Corn:                     July quotation up by 17 cents.              (+4.6 percent)
  • Soybeans:            July quotation up by 20 cents               (+2.1 percent)
  • Soybean Meal:   July quotation up by $5/ton                  (+1.7 percent)                                  

 

For each 10 cent per bushel change in corn :-

  • The cost of egg production would change by 0.45 cent per dozen
  • The cost of broiler production would change by 0.25 cent per pound live weight

 

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

  • The cost of egg production would change by 0.40 cent per dozen
  • The cost of broiler production would change by 0.25 cent per pound live weight

See posting on the May edition of CHICK-CITE (enter WASD in SEARCH block) summarizing the May 10th USDA-WASDE Report #565, for a review of price projections and quantities of commodities produced during the 2016-17 season.

   
 

Export of Shell Eggs and Products, January-April 2017.

Jun 9, 2017

    

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing the first four months of 2017 with the corresponding period in 2016:-

 

U.S. EGG EXPORTS FOR JANUARY-APRIL 2017 COMPARED WITH THE CORRESPONDING MONTHS IN 2016

    PRODUCT

  Jan.-April 2016  

Jan.-April 2017

   Difference

Shell Eggs

 

 

 

Volume (m. dozen)

  41.6     

     36.3

 - 5.3      (-12.7%)

Value ($ million)

  41.9

     35.4

 - 6.5      (-15.5%)

Unit Value ($/dozen)

    1.01

      0.97

  -0.04    (- 3.9%)       

Egg Products

 

 

 

Volume (metric tons)

   6,941

 14,318

 +7,377   (+106.3%)

Value ($ million)

     21.0

     37.3

    +16.3   (+77.6%)

Unit Value ($/metric ton)

   3,026

   2,605

    -421     (-13.9%)

Source USDA-FAS/USAPEEC

   
 

Luxemburg reports Avian Influenza

Jun 9, 2017

    

Incident cases of avian influenza involving H5N8 tthe predominant E.U. strain have declined in recent weeks. Luxemburg a principality sandwiched between France and Germany this week reported outbreaks on three small farms.

Control measures included depopulation and a ban on movement of poultry for at least two weeks according to the Luxemburger Wort of June 2nd.

  

The Ministry of Agriculture, Viticulture and Consumer Protection has recommended that poultry be kept indoors to avoid contact with free-living birds.

   
 

South Korea Reports H5N8 HPAI

Jun 9, 2017

    

The emergence of H5N8 Avian Influenza was announced by the Ministry of Agriculture, Food and Rural Affairs of South Korea at the beginning of June.

This is the first case recorded since the H7N6 epornitic was controlled in early April. This outbreak resulted in culling of 38 million hens representing 20 percent of the total poultry population.

 

The Index Farm has been depleted and an adjacent facility with 12,000 hens will also be depopulated as a precaution since exposure may have occurred.

Epidemiologic investigations are in progress.