In The News This Month – February 2022

 

 

Editorial

Just as we start hearing talks of a what a post-covid world will look like, we’re hit with another major crisis. The news throughout the month focused on the continuing crisis in the Ukraine. Early on February 24^th the Russian military began a full-scale invasion of Ukraine. Since before that day social media pages were filled with posts of concerned people. Even on what is widely considered a business professional platform, LinkedIn, the #standwithukraine tag has been trending throughout the month with many businesses extending support in any way they can. Of the many posts out there, the best ones I’ve seen have featured Ukrainian farmers. The resilience and strength of these farmers is beyond admirable. Global Farmer Network member, Kees Huizinga who has been farming in the Ukraine for 20 years stated it best, “even in war, farmers keep working”.

What does this crisis mean for the industry? USDA Chief Economist, Seth Meyer acknowledged that the situation is impacting world trade as well as U.S. commodity prices. However, there are just too many unknowns to truly determine what is going on. The news of Russia invading Ukraine sent wheat prices skyrocketing 50 cents higher, with corn up 30 cents at one point on Feb. 24^th. As Dan Basse of AgResource Company recently stated “there’s a lot we don’t know yet. But when you think about 31% of world wheat trade being domiciled in Ukraine and Russia, 30% of world barley trade, and then somewhere around 29% of ‘sunoil’ trade, it’s a really big deal.”

This month also featured stories on the current outbreak of the Avian flu. U.S. Secretary of Agriculture, Tom Vilsack said this outbreak is not as severe as the outbreak of 2015. Having experience with this situation, Vilsack believes the outbreak is different today largely because there is more testing for the virus. The USDA confirmed this month the presence of HPAI in a commercial poultry flock in Delaware. State officials quarantined the affected premises, and birds on the property were depopulated to prevent the spread of the disease.  The highly pathogenic avian influenza also hit Kentucky with over 300,000 birds needing to be depopulated.

Be sure to check out an article from The Daily Scoop that highlighted five diverse farm technologies associated with AgLaunch. An ultra-high pressure water system that offers a reduction in farming costs, an app that keeps track of individual calf records, and electric, lightweight farm machines are a few of the technologies featured. Rounding out the month was a story from AgWeb that showcased 9 farm financial statistics to know for 2022. According to an economist for the Federal Reserve Bank of Kansas City, the agricultural economy outlook for the US remains solid, but a sharp increase in production costs is weighing on expectations for 2022.

As we enter a new month and continue to follow the crisis in the Ukraine, I will turn to stories about our world farmers and their strength and adaptability. I will stop at the posts of John Deere tractors “getting it done” in Ukraine because the world still needs to be fed, and simply put farmers don’t quit.

 

Monica Lizar

Account Manager

Aeros, a Cultura Company

 

Feed and Grains:

 

 

Here’s Why the Russia-Ukraine Crisis Creates a Realignment of World Trade

The war of words turned into an escalating situation Thursday as Russia invaded Ukraine. The news sent wheat prices skyrocketing 50 cents higher, with corn up 30 cents at one point Thursday. Crude oil also soared above $100 per barrel, hitting the highest level since 2014. 

Dan Basse of AgResource Company says the situation fueled commodities, as two major grain producers were thrown into chaos and uncertainty. And as that happened, it elevated the U.S.

“It’s really a realignment of world trade,” says Basse. “What we don’t know about, of course, is the sanctions. The Russians have also threatened that if another country were to blockade the Bosphorus (the Strait of Istanbul), which is the feeder of all the grain coming down, that they would take actions against that country. So there’s a lot we don’t know yet. But when you think about 31% of world wheat trade being domiciled in Ukraine and Russia, 30% of world barley trade, and then somewhere around 29% of ‘sunoil’ trade, it’s a really big deal.”

Read full article here

 

How Will A Surge in Bio-Based Fuels Impact Grain Demand?

The dramatic development of the U.S. renewable diesel industry is similar to how ethanol changed the U.S. corn industry from 2007 to 2010. But renewable diesel and Sustainable Aviation Fuel (SAF) could be more disruptive. “Lifechanging is how I describe the potential,” says Chip Flory, host of “AgriTalk and Farm Journal Economist.

Chip Flory moderated a session with Dan Basse, AgResource Company, Stephen Nicholson, Rabo AgriFinance, Pete Meyer, S&P Global Platts during the Top Producer Summit in Nashville. You can still register for the Online Top Producer Summit, which gives you access to content through March 31. Use the code “VIRTUAL” to take 50% off your registration fee.

While it is a cousin of biodiesel, the two fuels are not the same. Renewable diesel, which is produced by processing fats and vegetable oils, is chemically the same as petroleum diesel and has nearly identical performance characteristics. Plus, it is 100% fuel, removing the need for blending it with diesel.

Similarly, SAF is a non-petroleum jet fuel that is made from products such as cooking oil, vegetable oil and even soybean oil.

Infrastructure is on its way and policy makers are putting their support behind these “green” fuels. So, what does it mean for American farmers?

Read full article here

 

2022 avian flu outbreak not as severe as 2015

U.S. Secretary of Agriculture Tom Vilsack said the current outbreak of highly pathogenic avian influenza (HPAI) is not a severe as the outbreak of 2015, largely because of increased testing for the virus.

Vilsack served as agriculture secretary during the Barack Obama administration, when the earlier outbreak occurred, and he returned to the role during the Joe Biden administration.

He compared the experiences between the two outbreaks while speaking on February 24 at the United States Department of Agriculture (USDA) 98^th Agricultural Outlook Forum.

“This is a circumstance and situation that we obviously had some experience with, but the experience that we’re having today is significantly different than the experience we had the last time I had this job,” he said. “It is significantly less, and I think, in large part because we are essentially doing more testing. Getting more quick results, understanding that once results are confirmed the necessity of the population eradication. And that has happened in a number of instances already. Flocks have been depopulated in a number of states.”

Read full article here

 

Egg Week

USDA Weekly Egg Price and Inventory Report, February 24th, 2022.

• Unit revenue for Midwest Extra-large and Large sizes during the third week of February was lower by an average of 9.9 percent this past week following a 2.9 percent decline in price over the previous week. Mediums were down 7.9 percent. Unseasonal consumer demand has ended after four successive weekends of inclement weather in the Northeast and Mid-Atlantic states. The decrease in price for all sizes this past week coupled with a noteworthy increase in industry inventory suggest lower in prices over the immediate term unless HPAI impacts availability. Absent this situation the trajectory in price will be downwards. Industry inventory rose this past week to 1.89 million cases mainly due to an accumulation of stock in shell eggs. Retailers will continue refilling the pipeline to satisfy consumer demand that was higher compared to past years as the industry moves through the last week of February 2022. It is possible that orders will increase over uncertainty on the part of buyers concerning avian influenza. Either way retailers will adjust shelf prices higher. Wholesale unit prices in January and February 2022 contrasted favorably with the corresponding months in both 2020 and 2021 that were characterized by low ex-plant unit revenue. The price of shell-eggs will benefit from a net decrease of 0.2 million hens in the producing flock this past week but with a 9.9 million net increase in flock size over the past six months. Wholesale Midwest prices are still yielding positive margins, taking into account the combined costs of nest-run, grading, packaging and delivery.

Read full article here

 

Poultry:

 

USDA Confirms Highly Pathogenic Avian Influenza in a Commercial Poultry Flock in Delaware

WASHINGTON, February 23, 2022 – The United States Department of Agriculture’s (USDA) Animal and Plant Health Inspection Service (APHIS) has confirmed the presence of highly pathogenic avian influenza (HPAI) in a commercial poultry flock in New Castle County, Delaware.

Samples from the flock were tested at the University of Delaware’s Allen Laboratory in Newark, part of the National Animal Health Laboratory Network, and confirmed at the APHIS National Veterinary Services Laboratories (NVSL) in Ames, Iowa.

APHIS is working closely with state animal health officials in Delaware on a joint incident response. State officials quarantined the affected premises, and birds on the property will be depopulated to prevent the spread of the disease. Birds from the flock will not enter the food system.  

Read full article here 

 

Proposed poultry merger raises concerns from legislators

Sanderson Farms is already one of the “Big Four” poultry producers which dominates 54% of the market. The proposed merger with Wayne Farms raises deep concerns that further consolidation will increase price-fixing schemes as well as hurt farmers and consumers, according to a letter to the Department of Justice signed by Democrat Congressional members in the Senate and House of Representatives.

Sen. Elizabeth Warren, D-Mass., and Representative Mondaire Jones, D-N.Y., along with Sens. Cory Booker, D-N.J., Richard Blumenthal, D-Conn., and Bernie Sanders, I-Vt., and Reps. Mark Pocan, D-Wisc., Katie Porter, D-Calif., Hank Johnson, D-Ga., Pramila Jayapal, D-Wash., Jan Schakowsky, D-Ill., David Cicilline, D-R.I., Jamie Raskin, D-Md., and Judy Chu, D-Calif., slammed the proposed merger between Sanderson Farms, the third largest poultry processor, and Wayne Farms, the sixth largest poultry processor, and called on the DOJ to thoroughly review the deal and step in to prevent harm to American farmers and consumers. 

Read full article here 

 

Turkey:

Read full article here

 

302,400 birds in Kentucky depopulated

The toll of highly pathogenic avian influenza (HPAI) on poultry in Kentucky has exceeded 300,000 birds, according to a report from the World Organisation for Animal Health (OIE).

On February 14, the United States Department of Agriculture (USDA) Animal and Plant Health Inspection Service (APHIS) reported a confirmed case of HPAI in a commercial broiler flock in Fulton County and a presumed-positive case in a commercial turkey flock in Webster County. Later that week, APHIS confirmed the Webster County avian influenza case. APHIS stated that it would report both cases to the OIE, but at the time, it had not revealed the size of either flock.

In the latest report on the OIE webpage, it listed the size of the Fulton County broiler flock as 246,000 chickens, and the Webster County turkey flock’s size at 54,600. Both farms have been quarantined and depopulated.

Read full article here

 

Pork:

 

McDonald’s pressured on pig welfare.

Carl Icahn – who calls himself a “leading shareholder activist,” according to his website – is currently protesting the fact that some of McDonald’s pork suppliers still house pregnant pigs in crates. The QSR previously vowed to phase out the use of pig gestation crates by the end of 2022.

As a result, Icahn, who owns only 200 McDonald’s shares that are worth approximately $50,000, has nominated two new candidates for the fast-food chain’s board of directors to further these animal welfare claims. In 2021, activist investors restructured the Exxon board of directors to boost more climate-friendly initiatives. 

According to McDonald’s, the brand will source 85-90% of its U.S. pork from pigs not housed in gestation crates by the end of 2022 and pushed the 100% goal to 2024.

“Mr. Icahn’s stated focus in making this nomination relates to a narrow issue regarding the Company’s pork commitment, which The Humane Society U.S. has already introduced through a shareholder proposal. This is an issue on which McDonald’s has been a leader,” the McDonald’s Corporation Board of Directors said in a February 20 statement.

Read full article here

 

Pork, beef export values reach new highs

U.S. beef exports greatly exceeded previous volume and value records in 2021, surpassing $10 billion for the first time, according to year-end data released by USDA and compiled by the U.S. Meat Export Federation (USMEF). Pork exports finished slightly below the record volume reached in 2020 but set a new value record, topping $8 billion for the first time.

December beef exports totaled 121,429 metric tons (mt), up 1% from a year ago, while value climbed 33% to $991.8 million – the third largest month on record. These results pushed 2021 volume to 1.44 million mt, up 15% from a year ago and 7% above the previous record set in 2018. Export value soared to $10.58 billion, up 38% from 2020 and shattering the previous record (also from 2018) by 27%.

Pork exports trended lower in December, falling 17% from a year ago to 215,872 mt, valued at $604.3 million (down 12%). For 2021, export volume was 2.92 million mt, down 2% from the 2020 record, but export value still climbed 5% to a record $8.11 billion.

Read full article here

 

Beef:

 

Understanding the beef supply chain in a “Post-COVID world”

Rabobank senior protein analyst Don Close explains four key challenges facing the beef supply chain in the coming months as the global marketplace unwinds from a multi-year worldwide pandemic.

EPISODE NOTES

Beef prices – like all food prices – have increased as the inflationary story in the marketplace unfolds. Thus far consumers haven’t balked at paying higher prices for their favorite center-of-plate protein, but how long can that demand hold out? And what is the outlook for the cattle producer as feed costs escalate, too?

Don Close is an agricultural economist, and senior animal protein analyst with Rabobank’s Food & Agribusiness Research team. He recently released a report on the beef supply in a “post-COVID world”, discussing a series of challenges facing the beef supply chain in the coming year. I spoke with Don about those challenges, and how beef demand has remained so resilient in the face of inflation the likes of which hasn’t been seen in a generation.

Listen to podcast here

 

Dairy:

 

Dairy industry GHG reductions an example for other sectors

The dairy industry in California has made big progress in reducing greenhouse gas emissions, setting an example that the pork industry and other animal agriculture sectors could follow.

Frank Mitloehner, professor and air quality extension specialist for the Department of Animal Sciences at the University of California, Davis (UC Davis), told of those efforts while speaking during a February 17 webinar in which the National Pork Board (NPB) revealed its sustainability goals and metrics.

Mitloehner commended the pork industry for its sustainability initiatives, while also suggesting more could be done. In his state of California, the dairy industry has done much to reduce its greenhouse gas emissions.

Read full article here

 

Dairy X Beef: New research findings

Dr. Tom Earlywine, Director of Nutritional Services, Land O’Lakes Animal Milk Solutions, joins us with an update on some new research finding related to dairy x beef. We also will talk rumen development and what’s new there. We come to you from the Purina Animal Nutrition Center in Gray Summit, Mo.

Watch video here

 

Miscellaneous:

 

Read full article here

 

Attorney general examining high fertilizer costs

Secretary of Agriculture Tom Vilsack says he’s supportive of action taken by Iowa Attorney General Tom Miller requesting a study on the market case for higher fertilizer costs.

Since January 2021, anhydrous ammonia has increased 315%. Urea has increased by 214%, liquid nitrogen by 290%, monoammonium phosphate by 171%, and potash by 213%, according to the most recent data supplied by USDA’s Agricultural Marketing Services.   

“These sudden and significant price increases warrant an analysis into the underlying causes,” Miller says. “We are not looking at any legal theory or from an enforcement point of view at this time. We want to know, to the extent possible, why this happened, what were the basic factors that caused the price increase, and whether the increases can be explained by supply and demand.” 

Read full article here

 

9 Farm Financial Statistics to Know for 2022

While this year is forecast not to exceed the farm profits of 2021, it should still be well above average.

U.S. net farm income, a broad measure of farm profitability, is currently forecasted at $113.7 billion, down 4.5%, according to USDA’s most recent Farm Sector Income Forecast, released Feb. 4.

That is 15% above the 2001-2020 average of $98.7 billion when adjusted for inflation. 

“The outlook for agricultural economy in the United States remains solid,” says Cortney Cowley, economist for the Federal Reserve Bank of Kansas City. “But a sharp increase in production costs is weighing on expectations for 2022.”

Read full article here

 

 

The information in this newsletter is intended to update our readers of current events.  Any third-party publications are presented for informational purposes only and the views presented in such publications are those of the respective authors.  The views therein are not necessarily representative of Aeros or any other CULTURA company’s views on any particular topic.