In the News Week – December 18, 2020
While the holiday season goes into full swing a lot of us are still glued to our news channels watching as the COVID-19 vaccine begins to arrive throughout the United States. With its arrival, many of us are questioning how soon we will see an end to the effects of this pandemic. As I read through this week’s news headlines, it becomes obvious that a true recovery is still a long way out.
According to a CoBank report feed costs are expected to see a 12% increase in 2021, further testing the industry’s recovery. The ethanol outlook is not much better. The biggest impact for this industry was the high reduction in gasoline demand due to the pandemic. Although they are hopeful the vaccine will help, they do not see a full recovery until at least late spring. Unfortunately, egg prices continue to fall and lag behind the 3-year average. Hopefully, we will see a slight increase in seasonal demand in the coming weeks. Let’s start that holiday baking now!
This week’s headlines brought even more questions about the outlook in 2021. Will it be a better year for the pork industry? How will feed costs impact the cattle industry? Probably one of the more predominant questions this week is when will the workers in the meat and poultry plants receive the COVID vaccine? Organizations and unions are urging priority status for these front-line workers as they have been putting themselves in danger from day one to make sure our families are fed. Many people strongly feel that these heroes along with our health care workers should be among the first to receive the vaccine.
A bit of good news during these still challenging times, college graduates in agriculture can expect to see more employment opportunities in the coming years. The agriculture industry is resilient, and as it continues to grow and develop it will require more people working together to solve future challenges.
Sometimes, and especially during the holiday season, some interesting and fun news can brighten everyone’s day. As we approach the new year, it is encouraging to see that Proctor & Gamble is following the growing trend of sustainable packaging by introducing a recyclable toothpaste tube. Finally, not sure if you caught it, but a TikTok video went viral this week that revealed how Chick-fil-A nuggets are made. After watching the video myself, I was pleasantly surprised with their simple and candid process. Now I can happily enjoy my nuggets with a vanilla shake of course!
Monica Lizar
Business Development Manager
Aeros, A CULTURA company
Feed and Grains:
USDA-WASDE FORECAST #607 December 10th 2020
The December 10th 2020 USDA WASDE Report was updated from the November edition with no change in either corn or soybean harvest. December values are based on actual harvest areas and yields. The corn acreage harvested is currently estimated at 82.5 million acres, unchanged from the November 10th WASDE report. Soybeans will be harvested from 82.3 million acres, unchanged from the December 10th WASDE report.
The December 2020 WASDE estimate of corn yield was retained at 175.8 bushels per acre, (168.0 bushels per acre in 2019). The estimate of soybean yield was retained at 50.7 bushels per acre. (47.4 bushels per acre in 2019)
The December USDA projection for the ending stock of corn was held at 1,702 million bushels. Due to exports, the ending stock for soybeans was reduced by 7.9 percent to 175 million bushels.
Projections for ending stocks of both corn and soybeans have influenced recent CME price quotations concurrently with increased compliance with the Phase-One trade agreement with China. The November WASDE projected the corn price to be $4.00 per bushel and soybeans at 1,055 cents per bushel.
Read full article here
Grain elevator outlook explored in CoBank report
The year is concluding much different than expected for U.S. grain elevators as prices rally in fall. The largely unexpected grain price rally that began in August enabled U.S. grain elevators to capture strong margins on stored crop, as well as on new crop which they bought and resold into a rising market.
Having already accelerated merchandising, elevator activities will be limited over the next three months until the market has greater visibility to U.S. planting intentions and actual crop production in key international grain growing regions, according to a new report from CoBank’s Knowledge Exchange division, Grain Elevator Outlook: Accelerated Merchandising Margins Today, Potential Volatility Tomorrow.
“Given the continued inversion in futures prices, we see volatility ahead with limited opportunities for elevators to buy basis cheap and capture carry, at least during the near-term,” said Kenneth Scott Zuckerberg, lead grain and farm supply economist at CoBank. “However, grain cooperatives that also have farm supply divisions should benefit from a strong fall application season and what we believe will be an acceleration of farmer prepayments of spring crop inputs prior to yearend.”
The crop year is concluding on a much different but substantially more profitable note for U.S. grain elevators than was expected as recently as four months ago. Early in the 2020 growing season, expectations for a large crop resulted in low estimates of average farm-gate prices at harvest, specifically $3.20 per bushel for corn and $8.40 per bushel for soybeans.
Read full article here
US animal feed costs expected to rise 12% in 2021
CoBank report says surging feed costs will test the sector’s recovery from COVID-19. The U.S. animal protein sector is expected to see a 12% increase in feed costs in 2021, according to a new report from CoBank. This is due to higher corn and soybean meal prices, which are expected to see the highest year-over-year inflation since 2011, as well as increased demand from China.
“With corn futures above $4 per bushel and soybean meal futures around $350 per ton, cattle feeders, hog producers and chicken producers face higher prices for feed than they have in many years,” the report said. “These higher feed costs come at a challenging time, as meat and poultry industry margins have been pressured by weak prices in 2020 due to COVID-19.”
As China rebuilds its hog herd and recovers from African swine fever (ASF) losses, its demand for grain will grow.
“We expect China to shift its imports in the coming years from animal protein to feed as it works to regain its self-sufficiency in animal protein lost due to ASF,” CoBank said.
China’s shortage of animal protein supply as a result of ASF has moved it to the position of the largest global importer of beef and pork. But China’s animal protein imports are expected to decline in 2021 while its imports of animal feed could surpass all-time highs in the 2020-21 crop year.
“This slow but meaningful shift in China’s ag imports has massive implications not only for animal protein and grain markets, but for agriculture globally,” the report said. “Prior to the outbreak of ASF, China accounted for nearly 30% of global animal protein consumption and in 2020 will account for a similar level of global animal protein trade. As China’s imports of animal protein fall and their imports of feed rise, we see U.S. animal protein sectors facing higher feed costs and lower livestock prices resulting in a more difficult profit margin environment.”
Read full article here
Ethanol:
Ethanol outlook goes from bad to worse
The coronavirus pandemic’s induced reduction in gasoline demand and fuel use resulted in 2 billion gallons in reduced ethanol production from March to November. That equals an estimated $3.8 billion in lost revenues for the ethanol industry, and 700 million bushels of corn not ground, according to Scott Richman, economist at the Renewable Fuels Association.
During a call with the media Wednesday morning, Richman says the economic impact to the ethanol industry is continuing. “The impact from this pandemic is not over yet. Even though our industry is very resilient, it’s taken a direct hit from this pandemic.”
Richman says the industry is hopeful vaccines approved and now being distributed will help, but it’s probably not going to amount to a full recovery until late spring at the earliest.
Ethanol production dropped by 45-50% from year-ago levels during April, and then began to climb before stalling out around July 4, he adds. Summer ethanol production settled at 10% below previous year levels, and never returned to normal. In recent weeks, the increase in COVID cases in November and increased restrictions sent production levels to 15% below normal.
Richman says the industry was already experiencing challenges when coming into 2020 due to the small refinery exemptions which reduced 1.4 billion gallons of demand for the 2018 compliance year and 2019 consumption and trade tensions with China.
Read full article here
Eggs:
Egg Week
USDA Weekly Egg Price and Inventory Report, December 10th 2020.
- The U.S. flock in production was up 0.4 million from the previous week to 323.4 million, with molted hens resuming production and pullets reaching maturity in anticipation of increased December demand that has not materialized.
- Shell inventory was up 9.1 percent after a 5.8 percent increase last week. This indicates an imbalance between demand and supply with implications for prices extending into the pre-Christmas period given projections of seasonal increases in supply. There is little evidence of a return in the food service sector as liquid and dried-egg prices firm and reopening of the economy is delayed by a surge in COVID-19 incidence rates in many regions suggesting more restrictions.
- The USDA Midwest benchmark generic prices for Extra-large and Large sizes were approximately thirteen percent down from the previous week to 84.5 and 81.5 cents per dozen respectively. Mediums were down 16.1 percent to 68.5 cents per dozen. For the past three weeks Midwest prices have sharply lagged both the corresponding weeks in 2019 and the 3-year average. Prices will continue to fall if there is no increase in seasonal demand given the number of molted hens resuming production and pullets commencing lay.
- The Midwest price of breaking stock was down 26.6 percent to an average of 40.5 cents per dozen. Checks in the Midwest were down 34.3 percent to an average of 32.5 cents per dozen.
Read full article here
Procter & Gamble to Introduce Recyclable Toothpaste Tubes; Implications for Egg Cartons?
Consistent with P&G Ambition 2030 a commitment to achieve 100 percent recyclable or reusable packaging, Oral Care and Crest toothpaste will be fabricated from high-density polyethylene. This material is compatible with existing recycling technologies where collection programs exist. Procter & Gamble has obtained recognition from the North American Association of Plastic Recyclers for the proposed change in packaging. Tubes are converted into quality post-consumer, high-density polyethylene resin used to make new plastic bottles.
The selection of recyclable material by Procter & Gamble illustrates a growing trend among manufacturers towards sustainable packaging. This represents a challenge to the egg industry to either reuse or recycle egg cartons and outer packaging. Eggs represent a special set of requirements to manufacturers of packaging material since transport requires protection from physical damage extending from the plant to the shelf and then on to the consumer’s refrigerator. Apart from physical damage, considerations such as compatibility with grading and robotic packing, condensation and possible contamination are inherent to the design of cartons in addition to appearance, visualization of quality at point of sale, and suitable surfaces for advertising and nutrient content. With a price-sensitive industry cost is also emerging as a significant determinant especially for generic eggs. It is evident that in the future innovative materials will be used for egg cartons including high-density polyethylene.
Read article here
Feds, 20 states file briefs in support of Meat Institute lawsuit
North American Meat Institute argues that Proposition 12 is unconstitutional and hurts consumers.
The federal government and 20 states filed amicus briefs in support of the North American Meat Institute lawsuit challenging the constitutionality of California’s Proposition 12.
The U.S. Department of Justice filed an amicus brief in support of the Meat Institute’s petition for rehearing en banc in the U.S. Court of Appeals for the Ninth Circuit.
In addition, the states of Indiana, Alabama, Alaska, Arkansas, Georgia, Iowa, Kansas, Louisiana, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Texas, Utah, West Virginia, and Wyoming filed a separate amicus brief in support of the Meat Institute’s petition.
“The support from the United States government and 20 states underscores the significance of our case against Prop 12,” said Meat Institute President and CEO, Julie Anna Potts. “Prop 12 is unconstitutional and not only hurts consumers with higher prices for pork, veal and eggs, it is costly for the federal government’s programs designed to help those facing hunger, including the Emergency Food Assistance Program and the Supplemental Nutrition Assistance Program.”
According to the state of California’s own economic analysis, consumer prices are likely to increase because producers will have to spend to expand or construct new animal housing which may cost more to operate in the long term. The state acknowledges it may take several years for farmers to comply resulting in a shortfall of products and increased prices for consumers.
Read full article here
Poultry:
U.S. Broiler and Turkey Exports for January-October 2020.
Export data for the first ten months of the current year confirmed a 5.3* percent increase in exports of broiler parts including feet, in comparison to January-October 2019. Unit price was 2.9 percent lower compared to the corresponding period in 2019 at $996. Value rose by 2.3* percent compared to the first ten months of 2019. There were progressive reductions in value during May, (7 percent); June, (11 percent); July, (14 percent) and August, (10.7 percent) but with stabilization in September, (-0.2 percent) and an increase of 6.1 percent in October compared to corresponding months in 2019.
Unit price is constrained by the fact that leg quarters comprise over 96 percent of chicken meat exports, excluding feet with whole birds and specialty products contributing a small proportion to the volume shipped. Leg quarters represent a relatively low-value commodity lacking pricing power. Exporters of commodities are subjected to competition from domestic production in importing nations. Generic products such as leg quarters are vulnerable to trade disputes and embargos based on real or contrived disease restrictions.
The extensive outbreak of African swine fever has boosted U.S. livestock and poultry exports to Asia over the intermediate term, as all animal protein will rise in price as pork supply is restricted. The effect of increased demand from Viet Nam is apparent but disruption in ports and transport infrastructure due to the COVID-19 outbreak impacted exports to China during January and February 2020.
Read full article here
Viral video reveals how Chick-fil-A nuggets are made
Commenters on TikTok overwhelmingly praised the brand’s straightforward cooking process.
Footage showing behind-the-scenes footage of how Chick-fil-A’s chicken nuggets are made went viral on social media platform TikTok this week.
The video, which generated more than 13 million views, was posted by the account dxxdxx7, who claims to be an employee of the popular quick service restaurant known for chicken.
It shows the gloved hands of an employee showing a raw chicken breast to the camera before dipping it in a milk wash. Then, the chicken gets dipped into a “seasoned coater,” a mix of flour and seasoning, before being sifted and deep-fried in oil.
The comments on the video were overwhelmingly positive, praising the straightforward cooking process.
Read full article here
Pork:
Impact of sow transition diet, genetic line on reproduction
Evaluating sow transition diets, defined as diets fed in late gestation and/or early lactation, have recently received increased attention in the U.S. The mindset of our research lab is that we may be able to use sow transition nutrition to reduce the need for farrowing assistance, thus reducing the need for farrowing house labor, while maintaining or enhancing productivity.
Past research suggests sow transition nutrition may help the farrowing process and enhance piglet survival. The Danes (Feyera et al., 2017) found feeding greater levels of fiber reduced sow farrowing duration, and the Dutch (Ramaekers, 2013) reported feeding hemicellulose to improve sow fecal scores. In a review paper, Pettigrew (1981) analyzed feeding increased levels of fat during the transition period and suggests feeding 2.2 pounds of added fat pre-farrow enhances piglet survival when piglet survival is lower than 80%. Yet the majority of the studies in Pettigrew’s review were conducted in the 1970’s. Farrowing management has evolved since that time. Hence revisiting the value of fat feeding pre-farrow is warranted. More recently, scientists (Manu et al., 1981; Batson et al., 2018) found super dosing phytasepre-farrow reduced farrowing duration. Of late, U.S. research reports (Vallet et al., 2014; Holen et al., 2020) showed feeding high levels of zinc sulfatepre-farrow enhanced piglet survival. In relation to production management, Denmark (Feyera et al., 2018) and the U.S. (Miller et al., 2020; Gourley et al., 2020) have found feeding multiple meals pre-farrow reduced stillborns or enhanced piglet survival. While promising studies exist, more research is needed to confirm initial positive results in the area of sow transition diets.
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U.S. Pork Outlook: Will 2021 Be Different?
Many people would like to push fast forward to 2021 and forget 2020 ever happened. Will 2021 be a better year for the U.S. pork industry? Most economists think so, but they’ll be the first to admit that’s what they thought last year.
The industry appears to be set for another year of large hog supplies that will stretch processing capacity and pork demand, says University of Missouri economist Scott Brown. Demand growth will need to continue in 2021 and any slowdown could make 2021 a tough year, he cautions.
“Keeping all the pieces in balance and working together is the key,” says John Nalivka, president of Sterling Marketing. “Capacity is more than just how much space you have to bring hogs into the plant and slaughter them, it also has to do with capacity beyond that – on further processing and fabrication.”
Read full article here
Beef:
Cattle feed costs impacting profits in 2021
Beef Outlook: Look for cheap feed if corn prices continue to trend higher. Corn prices have surged higher at the end of November and may take a bite out of cow-calf returns in 2021.
The weekly average nearby corn futures contract gained more than a dollar from early August through mid-November. This has affected feeder cattle values, with nearby feeder cattle futures losing $7.50 during that same timespan, even as live cattle futures advanced by more than $7.
As the amount that feedlots are willing to pay for feeder animals declines as the cost of adding weight to those animals increases, higher corn prices have the potential to lower returns for beef cattle producers.
Read full article here
Dairy:
Dairy Farmer Says She Won’t Be Bullied into Repaying $50,000 to Dean Foods
A Dean Foods’ dairy debacle is playing out, and dairy farmers are frustrated. As Farm Journal’s MILK reported this week, farmers who shipped to Dean Foods prior to the company’s bankruptcy are now being asked to help pay Dean Foods’ debt. In debt settlement letters sent by lawyers representing Dean Foods trustees, the company demanding dairy farmers repay money they were paid for shipping milk.
Jessica Peters is a dairy farmer in Meadville, Penn. and received one of those letters last week. She says she was immediately overcome with unwelcome emotions.
“When I first opened it, just like complete confusion, because the legal jargon is over everyone’s head if you’re not a paralegal or a lawyer, and it took me about 10 or 15 minutes to really sink in what was happening,” says Peters of Spruce Row Farms. “Tears immediately came to my face. I was lost and confused.”
Read full article here
Misc.:
Meat Industry and Unions Urge COVID Priority Vaccination for Workers
In a rare instance of unity, meat packing companies, unions and advocates for worker’s rights are jointly urging priority status for workers in meat and poultry plants to receive COVID vaccine. Organizations involved include the League of United Latin American Citizens (LULAC)), the North American Meat Institute (NAMI) and the United Food and Commercial Worker’s International Union. (UFCWI)
The UFCWI stated, “America’s grocery, meat packing and food processing workers have been on the front line of this deadly pandemic since day-one, putting themselves in harm’s way to feed our families during the crisis”. The statement continued, “as the largest union for America’s essential workers in grocery, meat packing and food processing, UFCWI is calling on the Centers for Disease Control and Prevention to prioritize these brave men and women for early access to COVID-19 vaccine, immediately after healthcare workers”.
Julie Anna Potts, President and CEO of the North America Meat Institute commented, “the men and women of the meat and poultry industry help keep America’s grocery stores stocked and our farm economy working”. She added, “they should be highly prioritized for COVID-19 vaccination following our Nation’s brave healthcare workers”. NAMI claim that vaccination would be justified on the basis of diversity among the workforce and that vaccination would limit spread of COVID in rural communities.
LULAC stated that meat-packing workers deserved to be protected as soon as possible as a high-risk group.
Read article here
Promising outlook for new college graduates in agriculture
College graduates can expect 2.6% more employment opportunities annually between 2020 and 2025.
A new report, released today by the U.S. Department of Agriculture’s National Institute of Food and Agriculture (NIFA) and Purdue University, shows a strong job demand for new college graduates with degrees in agricultural programs. U.S. college graduates can expect approximately 59,400 job opportunities annually between 2020 and 2025. This reflects a 2.6% growth from the previous five years. Employer demand will exceed the supply of available graduates with a bachelor’s degree or higher in agriculture-related fields.
“Future development of our complex global food system requires the brightest minds from a wide range of backgrounds, cultures and disciplines working together to solve the challenges before us,” said Parag Chitnis, acting director of USDA’s NIFA. “This report shows that students across America who are studying food, agriculture and related sciences to take on these challenges have made a sound career choice and will graduate into a strong and growing job market in the years ahead.”
Read full article here
Keeping up with changing consumer desires and distribution channels
Consumer desires are changing rapidly, and this is impacting how chickens are raised, processed and marketed, and these changes are also impacting distribution channels. Chicken Marketing Summit provides chicken sales and marketing professionals a unique setting for learning about these trends and networking to find solutions for the challenges of today and opportunities of tomorrow.
Make plans to attend the 2021 edition of Chicken Marketing Summit scheduled for July 18-20, 2021. Whether in person, virtual or both, the Summit will offer quality content and networking, keeping health and safety in mind. If held in-person, Chicken Marketing Summit will take place at the Omni Amelia Island Plantation Resort in Fernandina Beach, Florida.
Registration and agenda details will be announced in March 2021.
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.