It is hard to believe we are already a month into 2021. Many of us were happy to say good-bye to a very unusual 2020 and welcome 2021 with open arms. But how much will change this year, or will it simply be an extension of 2020? It seems obvious that we will continue to see the effects of COVID-19 for a while yet. If 2020 taught us anything, it is that we need to be prepared for the unknown. For example, in response to the skyrocketing feed prices, Ag economist Dan Basse has said to simply be ready. Be ready and aware because there are and will be a lot of farmers struggling this year.

It appears there are a lot of unknowns in 2021. COVID-19 related restrictions continue in many parts of the country, leaving us with a lot of unanswered questions. How much of a reduction will ethanol demand see? When will the food service industry start seeing a recovery? With these continued restrictions, there are still not a lot of people on the road or dining at restaurants. It is yet another unknown as there is little evidence of a return in the foodservice sector. Liquid and dried-egg prices did remain stable this week, but the re-opening of the economy is still being delayed. Even with the vaccine being distributed to the public, many regions are still facing surges in COVID-19 incidence rates. The pandemic may have radically changed the dining experience for us all, however I really hope restaurants continue to innovate and adjust accordingly. I know I plan to support my local restaurants and continue to order take-out, which keeps my kids happy. Maybe we can continue to keep the chicken sandwich in the news and order from our favorite spot this week.

With this common theme of being prepared, perhaps we will be able to better navigate some of the challenges that 2021 is already bringing. We learned a lot in the year of a pandemic and even if our new normal is more like 2020 than we would like, it seems that technology, innovation, and adaptation are great areas to focus on as we navigate through the unknowns of 2021. As you read this week’s headlines, remember that we are only one month into a NEW year and small changes can bring big impacts in the long term.

 

Monica Lizar

Account Manager

Aeros, a Cultura Company

 

 

Feed and Grains:

Ag economist warns about skyrocketing feed prices

Corn prices have skyrocketed since last fall. “They are knocking on the door at $5.35 per bushel,” said ag economist Dan Basse, president of AgResource Co. in Chicago, during a Jan. 14 Dairy Signal webinar sponsored by Professional Dairy Producers.  Basse believes corn prices will climb to $5.70 to $6 by spring. “This is really changing margins,” he said.

“If you are a dairy farmer, are blessed and have plenty of corn silage and corn and you bought some soybean meal, then you are in a good position,” Basse said. “But there are a lot of farmers who are struggling or are going to be struggling.”

Why are corn and soybean prices soaring?  “We have the lowest stocks of soybeans ever and nearly a record low stock for corn,” Basse explained. “These are prices we haven’t seen since 2013.”  Basse thinks prices for soybean meal will climb to between $500 and $540 per ton this year.

BE READY: “I want everyone in the dairy industry and livestock producers to be aware of the upside risks in the feed markets, because there are such low stockpiles to lean on right now,” ag economist Dan Basse says.

Read full article here

 

USDA Report Analysis: Is the U.S. Running Out of Soybeans to Sell?

USDA’S final crop production report of the year made some historic adjustments. As a result, soybeans shot 60 cents higher in a matter of minutes, and corn traded up the limit.

While the corn revisions seemed to be the bigger story on Tuesday, University of Missouri extension economist Ben Brown says USDA produced several surprises in its report on Tuesday.

“I continue to believe after today that the story was really about corn, and especially the corn yield drop,” he says. “We found in our first quarter stocks report this month, it came in 651 million bushels blow trade estimate. So that’s a large bullish surprise.”

 

Read full article here

 

Ethanol: 

USDA Cut Ethanol Demand; USDA Chief Economist Explains Why

Ethanol demand continues to be a question in the new year. As COVID-19 cases continue to rise in the country, some states are still seeing restrictions, which is impacting the number of people on the road. At the same time, ethanol stocks rose to an 8-month high earlier this month.

Just how much of a reduction ethanol demand will see in 2021 is still unknown. In the latest World Agricultural Supply and Demand Estimates (WASDE) report, USDA showed corn used for ethanol would be lower this year. The agency said it was based on data through November from the Grain Crushings report, as well as weekly ethanol production data from the Energy Information Administration (EIA).

The new USDA Chief Economist Seth Meyer was a guest on U.S. Farm Report and explained USDA’s decision to cut ethanol demand.

Read full article here

 

Corn Prices Climb as China Commits to Biggest U.S. Ethanol Purchase Ever

Corn prices climbed double digits on Tuesday. The market was fueled by news China made its biggest buy of corn in six months.

“53.5 million bushel corn buy all at once is the biggest sale that would have corn that we’ve had to China’s since July,” says Arlan Suderman of Stonex Group. “It’s pretty significant and helps explain why we saw the big run up in prices on Monday with some follow through today.”

More than corn, China hinted at a historic ethanol purchase, committing to buy the most ethanol it’s ever bought in a year, and China says it will do so in the first six months of 2021.

During its investor call Tuesday, ADM’s CFO Ray Young said China bought roughly 200 million gallons of ethanol for the first half of 2021, a move Young said could bring optimism for ethanol’s recovery this year.

But just how big of a deal is China’s 200-million-gallon ethanol buy? If China follows through with shipments, it would be the biggest annual buy ever by China and happen in just six months.

Read full article here

 

Eggs:

USDA Weekly Egg Price and Inventory Report, January 27, 2021

  • Shell inventory was down by 0.5 percent after a substantial 6.0 percent decrease last week. This confirms a move towards balance between demand and supply with implications for prices extending through the remainder of January, given a reasonable anticipation of a reduction in flock size by depletion. There is little evidence of a return in the food service sector as liquid and dried-egg prices are stable and reopening of the economy is delayed by a surge in COVID-19 incidence rates in many regions suggesting more restrictions.
  • The U.S. flock in production was down 5.0 million from the week of January 19th, 2021 to 316.2.2 million, with about 2 million molted hens resuming production within weeks.
  • The USDA average Midwest benchmark generic prices for Extra-large and Large sizes were up 25.2 and 25.8 percent respectively from the previous week to 104.5 and 102.5 cents per dozen. Mediums were 38.3 percent higher at an average of 79.5 cents per dozen. During past two weeks Midwest prices have risen following three weeks of lagging the corresponding weeks in 2019 and the 3-year averages. It is apparent that unlike previous years the pre-Christmas rise failed to materialize. The price increases over the past two weeks reflect increased demand with only a moderate decrease in flock number.
  • The Midwest price of breaking stock was up 10.6 percent to an average of 36.5 cents per dozen. Checks in the Midwest were up 14.6 percent to an average of 31.5 cents per dozen.

Read more here

 

Feed cost increases could squeeze Easter egg profits

Higher corn and soybean meal costs might make take some of the fun out of Easter for US egg producers.

An unparalleled demand for corn and soybeans, coupled with unforeseen declines in worldwide production, have sent prices racing toward historic levels in recent months. Those increasingly high feed cost will have an impact on input expenses for layer producers and inevitably will cut into the potential for profits.

According to Maro Ibarburu, associate scientist and business analyst with the Egg Industry Center at Iowa State University egg producers may see the following price increases:

  • A 10 cents/bushel increase of the corn price would result in a 0.43 cents/dozen increase in the cost of production
  • A $10/ton increase in soybean meal price would result in a 0.39 cents/dozen increase in the cost of production

The January 12 USDA WASDE report estimates that the U.S. farm price for corn will be $0.64 per bushel higher in the 2020/2021 crop year than in the 2019/2020 crop year. The same report estimates that the soybean meal price will be $90.50 per ton higher in the current crop year than in the last. If these projections come true, then the feed cost per dozen eggs will be around $0.063 higher this crop year than last.

Read full article here

 

Feeding DDGS to layers – Six nutritional aspects to consider

Good-quality Distillers’ Dried Grains with Solubles (DDGS) are high in energy and amino acid content and free of anti-nutritional factors such as mycotoxins and can support good egg production and egg quality. With inclusion rates of 3 to 5% for pullets and rates of up to 15% for layers, DDGS is widely recognized as an excellent feedstuff.

The greatest challenge in using DDGS in poultry diets is to work with accurate nutrition matrices. The nutritional composition and quality differ substantially between sources of DDGS. For example, the conditions during the drying process have a huge impact on the amino acid digestibility.

DDGS users are often tempted to use color as an indicator of DDGS quality, and energy and protein levels as the main criteria to decide whether they use it. However, there are more aspects to consider when birds are being fed with DDGS.

Read full article here

 

Poultry:

Chicken sandwiches continue meteoric rise

The chicken sandwich is quickly becoming America’s choice for a quick meal.

McDonald’s opens fire:  After much buzz about the so-called chicken sandwich wars in 2019, McDonald’s Corp. announced plans to roll out its own trio of chicken sandwiches in February 2021. This is a clear signal the chicken sandwich is now a leading convenience and comfort food of the American diner.

The hamburger is not dethroned yet. An October 2019 report from QSR magazine said in the first half of that year nearly three burgers were ordered for every chicken sandwich, or 6.4 billion to 2.3 billion. However, long-term consumption trends show beef consumption dropping while chicken continues to rise.

Chicken is profitable:  Chicken is a commercial success for those who focus on the protein. An April 2020 report published by Statista said there were more than 15,000 restaurants in the U.S. run by the 17 chicken-focused chains with more than 40 locations.

Chicken sandwich purveyor Chick-fil-A Inc., according to Nation’s Restaurant News, brought in $12.67 billion in total sales in 2019. That places the chain behind only Starbucks Corp.’s coffee chain and McDonald’s in terms of sales. Those two operate more than 13,000 locations in the U.S. each compared to Chick-fil-A’s 2,400 locations.

Read full article here

 

Digital data management connects poultry stakeholders

Emerging approaches that change how the poultry industry manages data could better connect stakeholders and encourage more collaboration across the value chain.

“Our practices have evolved from traditional small-scale operations to multi-billion enterprise operations. Our research and processes have evolved to optimize production at every step. The use of information across the value chain to improve some results has evolved over time too,” Kshitij “Tij” Gupta, Head of Platform & Business Development, Evonik Corporation, said during the 2021 International Production & Processing Expo (IPPE) Marketplace Week.

New technologies – including artificial intelligence, cameras and acoustic monitoring – can capture an incredible amount of data about the poultry house. Figuring out how exactly to use that data is a more challenging task.

“Today, most of us will agree that mastering data will help us improve and innovate. However, leveraging data has not been an easy task,” said Gupta.

As a result, a lot of the data within the poultry industry is not being used to its full potential.

Read full article here

 

3 potential solutions to manage woody breast in broilers

Woody breast is breast meat myopathy that affects the rigidity, texture and mouth feel of broiler meat. The breast meat may also be a pale color and soft in consistency.

Texture issues can include fibrousness, crunchiness, and other unappealing attributes to consumers. Woody breast meat is typically discarded at the processing stage because of its undesirable attributes, resulting in large financial losses.

The myopathy is categorized on a scale of zero to three, with three being the most severe.

Woody breast has become more common with the selection of fast-growing, heavier broilers, although the underlying cause of the condition is still a mystery.

Read full article here

 

Pork:

ASF spreads to new areas of the Philippines

In July 2019, first cases of African swine fever (ASF) occurred among pigs in the Philippines, according to the World Organisation for Animal Health (OIE). Officially, outbreaks are ongoing in 27 of the country’s 83 administrative regions.

Last week, ASF was reported in the province of Albay. Belonging to the Bicol Region, Albay is located in the Luzon Island group.

Disease spreads to Eastern Visayas, Mindanao

Now, the infection has been detected in the Eastern Visayas region for the first time, reports Philippine News Agency (PNA).

Last week, four pigs tested positive for the ASF virus in Letye province in this region after mortality began to rise sharply at the end of December. Initially, all pigs within 500 meters of the outbreak were culled, and this has now been applied to more than 500 animals in several villages in this area.

Also included in this article:

  • Disease controls threaten pork shortages in the Philippines
  • China outbreak: unconfirmed
  • Russia, South Korea record new cases in wild boar
  • ASF returns to Tanzania

Read full article here

 

‘Fair share’ of challenges ahead for animal protein

African swine fever, COVID-19 and rising feed costs leading to murky outlook for 2021.  The biggest question on everyone’s mind currently is how much 2021 will look like 2020, Will Sawyer, lead animal protein economist at CoBank, said during Market Intelligence Forum, held virtually this week as part of International Production & Processing Expo.

“In some ways, we think that 2021 is going to be a lot better than 2020, but at the same time, we think there’s definitely going to be our fair share of challenges for the global poultry market.”

CoBank sees upcoming challenges on the demand side, the supply side and then rising feed costs after last year brought a “historic shift.”

“In the midst of the shift in consumption, there was also this historic contraction in the global economy. Both of those drivers really affected demand for poultry, for protein, and for food, in general.”

As last year has concluded and a new year begins, weather, changes in demand for animal protein and feed, and rising feed costs are all at play.

Read full article here

 

Beef:

Feedlot cattle inventory up slightly

The U.S. Department of Agriculture released the latest “Cattle on Feed” report this week, showing the inventory of feedlots with capacity of 1,000 or more head totaled 12.0 million head on January 1, 2021, a slight increase from the same period last year.

According to USDA, the inventory included 7.40 million steers and steer calves, up slightly from the previous year. This group accounted for 62% of the total inventory. Heifers and heifer calves accounted for 4.57 million head, down slightly from 2020.

Placements in feedlots during December totaled 1.84 million head, 1% higher than 2019. Placements were the second highest for January since the series began in 1996, USDA noted.

Read full article here

 

Profit Tracker: Cattle, Hog Margins Treading Water

Average cattle feeding margins improved $15 per head last week, with closeouts showing a modest $42 per head return over breakeven. Industry-wide average cash cattle prices were mostly steady at $111 and average per head feed costs declined about $2, according to the Sterling Beef Profit Tracker.

The total cost for finishing a steer marketed last week was $1,465, about $87 less than the same week a year ago.  Cash cattle prices that were $14 per cwt. higher a year ago produced profits of about $146 per head the second week of the New Year. This year feeder cattle represent 67% of the cost of finishing a steer compared with 73% a year ago.

Beef packer margins declined $48 per head with profits of $179, the lowest margin since last March. Packer margins have declined $259 per head the past month after posting margins of $490 the first week of December.

Read full article here

 

 

Dairy:

Robotic Shot Injection System Under Development For Dairy

If you’re interested in helping dairy clients improve the accuracy and efficiency of their vaccination program and record keeping, you may want to check out an up-and-coming robotic injection system called SureShot. Currently under development by Pharm Robotics, San Jacinto, Calif., the system is being designed to automate the shot delivery and data management process, according to Marinus Dijkstra, CEO, and Alexander (Alika) Chuck, CFO, company co-founders.

The partners say the automated system will reduce the amount of labor required to administer shots, thereby reducing out-of-pocket costs, while improving herd health and production outcomes in the process.

“By automating this tedious process and data management, farmers can be assured that their cows have received the required shot protocol, and they will no longer have to enter the data by hand,” reports Dijkstra.

Read full article here

 

The Race is on to Build the World’s First Carbon-Neutral Dairy

It’s no secret that climate change has become a huge focus in the United States and around the world. The global dairy industry has focused in on this concern with several countries vowing to become carbon neutral within the next few decades.

For example, the Innovation Center for U.S. Dairy unveiled a ‘Net Zero Initiative’ last year in hopes of driving the industry to achieve carbon neutrality, optimized water usage and improved water quality by 2050. Similarly, Meat and Livestock Australia, which includes the dairy industry, has set a goal to become carbon neutral by 2030 “to meet consumer and community expectations.”

Recently, the country has been stricken by intense drought and extreme heat, driving the push for sustainability within agriculture. In response, government research in Victoria, Australia, has been conducted to help construct the Ellinbank “Smartfarm,” the world’s first carbon-neutral dairy farm, according to Farm Online National.

Read full article here

 

  

Misc.:

CoBank Quarterly: Reasons for optimism, but risks remain

According to the new Quarterly report from CoBank’s Knowledge Exchange, it will likely be summer before the economy really begins to gain steam, but the second half of the year should power the economy to annual growth of roughly 4.5%–5.5%.

“While the economic outlook has improved, significant risks still remain,” said Dan Kowalski, vice president of CoBank’s Knowledge Exchange division. “Key among those risks are the potential for more geopolitical crises, business solvency, a slower than expected receding of the pandemic and persistence in high rates of long-term unemployment.”

Read full article here

 

Will foodservice ever recover after COVID-19?

The COVID-19 global pandemic fundamentally changed the dining out experience for consumers, closing dining rooms and forcing restaurants to innovate to survive.

Hudson Riehle, senior vice president of research at the National Restaurant Association, shared his thoughts on how COVID-19 impacted foodservice, how the industry reacted and adapted and which changes will remain post-pandemic during CFI NOW: The Future of Dining Out.

Prior to COVID-19, consumer demand had been gradually shifting to where the majority of dining took place out of house. The pandemic changed that, with retail sales spiking in March and April of 2020 as consumers prepared for stay at home orders.

Foodservice sales suffered as a result. One year ago, the National Restaurant Association expected industry sales to reach a record high of $899 billion. Instead, industry sales netted $659 billion, a $200 billion loss, Riehle said.

Read full article here

 

Food prices rise for seventh month in a row

World food prices rose for the seventh consecutive month in December, led by dairy products and vegetable oils, according to the Food and Agriculture Organization of the United Nations.

The FAO Food Price Index averaged 107.5 points in December, 2.2% higher than in November. Over the whole of 2020, the benchmark index, which tracks monthly changes in the international prices of commonly traded food commodities, averaged 97.9 points, a three-year high and a 3.1% increase from 2019. However, this was still more than 25% below its historical 2011 peak.

Read full article here

 

Robotics and automation a new frontier

Use of robotics and automation in U.S. packing plants accelerates amid global pandemic.

An industry responsible for $1.02 trillion in total economic output in the U.S., translating to 5.6% of gross domestic product (GDP), is making a shift — a quite dramatic one at that. Boasting the seat as the largest segment of the country’s agriculture, the U.S. meat industry is a huge innovation driver.

Responsible for feeding 326 million Americans and producing roughly 52 billion pounds of red meat and 48 billion pounds of poultry annually is reason enough to seek out and implement the most cutting-edge technology available. Today, that technology happens to be robotics and automation in meat and poultry processing facilities.

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.