In The News Week – September 11, 2020

 

Editorial

I have been blessed to be a part of the egg and poultry industries since 1986. Back then, as a recent graduate of a small liberal arts college in Conway, Arkansas I thought …. a liberal arts education isn’t easy. You don’t just “learn a little about a lot.” You read, think, write, argue, change your mind, and shape your unique view of the world. You constantly discover. It happens in lectures and labs, in recital halls and residence halls. It happens on the playing field and in field research. It doesn’t stop. That’s Hendrix.  https://www.hendrix.edu/

Hendrix was right, the learning doesn’t stop.  My degree in Economics and Business with an emphasis in Accounting didn’t teach me about eggs and chickens and how to meet the needs of my new employer’s responsibility to deliver fresh eggs and poultry from the processing facilities to our retail and food service customers … and in time for them to be able to deliver food to tables on their schedules. 

Through the years, the employers changed but my learning continued.  However, I’ll be honest, the learning was singularly focused on the current employer’s mission statements.  My world was specifically in broilers and in eggs.  Then my world changed! COVID-19 pandemic.  

With this change, I felt a greater need to be in tune with not just my industries and but also with other agribusiness industries.  I needed to be more informed for my employees, my customers, and my company.  I subscribed to many newsletters and made time in each week’s busy schedule to find out what was happening in the unprecedented world I suddenly found myself living in.   I began sharing what I thought to be top and interesting articles with my employees, then began sharing them with the management amongst Cultura. 

This “In The News” recap is by all means not inclusive of a week’s events.  It simply represents some top stories I find interesting.  I hope you find the recap a quick and easy way for you to stay abreast of news.

Anthony Barton,

 

 

Feed and Grains:

Drought Footprint Shrinks a Little In Midwest, Expands Across Plains

Some form of dryness/drought covered 36% of the Midwest (Minnesota, Iowa, Missouri, Wisconsin, Illinois, Michigan, Indiana, Ohio and Kentucky) as of Sept. 1, according to the U.S. National Drought Monitor, though that was down three percentage points from the previous week. Dryness/drought covered virtually all of Iowa, the northern halves of Illinois and Indiana, and much of western Ohio. Commentary along with the drought map stated: “Southern and western parts of the region fared much better than other areas. Dryness and drought decreased in a strip across central Wisconsin and southern Michigan, as well as large sections of Ohio. In contrast, drought expanded and deteriorated from central and southern Iowa eastward into northwestern Indiana. A sizable area in central and southwestern Iowa (where extreme drought expanded) received 6 to 10 inches less rain than normal during June-August while adjacent moderate to severe drought areas recorded shortfalls of 3 to 6 inches. Further, hot weather has been common this summer, and temperatures averaged 6 to nearly 12 degrees above normal the last two weeks, exacerbating the effects of the dryness and stressing some crops.”

Read full article here

 

The Grain & Oilseed Sector in a Post-Covid-19 World

Rabobank’s Grain & Oilseed analysts have identified seven areas of major change in a post-Covid-19 world. Recurring global themes are retreat from globalization, flexibility and digitalization of supply chains, and increased concern over food security and safety.

Covid-19 has changed our world as few incidents have. Some short-term impacts (e.g. biofuel demand and commodity price declines) were followed by quick recoveries. Some medium-term impacts could be mitigated by the availability of a vaccine (e.g. travel restrictions) or are recession-induced (e.g. negative impacts on feed demand from a potential slowdown in meat consumption in the developing world). But some long-term impacts could cause structural changes that require businesses to make strategic changes.

Read full article here

 

Commodity Report 

August 28th 2020

  • The financial and economic implications of the COVID-19 pandemic continue but will gradually ease as society returns to a “new normal” despite a recent serious upsurge in cases.
  • Corn and soybeans rose significantly this week on orders booked by China, the August 10th derecho storm and lower projections for 2020 crop yields developed from the Pro Farmer 7-state Tour.
  • Since July 10th year-to-date exports and 2020/2021 market year orders for corn have attained 6.23 million metric tons [245.4 million bushels]. Exports and orders for soybeans amounted to 8.26 million tons (303.0 million bushels).
  • Prospects for commodity exports to China for the 2020/2021 market year beginning September 1st have improved. China has adjusted their domestic short-term demand for soybeans as a result of stabilization of the hog herd after severe losses in 2019 and early 2020 from African swine fever. White-feathered chicken production has now recovered after COVID disruptions and QSR demand. China is also taking advantage of shipping rates that are rising

Commodity Change from Past Week 

  • Corn: Sept. quotation up 17 cents per bushel         (+5.2 percent)
  • Soybeans: Sept. quotation up 47 cents per bushel (+5.2 percent)
  • Soybean Meal: Sept. quotation up $12 per ton       (+4.1 percent)

Read full article here

 

Is China’s New Interest in U.S. Corn Enough to Offset Ethanol Drop?

China is on a buying spree making more historic purchases. USDA Secretary Sonny Perdue took to Twitter this week, celebrating the fact China purchases of 10 million metric tons (mmt) of corn for the fall and winter months, marking a new record.

As China’s interest in U.S. commodities like corn, soybeans and sorghum shows no signs of slowing down, the momentum may be helping to fuel a shift in the psychology of the commodity markets.

“I think it’s helping to move the market just in terms of sentiment,” says Sam Hudson of Cornbelt Marketing. “When we look at their current export projections and the pace that they’ve set, we’re a little bit ahead of it in soybeans. So I think it helps the macro cause, while we figure out yield.”

Read full article here

 

Eggs:

USDA Weekly Egg Price and Inventory Report, September 2nd 2020.

  • The U.S. flock in production was up 0.2 million from the previous week at 311.3 million, with molted hens resuming production and pullets reaching maturity.
  • Shell inventory was up 1.5 percent after a 2.0 percent decrease last week indicating decreased demand that influenced price. There is some evidence of a return in the food service sector as the economy cautiously reopens but the incidence rate of COVID-19 is increasing in some regions.
  • USDA Midwest benchmark generic prices for Extra-large and Large were higher by 2.5 percent to averages of 81.5 and 79.5 cents per dozen respectively. Mediums were up 3.7 percent to 55.5 cents per dozen. Prices will continue to fluctuate in a narrow range as molted hens resume production and pullets commence lay unless offset by proportional increase in demand leading into and past the Labor Day weekend.
  • The price of breaking stock in the Midwest was 7.0 percent lower to an average of 46.0 cents per dozen. Checks were unchanged at an average of 36.5 cents per dozen.

Overview:

According to the USDA Egg Market News Reports posted on August 31st 2020 the Midwest wholesale prices for Extra-large, Large and Mediums as delivered to DCs attained averages of 81.5 and 70.5 cents per dozen. Mediums rose to 55.5 cents per dozen. Prices should be compared with the USDA benchmark average 5-Region blended nest-run, (excluding provisions for packing and transport) cost of 58.7 cents per dozen in July 2020. The progression of prices during 2018-2020 is depicted in the USDA chart reflecting three years of data, updated weekly.

The August 31st 2020 USDA Egg Market News Report (Vol. 67: No. 35) documented a USDA Combined Region value rounded to the nearest cent, of $0.87 per dozen delivered to warehouses for the week ending August 26th. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $0.78 per dozen. At the high end of the range, price in the South Central Region attained $0.92 per dozen. The USDA Combined Price last week was 13 cents per dozen below the 3-year average and equivalent to the corresponding week in 2019.

hen population producing eggs is now almost in balance relative to seasonal

Read full article here

 

Nielsen Update

The American Egg Board circulates Nielsen data on retail egg sales each month.  The following points summarize volume and value data for the week ending July 11th 2020.

  • Retail egg sales in equivalent dozens were higher by 10.5 percent compared to the equivalent period in 2019.  Year-to-date the dollar value was 23.1 percent higher attributed to the price spike at the end of March and extending into April.
  • Per capita consumption for 2020 should attain 283.8 eggs, approximately 2.8 percent less than in 2019 according to the WASDE August 12th report.
  • Of 3.29 billion egg-equivalent dozens sold for the 52-week period ending July 11th, shell eggs represented 96.5 percent egg-alternative dozens, 2.6 percent in the form of liquid and frozen products and hardboiled eggs represented 0.9 percent.
  • Shell eggs increased 5.9 percent in volume and 7.0 percent in dollar value compared to the preceding 52-week period for the most recent week in the year-to-date series. Weekly sales amounted to 59 million dozen at an average unit price at retail of $2.50.  These values correspond to the eighth week of the year immediately preceding the COVID-19 period of intense grocery sales.
  • Year-to-date generic shell egg sales increased 1.9 percent compared to the corresponding period in 2019 but with a 23.8 percent increase in value. Cage-free eggs increased 19.5 percent in volume and 19.6 percent in value.  Organic eggs increased by 21.4 percent in volume and 25.4 percent in value. 
  • Conventional eggs represented 86.1 percent of sales, cage-free, 11.2 percent and organic, 2.8 percent.
  • Year-to-date private label sales represented 71.3 percent of the total non-generic eggs sold an 8.8 percent increase over 2019.  Private label eggs represented 59 percent of dollar value, an increase of 21.3 percent over 2019.  Branded eggs comprised 28.7 percent of the non-generic category, an increase of 14.7 percent over 2019.  The dollar value of branded eggs attained 41 percent of category value, 25.8 percent higher than in 2019.
  • In reviewing retail channels, supermarkets and groceries increased sales by 8.8 percent, outpaced by club stores and dollar stores that advanced in volume by 13.7 percent.

 

Poultry:

Australia confirms third avian flu virus type in poultry

As Australia’s veterinary authority confirmed the presence of a third avian influenza virus in poultry, several countries have put restrictions on imports of poultry products from the affected area.

By the end of August, eight countries announced they had halted poultry imports from the state of Victoria, reported the Australian Broadcasting Corporation (ABC). Without identifying all the destination countries that have introduced such a ban, the national agriculture department has stated it is working to restore trade.

Read full article here 

 

Is the poultry industry ready for the new environment?

Worldwide, the poultry industry is considered as one of the strongest, most dynamic, and most cutting-edge agrifood activities.

Its production processes contain the most advanced technological developments while maintaining productivity and efficiency. However, in modern and in the presence of SARS-CoV-2 (better known as COVID-19), we have to ask: Is the poultry industry ready to develop in the new economic environment?

The new global environment originated in the city of Wuhan, Hubei province, in the People’s Republic of China, in December 2019, when government authorities reported cases of people with atypical pneumonia caused by the COVID-19 virus. Because of the rapid spread of the virus, the World Health Organization (WHO) recognized it as a global pandemic in March 2020.

Read full article here

 

Pork:

Poland confirms 16 recent ASF outbreaks in pigs

As the disease returns to another region of Ukraine after a short absence, new outbreaks of African swine fever are announced among Polish pigs.

Over the past week, 16 new outbreaks of African swine fever (ASF) have been confirmed by Poland’s chief veterinary office. They bring the country’s total so far this year to 71. Since the first cases were identified in March, the number of Polish pigs directly affected has reached 45,854.

Of the latest outbreaks — affecting a total of 1,332 pigs — the great majority belonged to herds of no more than 35 animals. However, ASF virus was detected on two farms in Warmia-Masuria province with 151 and 855 pigs, and two in Lublin with 64 and 75 animals. All of the latest outbreaks were in these two eastern provinces.

Read full article here

 

ASF will lead to many changes in China’s pork industry

Rabobank senior analyst says entire supply chain will eventually be affected

The effects of African swine fever (ASF) will change several aspects of China’s pork industry, according to Chenjun Pan, senior analyst at Rabobank.

Pan spoke August 26 during the Alltech ONE Virtual Experience session on the Asian market, “The Art of Adaptation: Evolving Agri-Business Models.” She said ASF will eventually affect the entire supply chain, from biosecurity to market consolidation and modernization to consumer attitudes.

“African swine fever is the biggest factor for the pork market in the past two years, not only in China but also in Vietnam and the Philippines,” she said.

The deadly pig disease has brought biosecurity to the forefront, and that has meant big changes for China’s hog operations.

Read full article here

 

Beef:

Was 2020 good to you? By:  Doug Ferguson

This has been an interesting and unique year. Writing this blog every week I pay a little more attention to cattle prices and their relationships than I would if I weren’t doing this. I keep all my sheets of paper where I figure value of gain (VOG) each week.

I remember one week in particular, the first week of April. I was getting blown out at every auction I went to. Grass fever had finally kicked in and people were making grass calves overvalued. I easily bid on over 1,500 head that week and only got around 60 head bought. The following week was one of those were the market dropped $15 to $20 and I completed my buy-back with ease, securing a handsome profit. I stayed disciplined and let the math guide me.

Read full article here

 

Dairy: 

Milk Futures Look Positive. Will Higher Milk Production Change That? 

While milk prices saw frightening drop-offs at the beginning of the coronavirus pandemic, they quickly began to rally in May as USDA programs took effect. 

The government cheese buying program was the catalyst behind that move higher. There was a new demand for dairy as children who were not in the school system still needed access to lunches during the summer months. 

Read full article here

 

Miscellaneous:

How has COVID-19 affected companies, consumers?

Food and beverage industries may emerge from pandemic in better shape than many other sectors.

While the coronavirus (COVID-19) pandemic has had negative effects on revenue across industries, it seems the food and beverage sector will emerge in better shape than many others.

The impact of the pandemic is “rather bleak” and many industry professionals don’t predict revenues will bounce back anytime soon, according to Lisa Holmes, global head of surveys at Euromonitor International, who spoke during the webinar, “Voice of the Industry: Coronavirus Impact on Companies, Employees and Consumers.”

“Interestingly, the picture looks best for companies in the food and beverage space,” she said. “Almost 40% of food and beverage professionals actually expect an increase in their company’s sales over 2019. One important caveat here is that food and beverage in this case does not include restaurants or other consumer foodservice outlets, which we know have been very, very badly hit by the pandemic and by shifting consumer behavior.”

Some of that shifting consumer behavior is expected to stick around after the pandemic, while some may only be temporary.

Read full article here

 

Grocery Spending is Tapering from Second Quarter

Following unprecedented spending on groceries following the emergence of COVID-19, consumer spending is certainly declining.  The U.S. economy is obviously in recession and termination of the $600 per week unemployment benefit in July was evident in August data.  Most supermarket chains are recording single digit monthly increases in same-store sales compared with the corresponding months of 2019 compared to values between 10 and 20 percent in April and May with a rise in July.

Read full article here

 

Global food prices rise for third consecutive month

Stronger demand and a weakening US dollar increased global food prices in August, according to the Food and Agriculture Organization of the United Nations (FAO).

The FAO Food Price Index, which tracks the international prices of the most commonly traded food commodities, averaged 96.1 points in August, up 2% from the previous month and reaching its highest level since February 2020.

The FAO Cereal Price Index rose by 1.9% from July, averaging 7% above its value in August 2019. The increase was led by coarse grains. Sorghum prices also rose with a jump in demand from China. Damage from the derecho storm that hit Iowa in early August pushed maize prices up 2.2%. Rice prices increased due to a boost in demand from African countries and decreasing supplies.

Read full article here

 

Technology

How will consumer trends for poultry change by 2030? 

Consumers are asking more questions and have more expectations for the food they buy. How birds were raised, what they were fed, what the carbon footprint is of a pound of meat are now concerns for some consumers.

Learn more about the emerging macroeconomic and consumer trends that will impact the market for center of the plate protein by 2030 and what this means for the industry’s technology needs by attending a panel discussion on the topic at the Virtual Poultry Tech Summit 2020, October 20-22.

Read full article here 

 

“Technology often brings thought of Microsoft, Apple, Google and Amazon – but this conference shows that technology is not only digital, but physical and it takes a lot of combined solutions to deliver food to the growing world. That bio-tech, machine-tech and digi-tech combination shows just how much opportunity exists for inventors and entrepreneurs that can make a difference in the world every day. This conference is a unique place that brings all of these technologies together to give a glimpse of the evolving future of food.” –Alex Hatzopoulos. Operations Manager at Aeros regarding value of attending this year’s virtual Poultry Tech Conference.

 

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.