Author - jwasilewski
23Dec

Tyson Reports “Misappropriation” Of Funds By Beef Supplier

Tyson Foods filed corrected financial results on Monday with the Securities and Exchange Commission for its beef segment for fiscal years 2017 through 2020. The report to the SEC – in Form 8-K – specifies that Tyson is reporting “misappropriation of company funds” by one of its beef suppliers. An internal review of the supplier’s accounts is underway, Tyson said, with assistance of outside advisors. That review determined the supplier made “misrepresentations regarding the number of cattle the supplier purchased on behalf of the company’s beef segment.” Tyson said in the Form 8-K that its live cattle inventory for the year-end fiscal 2020, for instance, was overstated by $285 million, and that the cumulative four-year inventory was overstated by $645 million. However, Tyson’s investigations indicate the resulting losses on their books is isolated to one cattle supplier who represented about 2% of the cattle supplied to Tyson each year from 2017 to 2020. Further, Tyson stated in the Form 8-K the losses do not have a material impact on Tyson’s financial results for the years examined. The internal review is ongoing. Tyson also said in the filing its investigation found “no evidence that the company benefitted from the supplier’s unlawful conduct or that anyone at the company took steps to alter financial statements to hide the transactions resulting from the supplier’s unlawful acts.” Tyson also expects to pursue restitution for losses to date. "The Company anticipates that, despite the corrections to previously issued financial statements, general trends in growth and operating profit metrics will remain unaltered, operating cash flow will be largely unaffected, liquidity will not change and the Company will remain in compliance with all debt covenants," it said. Tyson’s independent registered public accounting firm is PricewaterhouseCoopers LLP. As a publicly traded company, Tyson is required to make quarterly earnings reports to the Securities and Exchange Commission.
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21Dec

Milk Markets Dive as Milk Production Increases 3% Over 2019

Thursday’s milk market moved sharply lower. Speculations continue on what is included in the Covid-19 aid bill being negotiated in Washington. We also got the USDA Milk Production report for November. Price has encouraged dairyman to produce milk and we see it in numbers from November. In November, 12,000 cows were added to the herd and October was adjusted 5,000 head higher, for a net increase of 17,000 head to the U.S. dairy herd. Milk production grew 3% over 2019, the largest increase year over year since 2014. Class III milk anticipated these bearish tones all day. December fell 14 to $15.63, January fell 49 to $15.64, and February fell 67 cents to $16.53/cwt. The balance of 2021 was 4-36 cents lower. Class IV saw small gains in a few months. Dec and January held unchanged at $13.42, and $13.91. February gained 7 cents to $14.32/cwt.   The CME spot trade was mixed though. Butter was unchanged at $1.45 ¼, Cheddar blocks unchanged at $1.65/lb, and Barrels fell 2 ¼ cents to 1.43 1/2/lb. Grade A Non-Fat Dry Milk gained a quarter of a cent to $1.15 ¼, withy Dry Whey falling ¾ of a cent to $0.45 3/4/lb. Grain markets witnessed our first close for soybeans over $12. January beans finished at $12.01 ¼, Corn at $4.32 ½, and soybean meal sitting at $397.90/ton.
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07Dec

Flush with Cash, Chinese Hog Producer Builds World’s Largest Pig Farm

Behind the walls of a hulking industrial compound in rural China, top pig producer Muyuan Foods is trying to raise more hogs on a single site than any company in the world - a risky investment with deadly African swine fever lingering. The new farm, which began construction in March and started operations at the first of its 21 buildings in September, epitomises the breakneck pace at which huge, industrialised hog breeding facilities are replacing small, traditional farms, many of which were wiped out by the worst animal disease outbreak in recent history. The shift, under way for years, has accelerated sharply, fueled by huge profits at corporate producers since African swine fever ravaged the country's herd and sent pig prices soaring to double the previous record. Corporate farms weren't spared by the epidemic, but as prices jumped, they quickly recouped their losses. Muyuan's profits grew 1,413% in the first nine months of 2020 to 21 billion yuan  ($3.21 billion). "We have hit a very favourable period for development. Pig prices are very high, our profits are really good, and cash flow is really ample," Qin Jun, Muyuan's vice general manager, told Reuters at the company's headquarters in Nanyang city in central China. In the race to take share, companies like Muyuan are designing higher-density automated farms, betting they can keep disease out while increasing efficiency to satisfy the country's huge appetite for pork. Muyuan's new mega farm near Nanyang, which will eventually house 84,000 sows and their offspring, is by far the largest in the world, roughly 10 times the size of a typical breeding facility in the United States. It aims to produce around 2.1 million pigs a year. If it works as planned - and other producers follow suit - the world's top pork consumer could reduce purchases from the global market, upending a booming meat trade that has supported farmers across the world.
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01Dec

Wheat Acres To Expand For First Time In 8 Years

Farmers will be planting more total wheat acres for 2021, thanks to stronger demand, higher grain prices and good weather conditions. USDA predicts 46 million total acres of wheat will be planted—a 1.7-million-acre increase over the 44.3 million acres of wheat planted in 2020. The increase marks the first expansion of U.S. wheat acres in the past eight years. Winter wheat is the first cash crop that farmers have planted since the agricultural commodity price rally began in late summer. However, the U.S. government will not release a farmer survey specifically on winter wheat plantings until January, reports a Reuters article posted earlier this month. Reuters reports that private analytics firm IHS Markit Agribusiness forecast U.S. winter wheat plantings at 31.5 million acres, up 3.6% from the 30.4 million acres seeded a year ago.
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24Nov

Mexico shipments surge in second quarter

Shipments of Mexican produce to the U.S. increased at a double-digit rate in the second quarter this year, a transportation report from the U.S. Department of Agriculture reveals. The USDA’s Mexico Transport Cost Indicator Report showed second quarter total reported shipments of fruits and vegetables from Mexico were 2.96 million tons, an 11% increase compared with the second quarter last year. The sum of the top five commodities shipped from Mexico (figured on an annual basis: tomatoes, peppers, cucumbers, avocados and squash) increased by 31,000 tons, or 6%, according to the report. Seedless watermelons shipped to the U.S. in the second quarter topped all fresh produce commodities for the quarter, the report said, with 297,000 tons shipped. Still, that was down 19% than the same quarter last year, according to the USDA.

Truck rates

The USDA report said truck rates for shipments of 501 miles to 1,500 miles from the Arizona border crossings averaged $2.55 per mile, up 1% quarter to quarter, but down 6% compared with the second quarter a year ago. Rates for shipments of 501 miles to 1,500 miles from the Texas border crossings averaged $2.25 per mile, down by 10% quarter to quarter and down by 1% year to year. Diesel fuel prices for border crossings through Texas averaged $2.21 per gallon for the quarter, compared with $2.60 per gallon for crossings through Arizona.  
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12Nov

Pandemic, tight frozen product market cause drop in potato exports

U.S. potato exports for the July – September quarter were down significantly compared to the same period in 2019. This drop is a result of the pandemic’s continuing impact on the demand in many markets, particularly in SE Asia and Central America and the tight supplies of U.S. frozen potato products. Additionally, exports for this period in 2019 were at record levels, so the bar was set very high. Frozen exports were down 23% in volume; however, they were down only 14% in September, showing recoveries in some markets. Frozen exports to Mexico are still well above 2019 when the retaliatory tariff caused switches to Canadian and EU products. The least impacted markets are Korea, up 2%, Taiwan, down 6%, and Japan, down 12%. The biggest impacts were in China, down 62%, Indonesia, down 71%, the Philippines, down 67%, and Vietnam, down 69%. Dehydrated exports were down only 2% for the quarter and 5% for September. This reduction is more reflective of tight U.S. supplies than decreased demand. Some very positive results were recorded for Japan, up 19%, Korea, up 71%, Taiwan, up 16%, and Saudi Arabia, up 137%. Exports of fresh potatoes, including table-stock and chipping, were down 6% for the quarter but up 10% in September. The decline is largely caused by a 16% drop to Canada as the movement of raw potatoes for frozen processing was curtailed. Exports to target markets in Asia, Central America, and Mexico were either up or even with last year. Of note, the new year-round access to Japan resulted in a 306% increase, while the Philippines was up 30%, and Taiwan up 42%. Exports to Mexico held steady and were up 3% in September despite the significant negative impacts of the virus on this country.
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10Nov

USDA Lowers Corn, Soybean Production Estimates

Corn Production Down 1 Percent from October Forecast Soybean Production Down 2 Percent Cotton Production Up less than 1 Percent Corn production for grain is forecast at 14.5 billion bushels, down 1 percent from the previous forecast but up 7 percent from 2019. Based on conditions as of November 1, yields are expected to average 175.8 bushels per harvested acre, down 2.6 bushels from the previous forecast but up 8.3 bushels from last year. Area harvested for grain is forecast at 82.5 million acres, unchanged from the previous forecast, but up 1 percent from the previous year. Soybean production for beans is forecast at 4.17 billion bushels, down 2 percent from the previous forecast but up 17 percent from last year. Based on conditions as of November 1, yields are expected to average 50.7 bushels per harvested acre, down 1.2 bushels from the previous forecast but up 3.3 bushels from 2019. Area harvested for beans in the United States is forecast at 82.3 million acres, unchanged from the previous forecast but up 10 percent from 2019. All cotton production is forecast at 17.1 million 480-pound bales, up less than 1 percent from the previous forecast but down 14 percent from 2019. Based on conditions as of November 1, yields are expected to average 911 pounds per harvested acre, up 2 pounds from the previous forecast and up 88 pounds from 2019. Upland cotton production is forecast at 16.5 million 480-pound bales, up less than 1 percent from the previous forecast but down 14 percent from 2019. Pima cotton production is forecast at 557,000 bales, up 2 percent from the previous forecast but down 19 percent from 2019. All cotton area harvested is forecast at 9.01 million acres, unchanged from the previous forecast, but down 22 percent from 2019.
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27Oct

The Sudden Shift to Winter Weather May be Short-Lived

Harvest came to a halt in some areas seeing snow, while other farmers continued to roll on with corn. The early season October snow followed last week’s snowfall where more than 7 inches of snow fell in the Twin Cities, marking the snowiest October 20th on record for the area. “We'll still see a little bit of that as we head through this week, but I don't think a repeat of last week in most locations,” says Mike Hoffman, U.S. Farm Report meteorologist. The snow is welcome in some areas experiencing drought. That’s as Hoffman says as the weeks progress, dry pockets continue to get drier with new areas of drought starting to pop up. “Looking at the drought monitor, boy are we getting more and more color to this thing,” he says. “The western third of the country just keeps getting drier; we do actually have a system coming for the Southwest this week, but we're also seeing some of these pockets of drier conditions across the upper Midwest, central Mississippi Valley and on into parts of the Northeast.” Hoffman says portions of the central Mississippi Valley will see showers along the moving front this week, with snow hitting the northwestern area. He thinks New Mexico and surrounding areas will also see rain during the middle of the week. “Then, next weekend, we're still looking at kind of a zonal flow, which keeps the real cold air to the north, unlike this past week, and the warm air continues in the southern states under that scenario,” he says. As for Hoffman’s 30-day outlook, he thinks temperatures will warm up from what many areas are experiencing the first part of this week, but the northern tier of states may stay cold.
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23Oct

Empirical Foods Building New Kansas Facility

A beef company that fought for years to clear its name in court has broken ground on a state-of-the-art ground beef production facility in Garden City, Kan. The empirical family of companies says the new operation will supplement its existing production at its South Sioux City, Neb., location and represents an investment of $250 million. Formerly Beef Products Inc. (BPI), the company changed its name to empirical in 2019. That was after BPI settled a landmark defamation suit with the Walt Disney Co., owner of ABC News, in June of 2017 for $1.9 billion. The lawsuit was the culmination of a five-year battle by BPI after an ABC News report on ground beef. In 2012, ABC Correspondent Jim Avila reported on BPI’s lean finely textured beef (LFTB) product processed from the trimmings from cattle carcasses. "Seventy percent of the ground beef we buy at the supermarket contains something he calls pink slime," Avila said in a clip from the original reporting – using the name for the substance that former USDA scientist microbiologist Gerald Zirnstein had given it: "pink slime." While ABC News noted in its stories that the addition of “pink slime” was common and not unsafe to eat, the sudden public awareness and the unappetizing name drove BPI to close three plants and cost 700 hundred workers their jobs. Following the ABC News reports, fast-food chains severed ties with the company, and hundreds of thousands of people signed petitions to keep “pink slime" out of school lunches. In a dramatic turnaround, the empirical company – still under the same family ownership – is now thriving again. “The increased demand for empirical’s lean ground beef requires us to significantly increase our processing capacity to meet the growing needs of our customers,” Craig Letch, president of empirical foods, said in a press release. “This presents a tremendous growth opportunity for empirical and we are excited about what it means for the future of our company and the communities where we live and work.” The facility is expected to be operational in 2023 and will increase empirical’s current ground beef capacity by 50%, and will employ 250 workers in the Garden City region. A phase two expansion would double production as demand allows. To ensure a strong pipeline of qualified staff able to operate empirical’s advanced machinery, empirical is committing to an investment of up to $300,000 in a new industrial maintenance program that will be established at Garden City Community College to train the next generation of facility operators and leaders.
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19Oct

China’s Increased Appetite Drives Wheat to Multi-Year Highs, What’s Behind the Developing Demand?

Wheat futures rallied this week to levels U.S. farmers haven’t seen in six years. According to Pro Farmer, wheat prices jumped Friday on rumors China was shopping for French and U.S. wheat. The added interest from China continues to help major commodity prices, including soybeans and lean hogs, trend higher. The question many want to know is “why is China buying so much from the U.S.?" One University of Nebraska economist says the answer isn't simple. “Clearly, they've been strong buyers in the market,” says Brad Lubben, policy and extension specialist, University of Nebraska “There was hope back in January with a Phase One agreement that purchases were going to go way up. Well, you don't ever fundamentally know from a commitment to buy, whether it translates into actual purchases.” Lubben says COVID-19 slowed China’s appetite, however, as the economy is rebounding, China is returning to the market in a big way. “The rate they're buying now is certainly supportive of the positive market prices, but whether we can determine exactly what their policy is, we'll know after the fact, and we'll assess how much they really bought.” Lubben says China could be buying to help rebuild its domestic reserves, or possibly to feed the growing hog herd in the country as Chinese pork producers try to recover from ASF. He says no matter what the answer is, it won't known until after the fact. “It's always difficult to know what a closed economy system or a state-run economy system is doing,” he says. “It's difficult to know what's happening in the market until we come out after the fact and find out what really happened.” The increased appetite from China is coming at a time when farmers are seeing impressive harvest pace. What seems to be a quick harvest may typically add pressure to commodity prices, however 2020 is proving that’s not always the case. “This is something that shows how marketing works,” says Cory Walters of the University of Nebraska. “It's very random. You can't predict it. And you never know when those things are going to come.” The marketing plans that seemed to pay off this year are the ones who held on to their crop and waited to sell. Walters says that may not be the case next year. “There are always strategies that win,” adds Walters. “But you never know at the beginning of the year what's going to happen; you still have to take that survival point of view.” While Walters thinks these prices should entice more farmers to sell grain, he says leaving some bushels unpriced could help farmers who fear they will miss out on higher prices. Walter says those unpriced bushels will help farmers sell into potential future rallies.
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