Tough quarter for Pilgrim’s Pride

Citing high feed costs, Pilgrim’s Pride reported its third consecutive quarterly loss on Friday. The second-largest poultry processor in the world says it lost $162.5 million or 76 cents per share in the quarter compared to a profit of $59.7 million or 27 cents a share a year ago.

Sales were actually up 10 percent for the quarter ending September 25th to $1.89 billion but costs rose 25 percent to $1.95 billion pushing the company’s gross margin to a negative 3.3 percent.

$52.7 million of the loss was due to non-recurring charges including $14 million lost in foreign currency transactions and $11 million in restructuring charges.

For the first three quarters of the year, Pilgrim’s Pride reports a net loss of $411.4 million or $1.92 per share on sales of $5.7 billion.

Read the quarterly report here:

Closing Grain and Livestock Futures: October 28, 2011

Dec. corn closed at $6.55, up 3 and 1/2 cents
Nov. soybeans closed at $12.17, down 18 cents
Dec. soybean meal closed at $317.50, down $6.00
Dec. soybean oil closed at 51.77, down 34 points
Dec. wheat closed at $6.44 and 1/2, up 1/2 cent
Oct. live cattle closed at $120.95, up 20 cents
Dec. lean hogs closed at $86.67, up 2 cents
Dec. crude oil closed at $93.32, down $.64
Dec. cotton closed at 104.37, up 5 points
Nov. Class III milk closed at $18.35, up 26 cents
Dow Jones Industrial Average: 12,231.11, up 22.56 points

Another good week for dairy markets

A nice close to a pretty good week in the dairy markets on Friday. Cash cheese barrels were .25 cents lower to close at $1.7675 while blocks gained 5.25 cents to $1.7725. Butter added a penny to close at $1.88 per pound.

For the week, cash cheese barrels gained 7.75 cents, blocks gained 5.25 cents, butter is two cents higher and the October, November and December Class III contracts gained an average 48 cents.

USDA reports packaged fluid milk sales in August were down 1.2 percent compared to August of 2010. Estimated sales of conventional milk increased 0.6 percent on the year while organic milk sales increased 7.5 percent.

Commercial disappearance of dairy products for the first eight months of 2011 totaled 131.2 billion pounds, 1.2 percent above year-ago levels. Nonfat dry milk use is down 3.1 percent from a year ago, fluid milk use is 1.5 percent lower, cheese disappearance is up 4.7 percent and butter use is 10.9 percent higher.

Not much new out of New Zealand on Friday, Fonterra’s plants on the North Island were still operating at reduced capacity with hopes the main gas pipeline would be fixed and they could be back at full-throttle by Monday.

Iowa Farm Bureau supports fuel tax increase

A proposal to raise Iowa’s fuel tax by eight to ten cents per gallon has the support of Iowa Farm Bureau.

The tax increase recommendation was made by the Governor’s Transportation 2020 Citizen Advisory Committee.  It could generate as much as 230 million dollars per year to repair the state’s roads and bridges.

Farm Bureau president Craig Lang acknowledges that tax increases are a tough sell right now—but he says those repairs are way past due.

“We’re up to the fight in Farm Bureau. We believe it’s the right thing—we believe it’s the right answer,” Lang says. “Not just for the farmers today, but to put our roads in place that they’ll handle the implements of husbandry and implements for grain handling necessary for in the future.”

Lang says Farm Bureau will make sure that rural Iowa gets its fair share of the funds.  “We will make sure that our share gets back to the counties—or otherwise we’ll look to change it next legislative session,” he says.

Lang notes that Iowa Farm Bureau delegates in 2008 passed policy calling for the fuel tax increase to repair roads and bridges.  He says it is the right policy for agriculture.

“Hopefully we’ll not have a future where school buses, ambulances and fire trucks are embargoed on county roads during those parts of the spring when the roads were bottomless at one time.”

The fuel tax increase recommendation will be submitted to the Iowa Legislature by the Iowa Department of Transportation by the end of the year.

AUDIO: Craig Lang (4:59 MP3)

Higher dollar puts pressure on soybean futures

Soybeans are lower partly because of profit taking, giving back most of Thursday’s gains. There was some downward pressure from the stronger dollar, but DTN also cited late-season South American soybeans that weighed on the market. There’s concern about reduced U.S. soybean quality this year. If South American quality is up, it raises competitive issues. Biodiesel production is expected to grow and China may need more soybeans.

Corn was steady to higher for much of the Friday session with light follow-through buying. Corn posted a late rally Friday. DTN pointed out a factor that could continue to hold the rally in check is the increasingly bearish short-term commercial outlook. The world corn market is active. Japan and Taiwan are buying, but it’s Ukrainian corn. Weakness in the dollar will be needed to improve U.S. exports.

For much of the Friday session, wheat was mixed, without much change in Chicago and Kansas City. Both gained a little strength in the later minutes of trading. Minneapolis was mostly higher because of tight spring wheat supplies. The higher dollar limited any serious gains in wheat. Most U.S. exports were cheaper classes of wheat, while higher-grade milling wheat is in tighter supply. The hard red winter wheat area has gotten badly needed rain. There’s plenty of feed wheat to make up for corn shortfalls.

Court approves Pigford II settlement

The U.S. District Court for the District of Columbia has approved the terms of the so-called Pigford II settlement. This should be the last step in finally resolving the discrimination suit brought against the U.S. Department of Agriculture which charged African-American farmers were not treated fairly in farm programs from 1983 through 1997. Farmer Timothy Pigford sued USDA in 1997. The Ag Department offered a settlement and more than a billion dollars were paid out. But more farmers claimed they were entitled to compensation but had been shut out by the original deal. So, they were invited to submit claims in what became known as Pigford II.

In February of 2010, U.S. Attorney General Eric Holder announced an agreement to pay $1.25 billion to the second group. Congress passed the funding for the deal last November and the President signed it in December.

With the court’s approval of the agreement, Ag Secretary Tom Vilsack says the claims process will soon be established and announced for individuals who may have faced discrimination. In a statement, the Secretary said: “President Obama, Attorney General Holder and I are thrilled by the court’s approval so we can continue turning the page on this sad chapter in USDA history. In the months and years ahead, we will not stop working to move the Department into a new era as a model employer and premier service provider for all Americans regardless of race, ethnicity or gender.”

Harvesting “fresh” cranberries

Wisconsin produces nearly 60 percent of the nation’s cranberries and most of them go into the processed market for juices and other products…but a few go into bags to be sold as “fresh” cranberries. Harvesting cranberries for the “fresh” market is a little different.

Wisconsin’s Alice in Dairyland, Katie Wirkus spent some time with the Habelman Brothers Company near Tomah, Wisconsin recently as they brought-in the crop. For starters, they do not “corral” the berries like the frozen, juice and processed people do. The “fresh” cranberries go into a bucket and that lifts them into the truck which then hauls them to the processing plant. There the berries go through the “bounce” test; “A fresh cranberry will bounce” says Wirkus, “then they go through a series of sorters which take out the immature and undesirable fruit followed by “hand sorters”, six people who watch the cranberries zoom by, picking out anything the mechanical sorters might have missed.

The fresh berries are packaged from now to Thanksgiving so they are in the stores and available for the holidays.

AUDIO: Wirkus talks about the experience 2:30 mp3

Feedlot cattle ended the week with mostly higher prices

USDA Mandatory reported cattle trading was light in the Texas Panhandle on Friday morning. Compared to Thursday’s trade live sales were steady to 1.00 higher at mostly 121.00. Trading was light to moderate in Eastern Nebraska. Compared to last week dressed sales were steady to mostly 2.00 higher with the sales ranging from 191.00 to mostly 193.00. Dressed sales in Iowa have traded from 192.00 to 193.00. The weekly cattle slaughter was estimated at 671,000 head, 20,000 more than last week, and 3,000 greater than 2010.

Boxed beef values were steady to weak on light demand and moderate offerings. Choice beef was up .14 at 188.10, and select boxes were .13 lower at 169.13.

Chicago Mercantile Exchange live cattle contracts settled mostly lower after exhibiting moderate to strong support in the trade. The lack of support in the outside markets weighed on futures.  October settled .20 higher at 120.95, December was down .85 at 119.05, and February was .72 lower at 121.95.

Feeder cattle ended the session 15 higher to 47 lower in extremely light trade with most traders focusing on the lackluster moves in the outside markets. November ended .47 lower at 141.10, and January was down .35 at 145.60.

Continue reading “Feedlot cattle ended the week with mostly higher prices” »

Ohio’s ability to grow the sheep industry

Susan Shultz of DeGraff in Logan County and Daryl Clark of Zanesville in Muskingum County agree, Ohio has the ability to grow the sheep industry.

Shultz whose family has been raising sheep for three generations says the state has a wealth of experience when it comes to mentoring those young people wanting to get started.

“There’s no doubt, even though we say it’s easy to get into raising sheep, there are some animal husbandry techniques that you do need to learn,” said Shultz. “We need mentors and we have them in Ohio, we have people, for instance our family’s third generation sheep, so there’s lots of background.”

Audio: Susan Shultz, Logan Co. (2:00 MP3) 

Daryl Clark of Muskingum County, a former Extension educator lives in a part of the state that he says is ideal for raising sheep.

“What we have down there is really quite a bit of land that if we can manage it for the forage production, which it does real well at, then we end up with a product that the lambs do their own harvesting,” Clark said.

Audio: Daryl Clark, Muskingum Co. (3:00 MP3)

For the past several years, Daryl Clark has been working with the Amish community, a group that is finding sheep a source for steady income.

Dangers in the food movement

We all have things that drive us crazy.  People with cell phones in their ears blathering into the ether or folks who bring tiny children to really expensive restaurants and wonder why folks glare at them as the kids go nuts from boredom.  As I get older, I find myself with a much longer list such irritants, but firmly ensconced at the top of my list are people who consider themselves experts on an issue when judging by what they say and do, they’re sitting high in an ivory tower somewhere contemplating only the “wouldn’t-it-be-nice” aspects.

When it comes to the “food movement,” the penthouse of the ivory tower is still occupied by Michael Pollan, author of “Omnivore’s Dilemma” and related work.  Heck, if he continues to write the stuff he writes about the food industry and how to feed yourself – get out that bow and arrow, plant that backyard veggie garden – he’ll be the eternal leaseholder of that space.  However, his downstairs neighbor is “food luminary” Dr. Marion Nestle. Dr. Nestle is an academic – she’s the Paulette Goddard Professor (no joke) in the department of nutrition, food studies and public health at New York University – who just announced she’ll be in Zuccotti Park in lower Manhattan on Saturday, October 29, to join the Occupy Wall Street crowd with “Occupy Against Big Food.”

Says Dr. Nestle: “The food movement’s goal is to make the food system healthier for people and the planet.  That goal is entirely consistent with the goals of everyone else involved in the Occupy Wall Street movement.” It may be consistent, but it strikes me as a bit exploitive, but that’s a rant for another day. 

Nestle has written books as diverse as “What to Eat,” “Food Politics: How Food Industry Influences Nutrition and Health,” and “Safe Food: The Politics of Food Safety.”  She even advises on what to feed dogs and cats.  I’ve read none of these books – just being honest – but I’ve heard her speak and I’ve read her blogs.

Like Pollan, her opinions are predictable, and like Pollan, there’s a huge chunk of reality missing from Dr. Nestle’s academic approach to life. The missing bit is, quite simply, the answer to the following question: How do you feed 7 billion people today and 9 billion by 2040 through organic, natural and local food production?  The answer is you can’t, not without embracing mechanized and technologic food production, both apparent anathemas to the “food movement.”

I agree with Dr. Nestle; food production must strive to provide healthy sustenance in a way that does not do harm to the planet. But again, reality confronts us and Dr. Nestle prefers to turn away.  There simply isn’t enough land to raise the organic crops, fruits and veggies necessary to feed the world, even if you were to shut down animal production, not without technology and the efficiencies of scale necessary. 

It galls me that a premise of the food movement’s bloviating against modern, conventional U.S. farming and ranching is that big is automatically bad and efficiency of production is to be shunned.  However, it appears “big” is a relative term, apparently dependent on the production practice embraced. If you’re a monster organic or natural producer, selling at a premium to big city restaurants and Whole Foods within 500 miles, you’re the “local organic farmer,” and you’re to be esteemed and emulated.  If you’re a big conventional producer – even family owned – selling to big city restaurants, grocery stores, chain restaurants and others within 500 miles AND shipping across the country to meet demand, well, you’re bad, just plain bad. 

Most of the folks like Pollan and Nestle – “food movement leaders” – who contend we can feed this country and the world off of 50-acre hobby farms have never set foot on a real, live working farm of more than 150 acres in the middle of Iowa in February, nor have they worked calving or spent more than a couple of days “observing” how farming and ranching operate.  They do research, which by definition is a selective process. You get to pick what fits and supports your ideology.

While some find the “food movement” interesting or entertaining, I find it almost dangerous.  It misinforms and misdirects people to buy expensive foods for which the higher price is unjustified either by safety or humaneness. It plays off a naïve fantasy of a holistic lifestyle, and it’s generally promoted by those who can well afford to pay for that fantasy.   

Unfortunately, that’s about 1-5% of the population, the same group with whom Occupy Wall Street has a bone to pick.  How consistent is that, Dr. Nestle?