Ace ... do you know who has the McD contract? ... wondering if they'll be short eggs for their McMuffins this year ... doubt they get hurt with higher egg prices ... just if there is a lack of volume
Michaels buys eggs and sells egg product and has structured their contracts to make a nice little spread on all eggs delivered …. They have limited upside on these contracts … but make up for it with unlimited downside as we are finding out … at least on some of their contracts (not all)
POST should really sue GS for offloading these very bad contracts on POST … you would think management would think of all the what ifs when they set these contracts up … what if egg prices go up … what if feed prices go up … what if there’s a freaken bird flu that wipes out 25 plus million hens!!
There is a significant control weakness here … someone should be held accountable!
POST management addressed this in their recent conference call Q&A ... some contracts have the Force Majeure clause ... some do not .. in the Q&A it almost sounded like they would try to honor all contract prices ... but when it got worse, they had to get out of those they could ... the one contract I would be most interested in is McD .... if they now have to pay market instead of the lower contract amount ... they could have some significant addt'l expense .. but if there is one company who would not allow a Force Majeure clause in their contract it would be McD ... they are ruthless in their negotiations.
From May 14 POST press release ... they are adjusting pricing for loss of supply
• Post management has determined that the ongoing AI outbreak constitutes a force majeure event with respect to its Michael Foods egg business, the effect of which renders Michael Foods unable to fully perform under its existing supply agreements with customers.
Island ... a couple years back I asked Delores how much of CALM specialty eggs and production was cage free ... she said CALM does not disclose this info but mentioned said most of the specialty eggs are EB related hinting they are not cage free ... at beginning of year I don't think much of their production was CA prop 2 compliant ... maybe 5%?? but they are certainly moving in that direction now
believer ... CALM has to buy eggs themselves to cover need ... no extra for those who lost
Ikon … can’t POST just go to the spot market to buy eggs … process eggs … and pass on extra cost to customer?
I read in press release they are declaring force majeure and won’t have to deliver on some contracts.
OK just read the Flandreau SD head line 1.3m hens .. awfully suspicious jaquar seems to know about flocks impacted before anyone else ... jaquar can you account for your whereabouts over the last month?
different egg companies will profit or lose differently from AI
PEDV killed piglets before producers had a change to get a lot of feed cost into those pigs ... pork prices went up and more than compensated for losses ... Hens lost have about $1 to maybe $5 cost in them depending on age/lay cycle and some producers have unfavorable contract obligations they will need to meet with spot market eggs.
prophetic ... you're making money if you got in
"This may just become the short of the year.....I'm trying to wait until the shorts stop covering....."
island ... interesting posts here and on calm board ... didn't Foster have a big salmonella problem this year .. and is that because they went antibiotic free?
So to replace antibiotics producers really need to improve "gut" health... there has been a lot of development around probiotics is the chicken feed to promote a more healthy system ... TSN and PPC's goals for adopting antibiotic free chicken supply are not quick or lofty ... more science is needed, but I think it might be the future
sno ... depreciation of CAPEX comes off the top line ... but not CAPEX ... unless they classify maintenance as CAPEX ... what is your take on how turkey losses from bird flu will affect SEB? ... Lean hog prices starting to move higher into grilling season ... a good sign
Chicken flocks at company owned and third party farms in Nebraska and Iowa, respectively, have tested positive for AI. Including these two new incidents, Post now estimates that approximately 20% of its egg supply has been affected.
Most hens are productive for about one to two years ... usually these larger 1 million hen complexes have hens ranging from weeks into a first lay to late in a first or second lay cycle ... producers need to contract moths in advance to arrange for hen deliveries ... there are breeder constraints that will limit how quickly some of the younger hens lost can be replaced ... POST Michael Foods expects an impact for about a year as stated in their cc last week ... if a producer loses hens they may molt, or even double molt at farms with survivors ... and re-direct hen deliveries to the farms that lost hens. IMO effects will be greatest during the coming holiday season when the demand for the eggs is the greatest ... $2 .... $2.50 .... $4 who knows ????
Atlanta, GA Tue. May 12, 2015 USDA Market News
SHELL EGGS: Daily Southeast Regional Eggs
Prices are steady with a sharply higher undertone.