🍗 Chicken Watch + Drought Status Update, Agribiz Earnings, & more

There’s another shortage in the agrifood value chain, and this one is sure to ruffle some feathers.

The culprit: chicken.

Boneless chicken breast is now selling for $2.04 per pound, more than double the $1 per pound wholesale price from 2020. But it isn’t just high prices causing drama. For some restaurant operators, they simply can’t find a supplier with chicken to spare.

Rewind: Some experts point back to 2019 as the start of the issue. At the time, Popeye’s had kicked off the #ChickenWars when they launched their new chicken sandwich.

Not to be outdone, others joined the chicken sandwich race, with foodservice behemoth McDonald’s even launching some new crispy chicken options this past February.

When you add the increase in overall chicken consumption plus the lingering production constraints from pandemic-related slowdowns, the supply situation has gotten dicey.

So...what’s next? U.S. chicken production was down 3% in the first quarter of the year, according to the National Chicken Council. But data points to an uptick in output soon. Production is up year-over-year - jumping 9% in April alone - and it’s expected to continue to climb in the coming weeks.

But in the meantime, expect your favorite chicken sandwich to not be as friendly on the wallet.

→ Seaboard begs to differ. The pork processor is hoping to delay the court’s ruling of slowing the speed of plant lines by 10.5 months so they avoid excess market hogs in their supply chain.

→ Mexico says no to glyphosate...again. A Mexican court reversed a temporary ruling that created a stay on the impending ban of Bayer’s widely used herbicide.

→ No frills, high-tech forage. CubicFarm Systems raised $1.5 million to grow barley and wheat in climate-controlled, indoor facilities for the cattle industry.

→ U.S. fruit stumbles. The USDA reported that non-citrus fruits - like apples, grapes, and berries - saw a 10% production decline last year due to weather issues like freezing temperatures and wildfires.

→ Guess who’s SPAC. Benson Hill, the crop genetics startup, will go public via a special purpose acquisition company (SPAC) that will value the company at $2 billion.

→ A bacon barrier. U.S. pork continues to be hamstrung by Vietnam’s import structure even after tariffs were lowered from 15% to 10% last year.

Megadrought and megafire potential are leading to some mega concerning news.

How bad is mega bad? In the West, 83% of the region is currently in moderate-to-exceptional drought, with the most severe conditions centered on the ‘Four Corners’ states, California, and Nevada, according to the U.S. Drought Monitor.

Over it already: The West region has been in a state of drought nearly every year since 2000. That 20-year-long stretch tops any drought in the last 1,200 years.

La Niña and her annoying habit of drying out the Southwest have created the perfect storm or lack thereof. The addition of bad luck and human error that was partially responsible for 10,000 California wildfires last year has not helped either.

Last week’s moisture provided a little help to Texas, Northeastern Colorado, and portions of the central Plains.

But drought concerns drive grain prices. Fear that drought will eat into yields has grain prices at highs that farmers haven’t seen in nearly a decade. As thrilling as it sounds, folks aren’t sure how much they’ll have to harvest in the fall if they plant now.

North Dakota is completely covered in some level of drought, with extreme drought covering 85% of the state. Farmers in the Dakotas have had to plant nearly four inches deep to try to find moisture. As of last week, the state only had 25% of the corn crop in the ground.

MAGNETIC'S MUST-SEE STUFF

Mental health is no joke. And American Farm Bureau agrees. That’s why they’ve developed this epic resource hub under #FarmStateofMind for May’s Mental Health Month.

A new ag anthem? The new song ‘Do What We Do’ from Nashville artist Adam Sanders is getting some traction in ag and rural communities with its farm focus.

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Gangbuster earnings flooded the agribusiness world over the past two weeks.

We thought we’d skim the surface of a few more earnings reports that went live the past few days:

The Andersons: Trade for days and commodity price volatility made big gains for the agribusiness. Adjusted EBITDA boomeranged seven-fold, leaving 2020’s rough results in the dust. Magically-reappearing margins in ethanol also bumped earnings in the right direction.

CNH: The ag division and powertrain business powered revenue growth to a 37% leap over 2020 results. Again, commodity prices sure didn’t hurt the income statement.

Like most equipment makers, supply chain constraints on steel and freight have punched cost performance in the face. But overall, the order book is on overdrive.

Tyson: Operating income saw a 32% spike in the first half of fiscal 2021 for the global protein leader. The Beef and Prepared Foods segment led the charge with solid margin growth.

Next on the docket is a full recovery of the Chicken business to launch results higher in the second half of the year.