“This represented the eighth straight year of lower or relatively flat feed costs. However, given current estimates regarding the supply of feed grains and increased export demand for both corn and soybeans, we now expect that trend to end in 2021.” – Joe Sanderson Jr. of Sanderson Farms.
Chicken takeaways from Sanderson Farms (SAFM)
Sanderson Farms said overall realized prices for poultry products were 0.4% lower for the fiscal year. Boneless breast meat prices were 2.8% higher in Q4 but 4.3% lower for the year. Chicken breast prices were lower due to depressed demand from the foodservice channel. Jumbo win prices were down 6.6% for the year but up 9.0% for the fourth quarter. The average price for bulk leg quarters was down 42.8% for the quarter and down 20.6% for the year.
There were some additional highlights from the call:
- Restaurant distributor orders were said to be still down 28-20% in December. Management said that if they locked in the current market, prices for corn and soybeans next year’s feed costs would be $193M higher than this year. Corn and soybeans are the input for a large amount of food and non-food items. The higher costs are expected to hit the P&L in the next quarter.
- The USDA currently estimates that the poultry industry will produce 1% more pounds of chicken in 2021, which management believes is a good estimate.
- Management said, “We are encouraged by reports of a chicken sandwich war in 2021 in the QSR market.” Management later added, “We are aware of one major QSR participant building inventory, just one, and preparing for their rollout of a chicken sandwich.”
Cannabis taxes soon to surpass alcohol in Illinois (BUD)
November’s tax revenues from adult-use cannabis were $22.9M in Illinois based on $75.3M sales. In comparison, alcohol taxes were $25.7M for the month. The $3M gap between the two tax receipts is the smallest since marijuana was legalized in January. Cannabis taxes have raised $153M for the state so far this year, nearly $100M in the past five months. Illinois levy on cannabis is much higher than on alcohol. Illinois charges a 6.25% sales tax and an excise tax of up to 25%, depending upon THC's amount in the product. In comparison, alcohol has a 6.25% general sales tax and an excise tax of 23 cents per gallon of beer, $1.49 per gallon of wine, and $8.55 per gallon of liquor. For example, a six-pack of beer would generate $.69 of taxes, while two joints would generate $5. The cannabis industry is on track to raise more money for the state than alcohol shortly. What voice will that have in the halls of the State Capitol?
Consumers stocking up again (ACI)
A survey of 8,000 consumers nationwide in late November by Shopkick and ACI Worldwide revealed that 61% of respondents stocked up on groceries and other essential items. Shopkick’s survey in March reported 47% of consumers stocking up. Of the 39% of consumers who are not currently stockpiling essential items, nearly half said they would if COVID-19 cases continue to increase. The top items being stockpiled are toilet paper at 87%, followed by food and water at 85%, and cleaning supplies at 67%. 92% of respondents said someone in their household is still purchasing essential items from brick and mortar stores. 88% are shopping in big-box retailers, 80% in grocery stores, 61% in drugstores, 54% in dollar stores, 43% in club stores, and 30% in convenience stores. 47% of Baby Boomers are making fewer trips compared with a month ago. ACI Worldwide, a digital payments specialist, reported in its survey that 16% of all grocery shoppers are buying fewer groceries in-store and more online than before March. The top items being purchased in store are fruits and vegetables at 83%, fresh meat at 81%, and dairy products at 77%, as seen in the table below. The top items purchased online are shampoo, first-aid and cleaning products, and packaged foods.
Consumers increased their online grocery shopping during the pandemic, and the habit will likely remain just as the virus will. It’s more likely that the consumer will use online shopping for certain items, categories, or needs than to be all or nothing for online groceries.
