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Buying eggs—considerations and strategies

Buying eggs—considerations and strategies—

 

There are two buying strategies used to buy eggs:

 

1.      The traditional method contracts a set quantity of eggs for a set period of time (a month, a quarter, etc.) at a fixed price.  Most egg requirements are contracted this way.

2.      Grain Based—is considerably more complicated, but might make sense to a large industrial user under certain conditions.  I’ll explain grain based egg strategy in more detail below.

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America vs. the Sugar Lobby

 

On Wednesday, the Senate voted not to tamper with the Depression-era program that protects U.S. sugar growers.  It’s not often conservatives and liberals, Democrats and Republicans, pro-growth conservative groups and the Teamsters agree on something.  In fact, it’s almost unheard of.  But when it comes to the federal government’s sugar program – one of the most egregious corporate welfare handouts in a long list of wasteful programs – these strange bedfellows have found common ground. 

 

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A report on the current state of the “Cage Free” eggs movement

A wave of big restaurants and grocers has committed to switch entirely to cage-free eggs, setting up the industry for a broad transformation. The problem, critics say, is that while the industry is preparing to flood the market with cage-free product, what consumers still overwhelmingly choose to buy are the cheaper, battery-farmed options.

Since the mid–20th century, when farmers started bringing hens indoors, the system has become so efficient that people can now buy eggs for less than 10 cents each.  But that efficiency came at a price: Life is miserable for hens in battery cages, and opposition to the system became a core concern of the animal rights movement, which has succeeded in turning dislike of the battery egg system into a mainstream issue.

Businesses have felt the pressure and responded.  So far, about 100 grocery chains, 60 restaurant chains, and dozens of other major food businesses have promised to switch to cage-free in the next decade, according to the U.S. Department of Agriculture.  Together, they represent an estimated 70% of U.S. egg demand.

That change will require egg farms to make big investments in new facilities and equipment to support hundreds of millions of cage-free hens.  Some egg producers worry that after they make huge investments to meet the new standards, consumers might end up being reluctant to buy a more expensive product just to feel a little better about themselves.  Only about 10% of eggs sold today are cage-free, and while pressure campaigns have succeeded in convincing businesses and the public that the battery farming system needs to change, people are not yet willing to vote with their wallets.  The vast majority of consumers are still buying the cheaper eggs on the shelf.

Read more: A report on the current state of the “Cage Free” eggs movement

American Crystal Union Workers Reject Contract

 

Locked-out union employees at American Crystal Sugar Co. rejected the company's contract proposal a third time Saturday in a nearly 11-month dispute that focuses on seniority and job security.

 

The union announced that 63% of voters opted against the latest offer. Union employees said Crystal was out to break the union, while the company has said it offered a good contract with substantial increases in wages and benefits.

 

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Complexities of the cocoa powder and cocoa butter markets

 

Complexities of the cocoa powder and cocoa butter markets--

 

Price relationships between beans, butter, and powder are never as straightforward as buyers would like.  A change in one component can change the price of the other component in a reverse direction, have no effect at all—or even change the price in the same direction.  It is not a zero-sum ratio even when markets are behaving “normally”.

 

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Wheat/Corn Ratio--Wheat as Animal Feed

You will often hear analysts talk about wheat prices being too high or low relative to corn.  They use the wheat/corn price ratio as an indicator of how much wheat will displace corn (the largest animal feed) as feed.  They then attempt to translate that information into bushels of demand and calculate the impact on future wheat prices.  
 
Nutritionally, wheat and corn are not equivalent. Corn has about 90 percent of the nutritional value of wheat. That is why corn prices are normally lower than wheat.
 

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