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USDA Weekly Egg Price and Inventory Report, January 9th 2018.

01/09/2019

Due to the Federal shutdown effective midnight December 24th some data required for this report was not updated by USDA-AMS. Updated data will be posted when the USDA resumes operation.

  • Hen Numbers in Production increased 3.0 million to 328.1 million from December 26th.
  • Shell Inventory Up by a substantial 9.4 Percent from Previous Week.
  • USDA Midwest Benchmark Generic Prices for Extra Large and Large Down by 11.4 and 11.5 Percent respectively. Mediums Down 16.6 Percent Compared to Past Week.

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on January 9 th the Midwest wholesale prices for Extra Large and Large were lower by 11.4 and 11.5 percent and Mediums were down 16.6 percent compared to the past week. The progression of prices during 2018 is depicted in the USDA chart reflecting three years of data, updated weekly.

The January 8th USDA Egg Market News Report (Vol. 66: No. 01) documented a USDA Combined Region value rounded to the nearest cent, of $1.31 per dozen delivered to warehouses for the week ending January 3rd. This price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $1.22 per dozen. At the high end of the range, price in the South Central Region attained $1.35 per dozen. The USDA Combined Price last week was 20 cents per dozen above the three-year average and 22 cents per dozen above the corresponding week in 2018. Weekly Combined Regional price did not increase with the same velocity during the 4th Quarter of 2018 as compared to 2017 especially during the last eight weeks of 2018.

Flock Size

The number of producing hens this week was 328.1 million, an increase of 3.0 million since December 26th. The hen population is more than adequate to meet early winter seasonal consumer and industrial demand but any number above 325 million in production over the short term into the new year portends lower prices and increased inventory unless matched by proportional demand. The total U.S. egg-flock comprises 332.0 million hens including 2nd Cycle birds and those in molt on all farms, up 2.0 million from December 26th. The 2.0 million difference between hens in production and total hens represents 0.7 percent of the national flock. This suggests that there are fewer pullets and molted flocks soon to come back into production with implications for price given current supply and seasonally moderate demand.

Stock levels

Generic shell-egg stock rose 9.4 percent to 1,390,000 cases following a 12.7 percent increase compared to the previous week. To maintain prices the market, will have to find a balance between supply and demand as the Industry moves through the first quarter of 2019, Seasonally the first two months of the new year are characterized by decreasing flock size but with lower demand and hence reduced prices until the pre-Easter weeks.

The National stock of frozen egg products as reported by the USDA on November 21st 2018 attained 30.2 million pounds (13,721 metric tons) on October 31st 2018 down 8.3 percent from October 31st 2017.

Dried-egg inventory increased by 3.8 percent during November to 13.5 million lbs. (6,123 metric tons) as of November 30th 2018 (was 13.0 million lbs. on October 31st 2018)

INVENTORY

Cold Storage

Cold storage stocks in selected regions on January 8th 2019 amounted to 2.706 million pounds (1,229 metric tons), 3.8 percent less than the stock of 2.812 million pounds during the week of December 1 st. 2018.

The most recent monthly USDA Cold Storage Report released on November 21st 2018 documented a total stock of 30.3 million pounds (13,721 metric tons) of frozen egg products on October 31st 2018. This value was down 8.3 percent from October 31 st 2017. A total of 90.0 percent of combined inventory comprised the categories of "Whole and Mixed" (44.9 percent) and "Unclassified" (45.1 percent). The lack of specificity in classification suggests a more diligent approach is required to enumerate and report inventory by the USDA.

Shell Inventory

The national stock of generic shell eggs reflecting January 7th 2019 was higher by 9.4 percent, following a 12.5 percent decrease in inventory during the previous week. This suggests that buyers have satisfied requirements for end-of-year demand and have filled the supply chain. The market is apparently in oversupply relative to demand and availability is increased by molted hens brought back into production for seasonal demand and the contribution of pullet chicks placed in late July contributing to an excess of Mediums.

Five of six USDA Regions reported higher stock levels. The Midwest Region was up 9.6 percent compared to the previous week to 441,700 cases. This region was followed in decreasing order of stock level by the South Central Region, up 11.4 percent to 296,700 cases; the Southeast Region up 6.5 percent to 271,700 cases; the Northeast Region up 16.4 percent to 145,800 cases; the Southwest Region down 2.0 percent to 136,700 cases and the Northwest Region up 20.2 percent to 97,800 cases.

The total USDA Six-Area stock of commodity eggs comprised 1,770,500 cases, of which 78.5 percent were shell eggs. The inventory of breaking stock was up 13.0 percent to 380,000 cases consistent with the trend in shell-egg price in recent weeks. The value of breaking stock and hence availability from both mature and young flocks will be influenced by the demand for generic shell eggs and contract obligations with breakers.

As of Monday January 8th 2019 the inventory of other than generic eggs, compared to the previous week in parentheses, comprised:-

  • Specialty category, down 0.4 percent to 41,100 cases. (up 12.9% to 41,100)
  • Certified Organic, up 2.6 percent to 73,900 cases. (down 1.4% to 72,100)
  • Cage-Free, down 2.7 percent to 68,200 cases. (up 3.2% to 70,100)

Recent data suggests a weekly fluctuation in demand for cage free products. This is attributed to an increase in production of this category in 2017, motivated by commitments by members of the FMI, NCCR and NRA. Recent announcements by major egg producers indicate a pause in conversion of existing facilities and a short-term moratorium in erecting new complexes and houses until sale of eggs from non-caged flocks rises in competition with generic white. There are indications from equipment manufacturers that some expansion is either planned or is in progress supported by quarterly statistics and the November 6th 2018 passage of California Proposition #12 and the failure of the Supreme Court to consider the multi-state challenge to the California and Massachusetts ballots.

Demand for cage-free eggs is influenced by the relative shelf prices of the category in comparison with generic white-shelled eggs from caged flocks. At the other end of the price range, consumers will purchase less-expensive brown cage-free product over organic eggs when there is a differential in price greater than $1.20 per dozen. Similarly, consumers purchase white-shelled generic eggs in preference to brown-shelled cage-free with a differential of over $1.20 per dozen. The need for structured statistically relevant market research on willingness to pay for attributes such as housing, GM status and nutritional enrichment is self-evident.

Relative Prices of Shell-egg Categories

During the past week the USDA benchmark advertised retail price of Cage-Free brown fell by 21.2 percent on reduced demand or 66 cents per dozen to $2.46 per dozen, reversing the upward move of the previous two weeks. Certified Organic fell 14.9 percent or 60 cents per dozen to $3.42 per dozen narrowing the price differential to $0.96 per dozen ($0.90 per dozen last week) suggesting short-term demand for certified organic over cage-free brown during the current week. The differential between generic white Large and cage-free brown was $0.95 per dozen ($1.96 per dozen last week) which will now favor demand for cage free brown over generic white. Preference for generic white over cage-free brown is evident with a price differential greater than $1.20 per dozen. Large week-to-week percentage fluctuations can be expected in the stock of specialty and organic eggs based on the small base of these categories. The low stock of specialty eggs is noted in the section on inventory.

USDA Cage-Free Data

According to the latest monthly USDA Cage-free Hen Report released January 7th 2018 the number of hens held in other than conventional cages in December was unchanged from November as follows:-

Total U.S. flock held for USDA Certified Organic production = 15.7 million (unchanged since Sept.)

Total U.S. flock held for cage-free production = 41.5 million (was 41.4 million, Oct.)

Total U.S. non-caged flock = 57.2 million This value represents 17.6 percent of a nominal 325 million U.S. flock in production but 25.4 percent of a presumed flock of 225 million held for shell-egg production

Processed Eggs

For the short processing week ending January 5th 2019 eggs processed under FSIS inspection decreased by 7.7 percent compared to the previous week to a level of 1,476,395 cases. The proportion of eggs broken by in-line complexes was 58.5 percent (was 52.9 percent) due to reduced collection from contractors. With lower prices for shell eggs there is a trend to increased consignment of non-contracted eggs to breaking from packing. During the corresponding short processing week in 2018 in-line breakers processed 56.5 percent of eggs broken.

Eggs broken YTD attained 1.5 million cases, 5.4 percent more than the corresponding 1st week in 2018.

PRODUCTION AND PRICES

Breaking Stock

The price range for breaking stock delivered to Central States plants on December 31st was lower by 28.0 percent compared to the previous week with a range of 37 to 40 cents per dozen. Checks were lower by 34.7 percent over a range of 22 to 27 cents per dozen. The revenue for both breaking stock and checks was lower than the benchmark production cost for nest-run, estimated by the USDA at 60.7 cents per dozen during November 2018.

Shell Eggs

The USDA Egg Market News Report released on January 7th 2019 documented the changes in price for the major grades from the Midwest, for Central States Breaking Stock and Certified USDA Organic. The following table lists the "most frequent" ranges of values as delivered to warehouses*:-

Size/Type

Current Week

Previous Week

Extra Large

108-111 cents per dozen

122-125 down 11.4%

Large

106-109 cents per dozen

120-123 down 11.5%

Medium

59-62 cents per dozen

71-74 down 16.6%

Certified Organic EL

275-310 cents per dozen

unchanged long term

Breaking stock

37-40 cents per dozen

52-55 down 28.0%

Checks

22-27 cents per dozen

35-40 down 34.7%

*Store Delivery approximately 5 cents per dozen more than warehouse price

The January 7th 2018 Regional (IA, WI, MN.) average FOB producer prices, for nest-run grade-quality white shelled eggs, with prices in rounded cents per dozen (last week in parentheses) were unchanged:-

EL. $0.90 ($1.03) estimated by proportion: L. $0.85 ($1.01): M. $0.40 ($0.49)

The following advertised retail prices for the week ending January 10 th 2019, (compared with the previous week in parentheses) were posted by the AMS for dozen packs:

        • USDA Certified Organic, Brown, Large: $3.42 ($4.02)
        • Cage-Free Brown, Large: $2.46 ($3.12)
        • Omega-3 Enriched Specialty, White, Large: $2.29 ($2.86)
        • Generic White, Large Grade AA $1.51 ($1.16)
        • Generic White, Large Grade A (Feature price) $1.49 ($1.14)

The retail price as determined by the USDA-AMS for generic white Large AA last week was up 35 cents per dozen to $1.51 per dozen. The price for generics is following seasonal trends but at a lower trajectory after the Christmas-New Year period.

(See the text, tables and figures in the review of production and prices comprising the report on USDA November 2018 data, posted under the STATISTICS tab. A report on the financial results attained by Cal-Maine Foods for the 2nd. Quarter of Fiscal 2019, is posted under the STATISTICS tab.)

Shell-Egg Demand Indicator

The USDA-AMS Shell Egg Demand Indicator for January 9th 2018 was numerically lower by 11.2 points from the last weekly report to +6.3 with a 9.4 percent increase in inventory as determined by the USDA-ERS as follows:-

Productive flock

328,091,871 million hens

Average hen week production

79.9 % (was 79.1%)

Average egg production

262,144,606 million per day

Proportion to shell egg market

71.0%

Total for in-shell consumption

517,007 cases per day

USDA Inventory

1,390,400 cases

26-week rolling average inventory

4.69 days

Actual inventory on hand

4.41 days

Shell Egg Demand Indicator

+6.3 points (was +17.5 on January 2nd 2019)

Dried Egg Products

Prices for dried egg products (most frequent price with a range in $ per pound) effective January 4th 2018 were:-

Whole Egg

$2.80-$2.90

Down $0.05 on both ends of the range

Yolk

$2.85-$3.00

Down $0.05 on both ends of the range

Spray-Dried White

$4.85-$5.15

Down $0.10 on both ends of the range

Blends

$2.75-$2.80

No new quotation

Although declining, U.S. dried egg inventory as reported on December 14 th was at a moderate level on November 30th attaining 13.5 million lbs. (6,123 metric tons), equivalent to slightly less than 4-weeks current production. This was 25 percent lower compared to November 30th 2017. During the period November 4th 2018 through December 1st 2018, dried egg processed under USDA inspection amounted to 9.4 million lbs. (12.3 million lbs. in October 2018). Lower shell-egg prices over the past few weeks diverted non-contracted eggs from packing to breaking.

COMMENTS

Newcastle Disease

A total of 231 exotic velogenic viscerotropic Newcastle disease (vvND = END) cases in small multi-species backyard flocks mainly comprising gamefowl (fighting cocks) was confirmed between May 18th and December 20th in the Southern California Counties of San Bernardino (104), Riverside (87), Los Angeles (39) and Ventura (1). An isolate of END was obtained from a live bird market in Los Angeles on routine surveillance in October. Pre-emptive slaughter of all "birds" (presumed to be domestic galliformes and anseriforms) in four communities in Los Angeles, Riverside and San Bernardino Counties has commenced under the direction of the State Veterinarian for California. The incidence rate for END has fallen sharply since mid-October with 17 incident cases in November but with a surge in Riverside County during the past week. A flock of 103,000 pullets aged 6 weeks located near Perris in Riverside County was depleted following PCR-diagnosis of vvND during the third week of December 2018. A second commercial flock comprising 180,000 egg-producing hens in Riverside County was diagnosed with vvND during the first week of January 2019.

As yet the END situation has not disrupted exports of raw poultry, breeding stock, hatching or table eggs and egg products to Mexico. Following negotiations after the index case of END was diagnosed in Los Angeles County during mid-May, authorities in Mexico accepted regionalization and on May 23rd restored importation of raw poultry from other than the restricted Counties in California. There is absolutely no reason to embargo pasteurized egg products derived from a USDA-FSIS inspected plant.

Avian Influenza

As in the U.S. and the E.U. reassortant strains of avian influenza virus are introduced into regions beneath flyways by migratory birds and then transmitted to backyard and commercial free-range flocks or to confined flocks by deficiencies in biosecurity. Incident cases in the E.U., Asia and North Africa during 2018 should be a warning to U.S. producers during the fall and early winter of 2018 since the risk of infection necessitates enhanced biosecurity and effective containment.

Four cases of LPAI H7N3 were diagnosed in organic turkey growing farms in Stanislaus County, California in early September. Cases of H5N2 LPAI were diagnosed in flocks of commercial turkeys in Kandiyohi (4) and Stearns Counties (4) in Minnesota, during late-October through mid-November. These flocks have since been depleted following application of "controlled marketing". There is a presumption that migratory waterfowl cease shedding AI virus by the first week of April, re-commencing in December. Accordingly, enhanced biosecurity is required under the Pacific, Central and Mississippi flyways. Flocks allowed outside access during periods when migratory birds are shedding virus are vulnerable to infection.