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USDA Weekly Egg Price and Inventory Report, March 14th 2019.

03/14/2019
  • Hen Numbers in Production Stable from Previous Week 323.0 million .
  • Shell Inventory Down 0.3 Percent from Previous Week.
  • USDA Midwest Benchmark Generic Prices for Extra Large, Large Down 5.9 percent and Mediums Unchanged Compared to Past Week.
  • Breaking Stock Below Cost of Production

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on March 11 th the Midwest wholesale prices for Extra Large and Large were down 5.9 and 5.8 percent respectively compared to the past week. Mediums were unchanged. The progression of prices during 2019 is depicted in the USDA chart reflecting three years of data, updated weekly.

The March 11th USDA Egg Market News Report (Vol. 66: No. 10) documented a USDA Combined Region value rounded to the nearest cent, of $0.96 per dozen delivered to warehouses for the week ending March 5th and reflects the sharp downturn during the week. This price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $0.87 per dozen. At the high end of the range, price in the Southeast Region attained $1.03 per dozen. The USDA Combined Price last week was 27 cents per dozen below the three-year average and 83 cents per dozen below the corresponding week in 2018 which was exceptionally high.

Flock Size

The number of producing hens this week was stable at 323.0 million. The hen population is more than adequate to meet seasonal consumer and industrial demand in winter but any number above 325 million in production over the short term into the pre-Easter 2019 season portends lower prices and increased inventory unless matched by proportional demand. The total U.S. egg-flock comprised 332.0 million hens including 2nd Cycle birds and those in molt on all farms. The 9.0 million difference (4.0 million last week) between hens in production and total hens represents 2.7 percent of the national flock. This suggests that there is a considerable increase in pullets and molting flocks soon to come back into production for the pre-Easter period with implications for price given current supply and seasonally moderate demand.

STOCK LEVELS

Generic shell-egg stock fell 0.3 percent to 1,387,500 cases following a 1.0 percent increase during 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 third month of the year is characterized by stable or decreasing flock size but with higher demand during Lent and leading up to Easter falling on April 21st and 22nd.

The National stock of frozen egg products as reported by the USDA on March 7th 2019 (the first release after the Federal shutdown) attained 32.2 million pounds (14,636 metric tons) on January 31st 2019, up 3.9 percent from January 31st 2018.

Dried-egg inventory reported on March 8th increased by 4.6 percent during February 2019 to 17.3 million lbs. (7,864 metric tons) as of February 28th 2019 (was 16.5 million lbs. on January 31 st 2019)

INVENTORY

Cold Storage

Cold storage stocks in selected regions on March 12th 2019 amounted to 3.043 million pounds (1,383 metric tons), down 0.5 percent from the stock of 3.057 million pounds during the week of March 1 st. 2019, the first recorded after the Federal shutdown.

The most recent monthly USDA Cold Storage Report released on March 7th (the first since the Federal shutdown) documented a total stock of 32.2 million pounds (14,622 metric tons) of frozen egg products on January 31st 2019. This value was up 3.9 percent from January 31 st 2018. A total of 89.2 percent of combined inventory comprised the categories of "Whole and Mixed" (46.9 percent) and "Unclassified" (42.3 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 March 11th 2019 was lower by 0.3 percent, following a 1.0 percent increase in inventory during the previous week. This suggests an increase in demand passing into mid-March relative to supply as indicated by the decline in inventory. The market is evidently slightly out of balance relative to supply although flocks in production have stabilized in number. Availability of shell eggs is now restrained by fewer molted hens coming back into production but with more Mediums from pullet chicks placed in early-October 2018 in anticipation of Easter.

Four of six USDA Regions reported higher stock levels. The Midwest Region was unchanged compared to the previous week to 483,300 cases. This region was followed in decreasing order of stock level by the Southeast Region, up 0.6 percent to 281,300 cases; the South Central Region down 6.9 percent to 241,700 cases; the Northeast Region up 1.8 percent to 169,300 cases; the Southwest Region up 5.2 percent to 149,700 cases and the Northwest Region up 2.2 percent to 107,300 cases.

The total USDA Six-Area reported stock of commodity eggs comprised 1,716,700 cases, of which 80.8 percent were shell eggs. The inventory of breaking stock was up 3.3 percent to 329,200 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 March 11th 2019 the inventory of other than generic eggs, compared to the previous week in parentheses, comprised:-

  • Specialty category, down 2.8 percent to 42,600 cases. (up 0.3% to 43,900)
  • Certified Organic, down 9.2 percent to 74,500 cases. (up 7.0% to 82,000)
  • Cage-Free, up 6.6 percent to 65,100 cases. (down 14.9% to 61,000)

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 firm indications from equipment manufacturers and builders and evidenced by interest at the IPPE and especially the Midwest Poultry Federation Convention that expansion is either planned or is in progress. This is supported by quarterly statistics, the November 6 th 2018 passage of California Proposition #12 and the failure of the Supreme Court to consider the multi-state challenge to the California and Massachusetts ballot outcomes.

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 rose by 14.1 percent on increased demand corresponding to 35 cents per dozen to $2.83 per dozen, reversing the downward move of the previous week. Certified Organic fell by 9.4 percent or 38 cents per dozen to $3.67 per dozen narrowing the price differential to $0.84 per dozen ($1.57 per dozen last week) suggesting short-term demand for more certified organic over cage-free brown during the current week. The differential between generic white Large and cage-free brown was $1.85 per dozen ($1.46 per dozen last week) which will favor generic white over cage-free brown. 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 March 4 th 2019 the number of hens held in other than conventional cages in February 2019 was higher by an inconsequential 0.1 million hens 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 = 41.6 million (was 41.4 million, Oct.)

Total U.S. non-caged flock = 57.3 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 processing week ending March 9th 2019 eggs processed under FSIS inspection increased by 1.8 percent compared to the previous week to a level of 1,550,199 cases. The proportion of eggs broken by in-line complexes was 53.1 percent (was 54.4 percent). With lower prices for shell eggs there is a trend to divert non-contracted eggs from packing to breaking. During the corresponding processing week in 2018 in-line breakers processed 54.3 percent of eggs broken.

Eggs broken YTD 2019 attained 15.56 million cases, 7.6 percent more than the corresponding period during 2018. The difference is in part due to higher prevailing shell-egg prices in 2018.

PRODUCTION AND PRICES

Breaking Stock

The price range for breaking stock delivered to Central States plants on March 11th was 12.9 percent lower compared to the previous week with a narrower range of 26 to 28 cents per dozen. Checks were 27.5 percent lower over a 'throw away' range of 8 to 13 cents per dozen. The revenue for both breaking stock and checks was far lower than the benchmark production cost for nest-run, estimated by the USDA at 60.0 cents per dozen during February 2019.

Shell Eggs

The USDA Egg Market News Report released on March 11th 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

82-85 cents per dozen

87-90 down 5.9%

Large

80-83 cents per dozen

85-88 down 5.8%

Medium

72-75 cents per dozen

unchanged

Certified Organic EL

275-310 cents per dozen

unchanged long term

Breaking stock

26-28 cents per dozen

30-32 down 12.9%

Checks

8-13 cents per dozen

12-17 down 27.5%

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

The March 9th 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. $0.69 ($0.72) estimated by proportion: L. $0.64 ($0.67): M. $0.54 ($0.54)

The following advertised retail prices for the week ending March 20 th 2019, (compared with the previous week in parentheses) were posted by the AMS for dozen packs:

        • USDA Certified Organic, Brown, Large: $3.67 ($4.05)
        • Cage-Free Brown, Large: $2.83 ($2.48)
        • Omega-3 Enriched Specialty, White, Large: $2.44 ($2.52)
        • Generic White, Large Grade AA $0.98 ($1.03)
        • Generic White, Large Grade A (Feature price) $0.96 ($1.37)

The retail price as determined by the USDA-AMS for generic white Large AA last week was down 5 cents per dozen to $0.98 per dozen contributing to increased demand for this category. The price for generics is following seasonal trends.

(See the text, tables and figures in the review of production and prices comprising the report on USDA February 2019 cost data, posted in this edition. 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 March 13th 2019 was numerically lower by 0.8 points from the last weekly report to -2.6 with a 0.3 percent increase in inventory as determined by the USDA-ERS as follows:-

Productive flock

323,018,826 million hens

Average hen week production

80.0 % (was 80.1%)

Average egg production

258,439,061 million per day

Proportion to shell egg market

69.2% (was 69.5%)

Total for in-shell consumption

496,777 cases per day

USDA Inventory

1,387,500 cases

26-week rolling average inventory

4.46 days

Actual inventory on hand

4.58 days (was 4.45 days)

Shell Egg Demand Indicator

-2.6 points (was -1.8 on March 6th 2019)

Dried Egg Products

Prices for dried egg products (most frequent price with a range in $ per pound) effective March 8th 2018 were:-

Whole Egg

$2.50-$2.65

Down $0.05 on both ends of the range

Yolk

$2.50-$2.65

Down $0.05 on both ends of the range

Spray-Dried White

$4.70-$4.90

Unchanged

Blends

$2.75-$2.80

No new quotation

U.S. dried egg inventory on February 28th 2019 as reported on March 8th 2019 was higher than January 31st 2019 attaining 17.3 million lbs. (7,864 metric tons), equivalent to slightly less than 5-weeks current production. Inventory was 5 percent lower compared to February 28th 2018. During the period February 3 rd 2019 through March 2nd 2019, dried egg processed under USDA inspection amounted to 11.1 million lbs. Lower shell-egg prices over the past few weeks diverted non-contracted eggs from packing to breaking.

COMMENTS

Newcastle Disease

A total of 397 exotic velogenic viscerotropic Newcastle disease (vvND = END) cases in small multi-species backyard flocks mainly comprising gamefowl (fighting cocks) were confirmed between May 18th and March 8th in the Southern California Counties of San Bernardino (121), Riverside (233), Los Angeles (42) and Ventura (1). A case was recorded in northern California in the week of March 8th.An isolate of END was obtained from a live bird market in Los Angeles on routine surveillance in October 2018. Pre-emptive slaughter of all "birds" (presumed to be domestic galliformes and some anseriforms) in four communities in Los Angeles, Riverside and San Bernardino Counties was conducted under the direction of the State Veterinarian for California in November. This probably resulted in dissemination of infection by owners moving birds. A case of vvND was diagnosed in a flock of non-commercial chickens, presumed to be fighting cocks in Utah County, Utah on January 18 th. An investigation is in progress to ascertain whether there was any direct or indirect contact with similar flocks in Southern California.

The incidence rate for END fell sharply after mid-October 2018 with only 17 new cases in November. A surge of incident cases was detected in Riverside County during mid-December 2018 with 43 incident cases diagnosed during the month. There were 86 new cases in January and 35 through to mid-February.

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 followed by two other laying flocks located about 5 miles from the previous case.

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 early winter of 2019 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 2018. 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 with an additional case in Chippewa County in February 2019. The earlier affected 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.