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Egg Monthly

02/11/2020

Review of January 2020 Egg Production Costs and Statistics.

  • January 2020 USDA ex-farm blended nest-run benchmark price was 52.9 cents per dozen, 34.7 percent lower than in December 2019 at 81.0 cents per dozen. Falling prices during January are consistent with seasonal purchase trends but the reality in 2020 was accentuated by oversupply.
  • January 2020 USDA average nest-run production cost was 0.9 cent per dozen higher than in December 2019 at 60.8 cents per dozen.
  • January 2020 USDA benchmark nest-run margin attained a negative value of 7.9 cents per dozen compared to a positive margin of 21.1 cents per dozen in December 2019.
  • December national flock ( over 30,000 hens/farm) was up 1.4 million hens or 0.4 percent to 325.1 million.
  • December pullet chick hatch was down 2.5 percent from November to 23.4 million.
  • December exports of shell eggs and products were down 3.0 percent from November to 772,000 case equivalents representing the theoretical production of 10.4 million hens.

 

INTRODUCTION.

Summary tables for the latest USDA January 2020 prices and flock statistics made available by the EIC on February 11th 2020 are arranged, summarized, tabulated and reviewed in comparison with values from the previous January 14th 2019 posting reflecting January 2020 cost and production data.

 

COSTS & REVENUE

Parameter

JANUARY 2020

DECEMBER 2019

5-Region Cost of Production ex farm (1st Cycle)

60.8 c/doz

59.9 c/doz

Low

57.8 c/doz (MW)

57.0c/doz (MW)

High

86.5 c/doz (CA)

77.6 c/doz (CA)

Components of USDA 6-Region 1stCycle nest-run Cost of Production:-

 

JANUARY 2020

DECEMBER 2019

Feed

31.5 c/doz

31.0c/doz

Pullet depreciation

11.1 c/doz

10.9 c/doz

Labor (estimate)

4.0 c/doz

4.0 c/doz

Housing (estimate)

5.0 c/doz

5.0 c/doz

Miscellaneous and other*

9.2 c/doz

9.0 c/doz


* Adjusted January 2020 and used as a rounding factor

 

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting JANUARY 2020:-

52.9 cents per dozen1- 60.8 cents per dozen = -7.9

(Dec. 2019 comparison 81.01 cents per dozen - 59.9 cents per dozen = 21.1 cents per dozen.)

Note 1: USDA Blended egg price

   

JANUARY 2020

DECEMBER 2019

USDA

Ex-farm Price (Large, White)

52.9 c/doz (Jan.)

81.0 c/doz (Dec.)

 

Cage-free to packing plant

153.0 c/doz (Jan.)

153.0 c/doz. (Dec.)

 

Warehouse/Dist. Center

78.0 c/doz (Jan.)

128.0 c/doz (Nov.)

 

Store delivered (estimate)

83.0 c/doz (Dec.)

133.0 c/doz (Nov.)

 

Dept. Commerce Retail

153.5 c/doz (Dec.)

140.5 c/doz (Nov.)

Layer Feed Cost

JANUARY 2020

DECEMBER 2019

See note on source of data: now USDA

U.S. Average

$200.30/ton

 

$197.56/ton

High

$226.61/ton (West)

$223.05/ton (West)

Low

Differential

$183.24/ton (MW)

$43.37

$181.39/ton (MW)

$41.66

Pullet Cost (19 Weeks) $3.83 JANUARY 2019 $3.77 DECEMBER 2019

 

 

 

 

 

 

 

 

 

 

VOLUMES OF PRODUCTION

 

PARAMETER

JANUARY 2020

DECEMBER 2019

Table-egg strain eggs in incubators

48.3 million (Jan.)

47.9 million (Dec.)

Pullet chicks hatched

23.4 million (Dec.)

24.0 million (Nov.)

Pullets to be housed in 5 months

21.1 million (May '20)

21.6 million (Apr. '20)

     

National Flock in farms over 30,000

325.1 million (Dec.)

323.7 million (Nov.)

National egg-producing flock

340.6 million (Dec.)

339.1 million (Nov.)

     

Proportion flock in molt or post-molt

13.5% (Jan.)

13.9% (Dec.)

Total of hens in flocks over 30,000, 1st cycle (estimate)

284.4 million (Dec.)

292.1 million (Nov.)

Total U.S. Eggs produced

8.59 billion (Dec.)

8.32 billion (Nov.)

Cage-Free hens in production

69.7 million (Jan.)

22.5% Organic

70.8 million (Dec.)

22.9% Organic

"Top-5" States hen population (USDA)

168.6* million (Dec.)

166.8 (Nov.)

* Texas excluded to maintain confidentiality

PROPORTION OF U.S. TOTAL HENS BY STATE, 2020

Based on a denominator of 320 million hens in flocks over 30,000.

USDA has amended inclusion of specific states in regions and eliminated Texas data to protect confidentiality of Company flock sizes

 

STATE

JANUARY

2020

DECEMBER 2019

 

Iowa

17.6%

17.3%

 

Indiana

10.6%

10.9%

 

Ohio

10.8%

10.6%

 

Pennsylvania

8.8%

8.7%

 

Texas (estimate)

6.0% ?

6.0% ?

 

California

4.1%

3.9%

 

1. Values rounded to 0.1%

Rate of Lay, weighted hen-week (USDA) 81.0% (JANUARY) 81.7% (DECEMBER)

Actual USDA-ERS 2016 U.S. per capita annual egg consumption post HPAI:- 275.2 eggs (+19.8 from 2015)

Actual USDA-ERS 2017 U.S. per capita annual egg consumption:- 281.8 eggs (+6.6 from 2016)Actual USDA-ERS 2018 U.S. per capita annual egg consumption to be:- 284.0 eggs (+2.2 from 2017)*Projected USDA-ERS 2019 U.S. per capita annual egg consumption to be:- 289.9 eggs (+5.9 from 2018)*Projected USDA-ERS 2020 U.S. per capita annual egg consumption to be:- 293.3 eggs (+3.8 from 2019)

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook January 16th 2019

Egg Inventories at beginning of JANUARY 2020:

Shell Eggs: 2.05 million cases down 12.0 percent from December.

Egg Products: 3.60 million case-equivalents up 7.1 percent from December.

Eggs broken under FSIS inspection (million cases) DECEMBER 6.902 NOVEMBER 6.438

Cumulative eggs broken under FSIS inspection 2019 (million cases) 82.7 AN. to DEC.

Cumulative 2019: number of cases produced (million) 273.8 JAN. to DEC.

Cumulative 2019: proportion of total eggs broken 30.2%

 

EXPORTS DECEMBER 2019: ( Expressed as shell-equivalent cases of 360 eggs).

 

Parameter

Quantity Exported

Exports:

 

Shell Eggs (thousand cases)

NOV. 331 DEC. 356

Products (thousand case equivalents)

NOV. 465 DEC. 416

TOTAL (thousand case equivalents)*

NOV 796 DEC. 772

*Representing 3.1 percent of National production in December 2019.

 

COMMENTARY ON JANUARY 2020 COSTS AND STATISTICS

 

JANUARY 2020 COST AND REVENUE DATA

The USDA reports data for six regions, respectively comprising the Northeast, South East (Mid-Atlantic), South Central, Midwest, Northwest and California (NW and California combined in some tables).

From March 2019 onward some state data was withheld to maintain confidentiality where a company predominates in a specific state or region .

  • The USDA ex farm benchmark blended egg price in January 2020 decreased by 34.7 percent or 28.1 cents per dozen from December 2019 to 52.9 cents per dozen, contributing to a negative margin of 7.9 cents per dozen based on 'nest-run' eggs (delivered from the laying house). The January 2019 USDA benchmark price of 52.9 cents per dozen should be compared to 78.0 cents per dozen for the corresponding month in 2019 and 95.0 cents per dozen in November 2018.

· During January 2020, the feed component of production cost averaged 31.5 cents per dozen, up 1.6 percent from December 2019. For 2019 average feed price was 31.4 cents per dozen. The 2018 average feed cost was 33.3 cents per dozen compared with an average feed cost of 32.0 cents per dozen in 2017.

· Combining data from the USDA and the EIC, producers recorded a negative margin of 7.9 cents per dozen at farm-level for flocks in January 2020 compared to a margin of 21.1 cents per dozen in December 2019. The aggregate algebraic margin for 2019 was -33.3 cents per dozen or an average monthly loss of 2.8 cents per dozen.

The cumulative margin for entire 2018 was 424.0 cents per dozen or a monthly average of 35.3 cents per dozen. The algebraic margin for entire 2017 was a positive 39.2 cents per dozen, with the first eight months negative comparing production cost against USDA benchmark 'nest run' values. The algebraic average margin for entire 2016 was a loss of 9.6 cents per dozen with negative values recorded for eight consecutive months.

· The simple average price of feed for January 2020 over 5-regions was $200.30 per ton, 1.4 percent higher (using USDA-AMS data) or $2.74 per ton compared to December 2019. Southwest data is no longer disclosed to avoid compromising a company that predominates in Texas. The highest cost among five regions was the West (including California) at $226.61 per ton compared to the lowest region, the Midwest at $183.24 per ton. The average figure includes ingredients plus milling and delivery at approximately $10 per ton.

· The benchmark price of corn was $152.7 per ton in January 2020, up $3.61 per ton or 2.4 percent higher than December 2019, taking into account the difference in basis. A decrease of $1.55 per ton or 0.5 percent in the price of soybean meal from $310.22 per ton in December 2019 to $309.34 per ton in January 2020 partly offset the cost increase for corn There was a wider differential of $43.37 per ton in feed price between the Midwest and the West compared to $41.66 per ton in December. The differential in corn price between the Midwest and the West in October was $49.66 per ton ($44.66 in December 2019).

· Feed price will continue to be a major factor driving production cost and hence margin. Unknown factors influencing feed cost during the first quarter of 2020 will include continued disruption of international trade due to tariffs imposed by China coupled with the emergence of coronavirus. Substantial exports of soybeans to China, when and if they occur will increase domestic price and hence cost of production. Each $10 per ton difference in feed cost represents 1.75 cents per dozen.

· The EIC-calculated the 6-Region total nest-run production cost in January 2020 to be 60.8 cents per dozen, 0.9 cents per dozen higher than in December 2019. Production costs during January 2020 ranged from 57.8 cents per dozen in the Midwest up to 86.5 cents per dozen in California which was higher than the Midwest region by 28.8 cents per dozen.

· Retail egg prices as determined by the Department of Commerce for DECEMBER 2019 averaged 153.5 cents per dozen, 13.0 cents per dozen or 9.3 percent higher than in November 2019. During December 2017 and 2018 retail prices were respectively 180.5 and 159.5 cents per dozen. During 2016 and extending through mid-2019, retail prices did not decline in proportion to ex-farm prices allowing higher margins at retail thereby depressing demand.

 

JANUARY 2020 PRODUCTION DATA

 

· According to USDA data, the estimated average complement of U.S. hens in flocks over 30,000 during December 2019 amounted to 325.1 million, reflecting a seasonal adjustment in flock size. The average total U.S. flock including hens in molt on all farms counted by the USDA amounted to 340.6 million in December 2019. The average end-of-year flock sizes over the past five years respectively were, 2012 (299 million); 2013 (308 million); 2014 (311 million); 2015 (291 million post HPAI losses) and in 2016 (319 million). The EIC projected the January 2020 total flock at 340.7 million. The USDA recorded a total table-egg flock of 340.6 million.

· Pullet chick hatch was down 2.1 percent in December 2019 to 23.4 million compared to the previous month at 24.1 million. The high October 2019 value of 26.0 million was in anticipation of Easter 2020. It is evident that if lower than seasonal prices prevail during the remainder of winter and into spring, flock placements will be constrained by some producers cancelling pullet-chick orders.

· The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA attained 13.5 percent of the national flock in January 2020, 2.9 percent lower than in December 2019. Annual averages were 15.2 percent for 2019, 17.4 percent for 2018 and 18.0 percent in 2017. The high value of 23.8 percent in 2016 was due to the loss of hens in the 2015 HPAI epornitic.

· The average monthly projection for pullets to be transferred to laying houses during the 1st quarter of 2020 will be 22.1 million.

· The projected hatchery supply flock attained 2.4 million in December 2019. Peak parent-flock placements rose to 3.1 million hens in production in June 2015, coinciding with the end of the HPAI epornitic, to a low of 2.5 million hens during the 4th Quarter of 2016. Projections show monthly averages of 2.5 and 2.6 million breeder hens in production during the 1st and 2nd quarters of 2020.

· Average production of 81.0 percent in January 2020 compared to 81.5 percent in December reflects the relatively lower number of young pullets approaching and attaining peak production. This is evidenced by the volume and hence price of mediums. Average rate of lay attained 78.7 percent during 2016, 79.8 percent in 2017 and 79.2 percent in 2018. The average rate of lay during any period is a function of the proportion of pullets placed, the rate of depletion of flocks and retention of molted hens for a second cycle. Average flock production will fall as weighted flock age increases or will rise due to early depletion and restricting production to the first cycle.

  • The January 24th USDA Poultry Slaughter Report documented processing of 2.7 million light spent-hens under FSIS inspection during December 2019 up 6.3 percent from November. This was consistent with retention of flocks before Christmas and added to overproduction. Spent-hens are shipped live to Canada from Northern-tier U.S. states or are rendered or composted in other regions. Approximately 14 million spent hens are disposed of each month.

 

DECEMBER 2019 EXPORT DATA.

· According to USDA-FAS data, 356,200 cases of shell eggs were exported in December 2019, compared to 330,900 in November 2019, representing 1.5 percent of total production. This value should be compared to the high value of 409,700 cases in March 2016 prior to the onset of HPAI.

During December 2019 the following regions were the leading importers:- North America, comprising the two neighboring USMCA nations (60.4 percent, was 50.5 percent), East Asia (32.0 percent, was 43.5 percent). Shipments in December 2019 to the Middle East were inconsequential with a monthly volume of 8,000 cases.

· Exports of egg products in December 2019 were down 10.6 percent from November to 415,500 case-equivalents representing 1.7 percent of U.S. output. The following regions were the leading importers of egg products by proportion of volume shipped in October:- North America, our USMCA neighbors (41.6 percent), East Asia (31.8 percent), Southeastern Asia (8.0 percent), the EU-28 (5.2 percent) and the Caribbean (5.2 percent).

· Collectively, exports of shell eggs and products in December 2019 represented the output from approximately 10.4 million hens in production during the month, attaining 771,700 case-equivalents, down 3.1 percent from November. This was a 19.6 percent decrease compared to monthly average shipments of 960,000 case-equivalents exported over the first four months of 2015 prior to the advent of HPAI, indicating that international markets are being regained.

 

Efforts in this respect are attributed to cooperation between the AEB and USAPEEC both in existing and new markets. Specific attention is directed to nations with the potential to import U.S. product based on landed price against competition. Exports of both egg-products and shell eggs in December 2019 corresponded to 3.1 percent of a nominal national flock of approximately 325 million hens in production on commercial farms holding more than 30,000 hens.

· There is no scientifically justifiable reason why any nation should embargo pasteurized egg products from an approved plant, based on a diagnoses of avian influenza or END in a state or country.