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Egg Week (updated 12/29)

12/23/2020

USDA Weekly Egg Price and Inventory Report, December 24th 2020.

The USDA released the Shell Egg Demand Indicator for December 23rd on Monday 28th and accordingly flock numbers and relevant data have been updated.

  • Shell inventory was down 13.5 percent after a 7.9 percent decrease last week. This indicates an improvement in the balance between demand and supply with implications for prices extending into January, given projections of a reduction in flock size. There is little evidence of a return in the food service sector as liquid and dried-egg prices fall and reopening of the economy is delayed by a surge in COVID-19 incidence rates in many regions suggesting more restrictions.

 

  • The U.S. flock in production was down 0.6 million from the week of December 16th to 323.3 million, with fewer molted hens resuming production due to depletion and less pullets reaching peak against the reality that there was no December increase in demand or price increase
  • The USDA average Midwest benchmark generic prices for Extra-large and Large sizes were down 1.4 percent from the previous week to 71.5 and 70.5 cents per dozen respectively. Mediums were down 1.7 percent to 56.5 cents per dozen. For the past five weeks Midwest prices have sharply lagged both the corresponding weeks in 2019 and the 3-year average. It is apparent that unlike previous years the pre-Christmas rise failed to materialize. Prices have apparently stabilized at a low bottom with a balance between current demand and flock size represented by the number of molted hens that have resumed production and pullets that commenced lay in late November.
  • The Midwest price of breaking stock was down 5.2 percent to an average of 36.5 cents per dozen. Checks in the Midwest were unchanged at an average of 24.5 cents per dozen.

 

OVERVIEW

Prices

According to the USDA Egg Market News Reports circulated on December 21st 2020 the Midwest wholesale prices for Extra-large and Large sizes were down 1.4 percent from the previous week as delivered to DCs, attaining averages of 71.5 and 70.5 cents per dozen. Mediums were down 1.7 percent to a Midwest average of 56.5 cents per dozen reflecting an oversupply from young flocks. Prices should be compared with the USDA benchmark average   6-Region blended nest-run, (excluding provisions for packing and transport) cost of 66.4 cents per dozen in November 2020. The progression of prices during 2018-2020 is depicted in the USDA chart reflecting three years of data, updated weekly.

The December 21st 2020 edition of the USDA Egg Market News Report (Vol. 67: No. 51) documented a USDA Combined Region value rounded to the nearest cent, of $0.80 per dozen delivered to warehouses for the week ending December 15th. This average price lags current Midwest weekly values by one week.  The USDA Combined range for Large in the Midwest was $0.71 per dozen. At the high end of the range, price in the South Central Region attained $0.86 per dozen. The USDA Combined Price last week was about 55 cents per dozen below the 3-year average and about 45 cents per dozen below the corresponding week in 2019.

Flock Size

According to the USDA the number of producing hens reflecting December  23rd (rounded to 0.1 million) was down 0.6 million to 323.3 million. If USDA data is accurate, the producing flock contains molted hens coming back into production with approximately 5.0 million pullets reaching maturity during the week, offset by flock depletion. The hen population producing eggs is not in balance relative to seasonal consumer demand but is depressed by lower industrial and food service off-take. Any number above 320 million hens in production after  the holiday period portends lower than average prices and increased inventory, unless matched by proportional increases in demand.

The total U.S. egg-flock was down 1.3 million to 326.5 million hens including second-cycle birds and those in molt. The most recent EIC projection for December was 325.7 million hens in total. The difference of 2.6 million hens (3.9 million last week) between hens in production and total hens is equivalent to 0.8 percent of the national flock. This means that there are fewer molted hens to come back in production and less young pullets that will commence laying consistent with chick placements in July and August. The EIC model predicting a flock size of 326 million hens in December has already been exceeded. The obvious reduction in hen numbers in Iowa and to a lesser extent among the next three largest egg-producing states that commenced following the onset of COVID-19 in February partly reverted to pre-COVID numbers in anticipation of the holiday period. Chick placement data suggests that 19 to 20 million pullets commenced production in December following 25 million in November. This has implications for prices, given current supply and higher stock levels in relation to seasonal demand.

 

INVENTORY LEVELS

Cold Storage 

Cold storage stocks in selected regions on December 21st amounted to 2.428 million pounds (1,104 metric tons) of frozen egg products, <0.1 percent less than the level of 2.427 million lbs. on December 1st 2020.

The most recent monthly USDA Cold Storage Report released on December 22nd 2020 documented a total stock of 32.4 million pounds (14,743 metric tons) of frozen egg products on November 30th 2020. This value was down 7.9 percent from November 30th 2019. (34.9 million on October 31st 2020). A total of 91.1 percent of combined inventory comprised the categories of “Whole and Mixed” (44.8 percent) and “Unclassified” (46.3 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 effective December 21st 2020 was lower by 13.5 percent after a decrease of 7.9 percent last week. The U.S. population of laying hens is influenced by the number of flocks retained after molting coupled with the chick placements made in late June and  July. Despite low prices following the spike of Covid-stimulated buying in March and April, shell egg flocks were held over in anticipation of increased demand moving through the fourth quarter. The deep reduction in the requirement from the food service sector has resulted in diversion of eggs to the shell market. A balance in production relative to demand in early November was evident but reversed during the last week of the month. A few flocks may be molted but disposal is now more likely.

Five of the six USDA Regions reported lower stock levels. The regions are listed in descending stock level:-

  • The Midwest Region was down by 18.1 percent compared to the previous week to 355,800 cases.
  • The Southeast Region, down 9.0 percent from last week to 277,700 cases.
  • The South Central Region down 19.3 percent to 256,700 cases.
  • The Southwest Region up 4.1 percent to 173,900 cases.
  • The Northeast Region down 21.7 percent to 161,900 cases.
  • The Northwest Region down 0.5 percent to 98,600 cases.

The total USDA six-area stock of commodity eggs comprised 1,683,500 cases, of which 80.8 percent were shell eggs (82.2 percent last week). The inventory of breaking stock was down by 5.6 percent to 313,900 cases. The value of breaking stock and hence availability from both mature and young flocks is influenced by the demand for generic shell eggs and contract obligations with breakers.

As of Monday December 21st 2020 the inventory of other than generic eggs (with previous week in parentheses) comprised:-

  • Specialty category, up 4.2 percent to 55,000 cases. (was up 2.2% to 52,000 cases) 
  • Certified Organic, down 8.8 percent to 78,400 cases. (was up 4.9% to 85,900 cases)
  • Cage-Free, down 7.8 percent to 108,300 cases. (up 3.3% to 117,400 cases)

Demand for cage-free product will not increase materially while generic eggs are on the shelf at $1.00 to $1.35 per dozen over the long term. Existing state legislation mandating sale of only cage-free eggs will support most of the anticipated transition from cages but the change will not be completed by the beginning of 2025, less than 49 months away. With the current proportion of non-caged flocks, cage-free eggs are becoming a commodity in some markets subjected to the same price pressures as generic eggs from caged hens.

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 about $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 the willingness to pay for attributes such as housing, GM status and nutritional enrichment is self-evident.

 

RELATIVE PRICES OF SHELL-EGG CATEGORIES

The following advertised retail prices for the week ending December 24th 2020, (compared with the previous week in parentheses) were posted by the AMS on December 21st for dozen packs:

 

USDA Certified Organic, Brown, Large:            $3.71        ($3.75)   

            Cage-Free Brown, Large:                                    $2.48        ($2.67)

Omega-3 Enriched Specialty, White, Large:       $2.24        ($2.32)

Generic White, Large Grade AA                         $1.29        ($1.14)

Generic White, Large Grade A (Feature price)       $1.02         ($1.21)

*Adjusted by USDA

The weekly advertised retail price as determined by the USDA-AMS for generic white Large AA last week was $1.29 per dozen (last week $1.14). This difference will have little impact on seasonal demand providing retailers pass on the reduction to consumers. The pre-Christmas rise in wholesale price was not apparent this past week with Midwest large about 45 cents per dozen lower than the corresponding week in 2019.

During the present week the USDA benchmark-advertised retail price of brown Cage-Free was down 7.1 percent or $0.19 per dozen to $2.48 per dozen. (last week USDA price was $2.67 per dozen). Certified organic was down 1.1 percent or $0.04 per dozen to $3.71 per dozen. The differential in advertised price between cage-free brown and certified organic was $1.23 per dozen ($1.08 per dozen last week). This suggests relatively unaltered demand for cage-free in relation to certified organic during the current week. The differential between advertised price for cage-free brown over generic white was $1.19 per dozen this past week, ($1.53 per dozen the previous week) suggesting a balance in demand for generic white in relation to cage free brown. Preference for cage-free brown over generic white over 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.

USDA Cage-Free Data

According to the latest monthly USDA Cage-free Hen Report released December 7th 2020, the number of certified organic hens during November 2020 was unchanged from October at 17.2 million.

 The USDA reported no change in the cage-free flock from October at 62.9 million, the same as the average for Q3, 2020.

The stated population of hens producing cage-free and certified organic eggs in October comprised:-

Total U.S. flock held for USDA Certified Organic production = 17.2 million (16.2 million in Q3 2020).

Total U.S. flock held for cage-free production                          = 62.9 million (62.9 million in Q3 2020).

Total U.S. non-caged flock                                                        = 80.1 million (79.1 million in Q3 2020).

This total value represents 25.0 percent of a nominal 320 million total U.S. flock but 35.2 percent of a presumed flock of 224 million producing for the shell-egg market.                                                                                                                    

 

Processed Eggs

For the processing week ending December 19th 2020 the quantity of eggs processed under FSIS inspection over the past week as reported on December 23rd 2020 was down 4.4 percent compared to the previous processing week to a level of 1,488,396 (1,556,798 cases last week). The proportion of eggs broken by in-line complexes was 50.3 percent (was 49.7 percent last week) denoting diversion from the shell market with more availability of uncommitted shell eggs at spot prices. With lower prices for shell eggs there is a trend to divert non-contracted eggs to breaking from shell sales and vice versa resulting in either a higher or lower proportion of in-line breaking. This past week 71.3 percent of egg production was directed to the shell market, (70.2 percent for the past two weeks) reflecting sharply falling shell prices concurrent with negligible recovery of the food service sector offset partly by increased demand from eat-at-home. During the corresponding processing week in 2019 in-line breakers processed 55.4 percent of eggs broken.

For the last available monthly report dated December 9th 2020, yield from 5,839,248 cases  (7,306,318 cases last month) denoted a decrease in demand for liquid over the period November 1st 2020 through November 28th 2020.  Edible yield was 41.4 percent, distributed in the following proportions expressed as percentages:- liquid whole, 59.6; white, 24.4; yolk 11.9; dried, 4.1.

All eggs broken during YTD 2020 attained 73.3 million cases, 10.0 percent less than the corresponding period during 2019. Significantly lower prevailing shell-egg prices for the first four weeks of 2020 compared to 2019, favored breaking. This was followed by a transitory rise in price for shell eggs during March drawing non-committed product into the shell market reversing the trend over the first two months of the year. Over the past seven months shell egg prices reverted to levels slightly higher than the corresponding months in 2019. Shell egg prices have fallen sharply over the past three weeks. Demand for liquid is still curtailed by COVID-19 home confinement resulting in diversion of breaking stock into the shell market balanced by a reduction in hens dedicated to breaking.

 

PRODUCTION AND PRICES

Breaking Stock

The average price for breaking stock of 36.5 cents per dozen delivered to Central States plants on December 21st was 5.2 percent lower than the previous week over a range of 34 to 38 cents per dozen. Checks were unchanged over a range of 22 to 27 cents per dozen. Average revenue for both breaking stock and checks should be compared to the benchmark production cost for nest-run, estimated by the USDA at 66.4 cents per dozen during November 2020.

Shell Eggs

The USDA Egg Market News Report released on December 21st 2020 showed lower Midwest prices for all sizes consistent with an imbalance between production and demand. The following table lists the “most frequent” ranges of values as delivered to warehouses*:-

 

 

       Size/Type

       Current Week

    Previous  Week

Extra Large

     70-73 cents per dozen

         71-74  down  1.4%

Large

     68-71 cents per dozen

         69-72  down  1.4%         

Medium

     55-58 cents per dozen

         56-59  down  1.7%    

Certified Organic EL

275-310 cents per dozen

   Unchanged long term

Breaking stock

    34-38 cents per dozen

         34-43  down  5.2%

Checks

    22-27 cents per dozen

           Unchanged

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

The December 21st 2020 Midwest Regional (IA, WI, MN.) average FOB producer prices, for nest-run grade-quality white shelled eggs, with prices in rounded cents per dozen were unchanged from last week:-

         EL. $0.55 ($0.55), estimated by proportion):  L. $0.52 ($0.52): M. $0.37 ($0.37)

The December 21st California price per dozen in cartons delivered to a DC, with the previous week in parentheses:-

       EL. $1.37 ($1.37); L. $1.26 ($1.20); M. $1.13 ($1.14)

(See the text, tables and figures and the review of production data and prices comprising the USDA costs for November 2020 and 1st Quarter FY 2021 results for Cal-Maine Foods under the Statistics TAB.)

  

Shell-Egg Demand Indicator

The USDA-AMS Shell Egg Demand Indicator for December 23rd (released 28th) 2020 was up by 16.7 points from the last weekly report to 18.6 with a 13.5 percent decrease in inventory from the past week as determined by the USDA-ERS as follows:- 

Productive flock

   323,247,970 million hens

Average hen week production

82.8%  (was 82.9%)

Average egg production

            267,649,319 million per day

Proportion to shell egg market

                   71.3% (was 70.2%)

Total for in-shell consumption

 530,838 cases per day

USDA Inventory

                  1,324,600 cases

26-week rolling average inventory

                  4.85 days

Actual inventory on hand

                  4.09 days

Shell Egg Demand Indicator

18.6 points (was 1.9 on December 16th 2020 )

 

 

Dried Egg Products

Prices for dried egg products (most frequent price with a range in $ per pound) effective December 18th 2020 were:-

 

Whole Egg

$2.85-$3.00

Unchanged

Yolk

$2.20-$2.40

Up 0.05 on the low end and up $0.10 on the high end of the range

Spray-Dried White

$4.75-$5.00

Unchanged

Blends

$2.75-$2.80

No new quotation

 

USDA has not released a report on dried egg inventory since March 13th and due to an inability to obtain data from producers will not issue reports in the immediate future. For reference, total U.S. dried egg inventory on February 29th 2020 was 65 percent lower than on February 28th 2019 attaining 28.5 million lbs. (12,958 metric tons), equivalent to approximately 10 weeks production at current levels. Inventory was 9.0 percent higher as compared to January 31st 2019.  During the period February 2nd 2020 through February 29th 2020, dried egg processed under USDA inspection amounted to 12.0 million lbs. (5,896 metric tons). Lower shell-egg prices during the last eight months of 2019 and during the post-Christmas weeks of 2019 diverted non-contracted eggs from packing to breaking.  It is presumed that the sharp decline in demand from the food service sector resulted in diversion of dedicated shell eggs and liquid to dried products with considerable accumulation. Release of actual data, if large as expected, would depress export price, hence the reluctance by producers to release inventory data.

The February 29th 2020 total dried egg inventory comprised whole egg (38.7%); albumen (25.2%); yolk (34.1%) and blends (2.0%).

COMMENTS

Exotic Newcastle Disease (END)

In accordance with the World Organization of Animal Health (OIE) criteria the END outbreak in southern California is now over given that more than ninety days has elapsed since the last confirmed case was depleted. The CDFA and USA-APHIS have moved to a program of prevention emphasizing biosecurity and hopefully effective vaccination with continual surveillance. Special precautions should be observed in December based on a previous history of reoccurrence.

The END situation did not disrupt exports of raw poultry, breeding stock, hatching or table eggs or egg products to Mexico. Following negotiations after the index case of END was diagnosed in Los Angeles County during mid-May 2018, authorities in Mexico accepted regionalization and on May 23rd 2018 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

In accordance with OIE protocol a limited outbreak of low-pathogenicity H7N3 avian influenza during March in the Carolinas is over. The rapidly detected and eradicated outbreak was diagnosed on routine surveillance of asymptomatic turkey flocks with LPAI comprising nine grow-out and one breeder flock in Anson and Union Counties in North Carolina from March 13th through March 25th.  

There is a presumption that migratory waterfowl cease shedding AI virus by the end of April, re-commencing in December. Accordingly, increased biosecurity is required under the Pacific, Central, Mississippi and Atlantic flyways during periods when migratory birds are potentially shedding. Non-confined flocks are vulnerable to infection. Numerous outbreaks of H5N8 highly pathogenic avian influenza have occurred in recent weeks in Europe and Asia. Reports with increasing frequency are attributed to shedding of the strain by migratory waterfowl and attributed to contact between wild birds and domestic flocks, many of which are on pasture. Most veterinary authorities are advising or mandating flock confinement.