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Egg Monthly

01/12/2022

REVIEW OF DECEMBER 2021 EGG PRODUCTION COSTS AND STATISTICS.

 

HIGHLIGHTS

  • December 2021 USDA ex-farm blended USDA nest-run benchmark price was 126.3 cents per dozen, 39.4 percent higher than the November 2021 value of 90.6 cents per dozen. Average USDA benchmark price for 2021 was 84.3 cents per dozen compared to 76.5 cents per dozen for 2020 with a range of 52.9 cents per dozen in January to 159.7 cents per dozen in March during COVID hyper-demand. Currently stock levels and prices indicate a relative balance between supply and demand. Prevailing wholesale prices are largely dependent on retail sales despite moderate over-production, continued diversion from the egg-breaking sector and downward distortion attributed to the price discovery system.
  • December 2021 USDA average nest-run production cost was 2.6 cents per dozen (3.8 percent) higher than in November 2021 to 71.8 cents per dozen, mainly attributable to a 5.6 percent higher average feed cost.
  • December 2021 USDA benchmark nest-run margin attained a positive value of 51.5 cents per dozen compared to a margin of 21.4 cents per dozen for November 2021.
  • November 2021 national flock in production ( over 30,000 hens/farm) was up 0.8 percent or 2.4 million hens over a revised October value to 310.9 million. Approximately 3.0 million hens returned to production from molt in early December together with a projected maturation of 25.0 million pullets, with this complement to be offset by depletion of spent flocks.
  • November 2021 pullet chick hatch was up 0.4 percent or 0.1 million from October 2021 to 22.9 million indicating concern over recent low prices.
  • November 2021 export of shell eggs and products combined was down 14.3 percent from October 2021 to 670,000 case equivalents representing the theoretical production of 9.8 million hens. Decreased export to South Korea was responsible for the decline as flocks depleted by HPAI are restored.

 

INTRODUCTION.

Summary tables for the latest USDA November 2021 prices and flock statistics made available by the EIC on January 11th 2021 are arranged, summarized, tabulated and reviewed in comparison with values from the previous December 14th 2021 posting reflecting November 2021 cost and production data.

COSTS & REVENUE

Parameter

NOVEMBER 2021

DECEMBER 2021

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

69.2 c/doz

71.8 c/doz

Low

66.2 c/doz (MW)

68.5 c/doz (MW)

High

75.3 c/doz (N.West)

77.7c/doz (N.West)

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

Notes: 1. Rounded to decimal of a cent

 

NOVEMBER 2021

DECEMBER 2021

Feed

41.3 c/doz

43.5c/doz
Pullet depreciation 11.9 c/doz 12.2 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* 7.0 c/doz 7.1 c/doz

* Adjusted January 2021 and used as a rounding factor

 

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting DECEMBER 2021:-

123.6 cents per dozen1- 71.8 cents per dozen = +51.8 cents per dozen

(November 2021 comparison 90.6 cents per dozen – 69.2 cents per dozen = +21.4 cents per dozen.)

Note 1: USDA Blended egg price

 

   

NOVEMBER 2021

DECEMBER 2021

USDA

Ex-farm Price (Large, White)

90.6 c/doz (Nov.)

123.6 c/doz (Dec.)

 

Cage-free to packing plant1

153.0 c/doz (Nov.)

169.0 c/doz (Dec.)

 

Warehouse/Dist. Center

107.0 c/doz (Nov.)

156.8 c/doz (Dec.)

 

Store delivered (estimate)

112.0 c/doz (Nov.)

161.8 c/doz (Dec.)

 

Dept. Commerce Retail

182.0 c/doz (Oct.)

171.8 c/doz (Nov.)

1. Negotiated price nest run.

 

MONTH

NOVEMBER DECEMBER

U.S. Average Feed Cost per ton

$259.43 $273.85

 

Low Cost Midwest

$242.63 $255.65

 

High Cost Northwest

$293.61 $306.92

 

Differential

$ 50.98 $ 51.27

 

Pullet Cost

(19 Weeks)

$4.58 DECEMBER 2021 $4.47 NOVEMBER 2021

(16 weeks)

$3.97 DECEMBER 2021 $3.88 NOVEMBER 2021
 

VOLUMES OF PRODUCTION

 

PARAMETER

NOVEMBER 2021

DECEMBER 2021

Table-egg strain eggs in incubators

45.8 million* (Nov.)

48.4 million (Dec.)

Pullet chicks hatched

22.8 million* (Oct.)

22.9 million (Dec.)

Pullets to be housed in 5 months

20.7 million (Mar. ‘22)

20.7 million (April ‘22)

2021 December 1st Flock Projection

328.6 million

327.8 million

National Flock in farms over 30,000 (2021)

308.4 million* (Oct.)

310.9 million (Nov.)

National egg-producing flock (2021)

324.7 million* (Oct.)

327.3 million (Nov.)

Cage-free flock excluding organic

76.9 million (Nov.)

75.4 million (Dec.)

 

Proportion flock in molt or post-molt

14.9% (Nov.)

14.5% (Dec.)

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

262.5 million (Oct.)

265.8 million (Nov.)

* USDA Revision

 

Total U.S. Eggs produced (billion)

8.32 (Oct.)

8.13 (Nov.)

Total Cage-Free hens in production

94.3 million (Nov.)

18.5% Organic

111.1 million (Nov.)

16.4% Organic

“Top-5” States hen population (USDA)1

150.8 million (Oct.)

158.2 (Nov.)

Notes 1. Texas excluded to maintain confidentiality

 

PROPORTION OF U.S. TOTAL HENS BY STATE, 2021

Based on a nominal denominator of 310 million hens in flocks over 30,000 covering 95.0 percent of the U.S complement.

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

 

STATE

OCTOBER ‘21

NOVEMBER ‘21

 

Iowa

15.3%

15.3%

 

Indiana

11.4%

11.2%

 

Ohio

11.1%

11.1%

 

Pennsylvania

9.1%

8.9%

 

Texas (estimate)

6.5% ?

6.5% ?

 

California

4.3%

4.3%

 

1. Values rounded to 0.1%

Rate of Lay, weighted hen-week (USDA) 82.6% (Nov.) 82.9% (Dec.)

Actual per capita egg consumption 2016:- 275.3 (up 19.8 eggs from 2015, HPAI )

Actual per capita egg consumption 2017:- 282.1 (up 6.8 eggs from 2016)

Actual per capita egg consumption 2018:- 287.8 (up 5.7 eggs from 2017)

Revised per capita egg consumption 2019:- 293.4 (up 5.6 eggs from 2018)

Revised per capita egg consumption 2020:- 286.5 (down 6.9 eggs from 2019)*

Estimated per capita egg consumption 2021:- 283.1 (down 3.4 egg from 2020)*

Projected per capita egg consumption 2022:- 287.2 (up 4.1 eggs from 2021)*

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook November 16th 2021 taking into account the decreased demand from the food service sector

 

Egg Inventories at beginning of DECEMBER 2021:

Shell Eggs: 1.91 million cases Down 5.9 percent from November 2021.

Frozen Egg Products: 596,476 case equivalents down 6.3 percent from December 2021

Dried Egg Products: Not disclosed since March 2020. Assume moderate level of inventory

Eggs broken under FSIS inspection (million cases) OCTOBER 2021, 6.57 NOVEMBER 2021, 6.34

Cumulative eggs broken under FSIS inspection 2020 (million cases) 74.8 JAN. to DEC.

Cumulative 2020: number of cases produced (million) 268.0 JAN. to DEC.

Cumulative 2020: proportion of total eggs broken 27.9% (30.1% 2020)

Cumulative 2021: number of cases produced (million) 245.5 through NOV.

Cumulative 2021: proportion of total eggs broken 28.4% through NOV.

 

EXPORTS NOVEMBER 2021: ( Expressed as shell-equivalent cases of 360 eggs).

 

Parameter

Quantity Exported

Exports:

 

Shell Eggs (thousand cases)

OCT. 454 NOV. 355

Products (thousand case equivalents)

OCT. 328 NOV. 315

TOTAL (thousand case equivalents)*

OCT. 782 NOV. 670

*Representing 3.0 percent of National production in NOVEMBER 2021.

 

COMMENTARY ON DECEMBER 2021 COSTS AND STATISTICS

 

DECEMBER 2021 COST AND REVENUE DATA

The USDA reports data for five regions, respectively comprising the Northeast, South East (Mid-Atlantic), South Central, Midwest, and Northwest (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. From March 2021 California costs were inexplicably excluded, representing an unjustified concealment of data. The three Pacific Coast states could be combined to maintain state confidentiality while providing representative U.S. data .

  • The USDA ex farm benchmark blended egg price in December 2021 was 39.4 percent higher or 35.7 cents per dozen from November 2021 to 123.6 cents per dozen, contributing to a positive margin of 51.8 cents per dozen based on ‘nest-run’ eggs (delivered from the laying house) in December, compared to a positive margin of 21.4 cents per dozen in November 2021. The December 2021 USDA benchmark price of 123.6 cents per dozen should be compared to 81.0 cents per dozen for the corresponding month in 2019 and 57.4 cents per dozen in December 2020. The increase this past month was due to a moderate rise in demand with some lifting of COVID restrictions.
  • During December 2021, the feed component of production cost averaged 43.5 cents per dozen, up 5.3 percent or 2.2 cents per dozen from November 2021. For 2021 average feed cost was 42.5 cents per dozen. In 2020 average feed price was 31.7 cents per dozen and for 2019, feed cost was 31.4 cents per dozen.
  • Combining data from the USDA and the EIC, producers recorded a positive margin of 51.5 cents per dozen at farm-level for generic-egg flocks during December 2021. This compares with a positive margin of 21.4 cents per dozen in November 2021. For 2021 the average algebraic margin was 79.1 cents per dozen; for 2020, 16.0 cents; 2019, -2.8 cents and 2018, 35.3 cents per dozen, against USDA benchmark ‘nest run’ values.
  • The simple average price of feed in December 2021 over 5-regions was $273.85 per ton, $14.42 per ton or 5.6 percent lower (using USDA-AMS data) compared to November 2021. Southwest data is no longer disclosed to avoid compromising a company that predominates in Texas. The highest cost among five regions was the Northwest at $306.92 per ton, up 4.5 percent. This may be compared to the lowest-cost region, the Midwest at $255.65 per ton, up 5.4 percent. The average cost value for feed includes ingredients plus milling and delivery at a nominal $10 per ton.
  • The benchmark price of corn was $225.09 per ton in December 2021, up $8.80 per ton or 4.1 percent higher than the November 2021 price, taking into account the difference in basis paid by producers. The differential in corn price between the Midwest and the Northwest in December 2021 was $57.37 per ton. A 10.2 percent increase of $38.75 per ton in the price of soybean meal to $420.65 per ton in December 2021added to the increase in feed cost. During December there was a differential of $51.27 per ton in feed price between the Midwest and the Northwest compared to a difference of $60.25 per ton in November.
  • Feed price will continue to be a major factor driving production cost and hence margin. The December WASDE confirmed the volume of the 2021 harvest and ending stocks for corn and soybeans. Unknown factors influencing feed cost during the first quarter of 2022 will include volumes and prices for international trade and especially exports to China; diversion of corn to ethanol coupled with the remaining economic and logistic effects of coronavirus restrictions. There is obviously considerable recovery in the fuel sector with ethanol production above the one- million barrel per day benchmark for the post nine weeks. Substantial exports of corn and soybeans to China, in successive market years 2020/2021 and 2021/2022 to date have increased domestic price and hence cost of production. Each $10 per ton difference in feed cost represents approximately 1.70 cents per dozen. A change of 10 cents per bushel in the price of corn is reflected in a 0.45 cent per dozen difference in production cost. A $10 per ton change in the price of soybean meal affects production cost by 0.44 cent per dozen.
  • The EIC calculated the 5-Region total nest-run production cost in December 2021 to be 71.8 cents per dozen, 2.6 cents per dozen or 3.8 percent higher than in November 2021. Production costs during December 2021 ranged from 68.5 cents per dozen in the Midwest up to 77.7 cents per dozen in the Northwest, higher than the Midwest region by 9.1 cents per dozen. Deletion of California data is considered a substantial deficiency of the EIC Report.
  • Retail egg prices as determined by the Department of Commerce for NOVEMBER 2021 averaged 171.8 cents per dozen, down 10.3 cents per dozen from October 2021. During November 2019 and 2020 retail prices were respectively 140.4 and 145.0 cents per dozen. Consistently since 2017 average retail prices have not declined in proportion to ex-farm prices, allowing higher margins at retail, thereby depressing demand. Retailers have recently demonstrated some restraint in pricing possibly due to competition from deep discounters and club stores, despite sustained demand.

 

DECEMBER 2021 PRODUCTION DATA

 

  • According to USDA data, the estimated average complement of U.S. hens in flocks over 30,000 during November 2021 amounted to 310.9 million, reflecting seasonal upward adjustment in flock size. The average total U.S. flock including hens in molt on all farms counted by the USDA amounted to 327.3 million in November 2021. The average end-of-year flock sizes over the past seven years respectively were, 2014, (311 million); 2015, (291 million post-HPAI losses); 2016, (319 million); 2017, (329.6 million); 2018, (341.6 million); 2019, (341.6 million) and 2020, (325.5 million). The December 1st 2021 flock was projected to be 327.8 million, up 2.3 million from December 2020. Margins during the third quarter influenced flock size.
  • The effect of COVID restrictions on the egg-breaking segment of the industry is noted in the decline in the flock size in Iowa. In January 2020 the state had 56.4 million hens with a progressive decline following the retraction in the egg-liquid market. Hen population in Iowa stabilized at 46.4 million by March rising to 47.5 million in August 2021 and to 47.6 million in November but the hen population is still 15.6 percent lower (8.8 million hens) than the pre-COVID level.
  • Pullet chick hatch attained 22.9 million in November 2021, up 0.1 million from October 2021. It is evident that if relatively low seasonal prices are recorded through the first quarter of 2022, future flock placements will be constrained by some producers cancelling orders.
  • The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA attained 14.5 percent of the national flock in November 2021, down 2.7 percent from October 2021. Consistent with seasonal pre-Christmas placement programs producers molted flocks in late September and early October to optimize cage and floor capacity. Annual averages for molt and post-molt combined were 13.5 percent for 2020, 15.2 percent for 2019 and 17.4 percent for 2018. An historical high value of 23.8 percent in 2016 was due to the loss of hens during the 2015 HPAI epornitic.
  • During the fourth quarter of 2021 the average monthly transfer of pullets to laying houses was 24.3 million with a projection of 21.1 million per month during the first quarter of 2022.
  • The projected hatchery supply flock (parent generation) will attain 3.1 million hens in January 2022. Peak parent-flock placements of 3.1 million hens in production in June 2015, coinciding with the end of the HPAI epornitic, declined to a low of 2.5 million hens during the fourth quarter of 2016. Projections show a monthly average of 3.0 million parent breeder hens during the first quarter and 3.1 million in the second quarter of 2022. The size of the parent flock may be revised depending on pullet chick orders as influenced by margins.
  • Average hen-week production of 82.9 percent in December 2021 compared to 82.6 percent in November 2021 reflects a slightly higher proportion of younger hens in the national flock with many first-cycle hens and early second-cycle hens in production. Currently many young flocks are past peak production as reflected in the availability and price of Medium-sized eggs. Average rate of lay in 2020 attained 80.9 percent compared to 79.2 percent during 2019. 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 conversely will rise due to early depletion thereby increasing the proportion of young hens in their first cycle.
  • The December 22nd USDA Poultry Slaughter Report documented 3.0 million light spent-hens processed under FSIS inspection during November 2021, 0.2 million more than the previous month and 3.5 percent more than in November 2020. 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.

 

 NOVEMBER 2021 EXPORT DATA.

  • According to USDA-FAS data, 355,000 cases of shell eggs were exported in November 2021, representing 1.6 percent of total production. The 21.8 percent decrease compared to October 2021 is mainly attributed to lower demand from South Korea as flocks depleted due to HPAI have been restocked.
  • During November 2021 the following regions were the leading importers:- North America, comprising the two neighboring USMCA nations, but predominantly Mexico (43.1 percent of exports, was 52.2 percent last month). East Asia, predominantly Hong Kong- China, (42.2 percent, was 38.3 percent). The Caribbean and Central American Region combined represented 6.8 percent of shell egg exports in November.
  • Exports of egg products in November 2021 attained 315,000 case-equivalents, representing 1.4 percent of U.S. output. The following regions were the leading importers of egg products by proportion of volume shipped:- North America, our USMCA neighbors, (48.9 percent of exports, was 34.8 percent last month), East Asia comprising China, Japan and S. Korea (40.9 percent, was 31.2 percent), Central America and the Caribbean were lower in November (5.4 percent was 6.7 percent). Shipments to the Middle East continued at a low level in November representing 1.0 percent of exports.
  • Collectively, exports of shell eggs and products in November 2021 represented the output from approximately 9.8 million hens in production during the month, attaining 670,000 case-equivalents, down 14.3 percent from October 2021. This volume can be compared to monthly average shipments of 960,000 case-equivalents over the first four months of 2015 prior to the advent of HPAI, indicating that some export markets have been regained. The major loss from October and November volume other than traditional importers was South Korea as their flocks were restored following depletions due to HPAI.
    (See monthly Egg Export Report in this edition and after mid-month under the Statistics TAB)
  • Maintaining export volume is 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 November 2021 corresponded to 3.0 percent of a nominal national flock of approximately 327 million hens 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.