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Egg Monthly

07/14/2022

JUNE HIGHLIGHTS

 

  • June 2022 USDA ex-farm blended USDA nest-run benchmark price was 191.1 cents per dozen, 8.1 percent lower than the May 2022 value of 208.9 cents per dozen. For comparison average USDA benchmark price for 2021 was 84.3 cents per dozen with a range of 58.0 cents per dozen in June to a high of 123.6 in December. Stock levels and prices prior to the onset of flock depletion due to HPAI indicated a relative seasonal balance between supply and demand. Prevailing wholesale prices will be largely dependent on the magnitude of any unlikely future flock depopulations, retail sales and margins, diversion from the egg-breaking sector and fluctuation attributed to the price discovery system.
  • June 2022 USDA average nest-run production cost was 0.3 cents per dozen (0.4 percent) lower than in May 2022 to 83.0 cents per dozen, mainly attributable to a 0.4 percent lower average feed cost per dozen.
  • June 2022 USDA benchmark nest-run margin attained a positive value of 108.1 cents per dozen compared to a margin of 125.6 cents per dozen for May 2022.
  • May 2022 national flock in production (over 30,000 hens/farm) was down 1.3 percent or 3.9 million hens to 282.0 over a revised April 2022 value of 285.9 million. Approximately 2.5 million hens returned to production from molt in early April together with projected maturation of 24.0 million pullets, with this number offset by depletion of spent flocks. Through the end of the first week in June, 31.4 million hens were depopulated to control HPAI
  • May 2022 pullet chick hatch was up 12.3 percent or 3.1 million from April 2022 to 28.4 million.
  • May 2022 exports of shell eggs and products combined were down 52.4 percent from April 2022 to 276,800 case equivalents representing the theoretical production of 4.0 million hens.

INTRODUCTION.

Summary tables for the latest USDA June 2022 prices and flock statistics made available by the EIC on July 12th 2022 are arranged, summarized, tabulated and reviewed in comparison with values from the previous June 10th 2022 posting reflecting May 2022 costs and production data.

 

COSTS & REVENUE

Parameter

MAY 2022

 JUNE 2022

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

83.3 c/doz*

83.0 c/doz

Low

79.6 c/doz (NE)

79.4 c/doz (NE)

High

91.9 c/doz (N.West)

91.4c/doz (N.West)

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

*Adjusted by EIC

Notes: 1. Rounded to decimal of a cent

 

MAY 2022

 JUNE 2022

Feed

52.2 c/doz

52.0c/doz

Pullet depreciation

13.8 c/doz

13.8 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*

8.3 c/doz

8.2 c/doz


* Adjusted January 2022 and used as a rounding factor

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting June 2022:-

191.1 cents per dozen1- 83.0 cents per dozen = +108.1 cents per dozen (May 2022 comparison: 208.9 cents per dozen – 83.3 cents per dozen = +125.6 cents per dozen.)

Note 1: USDA Blended egg price

 

MAY 2022

 JUNE 2022

USDA

Ex-farm Price (Large, White)

208.9 c/doz (May)

191.1 c/doz (June)

Cage-free to packing plant1

232.0 c/doz (May)

176.0 c/doz (June)

Warehouse/Dist. Center

200.0 c/doz (May)

217.0 c/doz (June)

Store delivered (estimate)

205.0 c/doz (May)

222.0 c/doz (June)

Dept. Commerce Retail

252.0 c/doz (Apr.)

286.3 c/doz (May)


  1. Negotiated price nest run loose

 

MONTH MAY 2022 JUNE 2022

U.S. Average Feed Cost per ton* $328.16 $326.73

Low Cost Northeast $307.78 $306.42

High Cost Northwest $376.58 $373.60

Differential $ 68.80 $ 67.18

Pullet Cost*

 (19 Weeks) $5.19 MAY 2022 $5.18 JUNE 2022

(16 weeks) $4.49 MAY 2022 $4.48 JUNE 2022

* Values adjusted by EIC in February 2022

 

VOLUMES OF PRODUCTION

PARAMETER

MAY 2022

JUNE 2022

Table-egg strain eggs in incubators

52.5 million (May)

49.5 million (June)

Pullet chicks hatched

25.3 million (Apr.)

28.4 million (May)

Pullets to be housed in 5 months

22.8 million (Sept.)

25.6 million (Oct.)

2022 December 1st Flock Projection

327.0* million

321.0 million

National Flock in farms over 30,000 (2022)

285.9 million (Apr.)

282.0 million (May)

National egg-producing flock (2022)

302.6 million (Apr.)

298.8 million (May)

Cage-free flock excluding organic

88.5 million (May)

85.6 million (June)

Proportion of flocks in molt or post-molt

13.8% (May)

14.4% (June)

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

 260.8 million (Apr.)

241.4 million (May)

*Forecast subject to HPAI depletions

Total U.S. Eggs produced (billion)

7.55 (Apr.)

7.65 (May)

Total Cage-Free hens in production

106.5 million (May)

16.9% Organic

103.6 million (June)

17.4% Organic

“Top-5” States hen population (USDA)1

138.3 million (Apr.)

137.4 (May)

Notes 1. Texas excluded to maintain confidentiality

 

PROPORTION OF U.S. TOTAL HENS BY STATE, 20221

Based on a nominal denominator of 280 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

APRIL ‘22

MAY ‘22

Iowa

11.4%

11.8%

Indiana

12.2%

12.4%

Ohio

12.1%

12.5%

Pennsylvania

8.4%

7.7%

Texas (estimate)

6.5% ?

6.5% ?

California

4.3%

4.4%

  1. Values rounded to 0.1%

Rate of Lay, weighted hen-week (USDA) 82.9% MAY 2022.  82.2% JUNE 2022

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:- 285.4 (down 8.0 eggs from 2019)*

Estimated per capita egg consumption 2021:- 280.5 (down 4.9 eggs from 2020)*

Projected per capita  egg consumption 2022:- 274.8 (down 5.7 eggs from 2021, HPAI)*

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook June 16th 2022 taking into account the decreased demand from the food service sector and including an effect from HPAI depopulation.

Egg Inventories at beginning of JUNE 2022:

Shell Eggs: 1.81 million cases down 1.1 percent from May 2022.

Frozen Egg Products: 565,711 case equivalents down 2.1 percent from May 2022

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

 

Eggs broken under FSIS inspection (million cases)

 APRIL 2022, 6.60 MARCH 2022, 6.66

 

Cumulative eggs broken under FSIS inspection 2021 (million cases) 76.2 JAN. to DEC.

Cumulative 2021: number of cases produced (million) 268.7 JAN. to DEC.

Cumulative 2021: proportion of total eggs broken 28.3% (30.1% 2020)

Cumulative 2022: number of cases produced (million) 108.0 JAN. to MAY.

Cumulative 2022: proportion of total eggs broken 30.2 %

 

EXPORTS MAY 2022: (Expressed as shell-equivalent cases of 360 eggs).

Parameter

Quantity Exported

Exports:

2022

Shell Eggs (thousand cases)

APRIL 245 MAY 66

Products (thousand case equivalents)

APRIL 337 MAY 210

TOTAL (thousand case equivalents)*

APRIL 582 May 276

*Representing 1.3 percent of National production in MAY 2021.

 

COMMENTARY ON JUNE 2022 COSTS AND STATISTICS

 

COST AND REVENUE DATA FOR JUNE 2022

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 confidentiality while providing representative U.S. data. Costs including feed and depreciation were recalculated in January 2022.

  • The USDA ex farm benchmark blended egg price in June 2022 was 8.1 percent lower or 170.0 cents per dozen up from May 2022 to 191.1 cents per dozen. This contributed to a positive margin of 108.1 cents per dozen based on ‘nest-run’ eggs (delivered from the laying house) in June 2022, compared to a positive margin of 126.5 cents per dozen in May 2022. The June 2022 USDA benchmark price of 191.1 cents per dozen should be compared to 50.7 cents per dozen for the corresponding month in 2020 and 58.0 cents per dozen in June 2021. The relatively high values during the first quarter of 2022 compared to corresponding months for the two previous years were due to a rise in demand with lifting of COVID restrictions.
  • During June 2022, the feed component of production cost averaged 52.0 cents per dozen, down 0.3 percent or 0.2 cents per dozen from May 2022. For 2021 average feed cost was 42.5 cents per dozen. In 2020 average feed price was 31.7 cents per dozen and 31.4 cents per dozen in 2019.
  • Combining data from the USDA and the EIC, producers recorded a positive margin of 108.1 cents per dozen at farm-level for generic-egg flocks during June 2022. This compares with a positive margin of 125.6 cents per dozen in May 2022. For 2021 the cumulative average algebraic margin was 91.0 cents per dozen; for 2020, 16.0 cents; for 2019, -2.8 cents and for 2018, 35.3 cents per dozen, against USDA benchmark ‘nest run’ values. During the first half of 2022 cumulative algebraic margin attained 577.1 cents per dozen.
  • The simple average price of feed in June 2022 over 5-regions was $326.73 per ton, $1.43 per ton or 0.4 percent lower (using revised monthly USDA-AMS data) compared to May 2022. 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 $373.60 per ton, down 0.8 percent from May. This may be compared to the lowest-cost region, the Northeast at $306.42 per ton, down $1.33 from the previous month. The average cost value for feed includes ingredients plus milling and delivery at a nominal $10 per ton.
  • The benchmark price of corn was $277.57 per ton in June 2022, down $9.5 per ton or 3.3 percent lower than the May 2022 price, taking into account the difference in basis paid by producers. The differential in corn price between the Northeast and the Northwest in June 2022 was $79.91 per ton. A 5.0 percent increase of $22.61 per ton in the price of soybean meal to $478.81 per ton in June offset the decrease in corn. The industry has experienced sharp increases in the cost of phosphate additives, fat and vitamins since March. During June 2022 there was a differential of $63.18 per ton in feed price between the Midwest and the Northwest compared to a difference of $66.76 per ton in May 2022.
  • Feed price will continue to be a major factor driving production cost and hence margin. The June WASDE #626 released on July 12th projected the volume of the 2022 corn and soybean harvests, ingredient use, exports and ending stocks for the two commodities. Unknown factors influencing feed cost during the remainder of the second quarter and extending through September 2022 will include the invasion of Ukraine with inevitable disruption in production and shipping from the region, coupled with the drought in South America influencing volumes and prices in international trade. The price of ingredients will be influenced by weather conditions as influenced by the persistent La Nina, export volume from the U.S. and especially to China, diversion of corn to ethanol combined with the remaining economic and logistic effects of COVID restrictions. There is obviously considerable recovery in the fuel sector with ethanol production exceeding the one-million barrel per day benchmark. Substantial exports of corn and soybeans to China, in market year 2021/2022 and orders for 2022/2023 have increased domestic price and hence cost of egg 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 0.35 cent per dozen.
  • The EIC calculated the 5-Region total nest-run production cost in June 2022 to be 83.0 cents per dozen, 0.3 cents per dozen or 0.4 percent lower than in May 2022. Production costs during June 2022 ranged from 79.4 cents per dozen in the Northeast up to 91.4 cents per dozen in the Northwest but higher than the Midwest region by 11.3 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 May 2022 averaged 286.3 cents per dozen, up 34.3 cents per dozen from April 2022. During May 2020 and 2021 retail prices were respectively 164.0 and 162.5 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.

 

PRODUCTION DATA FOR JUNE 2022

  • According to USDA, the estimated average complement of U.S. hens in flocks over 30,000 during May 2022 amounted to 282.0 million, reflecting a net downward adjustment in flock size by 3.9 million hens during the month. Routine depletion and depopulation due to HPAI was partly offset by pullet replacements and retained flocks. The average total U.S. flock including hens in molt on all farms counted by the USDA amounted to 298.8 million in May 2022. This value will be adjusted subsequently following an accounting of depopulations and replacements. 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 2022 flock was projected to be 321.0 although this figure will be depressed by flock depopulation amounting to 31.4 million hens through the first week of June and possibly more if incident cases of HPAI occur.
  • 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 reduction following the retraction in the egg-liquid market. Hen population in Iowa stabilized at 46.9 million by May 2021 rising to 47.3 million in August 2021 but falling to 44.3 million in February 2022. The hen population was 21.2 percent lower (11.0 million hens) than the pre-COVID level. The decline in the population of hens in Iowa was accentuated by depopulation of 12.7 million in March to control outbreaks of HPAI. As of the end of May 2022 Iowa housed 33.2 million hens according to USDA figures.
  • Pullet chick hatch attained 28.4 million in May 2022, up 3.1 million from April 2022. It is anticipated that seasonal prices will be high through the remainder of the second quarter of 2022, resulting in larger chick placements if available in addition to necessary replacement of depleted pullets and hens.
  • The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA attained 14.4 percent of the national flock in June 2022, compared to 13.7 percent in May 2022. Annual averages for molt and post-molt combined were 14.9 percent in 2021, 13.5 percent for 2020, 15.2 percent for 2019 and 17.4 percent for 2018. The historical high value of 23.8 percent in 2016 was due to the loss of hens during the 2015 HPAI epornitic. This situation will be revisited in 2022 and 2023.
  • During the fourth quarter of 2021 the average monthly transfer of pullets to laying houses was 24.3 million with a projection of 2 million during the second quarter and 28.8 during the third quarter. A projected monthly average of 25.6 million was provided for October 2022.
  • The projected hatchery supply flock (parent generation) attained 3.1 million hens in May 2022. The previous peak parent-flock of 3.1 million hens in production was in June 2015, coinciding with the end of the HPAI epornitic. Parent hens then declined to a low of 2.5 million during the fourth quarter of 2016. Projections show a monthly average of 3.1 million in the second quarter and 2.9 million during the third quarter of 2022. The size of the parent flock may be revised based on pullet chick orders influenced by demand to replace depopulated hens and in response to higher producer margins.
  • Average hen-week production of 82.2 percent in June 2022 compared to a value of 82.9 percent in May 2022 reflects a slightly higher proportion of older hens in the national flock with many first-cycle hens and early second-cycle hens in production. Average rate of lay in 2021 was 82.0 percent, with 80.9 percent in 2020 and 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 June 24th USDA Poultry Slaughter Report documented 5.5 million light spent-hens processed under FSIS inspection during May 2022, 35.3 percent more than the previous month and 2.2 percent more than in May 2021. Provided space is available prevailing high prices resulted in retention of hens with fewer routine or previously scheduled flock depletions. 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 but this volume will decline as producers retain flocks to meet demand, subject to the availability of housing.

 

EXPORT DATA FOR MAY 2022.

  • According to USDA-FAS data, 66,000 cases of shell eggs were exported in May 2022, representing 0.3 percent of total production. The noteworthy 73.1 percent decrease compared to April 2022 is attributed to sharply lower demand from Canada and China, Exports to South Korea ceased in the fourth quarter of 2021 as their flocks depopulated due to HPAI were restocked.
  • During May 2022 the following regions were importers of shell eggs but on a lower base:- North America, comprising the two neighboring USMCA nations, but predominantly Canada (21.2 percent of exports, was 22.0 percent last month). East Asia, predominantly Hong Kong- China, (33.3 percent, was 28.1 percent).
  • Exports of egg products in May 2022 attained 210,000 case-equivalents, representing 1.0 percent of U.S. output. The following regions were the leading importers of egg products by proportion of volume shipped but on a smaller base compared to April:- Canada, (9 percent of exports, was 51.0 percent last month), East Asia comprising Japan and S. Korea (51.4 percent, was 45.4 percent), Central America and the Caribbean increased their proportion of imports in May (7.1 percent, up from 4.7 percent). The E.U. represented 7.1 percent of U.S. exports of products in May. There were negligible shipments to the Middle East in May.
  • Collectively, exports of shell eggs and products in May 2022 represented the output from approximately 4.0 million hens in production during the month, attaining 276,800 case-equivalents, down 58.4 percent from April 2022. 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 export markets will have to be regained. The major losses in shell eggs exported during May among traditional importers were to China (down 62 percent) and Canada (8.2 percent) The major change in egg products during May was Japan down 31 percent with 95,000 case equivalents. Canada imported 27.8 percent of egg products and shell eggs combined in May.
  • 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 May 2022 corresponded to 2.8 percent of a nominal national flock of approximately 310 million hens, (before HPAI depletions) 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.