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USDA Weekly Egg Price and Inventory Report, July 5th 2018.

07/05/2018

  • Hen Numbers in Production Increased by 0.4 million to 314.0 Million as Molted Hens and Late-February Chick Placements Commence Laying.
  • Shell Inventory Up by 1.4 Percent.
  • Generic Prices for Extra Large and Large were up 20 Percent Compared to Previous Week.

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on July 2 nd the Midwest wholesale prices for Extra Large and Large sizes were respectively up 19.7 and 20.1 percent. Mediums were higher by 4.3 percent compared to the past week. The progression of prices during 2018 is depicted in the USDA chart reflecting three years of data, updated weekly.

The July 2nd USDA Egg Market News Report (Vol. 65: No. 27) documented a USDA Combined Region value rounded to the nearest cent, of $1.18 per dozen delivered to warehouses effective July 2nd. This price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $1.10 per dozen. At the high end of the range, the price in the South Central Region attained $1.23 per dozen. The USDA Combined Price last week was 40 cents per dozen below the three-year average but 45 cents per dozen above the corresponding week in 2017.

Flock Size

The number of producing hens this week was 314.0 million following second cycle molted flocks coming back into production together with chicks placed in late-February contributing to lower prices for Mediums. The hen population is more than adequate to meet early-Summer seasonal consumer and industrial demand but any number above 315 million in production over the short term at this time of year portends lower prices and increased inventory going forward. The total U.S. egg-flock comprises 323.7 million hens including 2nd Cycle birds and those in molt on all farms. The 9.8 million difference between hens in production and total hens of 3.0 percent suggests that some molted flocks will soon come back into production with implications for price given increased supply and seasonally low to moderate demand.

Stock levels

Generic shell-egg stock rose 1.4 percent to 1,268,300 cases following a decline of 3.1 percent for the previous week. To maintain prices the market will have to find a balance between supply and demand as the Industry moves through the third quarter, generally characterized by falling prices during early to mid-Summer.

The National stock of frozen egg products as reported by the USDA on June 22nd 2018 attained 30.2 million pounds (13,747 metric tons) on May 31st 2018 down 22.5 percent from May 31st 2017.

Dried-egg inventory declined by 15.0 percent during the past month to 12.5 million lbs. (5,681 metric tons) as of April 30th 2018 (was 14.7 million lbs. on March 31st 2018)

INVENTORY

Cold Storage

Cold storage stocks in selected regions on July 3rd 2018 amounted to 2.800 million pounds (1,272 metric tons), 6.7 percent above the stock of 2.624 million pounds during the week of June 1 st. 2018.

The most recent monthly USDA Cold Storage Report released on June 22nd 2018 documented a total stock of 30,244 million pounds (13,747 metric tons) of frozen egg products on May 31st 2018. This value was down 22.5 percent from May 31st 2017. A total of 86.8 percent of combined inventory comprised the categories of "Whole and Mixed" (43.0 percent) and "Unclassified" (43.8 percent). The lack of precision 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 July 2nd 2018 was up 1.4 percent, following a 3.1 percent decrease in inventory during the previous week and a 2.2 percent fall during the preceding week. This suggests that the market will be in relative balance over next two weeks providing that additional output from molted hens coming back into production and pullet flocks do not exceed demand for generic eggs. Medium size eggs are disproportionately low compared to Large and Extra Large. Last week an additional 9.7 million hens commenced production.

Three of the six regions reported higher stock levels. The Midwest Region was up 1.1 percent compared to the previous week to 405,200 cases. This region was followed in decreasing order of stock level by the Southeast Region, down 4.6 percent to 238,500 cases; the South Central Region up by 9.5 percent to 212,300 cases; the Southwest Region up by 9.3 percent to 183,400 cases; the Northeast Region down by 1.2 percent to 145,600 cases and the Northwest Region down by 9.6 percent to 78,300 cases.

The total USDA Six-Area stock of commodity eggs comprised 1,602,200 cases, of which 79.1 percent were shell eggs. The inventory of breaking stock was up 5.4 percent to 334,400 cases.

The price for breaking stock and hence availability from both mature and young flocks will be influenced by the demand for generic shell eggs and contract obligations for the breakers.

As of Monday July 2nd 2018 the inventory of other than generic eggs, compared to the previous week in parentheses, comprised:-

  • Specialty category, up 6.4 percent to 50,700 cases. (was up 11.9% to 47,700)
  • Certified Organic, up 10.2 percent to 101,900 cases. (was up 4.6% to 92,500)
  • Cage Free, down 11.3 percent to 79,700 cases. (was down 1.5% to 89,900)

Recent data suggests a weekly fluctuation in demand for cage free products. This is attributed to an increase in production of this category in 2016 and 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. 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 $1.00 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 retail price of Cage-Free brown rose 14.0 percent or 37 cents per dozen to $3.01 per dozen. Certified Organic rose 3.7 percent or 15 cents per dozen to $4.24 per dozen narrowing the price differential to $1.22 per dozen ($1.44 per dozen last week) suggesting demand for Certified Organic over Cage Free brown in the coming week. The differential between generic white Large and Cage-Free brown was $1.62 per dozen ($1.33 per dozen last week) which will increase demand for generic white. Demand for generic caged white will usually increase with more than a $1.20 per dozen price differential below cage free brown. 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 June 29 th 2018 the number of hens held in other than conventional cages increased by 0.2 million or 0.4 percent on average as follows:-

Total U.S. flock held for USDA Certified Organic production = 15.6 million

Total U.S. flock held for cage-free production = 39.1 million

Total U.S. non-caged flock = 54.7 million This is 17.9 percent of a nominal 305 million U.S. flock in production but 25.7 percent of a presumed flock of 213 million held for shell-egg production

Processed Eggs

For the week ending June 30th 2018 eggs processed under FSIS inspection decreased by 1.7 percent compared to the previous week to a level of 1,574,737 cases. The proportion of eggs broken by in-line complexes attained 53.0 percent (was 52.0 percent) denoting continued consignment of non-contracted eggs from packing to breaking in response to prevailing low and static spot prices. During the corresponding week in 2017 in-line breakers processed 54.8 percent of eggs broken.

Eggs broken YTD attained 39.10 million cases, 0.9 percent more than the corresponding period in 2017.

PRODUCTION AND PRICES

Breaking Stock

The price range for breaking stock delivered to Central States plants on July 2nd was unchanged from the previous week over a range of 57 to 60 cents per dozen. Checks were unchanged over a range of 44 to 49 cents per dozen. The revenue for breaking stock and checks was lower than the production cost for nest-run, estimated by the EIC at 64 cents per dozen during May 2018.

Shell Eggs

The USDA Egg Market News Reports released on July 2nd 2018 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

132-135 cents per dozen

110-113 up 19.7%

Large

130-133 cents per dozen

108-111 up 20.1%

Medium

71-74 cents per dozen

68-71 up 4.3%

Certified Organic EL

275-310 cents per dozen

unchanged long term

Breaking stock

57-60 cents per dozen

unchanged

Checks

44-49 cents per dozen

unchanged

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

The July 2nd 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. $1.12 ($1.01) estimated by proportion: L. $1.18 ($0.96): M. $0.55 ($0.50)

The following advertised retail prices for the week ending June 29 th 2018, (compared with the previous week in parentheses) were posted by the AMS for dozen packs:

  • USDA Certified Organic, Brown, Large: $4.23 ($4.08)
  • Cage-Free Brown, Large: $3.01 ($2.64)
  • Omega-3 Enriched Specialty, White, Large: $2.82 ($2.49)
  • Generic White, Large Grade AA $1.39 ($1.31)
  • Generic White, Large Grade A (Feature price) $1.28 ($1.27)

Retail prices as determined by the USDA-AMS for generic white Large AA last week were up $0.08 per dozen to $1.39 per dozen. This price is following seasonal trends.

(See the text, tables and figures in the review of production and prices comprising the report on USDA May 2018 data posted June 15 th and now available under the STATISTICS tab. A report on the financial results posted by Cal-Maine Foods for the completed 3 rd Quarter of Fiscal 2018, released April 2nd can be accessed by using the SEARCH button on the toolbar and inserting "Cal-Maine".)

Shell-Egg Demand Indicator

The USDA-AMS Shell Egg Demand Indicator for July 5th 2018 was numerically lower by 0.2 points from the last weekly report to +2.7 with a 1.4 percent increase in inventory as determined by the USDA-ERS as follows:-

Productive flock

314,007,735 million hens

Average hen week production

79.4 % (was 79.3)

Average egg production

249,322,142 million per day

Proportion to shell egg market

67.5% (was 66.9%)

Total for in-shell consumption

467,479 cases per day

USDA Inventory

1,268,300 cases

26-week rolling average inventory

4.57 days (unchanged)

Actual inventory on hand

 4.45 days (was 4.44)

Shell Egg Demand Indicator

+2.7 points (was +2.9 on June 27th 2018 )

Dried Egg Products

Prices for dried egg products (most frequent price with a range in $ per pound) effective June 29th 2018 were:-

Whole Egg

$3.25-$3.40

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

Yolk

$3.15-$3.30

Up $0.15 on the low end and down $0.05 on the high end of the range.

Spray-Dried White

$6.35-$6.55

Up $0.15 on the low end and up $0.05 on the high end of the range

Blends

$2.75-$2.80

Unchanged

Although steadily declining, U.S. dried egg inventory is now at a moderate level attaining 11.7 million lbs. (equivalent to slightly less than 5-weeks current production) on May 31st 2018, with a 58 percent decrease compared to May 31st 2017. During the period April 29 th 2018 through June 2nd 2018, dried egg processed under USDA inspection amounted to 11.6 million lbs. compared to 8.3 million lbs. during the previous month. Higher shell-egg prices over the past two weeks restored the volume of non-contracted eggs from breaking back to packing.

COMMENTS

Newcastle Disease (END)

A cluster of over 35 exotic Newcastle disease (END=vvND) cases in small multi-species backyard flocks were confirmed between May 26th and June 30th in San Bernardino County, CA. This situation will not disrupt exports of raw poultry, breeding stock, hatching and table eggs and egg products to Mexico. Following strenuous negotiations after the index case diagnosed in Los Angeles County during mid-May, authorities in Mexico have accepted regionalization and on May 23rd restored importation of raw poultry from other than from the restricted Counties. Based on a statement by the USAPEEC it is anticipated that subject to agreement on "technical issues" export of eggs and egg products has resumed. There is absolutely no reason to embargo pasteurized egg products derived from a USDA-FSIS inspected plant.

It is high time after 37 days since the first San Bernardino outbreak that APHIS and the CADA released the results of their preliminary epidemiologic investigations. It is important for commercial egg producers to know the source of the END virus, mode of dissemination, extent of infection and whether wild birds are reservoirs. This information is required to plan biosecurity procedures and predict possible outcomes unless the incidence rate does not fall.

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 commercial free-range flocks or to confined flocks by deficiencies in biosecurity. This was evidenced by the apparently now contained, outbreak of H5N8 HPAI in commercial flocks in South Africa although the virus persists in free-living birds. Incident cases in the E.U., Asia and North Africa should be a warning to U.S. producers during the fall of 2018 since the risk of infection necessitates enhanced and effective containment. An outbreak of low-path H7N1 AI was diagnosed on routine surveillance in a turkey flock in Jasper County, MO. in late February followed by a broiler breeder flock in eastern Texas in early March. The affected counties should have been eligible for export in June. There is a presumption that migratory waterfowl cease shedding AI virus by the first week of April. Enhanced biosecurity is however still indicated under the Central and Mississippi flyways. Flocks allowed outside access during periods when migratory birds are shedding virus are vulnerable to infection.