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USDA Weekly Egg Price and Inventory Report, August 9th 2018.

08/09/2018
  • Hen Numbers in Production Increased by 0.5 million to 318.2 Million as Molted Hens and Late-February Chick Placements Approached Peak.
  • Shell Inventory Down by 5.6 Percent Confirming Market Stabilization After 2.8 Percent Fall Last Week.
  • Generic Prices for Extra Large and Large Were Unchanged Compared to Previous Week.

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on August 6 th the Midwest wholesale prices for Extra Large and Large sizes were respectively unchanged at 98 and 96 cents per dozen respectively. Mediums were higher by 18.6 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 August 6th USDA Egg Market News Report (Vol. 65: No. 32) documented a USDA Combined Region value rounded to the nearest cent, of $1.04 per dozen delivered to warehouses effective August 2nd This price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $0.96 per dozen. At the high end of the range, price in the South Central and Southeast Regions attained $1.10 per dozen. The USDA Combined Price last week was 42 cents per dozen below the three-year average and 18 cents per dozen above the corresponding week in 2017.

 

Flock Size

The number of producing hens this week was 318.2 million following second cycle molted flocks coming back into production together with chicks placed in late-February advancing in age with fewer Mediums resulting in an increase in price for this size category. 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 325.7 million hens including 2nd Cycle birds and those in molt on all farms. The 7.5 million difference between hens in production and total hens is the same as last week and represents 2.4 percent of the national flock. This suggests that there are molted flocks soon to come back into production with implications for price given increased supply and seasonally low to moderate demand.

Stock levels

Generic shell-egg stock fell 5.6 percent to 1,344,300 cases following a fall of 2.8 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 July 23rd 2018 attained 30.7 million pounds (13,957 metric tons) on June 30th 2018 down 26.3 percent from June 30th 2017.

Dried-egg inventory increased by 7.2 percent during the past month to 13.4 million lbs. (6,083 metric tons) as of June 30th 2018 (was 12.5 million lbs. on April 30th 2018)

INVENTORY

Cold Storage

Cold storage stocks in selected regions on August 7th 2018 amounted to 2.823 million pounds (1,283 metric tons), 9.5 percent above the stock of 2.577 million pounds during the week of July 1 st. 2018.

The most recent monthly USDA Cold Storage Report released on July 23rd 2018 documented a total stock of 30,705 million pounds (13,957 metric tons) of frozen egg products on June 30th 2018. This value was down 26.4 percent from June 30th 2017. A total of 86.1 percent of combined inventory comprised the categories of "Whole and Mixed" (41.8 percent) and "Unclassified" (44.3 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 August 6th 2018 was down 5.6 percent, following a 2.8 percent decrease in inventory during the previous week and a 3.1 percent increase during the preceding week. This suggests that the market is regaining equilibrium from oversupply which persisted for three consecutive weeks due to additional output from molted hens coming back into production and pullet flocks placed in late-February reaching peak production. Medium size eggs in the Midwest which were disproportionately low in price compared to Large and Extra Large increased with a two-week swing of 32.8 percent to 57.5 cents per dozen reflecting the lower contribution from flocks of increasing age. Last week an additional 0.5 million hens entered production.

Five of the six USDA Regions reported lower stock levels. The Midwest Region was down 6.9 percent compared to the previous week to 427,900 cases. This region was followed in decreasing order of stock level by the Southeast Region, down 1.4 percent to 259,600 cases; the South Central Region down by 9.1 percent at 227,700 cases; the Southwest Region down by 5.4 percent to 181,200 cases; the Northeast Region down by 11.8 percent to 152,800 cases and the Northwest Region down by 10.4 percent to 93,000 cases.

The total USDA Six-Area stock of commodity eggs comprised 1,704,300 cases, of which 78.9 percent were shell eggs. The inventory of breaking stock was up a noteworthy 9.2 percent to 360,000 cases, a 20.4 percent swing in two weeks.

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 August 6th 2018 the inventory of other than generic eggs, compared to the previous week in parentheses, comprised:-

  • Specialty category, down 6.1 percent to 36,400 cases. (was down 14.2% to 38,700)
  • Certified Organic, up 9.6 percent to 115,900 cases. (was up 0.7% to 105,700)
  • Cage Free, up 7.5 percent to 78,900 cases. (was down 5.5% to 73,300)

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 $1.20 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 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 fell 5.7 percent or 16 cents per dozen to $2.64 per dozen. Certified Organic rose 7.4 percent or 28 cents per dozen to $4.01 per dozen widening the price differential to $1.38 per dozen ($0.94 per dozen last week) suggesting continued demand for Cage Free brown over Certified Organic in the coming week. The differential between generic white Large and Cage-Free brown was $0.51 per dozen ($0.80 per dozen last week) which will increase demand for cage-free brown. Demand for cage-free brown will usually increase with a price differential less than $1.20 per dozen above generic white. 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. The low stock of specialty eggs is noted in the section on inventory.

USDA Cage-Free Data

According to the latest monthly USDA Cage-free Hen Report released July 31 st 2018 the number of hens held in other than conventional cages in July remained stable from June 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 17.3 percent of a nominal 317 million U.S. flock in production but 25.4 percent of a presumed flock of 215 million held for shell-egg production

Processed Eggs

For the week ending August 4th 2018 eggs processed under FSIS inspection decreased by 1.4 percent compared to the previous week to a level of 1,614,795 cases. The proportion of eggs broken by in-line complexes rose to 52.1 percent (was 51.2 percent) denoting consignment of non-contracted eggs from packing to breaking in response to prevailing spot prices. During the corresponding week in 2017 in-line breakers processed 55.1 percent of eggs broken due to lower wholesale prices for generic eggs.

Eggs broken YTD attained 47.02 million cases, 1.9 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 August 6th was unchanged compared to the previous two weeks over a range of 56 to 58 cents per dozen. Checks were unchanged over a range of 41 to 46 cents per dozen. The revenue for breaking stock and checks was lower than the production cost for nest-run, estimated by the EIC at 61.5 cents per dozen during July 2018.

Shell Eggs

The USDA Egg Market News Reports released on August 6th 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

96-99 cents per dozen

unchanged

Large

94-97 cents per dozen

unchanged

Medium

56-59 cents per dozen

47-50 up 18.6%

Certified Organic EL

275-310 cents per dozen

unchanged long term

Breaking stock

56-58 cents per dozen

unchanged

Checks

41-46 cents per dozen

unchanged

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

The August 6th 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. $0.83 ($0.83) estimated by proportion: L. $0.78 ($0.78): M. $0.38 ($0.29)

The following advertised retail prices for the week ending July 27 th 2018, (compared with the previous week in parentheses) were posted by the AMS for dozen packs:

  • USDA Certified Organic, Brown, Large: $4.02 ($3.74)
  • Cage-Free Brown, Large: $2.64 ($2.80)
  • Omega-3 Enriched Specialty, White, Large: $2.12 ($2.47)
  • Generic White, Large Grade AA $1.61 ($1.67)
  • Generic White, Large Grade A (Feature price) $1.48 ($1.56)

 

Retail prices as determined by the USDA-AMS for generic white Large AA last week were down $0.07 per dozen to $1.61 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 July 2018 data in this edition. A report on the financial results posted by Cal-Maine Foods for the completed 4th Quarter of Fiscal 2018, released July 23 rd can be retrieved under the STATISTICS tab)

Shell-Egg Demand Indicator

The USDA-AMS Shell Egg Demand Indicator for August 8th 2018 was numerically higher by 6.7 points from the last weekly report to +0.4 with a 5.6 percent decrease in inventory as determined by the USDA-ERS as follows:-

Productive flock

318,204,379 million hens

Average hen week production

78.7 % (was 78.8%)

Average egg production

250,426,846 million per day

Proportion to shell egg market

66.8% (was 66.4%)

Total for in-shell consumption

464,681cases per day

USDA Inventory

1,344,300 cases

26-week rolling average inventory

4.76 days (was 4.74)

Actual inventory on hand

4.74 days (was 5.06)

Shell Egg Demand Indicator

+0.4 points (was -6.7 on August 1st 2018 )

Dried Egg Products

Prices for dried egg products (most frequent price with a range in $ per pound) effective August 3rd 2018 were:-

Whole Egg

$3.15-$3.25

Unchanged

Yolk

$3.30-$3.40

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

Spray-Dried White

$6.15-$6.30

Down $0.05 on the low end and down $0.05 on the high end of the range

Blends

$2.75-$2.80

No new quotation

Although steadily declining, U.S. dried egg inventory is now at a moderate level attaining 13.4 million lbs. (equivalent to slightly less than 4-weeks current production) on June 30th 2018, with a 52 percent decrease compared to June 30th 2017. During the period June 3 rd 2018 through June 30th 2018, dried egg processed under USDA inspection amounted to 11.6 million lbs. the same quantity as 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 68 exotic Newcastle disease (END=vvND) cases in small multi-species backyard flocks were confirmed between May 26th and July 25th in the Southern California Counties of San Bernardino (58), Riverside (6) and Los Angeles (4). This situation should not disrupt exports of raw poultry, breeding stock, hatching and table eggs and egg products to Mexico unless a commercial farm might be infected. Following strenuous negotiations after the index case was 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 the restricted Counties in California. There is absolutely no reason to embargo pasteurized egg products derived from a USDA-FSIS inspected plant.

After nine weeks since the first San Bernardino outbreak it is high time that APHIS and the CADA release the results of their preliminary epidemiologic investigations, assuming they have collected and processed data. It is important for commercial egg producers to know the source of the END virus, mode of dissemination, extent of infection and whether and which species of wild birds may be 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 were eligible for export by mid-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. A resumption of migration will occur in the Fall.