Share via Email


* Email To: (Separate multiple addresses with a semicolon)
* Your Name:
* Email From: (Your IP Address is 54.162.133.222)
* Email Subject: (personalize your message)


Email Content:

REVIEW OF SEPTEMBER PRODUCTION STATISTICS AND COSTS.

10/08/2018
  • September 2018 USDA Ex-Farm Benchmark Price down 14.3 Percent from August Consistent with Seasonal Trends.

  • Production Cost Down 2.1 Percent (60.1 Cents per dozen, September) with Feed Cost Lower by 3.4 Percent.

  • Positive Nest-run Margin Decreased 46.2 percent from August to 12.7 Cents per Dozen

INTRODUCTION.

Summary tables for the latest USDA September 2018 statistics and prices made available by the EIC on October 8th are arranged, summarized, tabulated and reviewed in comparison with values from the previous September 11th 2018 posting reflecting August 2018 data.

 

COSTS & REVENUE

 

Parameter

SEPTEMBER 2018

AUGUST 2018

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

60.08 c/doz

61.40 c/doz

Low

55.17 c/doz (MW)

55.52c/doz (MW)

High

76.68 c/doz (CA)

77.97 c/doz (CA)

 

Components of 6-Region 1stCycle Cost of Production:-

 

SEPTEMBER 2018

AUGUST 2018

Feed

31.72 c/doz

32.87c/doz

Pullet depreciation

10.84 c/doz

11.01 c/doz

Labor

4.00 c/doz

4.00 c/doz

Housing

5.30 c/doz

5.30 c/doz

Miscellaneous and other*

8.22 c/doz

8.22 c/doz


* adjusted February 2018

Ex Farm Margin according to USDA values reflecting SEPTEMBER 2018 :-

72.8 cents per dozen1- 60.1 cents per dozen = +12.7 cents per dozen

(August 2018 comparison 85.0 1 cents per dozen - 61.4 cents per dozen = +23.6 cents per dozen.)

Note 1: USDA Blended egg price

   

SEPTEMBER 2018

AUGUST 2018

USDA

Ex-farm Price (Large, White)

72.8 c/doz

85.0 c/doz

 

Cage-free to packing plant

159.0 c/doz

159.0 c/doz

 

Warehouse/Dist. Center

101.0 c/doz (Aug.)

113.0 c/doz (July)

 

Store delivered (estimate)

106.0 c/doz (Aug.)

119.0 c/doz (July)

 

Dept. Commerce Retail

162.2 c/doz (Aug)

172.5 c/doz (July)

Layer Feed Cost

SEPTEMBER 2018

AUGUST 2018

U.S. Average

$202.02/ton

 

$209.36/ton

High

$237.00/ton (SE)

Not posted-estimate

$245.11/ton (SE)

Low

$174.50/ton (MW)

$176.45/ton (MW)

Differential

$ 62.50/ton

$ 68.66/ton

Pullet Cost (19 Weeks) $3.74 SEPTEMBER 2018 $3.80 AUGUST 2018

 

 

VOLUMES OF PRODUCTION

PARAMETER

SEPTEMBER 2018

AUGUST 2018

Egg-strain eggs in incubators

51.3 million (Sept.)

46.7 million (Aug.)

Pullet chicks hatched

26.7 million (Aug.)

25.4 million (July)

Pullets to be housed in 5 months

24.1 million (Jan. '19)

22.9 million (Dec.)

     

National Flock in farms over 30,000

304.4million (Aug.)

303.0 million (July)

National egg-producing flock

323.8 million (Aug.)

323.2 million (July)

     

Proportion flock in molt or post-molt

17.0% (Sept.)

17.4% (Aug.)

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

268.8 (Aug.)

267.2 million (July)

Eggs produced

7.97 billion (Aug.)

7.90 billion (July)

Cage-Free hens in production

57.1 million (Aug.)

27.5% Organic

54.7 million (July)

28.6% Organic

"Top-6" States hen population (USDA)

176.4 million (Aug.)

175.9 million (July)

 

PROPORTION OF U.S. TOTAL HENS BY STATE, 2018

Based on a denominator of 304.0 million hens in flocks over 30,000.

 

STATE

AUG. 2018

JULY 2018

Proportion by region (Aug. 2018)

Iowa

18.0%

17.9%

MW 55.0%

Indiana

10.0%

9.9%

NE 10.8%

Ohio

10.2%

10.2%

SE 9.1%

Pennsylvania

8.0%

8.0%

SC 12.5%

Texas

5.6%

5.7%

CA 4.6%

California

4.4%

4.5%

NW 2.9%

(Values rounded to 0.1%)

Rate of Lay, weighted hen-week (USDA) 79.6% (SEPTEMBER) 79.0% (AUG.)

Actual USDA-ERS 2015 U.S. per capita annual egg consumption revised due to HPAI:- 255.8 eggs (-11.7 from 2014)

Actual USDA-ERS 2016 U.S. per capita annual egg consumption:- 271.6 eggs (+15.8 from 2015)

Actual USDA-ERS 2017 U.S. per capita annual egg consumption:- 276.3 eggs (+4.7 from 2016)

Forecast USDA-ERS 2018 U.S. per capita annual egg consumption projected to be:- 277.7 eggs (+1.4 from 2017)

Eggs broken under FSIS inspection (million cases) AUGUST 7.063 JULY 6.770

Cumulative 2018: number of cases produced 172.2 million

Cumulative 2018: proportion of total eggs broken 30.6%

 

EXPORTS

 

Parameter

Quantity Exported

Exports:

 

Shell Eggs (thousand cases)

AUG. 374 JULY 274

Products (thousand case equivalents)

AUG. 323 JULY 346

TOTAL (thousand case equivalents)

AUG. 697 JULY 620

*Representing 3.2 percent of National production in Aug. 2018

 

COMMENTARY ON SEPTEMBER 2018 COSTS AND STATISTICS

The following comments and comparisons are provided on September 2018 USDA values:-

SEPTEMBER 2018 COST AND REVENUE DATA

The USDA reports data for six regions, respectively comprising the Northeast, South East (Mid-Atlantic), South Central, Midwest, Northwest and California (NW and California combined in some tables)

  • The USDA ex farm benchmark blended egg price in September 2018 decreased by 12.2 cents per dozen from August 2018 (14.3 percent) to 72.8 cents per dozen, contributing to a positive margin of 12.7 cents per dozen as delivered 'nest-run' (from the laying house). The September 2018 value of 72.8 cents per dozen should be compared to 84.0 cents per dozen for the corresponding month in 2017 and 38.3 cents per dozen in September 2016.

  • During September 2018 the feed component of production cost averaged 31.7 cents per dozen. The YTD feed cost was 33.7 cents per dozen compared with an average feed cost of 32.0 cents per dozen in 2017.
  • Combining data from the USDA and the EIC (formerly data from the University of California), producers recorded a positive margin of 12.7 cents per dozen at farm level for flocks in September 2018 compared to a positive margin of 23.6 cents per dozen in August 2018. The cumulative margin for the first nine months of 2018 was 340.7 cents per dozen. The algebraic margin for 2017 was a positive 39.2 cents per dozen, with the first eight months negative comparing production cost against USDA 'nest run' values. The algebraic average margin for 2016 was a loss of 9.6 cents per dozen with negative values recorded for eight consecutive months.

  • The simple average price of feed for September 2018 over 5-regions was $202.02 per ton, lower by $7.34 per ton (3.5 percent) compared to August 2018. The Southeast recorded the highest cost among five regions at an estimated price of $237.00 per ton compared to the lowest region, the Midwest at $174.50 per ton. The average figure includes ingredients plus milling and delivery at approximately $10 per ton. The benchmark price of corn was $146.35 per ton in September 2018, down 0.8 percent from August 2018. A decrease of 16.0 percent in the price of soybean meal from $372.08 per ton in August 2018 to $342.09 per ton in September 2018 was the major contributor to a lower feed cost. There was a $57.20 per ton differential in corn price between the Midwest and the Northwest in September 2018. Feed price will continue to be a major factor driving production cost and hence margin. Unknown factors influencing feed cost during the fourth quarter of 2018 will include disruption of international trade due to tariffs imposed by China. Each $10 per ton difference in feed cost represents 1.75 cents per dozen.

  • The EIC-calculated the 6-Region total nest-run production cost in September 2018 to be 60.08 cents per dozen, 1.32 cent per dozen less than in August 2018. Production costs during July 2018 ranged from 55.17 cents per dozen in the Midwest up to 76.68 cents per dozen in California which was higher than the Midwest region by 21.51 cents per dozen.

  • Retail egg prices as determined by the Department of Commerce for August 2018 averaged 162.2 cents per dozen, 10.3 cents per dozen less than in July 2018. During August 2016 and 2017 retail prices were respectively 145.5 and 136.7 cents per dozen. During entire 2016 and extending through August 2017, retail prices did not decline in proportion to ex-farm prices allowing higher margins at retail thereby depressing demand.

     

    SEPTEMBER 2018 PRODUCTION DATA

     

  • According to USDA data, the estimated average complement of U.S. hens in flocks over 30,000 during August 2018 amounted to 304.4 million, 1.4 million more than in July 2018 reflecting a seasonal adjustment in flock size. The total U.S. flock including hens in molt on all farms counted by the USDA amounted to 323.8 million in August 2018. The average end-of-year flock sizes over the past five years respectively were, 2012 (299 million); 2013 (308 million); 2014 (311 million); 2015 (291 million post HPAI losses) and 2016 (319 million). The EIC predicts the December 2018 total egg production flock to be 336.8 million, down 1.6 million from the August projection.

  • Pullet chicks hatched were up 5.8 percent in August 2018 to 26.7 million compared to the previous month at 25.4 million. It is evident that if low prices prevail during fall months flock placements will decline due to some producers cancelling pullet-chick orders.

  • The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA attained 17.0 percent of the national flock in September 2018, compared to 17.6 percent YTD and averages of 17.4 percent in 2017 and 23.8 percent in 2016.

  • Average monthly pullets transferred to laying houses during the second and third quarters of 2018 amounted to 21.7 and 26.0 million respectively. The monthly projection for pullets to be transferred to laying houses during the fourth quarter of 2018 is 24.7 million. Cancellation of pullet chick orders are unlikely if wholesale prices continue above production cost.

  • The hatchery supply flock increased from a level of 3.1 million hens in production in June 2015, coinciding with the end of the HPAI epornitic to a low of 2.5 million hens during the 4 th Quarter of 2016. Projections show monthly average of 2.5 and 2.4 million breeder hens in production during the third and fourth quarters of 2018 respectively.

  • Average rate of lay attained 78.7 percent during 2016 and increased to 79.8 percent in 2017. Average production of 79.6 percent in September 2018 reflected young pullets reaching peak and the balance among placements of pullets, 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 will rise due to early depletion and restricting production to the first cycle.

  • Processing of light hens under FSIS inspection attained 4.0 million in August, unchanged from June 2018 but 16.3 percent below August 2017 at 4.8 million. The average for the period January through July 2017 was 5.4 million per month. Spent-hens are shipped to Canada from Northern-tier U.S. states or are rendered or composted in other regions. Approximately 13 million spent hens are disposed of each month.

 

AUGUST 2018 EXPORT DATA

 

  • According to USDA-FAS data, 373,800 cases of shell eggs were exported in August, (273,300 in July 2018) representing 1.7 percent of total production. This value should be compared to the high value of 409,700 cases in March 2016 prior to the onset of HPAI. During August 2018 the following regions were the leading importers:- North America or NAFTA/USMCA (48.5 percent, was 42.4 percent), East Asia (37.0 percent, was 43.9 percent.). The E.U. and Southeast Asia did not import shell eggs in August but shipments to the Middle East increased to 10.6 percent of monthly volume at 39,700 cases.

 

  • Exports of egg products in August 2018 were down 6.6 percent from July 2018 to 323 million case-equivalents representing 1.5 percent of U.S. output. The following regions were the leading importers of egg products by proportion of volume shipped in July:- North America or NAFTA/USMCA (received 30.1 percent), East Asia (43.1 percent), the EU-28 (11.9 percent, was 14.0 percent) and Central America (4.9 percent).
  • Collectively, exports of shell eggs and products in August 2018 represented the equivalent of approximately 11.0 million hens in production during the month, attaining 696,900 case-equivalents (was 619,600 in July). This was a 27.4 percent decrease compared to monthly average shipments of 960,000 case equivalents exported over the first four months of 2015 prior to the advent of HPAI indicating the need to re-build markets. Efforts in this respect are in progress due to cooperation between the AEB and USAPEEC both in existing and new markets with potential to import. Exports of both egg-products and shell eggs in August 2018 corresponded to 3.6 percent of a nominal national flock of 305 million hens in production on all farms.
  • There is no scientific 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.