USDA Weekly Egg Price and Inventory Report, November 15th 2017

11/15/2017

Hen Numbers in Production up again by 1.0 million but Inventory Down 4.4 Percent; Significant Rise in Shell Price.

OVERVIEW

According to the USDA Egg Market News Reports posted on November 13th the Midwest wholesale prices for Extra Large and Large sizes were up 25 percent on average and Mediums were 15 percent higher compared to the previous week. The market was influenced mainly by hen numbers and egg inventory on the supply side of the equation for the first nine months of 2017. Seasonal and weather-related factors emerged to stimulate consumption in mid-September with an upward trend in price through early October. Thereafter price entered a steep downward trend for three consecutive weeks bottoming two weeks ago. This situation has reversed with two consecutive weekly rises. The progression of prices during 2017 is depicted in the USDA chart reflecting three years of data, updated weekly.

The November 13th USDA Egg Market News Report (Vol. 64: No. 46) documented a USDA Combined Region value of $1.08 per dozen delivered to warehouses. This price lags Midwest Weekly values by one week. The USDA Combined range for Large, in the Midwest was $1.01 per dozen. At the high end of the range, the price in the Southeast Region attained $1.12 per dozen. The USDA Combined Price last week was approximately 15 cents per dozen above the corresponding three-year average which increased sharply from the beginning of October but 2017 values are lagging the curve.

The number of producing hens this week was up by 1.0 million to 307.7 million. The hen population is at a high level relative to current consumer and industrial demand. The total egg-flock comprises 316.6 million hens over two cycles and in molt on all farms, up 0.3 percent (1.0 million) from last week.

Generic shell-egg stock fell by 3.7 percent compared to a decrease of 4.4 percent for the previous week suggesting short-term price increases only if hen numbers stabilize relative to demand. The market will find a balance between supply and demand as we approach winter months. Dried-egg inventory amounted to 19.6 million pounds (8,909 metric tons) as of October 31 st 2017 (was 22.1 million lbs. on September 30th 2017) The National stock of frozen egg products as reported by the USDA on October 23rd attained 33.9 million pounds (15,409 metric tons) as of September 30th 2017.

INVENTORY

Cold storage stocks in selected regions on November 6th 2017 amounted to 3.552 million pounds (1,145 metric tons), 1.0 percent below the stock of 3.514 million pounds during the week of October 1 st. 2017.

The most recent monthly USDA Cold Storage Report released on October 23rd documented a total stock of 33,900 million pounds (15,409 metric tons) of frozen egg products on September 30th 2017. This value was up 2.5 percent from September 30th 2016. Approximately 83 percent of combined inventory comprised the categories of "Whole and Mixed" (38.8 percent) and "Unclassified" (43.9 percent).

The national stock of generic shell eggs released on November 13 th was down by 3.7 percent, compared to a fall of 4.4 percent in inventory during the previous week. Three of six regions reported lower stock levels. The Midwest Region was down 9.6 percent compared to the previous week to 338,400 cases. This region was followed in decreasing order of stock level by the South Central Region down by 3.6 percent to 258,500 cases; the South East Region up by 0.1 percent to 273,500 cases; the Southwest Region down by 10.8 percent to 162,500 cases, the Northeast Region up by 12.2 percent (a 27 percent swing) to 126,700 and the Northwest Region up by 2.3 percent to 101,600 cases.

The total USDA Six-Area stock of commodity eggs comprised 1,548,400 cases, of which 81.5 percent were shell eggs. The inventory of breaking stock was up 2.0 percent to 287,200 cases with prices in the Central Region increased during the previous week. This reflects the availability of eggs from both mature and young flocks in relation to the demand for generic shell eggs.

As of Monday November 13th the inventory of other than generic eggs comprised:-

  • Specialty category, down 27.2percent to 31,800 cases
  • Certified Organic, down 8.6 percent to 64,200 cases
  • Cage Free, up a noteworthy 41.9 percent to 52,600 cases.

Recent data suggests a fluctuating build in the stock of USDA Certified Organic product. This is attributed to an apparent trend by consumers to purchase less-expensive brown cage-free product over organic eggs when there is a differential in price over $1.00 per dozen.

During the past week the USDA benchmark retail price of cage-free brown rose by 2.9 percent or 8 cents per dozen to $2.80 per dozen. USDA Certified Organic rose by 0.2 percent or 1 cent per dozen to $4.10 per dozen, narrowing the price differential to $1.30 cents per dozen ($1.36 per dozen last week) suggesting no difference in the relative consumption of the two categories from the previous week. The differential between generic white Large and cage-free brown was $1.83 per dozen which will attract buyers to 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.

According to the latest monthly USDA Cage-free Hen Report for November 7 th the number of hens held in other than conventional cages during October was as follows:-

Total U.S. flock held for USDA Certified Organic production = 14.7 million (Sept. 14.3 million, up 2.8 percent)

Total U.S. flock held for cage-free production = 34.7 million (Sept. 33.5 million, up 3.6 percent)

Total U.S. non-caged flock = 49.4 million (15.7 percent of a nominal 315 million U.S. flock but 23.9 percent of a presumed flock of 206 million held for shell-egg production)

For the week ending November 11th eggs processed under FSIS inspection decreased by 3.0 percent compared to the previous week to a level of 1,487,210 cases. The proportion of eggs broken by in-line complexes attained 54.5 percent. During the corresponding week in 2016 in-line breakers processed 54.3 percent of eggs broken.

The price range for breaking stock delivered to Central States plants on November 13th was up 14.9 percent to range of 86 to 91 cents per dozen. The price of checks was higher by 18.6 percent to a range of 78-81 cents per dozen. These values exceeded the production cost for nest-run, estimated by the EIC at 59.0 cents per dozen for October 2017.

PRODUCTION AND PRICES

The USDA Egg Market News Report released on November 13 th 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

127-130 cents per dozen

101-104 up 25.4%

Large

125-128 cents per dozen

99-102 up 25.8%

Medium

97-100 cents per dozen

84-87 up 15.3%

Certified Organic EL

275-310 cents per dozen

unchanged

Central States Breaking Stock

86-91 cents per dozen

75-79 up 14.9%

Checks

78-81 cents per dozen

66-68 up 3.1%

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

The November 13th regional average FOB producer prices, for nest-run grade-quality white shelled eggs, with prices in rounded cents per dozen (last week in parentheses) were:-

EL. $1.18 ($0.99) estimate by proportion: L. $1.14 ($0.86): M. $0.81 ($0.69)

The following advertised retail prices for the week ending November 9 th, (compared with the previous week in parentheses) were posted by the AMS for dozen packs:

  • USDA Certified Organic, Brown, Large: $4.10 ($4.09)
  • Cage-Free Brown, Large: $2.80 ($2.72)
  • Omega-3 Enriched Specialty, White, Large: $2.14 ($2.28)
  • Generic White, Large Grade AA $0.97 ($0.78)
  • Generic White, Large Grade A (Feature price) $1.05 ($0.96)

Retail prices as determined by the USDA-AMS for generic white Large AA were up a noteworthy 19 cents per dozen this past week which will not depress demand since there is a wide differential from specialty eggs. During the first nine months of 2017 retailers maintained disproportionately high prices at the shelf, taking advantage of low wholesale cost to inflate their margins. By this strategy, retailers have effectively depressed consumption thereby holding the industry to record-low price levels for generic eggs.

(See the text, tables and figures in the review of production and prices comprising the report on USDA September 2017 data posted in the November 17th. edition of EGG-NEWS and is available under STATISTICS. The financial results posted by Cal-Maine Foods for the completed 1st Quarter of Fiscal 2018 was posted on EGG-NEWS and can be retrieved by entering Cal-Maine in SEARCH )

The USDA-AMS Shell Egg Demand Indicator for November 15th 2017 increased numerically by 5.9 points from -3.4 in the last report to +2.5 with a 3.7 percent decrease in inventory as determined by the USDA-ERS as follows:-

Productive flock

307,759,293 million hens

Average hen week production

79.6% (was 79.3%)

Average egg production

244,976,397million per day

Proportion to shell egg market

68.8 (was 67.6%)

Total for in-shell consumption

468,177 cases per day

USDA Inventory

1,261,200 cases

26-week rolling average inventory

4.53 days

Actual inventory on hand

4.42 days

Shell Egg Demand Indicator

+2.5 points (was -3.4 on November 9th )

Prices for dried egg products (most frequent price with a range in $ per pound) posted on November 9th were:-

Whole Egg

$3.45-$3.55

Down $0.05 on both ends of the range

Yolk

$4.05-$4.20

Up $0.05 on both ends of the range

Spray-Dried White

$2.80-$3.05

Up $0.05 on both ends of the range

Blends

$2.70-$2.75

Up $0.05 on both ends of the range

Although declining, dried egg inventory persists at a high level of 19.6 million lbs. on October 31st 2017, despite the 30 percent decrease compared to October 31st 2016. During the period October 1st through October 28th 2017, dried egg processed under USDA inspection amounted to 6.4 million lbs. compared to 11.6 million lbs. during the previous month in 2017.

COMMENTS

It is apparent that the store recalls and regulatory action by authorities in the E.U. as a result of the fipronil contamination scandal firmed prices of shell eggs for breaking. Breakers are still showing a positive "crack spread" (return) representing by a beneficial margin over breaking stock which has increased over four weeks but now has stabilized. The escalation in price on both sides of the Atlantic will be transitory as non-contaminated eggs should by now have displaced recalled product.

Avian Influenza H5 strains have returned to Western Europe with reports from France, Italy, Bulgaria and the Netherlands. Incident cases of H5N6 infection have ceased in commercial flocks in both South Korea and Japan. South Korea has approved importation of shell eggs from the U.S. although our domestic industry will face considerable competition from India, Spain and Thailand offering brown-shelled eggs.

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 as evidenced by the expanding outbreak of H5N8 HPAI in South Africa. This should be a warning to U.S. producers during Fall and the late winter and early spring of 2018 since the risk of infection necessitates enhanced and effective containment. This is impossible if flocks are allowed outside access during periods when migratory birds are shedding virus.

There have been no reports of either LPAI or HPAI for over six consecutive months consistent with termination of shedding by waterfowl, enhanced biosecurity and a combination of these factors.

(SMS 1,868 -17. November 15th 2017)


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