Egg Monthly

07/11/2019

Review of June 2019 Production Costs and Statistics.

June 2019 USDA ex-farm nest-run benchmark price was up 66.7 percent from May 2019 to 38.5 cents per dozen but still below the cost of production. Low price is consistent with seasonal purchase trends and oversupply.

  • June 2019 USDA average nest-run production cost was 6.0 percent higher than May 2019 at 63.2 cents per dozen.

  • June 2019 USDA benchmark nest-run loss decreased from May 2019 to 24.7 cents per dozen.

  • June national flock ( over 30,000 hens/farm) was down 5.7 million or 1.7 percent to 319.0 million.

INTRODUCTION.

Summary tables for the latest USDA June 2019 prices and flock statistics made available by the EIC on July 11th 2019 are arranged, summarized, tabulated and reviewed in comparison with values from the previous June 12th 2019 posting reflecting May 2019 cost and production data.

COSTS & REVENUE

 

Note:

From January 2019 onwards EIC has used USDA-AMS data for regional corn, soybean and standard feed prices. The basis for corn will be cash payment except for California (10-day delivery) and Louisiana and Oregon (30-day delivery). For soybean meal a similar approach is applied with 20-days for Minnesota. It is noted that January 2019 prices are not directly comparable with December 2018. Month-to-month comparisons in 2019 will be valid.

 

Parameter

MAY 2019

JUNE 2019

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

59.57 c/doz

63.17 c/doz

Low

56.28 c/doz (MW)

60.02c/doz (MW)

High

77.28 c/doz (CA)

80.58 c/doz (CA)

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

 

MAY 2019

JUNE 2019

Feed

30.73 c/doz

33.91c/doz

Pullet depreciation

10.86 c/doz

11.31 c/doz

Labor (estimate)

4.00 c/doz

4.00 c/doz

Housing (estimate)*

5.00 c/doz

5.30 c/doz

Miscellaneous and other*

8.97 c/doz

8.95 c/doz


* Adjusted February 2019

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting JUNE 2019:-

38.5 cents per dozen1- 63.2 cents per dozen = -24.7

(May 2019 comparison 23.1 1 cents per dozen - 59.6 cents per dozen = -36.5 cents per dozen.)

Note 1: USDA Blended egg price

   

MAY 2019

JUNE 2019

USDA

Ex-farm Price (Large, White)

23.1 c/doz

38.5 c/doz

 

Cage-free to packing plant

156.0 c/doz (April)

156.0 c/doz. (May)

 

Warehouse/Dist. Center

50.0 c/doz (April)

61.0 c/doz (May)

 

Store delivered (estimate)

55.0 c/doz (April)

65.0 c/doz (May)

 

Dept. Commerce Retail

146.3 c/doz (April)

136.2 c/doz (May)

Layer Feed Cost

MAY 2019

JUNE 2019

See note on source of data: now USDA

U.S. Average

$195.76/ton

 

$215.96/ton

High

$221.39/ton (West)

$239.89/ton (West)

Low

$177.36/ton (MW)

$198.28/ton (MW)

Differential

$ 44.03/ton

$ 41.61/ton

Pullet Cost (19 Weeks) $3.76 MAY 2019 $3.90 JUNE 2019

 

 

 

 

 

 

 

 

 

VOLUMES OF PRODUCTION

 

PARAMETER

MAY 2019

JUNE 2019

Table-egg strain eggs in incubators

55.5 million

51.6 million

Pullet chicks hatched

30.3 million (April)

30.4 million (May)

Pullets to be housed in 5 months

27.4 million (Sept.)

27.4 million (Oct.)

     

National Flock in farms over 30,000

324.1 million (April)

319.0 million (May)

National egg-producing flock

339.6 million (April)

334.5million (May)

     

Proportion flock in molt or post-molt

15.7% (May)

15.2% (June)

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

273.2 million (April)

270.5 million (May)

* No December data

Total U.S. Eggs produced

8.16 billion (April)

8.34 billion (May)

Cage-Free hens in production

66.7 million (May)

23.7% Organic

67.1 million (June)

23.6% Organic

"Top-5" States hen population (USDA)

165.2 million (estimate*.)

163.2 (May)

* Texas excluded to maintain confidentiality

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

Based on a denominator of 320 million hens in flocks over 30,000.

USDA has amended inclusion of specific states in regions and eliminated Texas data to protect confidentiality of Company flock sizes

 

STATE

APRIL 2019

MAY 20191

Proportion by region (FEB. 2019)

Iowa

17.7%

17.8%

MW 53.7%

Indiana

10.3%

10.9%

NE 10.4%

Ohio

11.1%

10.4%

SE 6.7%

Pennsylvania

7.8%

8.0%

SC 5.2% (exc. TX)

Texas (estimate)

5.8%

?%

CA 4.1%

California

4.0%

4.0%

NW 2.9%

1. Values rounded to 0.1%

Rate of Lay, weighted hen-week (USDA) 80.0% (MAY) 81.0% (JUNE)

Actual USDA-ERS 2016 U.S. per capita annual egg consumption post HPAI:- 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)

Estimated USDA-ERS 2018 U.S. per capita annual egg consumption to be:- 278.8 eggs (+2.5 from 2017)

Projected USDA-ERS 2019 U.S. per capita annual egg consumption to be:- 279.9 eggs (+1.1 from 2018)

Egg Inventories at beginning of JUNE:

Shell Eggs: 1.85 million cases down 5.6 percent from May.

Egg Products: 2.94 million case-equivalents up 2.7 percent from May.

Eggs broken under FSIS inspection (million cases) APRIL 6.870 MAY 7,369

Cumulative 2019: number of cases produced (million) 113.1 Jan.-May

Cumulative 2019: proportion of total eggs broken 30.5%

 

EXPORTS: APRIL 2019 Data.

Parameter

Quantity Exported

Exports:

 

Shell Eggs (thousand cases)

APRIL 405 MAY 411

Products (thousand case equivalents)

APRIL 333 MAY 327

TOTAL (thousand case equivalents)

APRIL 738 MAY 738

*Representing 3.2 percent of National production in March 2019.

 

COMMENTARY ON JUNE 2019 COSTS AND STATISTICS

The following comments and comparisons are provided on June 2019 USDA statistics:-

JUNE 2019 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).

From March 2019 onward some state data is withheld to maintain confidentiality where a company predominates in a specific state or region.

  • The USDA ex farm benchmark blended egg price in June 2019 increased by 66.7 percent or 15.4 cents per dozen from May 2019 to 38.5 cents per dozen, contributing to a loss of 24.7 cents per dozen based on 'nest-run' eggs (delivered from the laying house). The June 2019 USDA benchmark price of 38.5 cents per dozen should be compared to 76.8 cents per dozen for the corresponding month in 2018 and 39.5 cents per dozen in June 2017 post-recovery following HPAI.

  • During June 2019 the feed component of production cost averaged 33.9 cents per dozen higher by 10.4 percent from May 2019. Year-to-date average feed price is 31.5 cents per dozen. The 2018 average feed cost was 33.3 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, producers recorded a loss of 24.7 cents per dozen at farm-level for flocks in June 2019 compared to a negative margin of 36.5 cents per dozen in May. The aggregate algebraic margin for the first half of 2019 was -52.9 cents per dozen or an average monthly loss of 8.8 cents per dozen.

    The cumulative margin for entire 2018 was 424.0 cents per dozen or a monthly average of 35.3 cents per dozen. The algebraic margin for entire 2017 was a positive 39.2 cents per dozen, with the first eight months negative comparing production cost against USDA benchmark 'nest run' values. The algebraic average margin for entire 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 June 2019 over 5-regions was $215.96 per ton, 10.3 percent higher (using USDA-AMS data) by $20.2 per ton compared to May 2019. Southwest data will no longer be disclosed to avoid compromising a company that predominates in Texas. The highest cost among five regions was in the West at $239.89 per ton compared to the lowest region, the Midwest at $198.28 per ton. The average figure includes ingredients plus milling and delivery at approximately $10 per ton. The benchmark price of corn was $169.38 per ton in June 2019, up $21.60 per ton or 14.3 percent from May taking into account the difference in basis. An increase of $27.39 per ton or 9.0 percent in the price of soybean meal from $304.70 per ton in May to $332.09 per ton in June also contributed to a higher feed cost. There was a $42.93 per ton differential in corn price between the Midwest and the West in June 2019.

  • Feed price will continue to be a major factor driving production cost and hence margin. Unknown factors influencing feed cost during the second quarter of 2019 will include disruption of international trade due to tariffs imposed by China alternatively a possible settlement of the ongoing dispute. 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 June 2019 to be 63.2 cents per dozen, 3.6 cents per dozen more than in May. Production costs during June 2019 ranged from 60.02 cents per dozen in the Midwest up to 80.58 cents per dozen in California which was higher than the Midwest region by 19.0 cents per dozen.

  • Retail egg prices as determined by the Department of Commerce for May 2019 averaged 136.2 cents per dozen, 10.1 cents per dozen less than in April 2019. During April 2017 and 2018 retail prices were respectively 141.4 and 198.7 cents per dozen. During entire 2016 and extending through mid-2018, retail prices did not decline in proportion to ex-farm prices allowing higher margins at retail thereby depressing demand.

 

JUNE 2019 PRODUCTION DATA

  • According to USDA data, the estimated average complement of U.S. hens in flocks over 30,000 during May 2019 amounted to 319.0 million, reflecting a seasonal adjustment in flock size. The average total U.S. flock including hens in molt on all farms counted by the USDA amounted to 334.5 million in May. 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 in 2016 (319 million). The EIC predicts the December 2019 total flock will attain 342.0 million, down 3.3 million from the May forecast.

  • Pullet chick hatch was up 0.3 percent in May 2019 to 30.4 million compared to the previous month at 30.3 million. The high October 2018 value of 27.4 million was in anticipation of the Easter 2019 market. It is evident that if lower prices prevail during mid to late summer flock placements will be constrained by 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 15.2 percent of the national flock in June 2018, compared to 15.7 percent in May. The annual averages were 17.4 percent for 2018 and 18.0 percent in 2017. The high value of 23.8 percent in 2016 was due to the loss of hens in the 2015 HPAI epornitic.

  • Average monthly pullet transfer to laying houses during the third and fourth quarters of 2018 amounted to 26.0 and 24.7 million respectively. The monthly projection for pullets to be transferred to laying houses during the second and third quarters of 2019 will be 22.0 million and 26.2 million respectively.

  • The projected hatchery supply flock increased by 25,000 hens to 2.15 million in May 2019. Peak parent-flock placements attained 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 averages of 2.3 and 2.4 million breeder hens in production during the third and fourth quarters of 2019. The October 2018 breeder flock was 2.4 million in anticipation of progeny reaching maturity for Easter 2019.

  • Average production of 81.0 percent in June 2019 is reflected in the number of young pullets approaching and attaining peak production. This is evidenced by the volume and hence price of mediums Average rate of lay attained 78.7 percent during 2016 and increased to 79.8 percent in 2017. 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 will rise due to early depletion and restricting production to the first cycle.

  • Slaughter of spent light hens in plants under FSIS inspection during May 2019 was up 6.7 percent from April 2019 attaining 3.2 million. 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.

MAY 2019 EXPORT DATA.

 

  • According to USDA-FAS data, 411,300 cases of shell eggs were exported in May 2019, compared to 404,500 in April 2019, representing 1.8 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 May 2019 the following regions were the leading importers:- North America, comprising the two neighboring NAFTA/USMCA nations (51.8 percent), East Asia (43.9 percent, was 32.0 percent.). Shipments in May 2019 to the Middle East decreased to 0.7 percent of monthly volume with 3,000 cases, down from 5,300 cases in April 2019.
  • Exports of egg products in May 2019 were down 2.0 percent from April 2019 to 326,500 case-equivalents representing 1.4 percent of U.S. output. The following regions were the leading importers of egg products by proportion of volume shipped in May:- North America, our NAFTA/USMCA neighbors (received 42.2 percent), East Asia (36.8 percent), the EU-28 (5.9 percent) and the Caribbean (2.4 percent, was 7.4 percent).

  • Collectively, exports of shell eggs and products in May 2019 represented the equivalent of approximately 11.5 million hens in production during the month, attaining 737,800 case-equivalents, unchanged from April. This was a 23.1 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 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 2019 corresponded to 3.2 percent of a nominal national flock of approximately 320 million hens in production 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.

 

 

 


















































































































































































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