Egg Week

07/29/2020

USDA Weekly Egg Price and Inventory Report, July 29th 2020.

  • The U.S. flock in production was unchanged from the previous week at 309.5 million, despite molted hens resuming production and pullets reaching maturity.
  • Shell inventory was down 3.1 percent after a 3.4 percent increase last week indicating a restoration in balance between supply and demand that influences price. There is evidence of a return in the food service sector as the economy cautiously reopens.
  • USDA Midwest benchmark generic prices for Extra large and Large were down 12.7 percent to averages of 62.5 and 60.5 cents per dozen respectively. Mediums were down 22.1 percent to 40.5 cents per dozen. Prices will continue to decline as molted hens resume production without a proportional increase in demand.
  • The price of breaking stock in the Midwest was 7.6 percent lower to an average of 24.5 cents per dozen. Checks were down by 6.1 percent to 15.5 cents per dozen.

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on July 27th 2020 the Midwest wholesale prices for Extra Large, Large as delivered to DCs were down 12.5 and 13.0 percent respectively to averages of 62.5 and 60.5 cents per dozen. Mediums fell 22.1 percent to 40.5 cents per dozen. Prices should be compared with the USDA benchmark average 5-Region blended nest-run, (excluding provisions for packing and transport) cost of 58.2 cents per dozen in June 2020. The progression of prices during 2018-2020 is depicted in the USDA chart reflecting three years of data, updated weekly.

The July 27th 2020 USDA Egg Market News Report (Vol. 67: No. 30) documented a USDA Combined Region value rounded to the nearest cent, of $0.79 per dozen delivered to warehouses for the week ending July 21st. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $0.70 per dozen. At the high end of the range, price in the South Central Region attained $0.85 per dozen. The USDA Combined Price last week was 15 cents per dozen below the 5-year average and 35 cents per dozen above the corresponding week of 2019.

Flock Size

According to the USDA the number of producing hens this past week (rounded to 0.1 million) was unchanged to 309.5 million. If USDA data is accurate, the producing flock contains molted hens coming back into production with approximately 5.1 million pullets reaching maturity during the week offset by flock depletion. Prices descended sharply after a transitory peak of $3.00 per dozen three months ago. The hen population producing eggs is now out of balance relative to acceptable seasonal consumer and depressed industrial and food service demand. Any number above 305 million hens in production during mid-summer portends lower than average prices and increased inventory, unless matched by proportional increases in demand. The “March Madness” buying in response to COVID-19 concern is long since over and the industry has not recovered from the downside of the roller coaster, with prices also depressed by shell eggs diverted from the food service sector.

The total U.S. egg-flock was up 0.1 million to 316.5 million hens including second-cycle birds and those in molt. The difference of 7.0 million between hens in production and total hens is equivalent to 2.2 percent of the national flock. This means that as molted hens come back in production and young pullets are placed, the size of the producing flock will be raised to a possible 320.0 million suggesting that the national flock should be reduced less by transitory molting but more by depletion. Chick placement data suggests that 22 million pullets will commence production in July. This has implications for prices, given current supply, higher stock levels given the seasonal demand dropping through late July and into August.

STOCK LEVELS

Generic shell-egg stock was down 3.1 percent, after a 3.4 percent increase last week. Shell egg inventory was 1,458,800 cases. The seventh month of the year is characterized by stable to decreasing flock size under normal seasonality.

The National stock of frozen egg products as reported by the USDA on July 22nd 2020 attained 339.3 million pounds (17,873 metric tons) on June 30th 2020.

The USDA has delayed release of dried-egg inventory report on stock levels since March 13th. The most recent report noted an increased of 9.0 percent to 28.5 million lbs. (12,958 metric tons) on February 29th 2020, compared to 26.1 million lbs. on January 31st 2020. It is presumed that levels of dried-egg products have increased substantially given the decline in the food service sector. The USDA-AMS has not been able to acquire data to document inventory.

INVENTORY

Cold Storage 

Cold storage stocks in selected regions on July 27th amounted to 2.650 million pounds (1,205 metric tons) of frozen egg products, 0.1 percent less than the level of 2.653 million lbs. on July 1st 2020.

The most recent monthly USDA Cold Storage Report released on July 22nd 2020 documented a total stock of 39.3 million pounds (18,783 metric tons) of frozen egg products on June 30th 2020. This value was up 5.2 percent from June 30th 2019. A total of 91.2 percent of combined inventory comprised the categories of “Whole and Mixed” (50.7 percent) and “Unclassified” (40.5 percent). The lack of specificity 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 effective July 27th 2020 was lower by 3.1 percent after an increase of 3.4 percent last week. The U.S. population of laying hens must be reduced by actual disposal of flocks to prevent overproduction during late summer and not simply by implementing a rolling molt. Disposal is an appropriate response to declining sales and price trends following the termination of intense COVID-19 demand extending from early March through mid-April.

Five of six USDA Regions reported lower stock levels. The Midwest Region was down by 4.6 percent compared to the previous week to 440,800 cases. This region was followed in decreasing order of stock level by the South Central Region, down by 3.3 percent to 275,900 cases; the Southeast Region down by 5.0 percent to 263,700 cases; the Northeast Region up by 0.2 percent to 215,800 cases, the Southwest Region down by 0.7 percent to 171,400 cases and the Northwest Region down 1.4 percent to 91,300 cases.

The total USDA six-area stock of commodity eggs comprised 1,815,000 cases, of which 80.4 percent were shell eggs (80.4 percent last week). The inventory of breaking stock was down 3.1 percent to 356,200. The value of breaking stock and hence availability from both mature and young flocks will be influenced by the demand for generic shell eggs and contract obligations with breakers.

As of Monday July 27th 2020 the inventory of other than generic eggs (with previous week in parentheses) comprised:-

  • Specialty category, up a noteworthy 60.2 percent to 46,500 cases. (was up 4.8% to 29,000 cases)
  • Certified Organic, down 3.9 percent to 68,000 cases. (was up 0.2% to 70,800 cases)
  • Cage-Free, down 1.9 percent to 118,400 cases. (was down 6.8% to 120,700 cases)

Demand for cage-free product will not increase materially while generic eggs are on the shelf at $1.15 to $1.45 per dozen over the long term. Existing state legislation mandating sale of only cage-free eggs will support some of the anticipated transition from cages but not completely by the beginning of 2025, less than 53 months away. With the current proportion of non-caged flocks, cage-free eggs are becoming a commodity subjected to the same price pressures as generic eggs from caged hens.

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 about $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 the willingness to pay for attributes such as housing, GM status and nutritional enrichment is self-evident.

RELATIVE PRICES OF SHELL-EGG CATEGORIES

The following advertised retail prices for the week ending July 31st 2020, (compared with the previous week in parentheses) were posted by the AMS on July 27th for dozen packs:

USDA Certified Organic, Brown, Large: $3.31 ($3.81)

Cage-Free Brown, Large: $2.59 ($2.92)

Omega-3 Enriched Specialty, White, Large: $2.24 ($2.42)

Generic White, Large Grade AA $0.89 ($0.78)

Generic White, Large Grade A (Feature price) $0.90 ($0.89)

The weekly advertised retail price as determined by the USDA-AMS for generic white Large AA last week was $0.89 per dozen (last week $0.78). Prices for all sizes rose sharply in late February through mid-March driven by transitory COVID-19 demand but values then declined with a similar trajectory to the ascent over the previous four weeks. There is a limit to the quantity of perishable foods consumers will buy and place in their refrigerators. Wholesale prices should trend lower through the last week in July into August.

During the present week the USDA benchmark-advertised retail price of brown Cage-Free was down 11.3 percent or $0.33 per dozen to $2.59 per dozen. Certified organic was down 13.1 percent or $0.50 per dozen to $3.31 per dozen. The differential in advertised price between cage-free brown and certified organic was $0.72 per dozen ($0.89 per dozen last week). This suggests increased demand for certified organic over cage–free brown during the next week. The differential between advertised prices for cage free brown and generic white was $1.70 per dozen this past week. Preference for generic white over cage-free brown is evident with a price differential greater than $1.20 per dozen. 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 July 6th 2020, the number of certified organic hens during June 2020 was up 0.6 percent from May to 15.8 million. This suggests saturation of the market for organic eggs.

 The USDA reported an apparent increase of 2.5 percent in the cage-free flock to 62.6 million, 11.2 percent higher than the average during the first quarter of 2020.

The stated population of hens producing cage-free and certified organic eggs in June comprised:-

Total U.S. flock held for USDA Certified Organic production = 15.8 million (16.2 million in December).

Total U.S. flock held for cage-free production = 62.6 million (61.5 million in June).

Total U.S. non-caged flock = 78.4 million (76.8 million in June).

This total value represents 24.5 percent of a nominal 320 million total U.S. flock but 35.o percent of a presumed flock of 224 million producing for the shell-egg market.

Processed Eggs

For the processing week ending July 25th 2020 the quantity of eggs processed under FSIS inspection over the past week as reported on July 29th 2020 was up 0.1 percent compared to the previous processing week to a level of 1,490,285 cases. The proportion of eggs broken by in-line complexes was 54.0 percent (was 53.8 percent last week) denoting similar availability of uncommitted shell eggs at spot prices. With higher prices for shell eggs there is a trend to divert non-contracted eggs to shell sales from breaking and vice versa. This past week 69.5 percent of egg production was directed to the shell market, (also 69.5 percent last week) due to lower shell prices concurrent with increasing recovery of the food service sector. During the corresponding processing week in 2019 in-line breakers processed 585.2 percent of eggs broken.

For the monthly report dated July 4th 2020, edible yield from 5,548,830 cases for the period May 31st 2020 through June 27th 2020 was 37.8 percent, distributed in the following proportions expressed as percentages:- liquid whole, 56.1; white, 26.0; yolk 13.3; dried, 4.6.

All eggs broken during YTD 2020 attained 42.8 million cases, 10.2 percent less than the corresponding period during 2019. Significantly lower prevailing shell-egg prices for the first four weeks of 2020 compared to 2019, favored breaking. This was followed by a transitory rise in price for shell eggs during March drawing non-committed product into the shell market reversing the trend during the first two months of the year. Over the past twelve weeks shell egg prices reverted to levels prevailing before the price surge. Demand for liquid was curtailed by COVID-19 home confinement resulting in diversion of breaking stock into the shell market.

PRODUCTION AND PRICES

Breaking Stock

The price range for breaking stock delivered to Central States plants on July 27th was lower by 7.6 percent over a range of 23 to 26 cents per dozen. Checks were lower by 6.1 percent to a range of 13 to 18 cents per dozen. Revenue for both breaking stock and checks was lower than the benchmark production cost for nest-run, estimated by the USDA at 58.2 cents per dozen during June 2020.

Shell Eggs

The USDA Egg Market News Report released on July 27th 2020 showed lower Midwest prices for large, extra large and medium shell eggs consistent with relative balance between supply and demand. The following table lists the “most frequent” ranges of values as delivered to warehouses*:-

Size/Type

Current Week

Previous Week

Extra Large

61-64 cents per dozen

70-73 down 12.5%

Large

59-62 cents per dozen

68-71 down 13.0%

Medium

39-42 cents per dozen

51-53 down 22.1%

Certified Organic EL

275-310 cents per dozen

Unchanged long term

Breaking stock

23-26 cents per dozen

25-28 down 7.6%

Checks

13-18 cents per dozen

14-19 down 6.1%

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

The July 27th California price per dozen in cartons delivered to a DC, with previous week in parentheses:-

  1. $1.47 ($1.57); L. $1.39 ($1.48); M. $0.95 ($1.02)

The July 27th 2020 Regional (IA, WI, MN.) average FOB producer prices, for nest-run grade-quality white shelled eggs, with prices in rounded cents per dozen were adjusted upward from last week:-

  1. $0.53 ($0.60), estimated by proportion): L. $0.43 ($0.50): M. $0.21 ($0.25)

 (See the text, tables and figures and the review of production data and prices comprising the USDA costs for June 2020 in their July report and 4th Quarter and FY 2020 for Cal-Maine Foods under the Statistics Tab.)

Shell-Egg Demand Indicator

The USDA-AMS Shell Egg Demand Indicator for July 29th 2020 was up 3.1 points from the last weekly report to -9.7 with a 3.1 percent decrease in inventory from the past week as determined by the USDA-ERS as follows:- 

Productive flock

309,508,650 million hens

Average hen week production

81.8% (was 81.8%)

Average egg production

251,011,515 million per day

Proportion to shell egg market

69.5% (was 69.5%)

Total for in-shell consumption

 484,592 cases per day

USDA Inventory

1,458,800 cases

26-week rolling average inventory

4.46 days

Actual inventory on hand

4.94 days

Shell Egg Demand Indicator

-9.7 points (was -12.9 on July 22nd 2020 )

Dried Egg Products

Prices for dried egg products (most frequent price with a range in $ per pound) effective July 17th 2020 were:-

Whole Egg

$1.95-$2.10

Unchanged

Yolk

$1.90-$2.00

Unchanged

Spray-Dried White

$4.35-$4.45

Unchanged

Blends

$2.75-$2.80

No new quotation

USDA has not released a report on dried egg inventory since March 13th. Total U.S. dried egg inventory on February 29th 2020 was 65 percent lower than on February 28th 2019 attaining 28.5 million lbs. (12,958 metric tons), equivalent to approximately 10 weeks production at current levels. Inventory was 9.0 percent higher as compared to January 31st 2019. During the period February 2nd 2020 through February 29th 2020, dried egg processed under USDA inspection amounted to 12.0 million lbs. (5,896 metric tons). Lower shell-egg prices during the last eight months of 2019 and during the post-Christmas weeks diverted non-contracted eggs from packing to breaking. It is presumed that the sharp decline in demand from the food service sector resulted in diversion of dedicated shell eggs and liquid to dried products with considerable accumulation. Release of actual data if large, as expected, would depress export price, hence a reluctance by producers to release inventory data.

The February 29th 2020 total dried egg inventory comprised whole egg (38.7%); albumen (25.2%); yolk (34.1%) and blends (2.0%).

The inventory of dried eggs will be updated after release of the relevant USDA Report.

COMMENTS

Exotic Newcastle Disease (END)

In accordance with the World Organization of Animal Health (OIE) criteria the END outbreak is now over given that ninety days has elapsed since the last confirmed diagnosis. The CDFA and USA-APHIS have now moved to a program of prevention emphasizing biosecurity and hopefully vaccination with continual surveillance.

The END situation did not disrupt exports of raw poultry, breeding stock, hatching or table eggs or egg products to Mexico. Following negotiations after the index case of END was diagnosed in Los Angeles County during mid-May 2018, authorities in Mexico accepted regionalization and on May 23rd 2018 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.

Avian Influenza

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 backyard and commercial free-range flocks or to confined flocks by deficiencies in biosecurity. Incident cases in the E.U., Asia and North Africa during 2018 and the spring of 2020 should be a warning to U.S. producers during the late winter of 2020 since the risk of infection necessitates enhanced biosecurity and effective containment.

 An outbreak of low pathogenicity H7N3 avian influenza was diagnosed on routine surveillance in asymptomatic flocks of turkeys comprising nine grow-out and one breeder flock in Anson and Union Counties in North Carolina from March 13th through March 25th. One grow-out flock in adjacent Chesterfield County, South Carolina yielded LP H7N3. Subsequently isolation of an H7 AI virus was made from a 12-week tom flock that showed mild respiratory signs and was depleted. The virus from this second South Carolina flock in Chesterfield County was characterized as a high pathogenicity strain by the NVSL. All infected flocks comprising 350,000 turkeys were rapidly depleted. Surveillance on contact and other flocks did not disclose infection. In accordance with OIE rules the outbreak should be considered over with all restrictions lifted in early July.

There is a presumption that migratory waterfowl cease shedding AI virus by the end of April, re-commencing in December. Accordingly, increased biosecurity is required under the Pacific, Central, Mississippi and Atlantic flyways during periods when migratory birds are potentially shedding. Non-confined flocks are vulnerable to infection.






























































































































































































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