Egg Week Review

09/08/2020

USDA Weekly Egg Price and Inventory Report, September 9th 2020.

  • The U.S. flock in production was up 0.3 million from the previous week at 311.6 million, with molted hens resuming production and pullets reaching maturity.
  • Shell inventory was up 4.1 percent after a 1.5 percent increase last week indicating decreased demand that will influence future prices. There is some evidence of a return in the food service sector as the economy cautiously reopens but the incidence rate of COVID-19 is increasing in some regions.
  • USDA Midwest benchmark generic prices for Extra-large, Large and Medium were unchanged to averages of 81.5, 79.5 and 55.5 cents per dozen respectively. Prices will continue to fluctuate in a narrow range as molted hens resume production and pullets commence lay unless offset by proportional increase in demand past the Labor Day weekend.
  • The price of breaking stock and checks in the Midwest were unchanged to averages of 46.0 and 36.5 cents per dozen respectively.

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on September 8th 2020 the Midwest wholesale prices for Extra-large, Large and Mediums as delivered to DCs attained averages of 81.5, 79.5 and 55.5 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 58.0 cents per dozen in August 2020. The progression of prices during 2018-2020 is depicted in the USDA chart reflecting three years of data, updated weekly.

 

The September 8th 2020 USDA Egg Market News Report (Vol. 67: No. 36) documented a USDA Combined Region value rounded to the nearest cent, of $0.89 per dozen delivered to warehouses for the week ending September 2nd. This average price lags current Midwest weekly values by one week.  The USDA Combined range for Large in the Midwest was $0.80 per dozen. At the high end of the range, price in the South Central Region attained $0.95 per dozen. The USDA Combined Price last week was 15 cents per dozen below the 3-year average and 15 cents per dozen below the corresponding week in 2019.

 

Flock Size

According to the USDA the number of producing hens this past week (rounded to 0.1 million) increased by 0.3 million (<0.1 percent) to 311.6 million. If USDA data is accurate, the producing flock contains molted hens coming back into production with approximately 5.8 million pullets reaching maturity during the week offset by inadequate flock depletion. The hen population producing eggs is now almost in balance relative to seasonal consumer demand but is depressed by lower industrial and food service off-take. Any number above 305 million hens in production during fall 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 0.3 million to 316.4 million hens including second-cycle birds and those in molt. The difference of 4.8 million between hens in production and total hens is equivalent to 1.5 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 315.0 million suggesting that the national flock should be reduced less by transitory molting but more by depletion that is evidently occurring. Chick placement data suggests that 25 million pullets will commence production in September. This has implications for prices, given current supply, higher stock levels given the seasonal demand dropping through the month.

 

STOCK LEVELS

Generic shell-egg stock was up 4.1 percent, after a 1.5 percent increase last week. Shell egg inventory was 1,434,600 cases. The ninth 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 August 24th 2020 attained 38.2 million pounds (17,480 metric tons) on July 31st 2020.

The USDA will no longer release the dried-egg inventory report on stock levels. The most recent report in March noted an increase 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 September 7th amounted to 2.626 million pounds (1,194 metric tons) of frozen egg products, 0.5 percent less than the level of 2.640 million lbs. on September1st 2020.

The most recent monthly USDA Cold Storage Report released on August 24th 2020 documented a total stock of 38.2 million pounds (17,480 metric tons) of frozen egg products on July 31st 2020. This value was up 5.6 percent from July 31st 2019. A total of 89.4 percent of combined inventory comprised the categories of “Whole and Mixed” (52.3 percent) and “Unclassified” (37.1 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 September 8th 2020 was higher by 4.1 percent after an increase of 1.5 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 higher stock levels. The Midwest Region was down by 1.9 percent compared to the previous week to 432,600 cases. This region was followed in decreasing order of stock level by the South Central Region, up by 8.0 percent to 299,700 cases; the Southeast Region up by 2.8 percent to 267,400 cases; the Northeast Region up by 14.0 percent to 193,200 cases, the Southwest Region up by 4.1 percent to 152,100 cases and the Northwest Region up by 6.1 percent to 89,600 cases.

The total USDA six-area stock of commodity eggs comprised 1,755,100 cases, of which 81.7 percent were shell eggs (81.6 percent last week). The inventory of breaking stock was up 3.2 percent to 320,500. 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 September 8th 2020 the inventory of other than generic eggs (with previous week in parentheses) comprised:-

  • Specialty category, up 9.8 percent to 39,000 cases. (was down 3.9% to 35,500 cases)
  • Certified Organic, up 3.9 percent to 74,700 cases. (was up 0.4% to 71,900 cases)
  • Cage-Free, up 2.2 percent to 123,000 cases. (was down 3.8% to 120,400 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 the change will not be completed by the beginning of 2025, less than 51 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 September 11th 2020, (compared with the previous week in parentheses) were posted by the AMS on September 8th for dozen packs:

 

USDA Certified Organic, Brown, Large:             $3.87        ($3.27)   

            Cage-Free Brown, Large:                                    $2.81        ($2.62)

Omega-3 Enriched Specialty, White, Large:       $2.40        ($2.02)

Generic White, Large Grade AA                         $1.01        ($0.95)

Generic White, Large Grade A (Feature price)       $1.14          ($1.09)

 

The weekly advertised retail price as determined by the USDA-AMS for generic white Large AA last week was $1.09 per dozen (last week $0.95). 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 have stabilized after the Labor Day week-end but with stock building a decline in prices is inevitable.

During the present week the USDA benchmark-advertised retail price of brown Cage-Free was up 7.3 percent or $0.19 per dozen to $2.81 per dozen. Certified organic was up 18.3 percent or $0.60 per dozen to $3.87 per dozen. The differential in advertised price between cage-free brown and certified organic was $1.06 per dozen ($0.76 per dozen last week). This suggests continued demand for certified organic over cage–free brown during the current week. The differential between advertised prices for cage free brown and generic white was $1.80 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 September 8th 2020, the number of certified organic hens during August 2020 was unchanged from July at 15.8 million. This suggests saturation of the market for organic eggs.

 The USDA reported no change in the cage-free flock of 63.0 million, 11.9 percent higher than the average during the first quarter of 2020.

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

Total U.S. flock held for USDA Certified Organic production = 15.8 million (16.2 million in December 2019).

Total U.S. flock held for cage-free production                          = 63.0 million (62.6 million in June).

Total U.S. non-caged flock                                                        = 78.8 million (78.4 million in June).

This total value represents 24.6 percent of a nominal 320 million total U.S. flock but 35.2 percent of a presumed flock of 224 million producing for the shell-egg market.                                                                                                                    

Processed Eggs

For the processing week ending September 5th 2020 the quantity of eggs processed under FSIS inspection over the past week as reported on September 9th 2020 was down 0.3 percent compared to the previous processing week to a level of 1,447,192 cases. The proportion of eggs broken by in-line complexes was 53.5 percent (was 54.1 percent last week) denoting less 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 71.2 percent of egg production was directed to the shell market, (71.1 percent last week) due to stable shell prices concurrent with a slight recovery of the food service sector and increased demand from eat-at-home. During the corresponding processing week in 2019 in-line breakers processed 58.5 percent of eggs broken.

For the monthly report dated September 5th 2020, edible yield from 5,845,652 cases (7,190,489 cases last month indicating the contraction of the demand for liquid) for the period August 8th 2020 through August 29th 2020 was 41.6 percent, distributed in the following proportions expressed as percentages:- liquid whole, 55.5; white, 26.7; yolk 12.7; dried, 5.1.

All eggs broken during YTD 2020 attained 28.2 million cases, 10.8 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 four months shell egg prices reverted to levels prevailing before the price surge. Demand for liquid is still curtailed by COVID-19 home confinement resulting in diversion of breaking stock into the shell market.

 

PRODUCTION AND PRICES

Breaking Stock

The average price for breaking stock of 46.0 cents per dozen delivered to Central States plants on September 8th was unchanged from the previous week over a range of 45 to 47 cents per dozen. Checks were unchanged over a range of 34 to 39 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 58.7 cents per dozen during July 2020.

Shell Eggs

The USDA Egg Market News Report released on September 8th 2020 showed unchanged Midwest prices for medium, large and extra large sizes 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

    80-83 cents per dozen

         Unchanged

Large

    78-81 cents per dozen

         Unchanged                      

Medium

    54-57 cents per dozen

         Unchanged

Certified Organic EL

275-310 cents per dozen

   Unchanged long term

Breaking stock

    45-47 cents per dozen

         Unchanged

Checks

    34-39 cents per dozen

         Unchanged 

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

 

The September 8th California price per dozen in cartons delivered to a DC, with the previous week in parentheses:-

  1. $1.64 ($1.64); L. $1.54 ($1.54); M. $1.05 ($1.05)

 

The September 8th 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 unchanged from last week:-

  1. $0.69 ($0.69), estimated by proportion):  L. $0.62 ($0.62): M. $0.36 ($0.36)

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

  

Shell-Egg Demand Indicator

The USDA-AMS Shell Egg Demand Indicator for September 9th 2020 was down 3.7 points from the last weekly report to -3.5 with a 4.1 percent increase in inventory from the past week as determined by the USDA-ERS as follows:- 

Productive flock

   311,590,915 million hens

Average hen week production

83.0%  (was 83.0%)

Average egg production

            258,620,460 million per day

Proportion to shell egg market

                   71.2% (was 71.1%)

Total for in-shell consumption

 511,494 cases per day

USDA Inventory

                  1,434,600 cases

26-week rolling average inventory

                  4.44 days

Actual inventory on hand

                  4.60 days

Shell Egg Demand Indicator

-3.5 points (was 0.2 on September 2nd 2020 )

 

 

Dried Egg Products

Prices for dried egg products (most frequent price with a range in $ per pound) effective September 4th 2020 were:-

Whole Egg

$1.95-$2.05

Unchanged

Yolk

$1.90-$2.00

Unchanged

Spray-Dried White

$4.30-$4.5

Down $0.05 on both ends of the range

Blends

$2.75-$2.80

No new quotation

 

USDA has not released a report on dried egg inventory since March 13th and due to an inability to obtain data from producers will not issue reports in the immediate future. 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 the 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%).

COMMENTS

Exotic Newcastle Disease (END)

In accordance with the World Organization of Animal Health (OIE) criteria the END outbreak in southern California is now over given that more than ninety days has elapsed since the last confirmed case was depleted. The CDFA and USA-APHIS have now moved to a program of prevention emphasizing biosecurity and hopefully effective 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 accordance with OIE rules a March outbreak of low-pathogenicity H7N3 avian influenza is over. The limited outbreak was diagnosed on routine surveillance in asymptomatic turkey flocks comprising nine grow-out and one breeder flock in Anson and Union Counties in North Carolina from March 13th through March 25th.  

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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