Egg Week

02/18/2021

USDA Weekly Egg Price and Inventory Report, February 18th 2021.

 

  • Shell inventory was up by 0.3 percent after a 5.4 percent increase last week. This confirms transitory balance between demand and supply with implications for prices extending through the remainder of February, given the reality that the retail pipeline is full as buyers purchased ahead of the winter blizzard. It is noted that a large number of molted hens are returning to production. Prices stabilized this past week but will fall if oversupply contributes to excess inventory, or conversely will rise if egg supplies and distribution are seriously impacted by weather conditions in Texas and southeast states. There is little evidence of a return in the food service sector as liquid and dried-egg prices are stable and reopening of the economy is slow consistent with a decrease in COVID-19 incidence rates in many regions coupled with more rapid deployment of vaccine.

 

  • The U.S. flock in production was up 0.1 million from the week of February 10th to 316.7 million, with about 3 million molted hens resuming production within weeks.

 

  • The USDA average Midwest benchmark generic prices for Extra-large and Large sizes were down 10.2 percent from the previous week to 114.5 and 112.5 cents per dozen. Mediums were down 2.6 percent to an average of 92.0 cents per dozen. During the previous four weeks Midwest prices were higher, tracking the three-year average, following four previous weeks of lagging both the corresponding weeks in 2019 and the three-year average. The recent price increases reflect increased demand with a moderate decrease in the U.S. flock in production. Imbalance between weekly demand and the availability from shell egg production coupled with diversion from the liquid sector will depress prices during early Lent.

 

  • The Midwest price of breaking stock was unchanged at an average of 41.5 cents per dozen. Checks in the Midwest were 1.5 percent higher to 33.0 cents per dozen.

 

OVERVIEW

Prices

According to the USDA Egg Market News Reports circulated on February 16th 2021 the Midwest wholesale prices for Extra-large and Large sizes were down 10.2 percent on average from the previous week as delivered to DCs, attaining 114.5 and 112.5 cents per dozen. Mediums were down 2.6 percent to 92.0 cents per dozen reflecting a proportionately lower supply from young flocks that have matured. Prices should be compared with the USDA benchmark average 6-Region blended nest-run, (excluding provisions for packing and transport) cost of 68.2 cents per dozen in December 2020. The progression of prices during 2019 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

 

The February 16th 2021 edition of the USDA Egg Market News Report (Vol. 68: No. 07) documented a USDA Combined Region value rounded to the nearest cent, of $1.35 per dozen delivered to warehouses for the week ending February 14th 2021. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $1.26 per dozen. At the high end of the range, price in the South Central Region attained $1.41 per dozen. The USDA Combined Price last week was almost the same as the 3-year average and about 30 cents per dozen above the corresponding week in 2020.

Flock Size

According to the USDA the number of producing hens reflecting February 17th (rounded to 0.1 million) was up 0.1 million to 316.7 million. If USDA data is accurate, the producing flock contains molted hens coming back into production with approximately 5.0 million pullets reaching maturity during the week, offset by flock depletion. The hen population producing eggs is in balance relative to seasonal consumer demand but is depressed by lower industrial and food service off-take. Any number above 315 million hens in production in mid-February portends lower than average prices and increased inventory, unless matched by proportional increases in demand. Prices are falling after a transitory rise over the past two weeks. It is unknown what effect weather conditions will influence prices over the short term.

 

The total U.S. egg-flock was up 0.1 million to 323.5 million hens including second-cycle birds and those in molt. The difference of 6.8 million hens (6.8 million last week) between hens in production and total hens is equivalent to 2.1 percent of the national flock the same as the previous week. This means that there are many molted hens due to come back in production and young pullets that will commence laying consistent with chick placements in September 2020. The obvious reduction in hen numbers in Iowa and to a lesser extent among the next three largest egg-producing states that occurred following the onset of COVID-19 in February 2020 has partly reverted to pre-COVID numbers in anticipation of Easter 2021. Chick placement data suggests that 20 to 21 million pullets per month will commence production in the first quarter of 2021. This has implications for prices, given current supply and stock levels in relation to 1st quarter demand before the Easter rise.

 

INVENTORY LEVELS

Cold storage stocks in selected regions on February 15th 2021 amounted to 2.399 million pounds (1,091 metric tons) of frozen egg products, 0.1 percent more than the level of 2.396 million lbs. on February 1st 2021.

 

The most recent monthly USDA Cold Storage Report released on January 25th 2021 documented a total stock of 31.7 million pounds (14,407 metric tons) of frozen egg products on December 31st 2020. This value was down 22.3 percent from December 31st 2019. (32.4 million on November 30th 2020). A total of 90.1 percent of combined inventory comprised the categories of “Whole and Mixed” (44.1 percent) and “Unclassified” (46.0 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 February 16th 2021 was higher by 0.3 percent after an increase of 5.4 percent last week. The U.S. population of laying hens at this time is influenced by the number of flocks retained after molting coupled with chick placements made in late September and early October. Balance in production relative to demand was evident in early November but reversed during the last week of the month without a seasonal December rise. Going forward a proportion of the national flock will increase as molted flocks resume production in anticipation of pre-Easter demand.

 

Three of six USDA Regions reported higher stock levels. The regions are listed in descending stock level:-

  • The Midwest Region was down 0.8 percent compared to the previous week to 471,900 cases.
  • The South Central Region, was up 3.1 percent from last week at 328,900 cases.
  • The Southeast Region was up 1.9 percent to 293,100 cases.
  • The Southwest Region was down 4.3 percent to 155,900 cases.
  • The Northeast Region was up 3.4 percent to 199,400 cases.
  • The Northwest Region was down 5.9 percent to 90,600 cases.

 

The total USDA six-area stock of commodity eggs comprised 1,836,700 cases, of which 83.8 percent were shell eggs (83.5 percent last week). The inventory of breaking stock was down by 1.9 percent to 297,000 cases. The value of breaking stock and hence availability from both mature and young flocks is influenced by the demand for generic shell eggs and contract obligations with breakers.

 

As of Monday February 15th 2021 the inventory of other than generic eggs (with previous week in parentheses) comprised:-

  • Specialty category, up 2.7 percent to 41,000 cases. (was down 15.2% to 39,900 cases)
  • Certified Organic, up 0.4 percent to 82,700 cases. (up 11.0% to 82,400 cases)
  • Cage-Free, down 1.1 percent 130,600 cases. (up 2.3% to 132,000 cases)

 

Demand for cage-free product will not increase materially while generic eggs are on the shelf at $1.00 to $1.35 per dozen over the long term. Existing state legislation mandating sale of only cage-free eggs will support most of the anticipated transition from cages but a total change will not be completed by the beginning of 2025, less than 47 months away. With the current proportion of non-caged flocks, cage-free eggs are becoming a commodity in some markets 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, shell color, GM status and nutritional enrichment is self-evident.

 

RELATIVE PRICES OF SHELL-EGG CATEGORIES

 

The following advertised retail prices for the week ending February 18th 2021, (compared with the previous week in parentheses) were posted by the AMS on February 12th for dozen packs:

USDA Certified Organic, Brown, Large: $4.40 ($3.97)

Cage-Free Brown, Large: $3.00 ($2.24)

Omega-3 Enriched Specialty, White, Large: $2.28 ($2.29)

Generic White, Large Grade AA $1.34 ($0.86)

Generic White, Large Grade A (Feature price) $1.34 ($0.96)

*Adjusted by USDA

 

The weekly advertised retail price as determined by the USDA-AMS for generic white Large AA last week was up $0.48 per dozen to $1.34 per dozen. This will have minimal impact on demand for this category given concurrent increases in cage-free eggs. The unanticipated mid-January increase in price continued into mid-February due to the inclement weather in the deep South and Northeast and heightened demand for shell eggs as eating-at-home is conditioned by concern over COVID and local restrictions. This trend should continue over the proximal two weeks.

 

During the present week the USDA benchmark-advertised retail price of brown Cage-Free was up 33.9 percent or $0.76 per dozen to $3.00 per dozen. (last week USDA price was $2.24 per dozen). Certified organic was up 10.8 percent or $0.43 per dozen to $4.40 per dozen. The differential in advertised price between cage-free brown and certified organic was $1.40 per dozen ($1.73 per dozen last week). This suggests continued demand for cage-free in relation to certified organic during the current week. The differential between advertised price for cage-free brown over generic white was $1.66 per dozen this past week, ($1.38 per dozen the previous week) suggesting demand for generic white over cage-free brown. Preference for cage-free brown over generic white is evident with a price differential lower than $1.20 per dozen. Last week cage-free white was advertised $1.07 cents per dozen below cage-free brown although over a relatively few data points. 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 February 1st 2021, the number of certified organic hens during January 2021 increased 0.6 percent to 17.3 million.

 

 The USDA reported a 2.2 million decrease in the cage-free flock from December to 65.0 million, compared to an average of 62.8 million hens in Q4, 2020.

 

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

Total U.S. flock held for USDA Certified Organic production = 17.3 million (17.2 million in Q4 2020).

Total U.S. flock held for cage-free production = 65.0 million (62.8 million in Q4 2020).

Total U.S. non-caged flock = 82.3 million (80.0 million in Q4 2020).

 

This total value represents 25.7 percent of a nominal 320 million total U.S. flock but 36.7 percent of a presumed pre-COVID flock of 224 million producing for the shell-egg market.

 

Processed Eggs

For the processing week ending February 13th 2021 the quantity of eggs processed under FSIS inspection as reported on February 17th 2021 was up 1.3 percent compared to the previous processing week to a level of 1,406,702 (1,388,359 cases last week). The proportion of eggs broken by in-line complexes was 54.8 percent (was 54.4 percent last week) denoting a balance between diversion to the breaking market and spot sales for uncommitted shell eggs. With lower prices for shell eggs there is a trend to divert non-contracted eggs to breaking from shell sales and vice versa resulting in either a higher or lower proportion of in-line breaking. This past week 71.9 percent of egg production was directed to the shell market, (72.2 percent for the previous week) reflecting higher shell prices for the past two weeks. There is evidence of slight recovery in the food service sector, especially for QSRs, offset by increased demand from baking and eat-at-home. During the corresponding processing week in 2020 (pre-COVID) in-line breakers processed 56.0 percent of eggs broken.

 

For the last available monthly report dated February 6th 2021, yield from 5,722,960 cases (7,125,717 cases last month) denoted a decrease in demand for liquid over the period January 3rd 2021 through January 30th 2021. Edible yield was 41.1 percent, distributed in the following proportions expressed as percentages:- liquid whole, 56.5; white, 25.7; yolk 12.5; dried, 5.3.

 

All eggs broken during YTD 2021 attained 8.52 million cases, 25.6 percent less than the corresponding period during 2020.

 

Demand for liquid is still constrained by COVID-19 home-cooking resulting in diversion of breaking stock into the shell market partly balanced by a reduction in hens dedicated to breaking.

 

PRODUCTION AND PRICES

 

Breaking Stock

The average price for breaking stock of 41.5 cents per dozen delivered to Central States plants on February 16th was unchanged from the previous week. Checks were 1.5 percent higher over a range of 31 to 35 cents per dozen. Average revenue for both breaking stock and checks should be compared to the benchmark production cost for nest-run, estimated by the USDA at 68.2 cents per dozen during December 2020.

 

Shell Eggs

The USDA Egg Market News Report released on February 16th 2021 showed substantially higher Midwest prices for all sizes consistent with relative balance between production and demand illustrated by a fall in stock over three consecutive weeks. The following table lists the “most frequent” ranges of values as delivered to warehouses*:-

Size/Type

Current Week

Previous Week

Extra Large

113-116 cents per dozen

126-129 down 10.2%

Large

111-114 cents per dozen

124-127 down 10.3%

Medium

91-93 cents per dozen

93-96 down 2.6%

Certified Organic EL

275-310 cents per dozen

Unchanged long term

Breaking stock

40-43 cents per dozen

Unchanged

Checks

31-35 cents per dozen

30-35 up 1.5%

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

 

The February 16th 2021 Midwest 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. $1.04 ($1.14), estimated by proportion): L. $0.93 ($1.08): M. $0.63 ($0.73)

 

The February 16th 2021 California price per dozen in cartons delivered to a DC, with the previous week in parentheses:-

  1. $1.75 ($1.90); L. $1.70 ($1.86); M. $1.28 ($1.39)
  2.  

(See the text, tables and figures and the review of production data and prices comprising the USDA costs for December 2020 and the 2nd Quarter FY 2021 results for Cal-Maine Foods available under the Statistics TAB.)

Shell-Egg Demand Indicator

The USDA-AMS Shell Egg Demand Indicator for FEBRUARY 17th 2021 was down 0.6 points from the last weekly report to -3.9 with a 0.3 percent increase in inventory from the past week as determined by the USDA-ERS as follows:- 

 

Productive flock

316,739,731 million hens

Average hen week production

81.2%(was 81.2%)

Average egg production

257,192,661 million per day

Proportion to shell egg market

71.9% (was 72.2%)

Total for in-shell consumption

 513,671 cases per day

USDA Inventory

1,539,700 cases

26-week rolling average inventory

4.72 days

Actual inventory on hand

4.91 days

Shell Egg Demand Indicator

-3.9 points (was -3.3 on February 10th 2021)

Dried Egg Products

Prices for dried egg products (most frequent price with a range in $ per pound) effective February 12th 2021 were:-

Whole Egg

$2.80-$2.95

Up $0.05 on both ends of the range.

Yolk

$2.15-$2.30

Unchanged

Spray-Dried White

$4.75-$4.95

Unchanged

Blends

$2.75-$2.80

No new quotation

 

USDA has not released a report on dried egg inventory since March 13th 2020 and due to an inability to obtain data from producers, will not issue reports for the immediate future.

 

COMMENTS

There is a presumption that migratory waterfowl commence shedding AI virus during December, ceasing in April. Accordingly, intensified 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. Numerous outbreaks of H5N8 highly pathogenic avian influenza have occurred in recent weeks in Europe and Asia. There are reports with increasing frequency of shedding H5N8 and other H5 strains by migratory waterfowl. Outbreaks of HPAI are attributed to contact between wild birds and domestic chicken and duck flocks, many of which are on pasture. Most veterinary authorities are advising or mandating flock confinement.










































































































































































































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