Egg Monthly

03/10/2021

REVIEW OF FEBRUARY 2021 EGG PRODUCTION COSTS AND STATISTICS.

 

HIGHLIGHTS

  • February 2021 USDA ex-farm blended nest-run benchmark price was 91.9 cents per dozen, 19.7 percent higher than the January 2021 value of 76.8 cents per dozen. The average monthly USDA benchmark ex-farm price for 2020 was 76.5 cents per dozen with a range of 52.9 cents per dozen in January to 159.7 cents per dozen in March. The downward price trend from early May through July 2020 was attributed to restoration of normal consumer purchasing patterns coupled with diversion of eggs from breaking to the shell-egg market. Currently stock levels and prices indicate relative balance between supply and demand with seasonal prices attributable to increased retail sales despite moderate over-production and continued diversion from the egg-breaking sector.
  • February 2021 USDA average nest-run production cost was 0.8 cents per dozen higher than in January 2021 at 71.1 cents per dozen mainly due to feed cost. A downward adjustment of 2.5 cents in fixed and miscellaneous costs was introduced for January 2021 by the EIC invalidating direct comparison with February 2020.
  • February 2021 USDA benchmark nest-run margin attained a positive value of 20.8 cents per dozen compared to a positive margin of 6.5 cents per dozen in January 2021.
  • January 2020 national flock in production (over 30,000 hens/farm) was up 0.5 million hens or 0.2 percent to 310.8 million. There are approximately 3.4 million hens due to return to production from molt offset by depletion of older flocks.
  • January 2021 pullet chick hatch was down 4.5 percent or 1.1 million from December 2020 to 25.4 million.
  • January 2021 export of shell eggs and products combined was down 7.7 percent from December 2020 to 809,900 case equivalents representing the theoretical production of 11.7 million hens.

 

INTRODUCTION.

Summary tables for the latest USDA February 2021 prices and flock statistics made available by the EIC on March 8th 2021 are arranged, summarized, tabulated and reviewed in comparison with values from the previous February 22nd 2021 posting reflecting January 2020 cost and production data.

COSTS & REVENUE

Parameter

JANUARY 2021

FEBRUARY 2021

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

70.3 c/doz

71.1 c/doz

Low

67.1 c/doz (MW)

67.9c/doz (MW)

High

75.1c/doz (NWest)

75.6c/doz (CA)

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

JANUARY 2021

FEBRUARY 2021

Feed

42.4 c/doz

42.9c/doz

Pullet depreciation

12.1 c/doz

12.1 c/doz

Labor (estimate)

4.0 c/doz

4.0 c/doz

Housing (estimate)

5.0 c/doz

5.0 c/doz

Miscellaneous and other*

6.8 c/doz

7.1 c/doz


* Adjusted January 2021 and used as a rounding factor

 

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting FEBRUARY 2021:-

91.9 cents per dozen1- 71.1 cents per dozen = +20.8 cents per dozen

(January 2021 comparison 76.81 cents per dozen – 70.3 cents per dozen = +6.5 cents per dozen.)

Note 1: USDA Blended egg price

 

 JANUARY 2021

FEBRUARY 2021

USDA

Ex-farm Price (Large, White)

76.8 c/doz (Jan.)

91.9 c/doz (Feb.)

Cage-free to packing plant

193.0 c/doz (Jan.)

 178.0 c/doz (Feb.)

Warehouse/Dist. Center

105.0 c/doz (Jan.)

 104.0 c/doz (Feb.)

Store delivered (estimate)

110.0 c/doz (Jan.)

 109.0 c/doz (Feb.)

Dept. Commerce Retail

148.1 c/doz (Dec.)

 146.0 c/doz (Jan.)

Layer Feed Cost

 JANUARY 2021

  FEBRUARY 2021

See note on source of data: now USDA

U.S. Average

$265.20/ton

$270.00/ton

High

$290.30/ton (N.West)

$295.63/ton (N.West)

Low

Differential

$246.93/ton (MW)

$44.37

$252.07/ton (MW)

$43.56

Pullet Cost

$4.53 JANUARY 2021 $4.55 February 2021 (19 Weeks)

$3.90 JANUARY 2021 $3.94 February 2021 (16 weeks)

VOLUMES OF PRODUCTION

PARAMETER

 JANUARY 2021

FEBRUARY 2021

Table-egg strain eggs in incubators

50.8 million (Jan.)

53.1 million (Feb.)

Pullet chicks hatched

26.7 million (Jan.)

25.4 million (Feb.)

Pullets to be housed in 5 months

24.1 million (May)

22.2 million (June)

December Flock

325.5 million (Dec. 2020 Actual.)

336.3 (Dec. 2021 Projected)

National Flock in farms over 30,000 (2020)

310.3 million (Dec.)

310.8 million (Jan.)

National egg-producing flock (2020)

326.0 million (Dec.)

327.1 million (Jan.)

Proportion flock in molt or post-molt

16.2% (Jan.)

16.2% (Feb.)

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

 272.7 million (Dec.)

273.9 million (Jan.)

* USDA Revisions

Total U.S. Eggs produced

8.34 billion (Dec.)

8.26 billion (Jan.)

Cage-Free hens in production

82.3 million (Jan.)

21.0% Organic

85.0 million (Feb.)

20.6% Organic

“Top-5” States hen population (USDA)1

155.9 million (Dec.)

157.1 (Jan.)

Note 1. Texas excluded to maintain confidentiality

 

PROPORTION OF U.S. TOTAL HENS BY STATE, 2020

Based on a nominal denominator of 310 million hens in flocks over 30,000 covering 95.2 percent of the U.S complement.

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

STATE

DECEMBER ‘20

JANUARY ‘21

Iowa

14.9%

15.1%

Indiana

11.0%

10.8%

Ohio

10.9%

11.0%

Pennsylvania

9.3%

9.3%

Texas (estimate)

6.5% ?

6.5% ?

California

4.4%

4.4%

  1. Values rounded to 0.1%

 

Rate of Lay, weighted hen-week (USDA) 81.5% (JANUARY) 81.4% (FEBRUARY)

Actual per capita egg consumption 2016:- 275.3 (up 19.8 eggs from 2015)

Actual per capita egg consumption 2017:- 282.1 (up 6.8 eggs from 2016)

Actual per capita egg consumption 2018:- 287.8 (up 5.7 eggs from 2017)

Revised per capita egg consumption 2019:- 293.6 (up 5.8 eggs from 2018)*

Projected per capita egg consumption 2020:- 285.9 (down 7.7 eggs from 2019)*

Estimated per capita egg consumption 2021:- 287.1 (up 1.2 eggs from 2020)*

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook February 16th 2020 taking into account the decreased demand from the food service sector

Egg Inventories at beginning of FEBRUARY 2021:

Shell Eggs: 1.71 million cases down 2.9 percent from January 2021.

Frozen Egg Products: 825,161 case equivalents down 1.0 percent from January 2021

Dried Egg Products: Not disclosed since March 2020. Assume high level of inventory

Eggs broken under FSIS inspection (million cases) December 2020, 6.49 JANUARY 2021, 5.92

Cumulative eggs broken under FSIS inspection 2020 (million cases) 74.8 JAN. to DEC.

 

Cumulative 2020: number of cases produced (million) 268.0 JAN. to DEC.

Cumulative 2020: proportion of total eggs broken 27.9% (30.1% 2019)

Cumulative 2021: number of cases produced (million) 23.0 JAN.

Cumulative 2021: proportion of total eggs broken 25.8% JAN. 

 

EXPORTS JANUARY 2021: (Expressed as shell-equivalent cases of 360 eggs).

Parameter

Quantity Exported

Exports:

Shell Eggs (thousand cases)

DEC. 492 JAN. 383

Products (thousand case equivalents)

DEC. 386 JAN. 427

TOTAL (thousand case equivalents)*

DEC. 878 JAN. 810

*Representing 4.6 percent of National production in January 2021.

 

COMMENTARY ON FEBRUARY 2021 COSTS AND STATISTICS

FEBRUARY 2021 COST AND REVENUE DATA

 

The USDA reports data for five regions, respectively comprising the Northeast, South East (Mid-Atlantic), South Central, Midwest, and Northwest (NW and California combined in some tables).

 

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

  • The USDA ex farm benchmark blended egg price in February 2021 increased by by 19.7 percent or 15.1 cents per dozen from January 2021 to 91.9 cents per dozen, contributing to a positive margin of 20.8 cents per dozen based on ‘nest-run’ eggs (delivered from the laying house) compared to a positive margin of 6.5 cents per dozen in January 2021. The February 2021 USDA benchmark price of 91.9 cents per dozen should be compared to 69.8 cents per dozen for the corresponding month in 2019 and 68.9 cents per dozen in February 2020.
  • During February 2021, the feed component of production cost averaged 42.9 cents per dozen, up 1.5 percent from January 2021. For 2020 average feed price was 31.7 cents per dozen. The 2019 average feed cost was 31.4 cents per dozen.
  • Combining data from the USDA and the EIC, producers recorded a positive margin of 20.8 cents per dozen at farm-level, for generic-egg flocks during February 2021. This compares with a negative margin of 6.5 cents per dozen in January 2021. For 2020 the cumulative algebraic annual margin was a positive 191.8 cents per dozen.

 

The cumulative algebraic margin for 2019 was -33.3 cents per dozen or an average monthly loss of 2.8 cents per dozen. The cumulative margin for 2018 was a positive 424.0 cents per dozen or a monthly average of 35.3 cents per dozen against USDA benchmark ‘nest run’ values.

 

  • The simple average price of feed in February 2021 over 5-regions was $270.00 per ton, 1.6 percent higher (using USDA-AMS data) corresponding to $4.10 per ton compared to January 2021. Southwest data is no longer disclosed to avoid compromising a company that predominates in Texas. The highest cost among five regions was the Northwest at $295.63 per ton. This may be compared to the lowest-cost region, the Midwest at $252.07 per ton. The average figure includes ingredients plus milling and delivery at a nominal $10 per ton.
  • The benchmark price of corn was $207.80 per ton in February 2021, up $10.60 per ton or 5.4 percent higher than the January 2021 price, taking into account the difference in basis paid by producers. A 2.9 percent decrease of $13.63 per ton in the price of soybean meal to $455.82 per ton in February 2021 offset the increase in corn on feed cost. There was a differential of $43.56 per ton in feed price between the Midwest and the Northwest compared to a difference of $44.37 per ton in January. The differential in corn price between the Midwest and the Northwest in February 2021 was $46.48 per ton.
  • Feed price will continue to be a major factor driving production cost and hence margin. Unknown factors influencing feed cost during the first and second quarters of 2021 will include uncertainty over international trade and especially exports to China, coupled with the economic and logistic effects of coronavirus restrictions. The decline in demand for crude oil and ethanol shuttered refineries in April depressing the price of corn. There is obviously some recovery in this sector with ethanol production attaining 849,000 barrels per day for the week ending February 26th. Substantial exports of corn and soybeans to China, in market year 2020/2021 beginning September 2020 have increased domestic price and hence cost of production. Each $10 per ton difference in feed cost represents approximately 1.70 cents per dozen.
  • The EIC calculated the 6-Region total nest-run production cost in February 2021 to be 71.1 cents per dozen, 0.8 cents per dozen higher than in January 2021. Production costs during February 2021ranged from 67.9 cents per dozen in the Midwest up to 75.6 cents per dozen in the Northwest, higher than the Midwest region by 7.8 cents per dozen.
  • Retail egg prices as determined by the Department of Commerce for January 2021 averaged 146.6 cents per dozen, 1.5 cents per dozen or 1.0 percent lower than in December 2020. During January 2019 and 2020 retail prices were respectively 153.5 and 148.1 cents per dozen. Consistently since 2016 retail prices have not declined in proportion to ex-farm prices, allowing higher margins at retail, thereby depressing demand. During January 2021 retail prices declined by 1.5 cents in comparison with a 14.3 cents per dozen increase in the USDA benchmark price demonstrating a two-month reversal of the previous trend. Retailers demonstrated restraint in pricing possibly due to competition from deep discounters and club stores despite sustained demand.

 

FEBRUARY 2021 PRODUCTION DATA

  • According to USDA data, the estimated average complement of U.S. hens in flocks over 30,000 during January 2021 amounted to 310.8 million, reflecting seasonal adjustment in flock size. The average total U.S. flock including hens in molt on all farms counted by the USDA amounted to 327.1 million in January 2021. The average end-of-year flock sizes over the past six years respectively were, 2014 (311 million); 2015 (291 million post-HPAI losses); 2016 (319 million); 2017 (329.6 million); 2018 (341.6 million); 2019 (341.6 million) and 2020 (325.5 million). The December 2021 flock is projected to be 336.3 million, up 10.8 million or 3.3 percent from December 2020. Prevailing margins will however determine flock size during December 2021.
  • The effect of COVID restrictions on the egg-breaking segment of the industry is noted in the decline in the flock size in Iowa. In January 2020 the state had 56.4 million hens with a progressive decline to 44.8 million in July. In December 2020 the Iowa flock attained 46.3 million hens, up 0.1 million from the previous month followed by January 2021 to 49.6 million. Low prices and COVID-related factors have reduced hen numbers by approximately 1.5 to 2.0 million hens in each of Ohio and Pennsylvania. Hens in U.S. flocks over 30,000 declined 3.8 percent or 12.1 million hens from 322.4 million in January 2020 to a low of 299.2 million in July rising to 309.6 million in January 2021.
  • Pullet chick hatch attained 25.4 million in January 2021, down 1.1 million from December 2020. It is evident that if relatively low seasonal prices occur with further declines through the second quarter of 2021, future 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 16.2 percent of the national flock in February 2021, the same as January 2021. Producers molted flocks in response to the drop in price of generic eggs following the end of the April 2020 surge in demand. Annual averages for molt and post-molt combined were 13.5 percent for 2020, 15.2 percent for 2019, 17.4 percent for 2018 and 18.0 percent in 2017. An historical high value of 23.8 percent in 2016 was due to the loss of hens during the 2015 HPAI epornitic.
  • The average monthly projections for pullets to be transferred to laying houses during the 1st quarter of 2021 is 21.9 million and is projected to be 22.7 million during the 2nd quarter of 2021.
  • The projected hatchery supply flock (parent generation) attained 3.1 million hens in January 2021. Peak parent-flock placements rose to 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 fourth quarter of 2016. Projections show a monthly average of 3.1 million parent breeder hens during the first quarter of 2021 and 3.2 million during the 2nd The size of the parent flock may be revised depending on pullet chick orders as influenced by margins.
  • Average production of 81.4 percent in February 2021 compared to 81.5 percent in January 2021 reflects an older proportion of first-cycle hens and early second-cycle hens in the national flock. More pullet flocks are at or just past peak production as reflected in the availability and relatively low price of Medium-sized eggs. Average rate of lay in 2020 attained 80.9 percent compared to 79.2 percent during 2019. 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 conversely will rise due to early depletion thereby increasing the proportion of young hens in their first cycle.
  • The February 22nd USDA Poultry Slaughter Report documented 2.8 million light spent-hens processed under FSIS inspection during January 2021, down 9.4 percent from January 2020 when hens were depleted after taking advantage of previously high prevailing prices. 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.

 

JANUARY 2021 EXPORT DATA.

  • According to USDA-FAS data, 383,000 cases of shell eggs were exported in January 2021, representing 1.7 percent of total production. This value should be compared to the high value of 409,700 cases in March 2015 prior to the onset of HPAI.
  • During January 2021 the following regions were the leading importers:- North America, comprising the two neighboring USMCA nations, but predominantly Mexico (36.3 percent, was 50.4 percent last month). East Asia, mainly Hong Kong/China, (37.9 percent, was 25.6 percent). The Caribbean and Central American Region combined represented 7.0 percent of shell egg exports in January. (See egg export data under the STATISTICS tab)
  • Exports of egg products in January 2021 attained 427,000 case-equivalents, representing 1.9 percent of U.S. output. The following regions were the leading importers of egg products by proportion of volume shipped:- North America, our USMCA neighbors (2 percent, was 49.0 percent), East Asia comprising China, Japan and S. Korea (33.4 percent), Central America and the Caribbean, (4.4 percent was 3.9 percent). No product was shipped to the EU-27+UK or to the Middle East in January 2021.
  • Collectively, exports of shell eggs and products in January 2021 represented the output from approximately 11.7 million hens in production during the month, attaining 809,900 case-equivalents, down 7.7 percent from December 2020. This was 15.7 percent lower 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 that international markets are being regained.

 

Maintaining export volume is 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 January 2021 corresponded to 3.5 percent of a nominal national flock of approximately 310 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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