Egg Monthly

11/07/2021

REVIEW OF OCTOBER 2021 EGG PRODUCTION COSTS AND STATISTICS.

HIGHLIGHTS

  • October 2021 USDA ex-farm blended USDA nest-run benchmark price was 77.7 cents per dozen, 20.4 percent lower than the September 2021 value of 97.6 cents per dozen. Year-to-date average USDA benchmark price is 79.7 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 during COVID hyper-demand. Currently stock levels and prices indicate a relative balance between supply and demand. Prevailing wholesale prices are largely dependent on retail sales despite moderate over-production, continued diversion from the egg-breaking sector and downward distortion attributed to the price discovery system.
  • October 2021 USDA average nest-run production cost was 0.3 cents per dozen (0.4 percent) lower than in September 2021 to 66.3 cents per dozen, mainly attributable to a 0.6 percent lower average feed cost.
  • October 2021 USDA benchmark nest-run margin attained a positive value of 11.4 cents per dozen compared to a margin of 31.0 cents per dozen for September 2021.
  • September 2021 national flock in production (over 30,000 hens/farm) was up 2.5 million hens to 305.6 million. There are approximately 3.0 million hens due to return to production from molt in November together with a projected maturation of 25.0 million pullets, with this complement to be offset by depletion of spent flocks.
  • September 2021 pullet chick hatch was down 1.2 percent or 0.3 million from August 2021 to 24.6 million indicating concern over recent low prices.
  • September 2021 export of shell eggs and products combined was up 13.7 percent from August 2021 to 1,098,000 case equivalents representing the theoretical production of 16.0 million hens. Increased imports by South Korea will progressively decline as flocks depleted by HPAI are restored.

 

INTRODUCTION.

Summary tables for the latest USDA October 2021 prices and flock statistics made available by the EIC on November 6th 2021 are arranged, summarized, tabulated and reviewed in comparison with values from the previous October 9th 2021 posting reflecting September 2021 cost and production data.

 

COSTS & REVENUE

Parameter

SEPTEMBER 2021

 OCTOBER 2021

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

66.6 c/doz

66.3 c/doz

Low

63.7 c/doz (MW)

63.5 c/doz (MW)

High

72.6c/doz (N.West)

72.5c/doz (N.West)

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

Notes: 1. Rounded to decimal of a cent

SEPTEMBER 2021

OCTOBER 2021

Feed

38.9 c/doz

38.7c/doz

Pullet depreciation

11.7 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*

7.0 c/doz

6.5 c/doz


* Adjusted January 2021 and used as a rounding factor

 

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

77.6 cents per dozen1- 66.3 cents per dozen = +11.4 cents per dozen

(September 2021 comparison 97.6 cents per dozen – 66.6 cents per dozen = +31.0 cents per dozen.)

Note 1: USDA Blended egg price

 

SEPTEMBER 2021

OCTOBER 2021

USDA

Ex-farm Price (Large, White)

97.6 c/doz (Sept.)

77.7 c/doz (Oct.)

Cage-free to packing plant1

99.0. c/doz (Sept.)

96.0 c/doz (Oct.)

Warehouse/Dist. Center

130.0 c/doz (Sept.)

 106.0 c/doz (Oct.)

Store delivered (estimate)

135.0 c/doz (Sept.)

 111.0.0 c/doz (Oct.)

Dept. Commerce Retail

170.9 c/doz (Aug.)

 183.5 c/doz (Sept.)


  1. Negotiated price nest run.

MONTH SEPTEMBER OCTOBER 

U.S. Average Feed Cost per ton $244.78 $243.33

Low Cost Midwest $228.81 $225.61

High Cost Northwest $278.81 $277.97

Differential $ 49.90 $ 52.36

Pullet Cost

 (19 Weeks) $4.34 OCTOBER 2021 $4.36 SEPTEMBER 2021 

(16 weeks) $3.79 OCTOBER 2021 $3.79 SEPTEMBER 2021

 

VOLUMES OF PRODUCTION

 

PARAMETER

SEPTEMBER 2021

OCTOBER 2021

Table-egg strain eggs in incubators

45.0 million (Sept.)

46.2 million (Oct.)

Pullet chicks hatched

24.9 million (Aug.)

24.6 million (Sept.)

Pullets to be housed in 5 months

22.4 million (Jan. ‘22)

20.7 million (Feb ‘22.)

2021 December 1st Flock Projection

326.7 million

327.2 million

National Flock in farms over 30,000 (2021)

303.1 million (Aug.)

305.6 million (Sept.)

National egg-producing flock (2021)

319.4 million (Aug.)

320.9 million (Sept.)

Cage-free flock excluding organic

75.1 million (Sept.)

75.4 million (Oct.)

Proportion flock in molt or post-molt

15.5% (Sept.)

15.7% (Oct.)

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

 269.9 million (Aug)

254.8 million (Sept.)

Total U.S. Eggs produced (billion)

8.14 (Aug.)

7.94 (Sept.)

Total Cage-Free hens in production

92.5 million (Sept)

18.8% Organic

92.9 million (Oct.)

18.8% Organic

“Top-5” States hen population (USDA)1

156.4 million (Aug.)

156.9 (Sept.)

Notes 1. Texas excluded to maintain confidentiality

 

PROPORTION OF U.S. TOTAL HENS BY STATE, 20211

Based on a nominal denominator of 310 million hens in flocks over 30,000 covering 95.0 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

AUGUST ‘21

SEPTEMBER ‘21

Iowa

15.5%

15.3%

Indiana

11.1%

11.4%

Ohio

11.0%

11.2%

Pennsylvania

9.2%

9.2%

Texas (estimate)

6.5% ?

6.5% ?

California

4.4%

4.3%

  1. Values rounded to 0.1%

 

Rate of Lay, weighted hen-week (USDA) 82.1% (Sept.) 82.7% (Oct.)

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

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:- 293.4 (up 5.6 eggs from 2018)

Revised per capita egg consumption 2020:- 286.5 (down 6.9 eggs from 2019)*

Estimated per capita egg consumption 2021:- 283.1 (down 3.4 egg from 2020)*

Projected per capita egg consumption 2022:- 287.2 (up 4.1 eggs from 2021)*

 

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook October 18th 2021 taking into account the decreased demand from the food service sector

 

Egg Inventories at beginning of OCTOBER 2021:

Shell Eggs: 1.99 million cases up 3.3 percent from September 2021.

Frozen Egg Products: 650,682 case equivalents down 5.7 percent from September 2021

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

Eggs broken under FSIS inspection (million cases) AUGUST 2021, 6.60 SEPTEMBER 2021, 6.54

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% 2020)

Cumulative 2021: number of cases produced (million) 199.8 through SEPT.

Cumulative 2021: proportion of total eggs broken 28.4% through SEPT. 

 

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

Parameter

Quantity Exported

Exports:

Shell Eggs (thousand cases)

AUG. 623 SEPT. 675

Products (thousand case equivalents)

AUG. 343 SEPT. 423

TOTAL (thousand case equivalents)*

AUG. 966 SEPT. 1,098

*Representing 4.2 percent of National production in SEPTEMBER 2021.

 

COMMENTARY ON OCTOBER 2021 COSTS AND STATISTICS

OCTOBER 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).

 

It is stressed that the deliberate exclusion of California data distorts average U.S. values. It is suggested that the EIC combine data for California, Oregon and Washington into a single “Pacific States” region.

 

From March 2019 onward some state data was withheld to maintain confidentiality where a company predominates in a specific state or region. From March 2021 California costs were inexplicably excluded, representing an unjustified concealment of data. The three Pacific Coast states could be combined to maintain state confidentiality while providing representative U.S. data.

  • The USDA ex farm benchmark blended egg price in October 2021 was 20.4 percent lower or 19.9 cents per dozen from September 2021 to 77.7 cents per dozen, contributing to a positive margin of 11.4 cents per dozen based on ‘nest-run’ eggs (delivered from the laying house) in October, compared to a positive margin of 31.0 cents per dozen in September 2021. The October 2021 USDA benchmark price of 77.7 cents per dozen should be compared to 49.0 cents per dozen for the corresponding month in 2019 and 85.6 cents per dozen in October 2020. The decline this past month was due to moderate flock increase and lower demand despite to lifting of COVID restrictions.
  • During October 2021, the feed component of production cost averaged 38.7 cents per dozen, down 0.5 percent from September 2021. For year-to-date, average feed cost is 42.6 cents per dozen. In 2020 average feed price was 31.7 cents per dozen and for 2019, feed cost was 31.4 cents per dozen.
  • Combining data from the USDA and the EIC, producers recorded a positive margin of 11.4 cents per dozen at farm-level, for generic-egg flocks during October 2021. This compares with a positive margin of 31.0 cents per dozen in September 2021. For 2021 YTD the average algebraic margin is 6.2 cents per dozen. For 2020 the cumulative algebraic monthly margin was a positive 16.0 cents per dozen. The cumulative algebraic margin for 2019 was -2.8 cents per dozen. The cumulative monthly margin for 2018 was a positive 35.3 cents per dozen against USDA benchmark ‘nest run’ values.
  • The simple average price of feed in October 2021 over 5-regions was $243.33 per ton, $1.43 per ton or 0.6 percent lower (using USDA-AMS data) compared to September 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 $277.97 per ton. This may be compared to the lowest-cost region, the Midwest at $225.61 per ton. The average cost figure for feed includes ingredients plus milling and delivery at a nominal $10 per ton.
  • The benchmark price of corn was $204.19 per ton in October 2021, up $3.79 per ton or 1.9 percent higher than the September 2021 price, taking into account the difference in basis paid by producers. The differential in corn price between the Midwest and the Northwest in October 2021 was $57.71 per ton. A 5.0 percent decrease of $18.13 per ton in the price of soybean meal to $345.56 per ton in October 2021offset the increase in corn price on feed cost. During October there was a differential of $52.36 per ton in feed price between the Midwest and the Northwest compared to a difference of $49.00 per ton in September.
  • Feed price will continue to be a major factor driving production cost and hence margin. Unknown factors influencing feed cost during the fourth quarter of 2021 will include uncertainty over corn and soybean yields in 2021 due to weather; volume and prices of international trade and especially exports to China; diversion of corn to ethanol coupled with the remaining economic and logistic effects of coronavirus restrictions. There is obviously considerable recovery in the fuel sector with ethanol production above the one- million barrel per day benchmark for the post four weeks. Substantial exports of corn and soybeans to China, in successive market years 2020/2021 and 2021/2022 to date have increased domestic price and hence cost of production. Each $10 per ton difference in feed cost represents approximately 1.70 cents per dozen. A change of 10 cents per bushel in the price of corn is reflected in a 0.45 cent per dozen difference in production cost. A $10 per ton change in the price of soybean meal affects production cost by 0.44 cent per dozen.
  • The EIC calculated the 5-Region total nest-run production cost in October 2021 to be 66.3 cents per dozen, 0.3 cents per dozen or 0.5 percent lower than in September 2021. Production costs during October 2021 ranged from 63.2 cents per dozen in the Midwest up to 72.5 cents per dozen in the Northwest, higher than the Midwest region by 9.3 cents per dozen. Deletion of California data is considered a substantial deficiency of the EIC Report.
  • Retail egg prices as determined by the Department of Commerce for SEPTEMBER 2021 averaged 187.5 cents per dozen, up 12.6 cents per dozen from August 2021. During September 2019 and 2020 retail prices were respectively 138.3 and 135.3 cents per dozen. Consistently since 2017 retail prices have not declined in proportion to ex-farm prices, allowing higher margins at retail, thereby depressing demand. Retailers have recently demonstrated some restraint in pricing possibly due to competition from deep discounters and club stores, despite sustained demand.

OCTOBER 2021 PRODUCTION DATA

  • According to USDA data, the estimated average complement of U.S. hens in flocks over 30,000 during September 2021 amounted to 305.6 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 320.9 million in September 2021. The average end-of-year flock sizes over the past seven 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 1st 2021 flock is projected to be 327.2 million, up 1.7 million from December 2020. Prevailing margins through fall will however determine flock size by mid-4th quarter of 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 following the collapse of the egg-liquid market. Hen population in Iowa stabilized at 46.4 million by March rising to 47.5 million in August 2021 and 46.7 million in September but the hen population is still 17.2 percent lower than the pre-COVID level.
  • Pullet chick hatch attained 24.6 million in September 2021, down 1.3 million from August 2021. It is evident that if relatively low seasonal prices persist with further declines through the fourth 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 15.7 percent of the national flock in October 2021, down 1.3 percent from September 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 transfer of pullets to laying houses during the second quarter of 2021 was 22.4 million with an increase to 27.1 million in the third quarter and a projection of 24.3 million for the fourth quarter.
  • The projected hatchery supply flock (parent generation) attained 3.0 million hens in January 2021. Peak parent-flock placements of 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 in the fourth quarter. The size of the parent flock may be revised depending on pullet chick orders as influenced by margins.
  • Average hen-week production of 82.7 percent in October 2021 compared to 82.1 percent in September 2021 reflects a slightly higher proportion of younger hens in the national flock with more first-cycle hens and early second-cycle hens in production. Currently many young flocks are past peak production as reflected in the availability and hence 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 October 25th USDA Poultry Slaughter Report documented 2.7 million light spent-hens processed under FSIS inspection during September 2021, 0.4 million less than from the previous month and 5.0 percent lower than in August 2020. 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.

SEPTEMBER 2021 EXPORT DATA.

  • According to USDA-FAS data, 675,000 cases of shell eggs were exported in September 2021, representing 3.1 percent of total production. The 8.3 percent increase compared to August 2021 is attributed to higher demand from South Korea although this demand will progressively decline as flocks depleted due to HPAI are restocked.
  • During September 2021 the following regions were the leading importers:- North America, comprising the two neighboring USMCA nations, but predominantly Mexico (28.0 percent of exports, was 22.5 percent last month). East Asia, comprising Hong Kong, China and predominantly South Korea, (65.3 percent, was 71.5 percent). The Caribbean and Central American Region combined represented 3.1 percent of shell egg exports in September.

(See monthly Egg Export Report in this edition and after mid-month under the Statistics TAB)

  • Exports of egg products in September 2021 attained 423,000 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, (4 percent of exports, was 44.9 percent last month), East Asia comprising China, Japan and S. Korea (61.5 percent, was 44.9 percent), Central America and the Caribbean were lower in September (5.4 percent was 8.2 percent). Shipments to the Middle East resumed in September representing 0.7 percent of exports.
  • Collectively, exports of shell eggs and products in September 2021 represented the output from approximately 16.0 million hens in production during the month, attaining 1,098,000 case-equivalents, up 13.7 percent from August 2021. This volume can be compared to monthly average shipments of 960,000 case-equivalents over the first four months of 2015 prior to the advent of HPAI, indicating that international markets have been regained. The major contributor to the September volume other than traditional importers was South Korea receiving shell eggs and egg products following flock losses due to HPAI and renewed demand from Canada as the economy of our northern neighbor is restored. 

    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 September 2021 corresponded to 4.9 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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