Egg Week

11/17/2021

USDA Weekly Egg Price and Inventory Report, November 17th 2021.

  • Shell inventory was unexpectedly down by a substantial 9.5 percent following a 2.8 percent increase last week, denoting the beginning of the seasonal increase in demand. The rise in unit revenue was evident despite the net addition of 0.9 million hens in the producing flock this past week and a 9.8 million algebraic increase over fourteen weeks. Midwest prices for generics were about 25 cents per dozen below the corresponding week in 2020 but now have advanced further above breakeven taking into account the combined costs of nest-run and for grading, packaging and delivery. Chains are spreading their purchases and are showing a trend of preempting anticipated price rises. It is possible that with a large National flock this strategy will suppress traditional pre-Christmas increases. Industry observers and participants expect buyers to adjust purchases only in response to retail demand and will hold down inventories in their DCs and stores. Since the beginning of 2021 generic eggs have been priced, with a few exceptions, at levels to maximize store margins. This strategy noted during the past few weeks depresses the volume of sales to the disadvantage of the industry. Market data suggests that chains have priced generic white eggs in response to prevailing demand and are infrequently featuring generic Large or Extra large.
  • Currently inventory although down comprises close to five days of production. Price movement over the past ten months and specifically since Labor Day, defies conventional supply to demand relationships and indicates extraneous factors affecting price. Wholesale Midwest prices for Extra- large and Large were higher this past week after sequential weekly declines. This suggests that prices that plateaued at the end of September and declined in October will stabilize into early November and then show a predicted seasonal increase. Prices in 2020 lagged corresponding weeks in 2020. The commercial shell-egg price discovery system is obviously used by buyers to negotiate lower prices, serving as a self-fulfilling prophecy and a de facto instrument of potential indirect, but not necessarily intentional, collusion. The current relationship between producers and chain buyers based on a single price discovery system constitutes an impediment to a free market. The benchmark price amplifies both downward and upward swings and functions to the detriment of the industry. A CME quotation based on Midwest Large, responding to demand relative to supply would be more equitable.
  • The U.S. flock in production was up 0.3 percent (0.9 million hens) from the week of November 10th to 320.1 million consistent with seasonal depletions but with about 2.5 million molted hens having resumed production during the past month. The Industry previously demonstrated beneficial restraint in flock placement with continued depletions and non-restocking of some complexes or houses. The trend going forward through November is for a build in numbers through the end of December based on chick placement data for July and August. Margins will continue to increase for commodity eggs due to increased demand as predicated by prevailing seasonal wholesale prices over the past three years.
  • The USDA average Midwest benchmark prices for generic Extra Large and Large were up 12.7 percent on average to 98.5 and 96.5 cents per dozen respectively and rising further this week. Mediums were up 3.9 percent to 80.5 cents per dozen. Third quarter prices reflected static demand, offset by increases in the U.S. flock in production during October. The trajectory of prices through late October suggested stabilization moving through the first week of November with increased seasonal demand coincident with the advent of colder weather. Prices going forward will be determined by the buyers for the major chains in response to consumer demand and their inventory levels. The spike in price for all categories may ebb after Thanksgiving as the pipeline is filled unless demand persists or is even intensified as consumers recognize the value of eggs as a source of inexpensive protein. Margins will be unaffected by stability in feed price. Higher chick, labor and fuel costs will detract from profit especially if unit revenue fails to match expectations in late November and pre-Christmas weeks in December.
  • There is some prospect of a return of the food service sector with both frozen and dried-egg prices marginally higher over the past month. The economy is reopening with a recent decline in COVID incidence rates and hospitalizations in many regions. There is some optimism over the rate of deployment and acceptance of the three available approved vaccines and boosters especially in rural areas and inner city zones. Reopening of the economy and schools in specific areas with low population immunity has resulted in rises in the incidence rate of COVID. This is especially the case following the introduction and dissemination of the Delta variant of SARS-CoV-2 virus that is more infectious and possibly with higher pathogenicity than the alpha and beta strains, especially among the non-immunized proportion of the population that represent an overwhelming majority of those hospitalized.
  • The Midwest price for breaking stock was up 11.1 percent to an average of 65.0 cents per dozen. Checks in the Midwest were up 6.2 percent to an average of 51.5 cents per dozen. It is anticipated that these prices will fluctuate in response to market trends and gradual recovery of the breaking sector.

 

OVERVIEW

Prices

According to the USDA Egg Market News Reports released on November 15th, the Midwest wholesale price for Extra-large was up 12.5 percent to an average of 98.5 cents per dozen; Large was up 12.9 percent to an average of 96.5 cents per dozen; Mediums were up 3.9 percent to 80.5 cents per dozen as delivered to DCs. Prices should be compared with the USDA benchmark average 6-Region blended nest-run, (excluding provisions for packing, packaging materials and transport) cost of 66.3 cents per dozen in October 2021. The progression of prices during 2021 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

 

The November 15th 2021 edition of the USDA Egg Market News Report (Vol. 68: No. 46) documented a USDA Combined Region value rounded to the nearest cent, of $0.99 per dozen delivered to warehouses for the week ending November 6th 2021. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $0.86 per dozen. At the high end of the range, price in the South Central Region attained $1.04 per dozen. The USDA Combined Price last week was equivalent to the 3-year average. This past week Midwest Large was approximately 25 cents below the corresponding week in 2020 that demonstrated a typical late Fall upturn. Prices are expected to rise through the Thanksgiving weekend.

Flock Size

According to the USDA the number of producing hens reflecting November 17th (rounded to 0.1 million) was 0.9 million higher to 320.1 million. If USDA data is accurate, the producing flock contains molted hens now coming back into production with approximately 4.5 million new pullets reaching maturity during the week, offset by limited flock depletion. The hen population producing eggs is in slight excess relative to anticipated consumer demand. Exports are moderate to high but industrial and food service off-take although increasing, has not reverted to pre-COVID levels. Any number of producing hens above a subjectively determined range of 317 to 319 million in production during mid-November, portends stable to higher prices depending on relative levels of producer and chain-store inventory. Prices generally lagged the seasonal trend of 2020 through early November. For the next two weeks prices will rise, given the sharp decline in inventory over the past week and seasonal demand through late November with the onset of cold weather. Previous oversupply is attributed to the contribution of hens returning to production from molt coupled with pullets placed 24 weeks earlier that have commenced production.

 

The total U.S. egg-flock was up 0.9 million hens (rounded to 0.1 million) to 325.9 million including second-cycle birds and those in molt. The difference of 5.8 million hens (5.8 million last four weeks) between hens in production and total hens is equivalent to 1.8 percent of the national flock, suggesting that despite disposal of older flocks, molted hens are still resuming production as planned for pre-Christmas demand. In addition, young pullets will commence lay consistent with chick placements in mid-June 2021.

 

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 been partly reversed with flocks trending upwards but still below pre-COVID numbers. Chick placement data suggests that 27.0 million pullets per month commenced production during the third quarter of 2021 and 24.3 million per month are projected for the fourth quarter. This has implications for prices, given current supply and stock levels in relation to anticipated depressed demand during the fourth quarter.

 

INVENTORY LEVELS

Cold storage stocks of frozen products in selected regions on November 15th 2021 amounted to 2.431 million pounds (1,105 metric tons) of frozen egg products, up 0.8 percent from the level of 2.411 million lbs. on November 1st 2021.

 

The most recent monthly USDA Cold Storage Report released on October 25th 2021 documented a total stock of 25.2 million pounds (11,469 metric tons) of frozen egg products on September 30th 2021. This value was down 33.4 percent from September 30th 2020. (26.8 million on August 31st 2021). A total of 88.7 percent of combined inventory comprised the categories of “Whole and Mixed” (38.7 percent) and “Unclassified” (50.0 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 November 15th 2021 was 9.5 percent lower after a rise of 2.8 percent last week. Combined with breaking stock, the total inventory of shell eggs in the industry is now at 1.89 million cases. The U.S. population of laying hens at this time is influenced by the number of flocks retained after molting coupled with chick placements started in June 2020. Going forward, older hens will assume a smaller proportion of the national flock as more pullet flocks commence production.

 

All six USDA Regions reported lower stock levels. These are listed in descending amounts:-

  • The Midwest Region was down 7.2 percent compared to the previous week to 534,000 cases.
  • The South Central Region, was down 15.7 percent to 317,000 cases
  • The Southeast Region was down 4.1 percent to 310,900 cases
  • The Northeast Region was down 5.9 percent to 120,400 cases.
  • The Southwest Region was down 6.4 percent to 120,400 cases
  • The Northwest Region was down a noteworthy 27.6 percent to 79,000 cases

 

The total USDA six-area stock of commodity eggs comprised 1,894,900 cases, of which 83.7 percent were shell eggs (84.5 percent last week). The inventory of breaking stock was down 4.2 percent to 308,100 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. Higher prices for shell eggs diverts uncommitted product to the shell market from breaking with a concurrent increase in the proportion of in-line breaking and with changes in price and inventory for contractors’ eggs.

 

On November 15th the inventory of other than generic eggs (with previous week in parentheses) comprised:-

  • Specialty category, up 3.6 percent to 38,600 cases. (was down 5.5% to 37,300 cases)
  • Certified Organic, up 0.3 percent to 127,100 cases. (was down 5.1% to 126,700 cases)
  • Cage-Free category, down a substantial 9.5 percent to 147,300 cases. (was up 3.0% to 162,800 cases)

 

Demand for cage-free product will not increase materially while generic eggs from caged flocks and surplus down-classified cage-free eggs are on the shelf at $1.10 to $1.45 per dozen over the long term. Existing and proposed individual state legislation mandating sale of only cage-free eggs will support most of the anticipated transition from cages but total re-housing will not be completed, if ever, by the beginning of 2025, less than 38 months away. An appeal regarding the constitutionality of California Proposition #12 was not granted certiorari by SCOTUS, letting stand the lower court decision concerning the constitutionality of the California law. 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 November 18th, (compared with the previous week in parentheses) were posted by the AMS on November 15th for dozen packs:

USDA Certified Organic, Brown, Large: $4.04 ($4.29)

Cage-Free Brown, Large: $2.64 ($2.32)

Omega-3 Enriched Specialty, White, Large: $2.47 ($2.39)

Generic White, Large Grade AA $1.14 ($0.98)

Generic White, Large Grade A (Feature price) $1.03 ($0.89)

 

The retail price this week as determined by the USDA-AMS for generic white Large Grade AA was up 19.3 percent or 16 cents per dozen from last week to $1.14 reflecting a relatively smaller margin taken by chains offering lower advertised prices. Shelf price will not materially decrease demand for this category given the higher advertised prices for cage-free brown eggs. Hopefully demand is returning to balance with supply. This is based on the sharply lower inventory of shell eggs over the past week. Demand for shell eggs may undergo a seasonal increase with restoration of home cooking and baking coupled with dining out as COVID restrictions are lifted.

 

During the present week the USDA benchmark-advertised retail price of brown Cage-Free was down 13.8 percent or 32 cents per dozen to $2.64 per dozen. (last week USDA advertised price was $2.32 per dozen). Certified organic was down 5.8 percent or 25 cents per dozen to $4.04 per dozen (last week $4.29 per dozen). The differential in advertised price between cage-free brown and certified organic was $1.40 per dozen ($1.97 per dozen last week) suggesting relatively higher demand for cage-free brown over certified organic during the current week. The differential between cage-free brown and generic white Grade AA was $1.50 per dozen this week, (last week $1.28 per dozen) favoring the generic white category. Preference for cage-free brown is evident with a price differential lower 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.

 

There was a $0.33 per dozen difference between the advertised retail per dozen for cage-free brown ($2.64) and cage-free white ($2.31).

Features for the major categories this week by proportion included Organic (21.2 percent up from 15.3 percent last week); Cage-free (33.2 percent, up from 16.8 percent) and Omega-3 enriched (29.5 percent, up from 27.7 percent). Other categories amounted to 16.1 percent of features with the Large category predominating at 10.3 percent of the total features consistent with young hens in the national flock and low prices for breaking stock.

 

USDA Cage-Free Data

According to the latest monthly USDA Cage-free Hen Report released on November 1st 2021, the number of certified organic hens during October 2021 was revised up from September to 17.5 million.

 

The USDA reported a 0.4 percent increase in the cage-free (non-organic) flock to 75.4 million in October compared to September and 13.2 percent higher than an average of 66.6 in Q1 2021.

 

According to the USDA the population of hens producing cage-free and certified organic eggs in October 2021 comprised:-

Total U.S. flock held for USDA Certified Organic production = 17.5 million (17.6 million in Q3 2021).

Total U.S. flock held for cage-free production = 75.4 million (72.3 million in Q3 2021).

Total U.S. non-caged flock = 92.9 million (89.9 million in Q3 2021).

 

This total value represents 29.0 percent of a nominal 320 million total U.S. flock but 41.5 percent of a presumed pre-COVID flock of 224 million producing for the shell-egg market. Hens certified under the USDA Organic program have not increased in proportion to cage-free flocks since Q1 2021. The accuracy of individual monthly values is questioned given either sharp changes or periods of no change as evidenced over the past two years. Precise quarterly reports would be more suitable for the industry in planning expansion and allocation of capital.

 

Processed Eggs

For the processing week ending November 11th 2021 the quantity of eggs processed under FSIS inspection as reported on November 17th 2021 was down 0.7 percent compared to the previous processing week to a level of 1,601,504 cases (1,612,000 cases last week). The proportion of eggs broken by in-line complexes was 51.7 percent (was 51.9 percent last week) denoting a stable proportion of non-committed eggs consigned to the breaking market. With higher prices for shell eggs in coming weeks there will be a trend to divert non-contracted eggs from shell breaking to shell sales. The relative prices of eggs for shell sales and breaking determines the movement of uncommitted eggs. This past week 69.2 percent of egg production was directed to the shell market, (68.9 percent for the previous week) consistent with higher prices for shell eggs. Breaking stock inventory was down 4.2 percent this past week (down 1.5 percent last week). There is evidence of a slight recovery in the food service sector, especially for QSRs and casual dining, offset by decreased demand from baking and eat-at-home. During the corresponding processing week in 2020 (during-COVID) in-line breakers processed 55.0 percent of eggs broken.

 

For the last available monthly report dated November 10th 2021, yield from 6,484,566, cases (7,702,219 cases last month) denoted a decrease in demand for liquid over the period October 3rd 2021 through October 30th 2021. Edible yield was 38.0 percent, distributed in the following proportions expressed as percentages:- liquid whole, 60.1; white, 24.3; yolk, 11.5; dried, 4.1.

 

All eggs broken during YTD 2021 attained 67.3 million cases, 2.3 percent more than the corresponding period during 2020 attributed to increasing demand for egg liquids from food service and QSRs and casual dining restaurants with restoration of service as COVID restrictions are relaxed.

 

Consumption of liquids 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

Compared to the previous week the average price for breaking stock was up 11.1 percent to an average of 65.0 cents per dozen with a range of 63 to 67 cents per dozen delivered to Central States plants on November 15th. Checks were 6.2 percent higher to an average of 52.0 cents per dozen over a range of 49 to 54 cents per dozen. Average revenue for both breaking stock and checks should be compared to the benchmark production cost for nest-run Large, estimated by the USDA at 66.3 cents per dozen for October 2021.

 

Shell Eggs

The USDA Egg Market News Report released on November 15th confirmed that Midwest prices for Extra Large and Large were on average 12.7 percent higher than the previous week. Mediums were up 3.9 percent. The sharp upward demand was apparent in the increase in prices possibly amplified by the price discovery system in use. The following table lists the “most frequent” ranges of values as delivered to warehouses*:-

Size/Type

Current Week

Previous Week

Extra Large

97-100 cents per dozen

86-89 Up 12.5%

Large

95-98 cents per dozen

84-87 Up 12.9%

Medium

79-82 cents per dozen

76-79 Up 3.9%

Certified Organic EL

275-310 cents per dozen

Unchanged long term

Breaking stock

63-67 cents per dozen

57-60 Up 11.1%

Checks

49-54 cents per dozen

46-51 Up 6.2%

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

 

The November 15th 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, with the previous week in parentheses:-

  1. $0.93 ($0.89), (estimated by proportion): L. $0.86 ($0.69): M. $0.64 ($0.58)

 

The November 15th 2021 California prices per dozen for cage-free, California-compliant product in cartons delivered to a DC, with the previous week in parentheses:-

  1. $1.96 ($1.64); L. $1.92 ($1.57); M. $1.58 ($1.35)

 

(See the text, tables and figures and the review of production data and prices comprising the USDA costs for October 2021 and the First Quarter FY 2022 results for Cal-Maine Foods under the Statistics Tab)

 

Shell-Egg Demand Indicator

The USDA-AMS Shell Egg Demand Indicator for November 17th 2021 was up10.6 points from the last weekly report to +4.7 with a 9.5 percent decrease in inventory from the past week as determined by the USDA-ERS as follows:- 

Productive flock

320,104,607 million hens

Average hen week production

83.5%(was 83.4%)

Average egg production

267,189,236 per day

Proportion to shell egg market

69.2% (was 68.9%)

Total for in-shell consumption

 513,406 cases per day

USDA Inventory

1,586,800 cases

26-week rolling average inventory

5.14 days

Actual inventory on hand

4.91 days

Shell Egg Demand Indicator

+4.7 points (was -5.9 on November 10th 2021)

 

Dried Egg Products

Prices for dried whole-egg and yolk products (most frequent price with a range in $ per pound) effective November 12th 2021 compared to the previous week were unchanged denoting stable demand from the institutional sector:-

Whole Egg

$3.85-$4.00

Unchanged

Yolk

$3.05-$3.15

Unchanged

Spray-Dried White

$4.70-$4.90

Unchanged

Blends

$2.75-$2.80

No new quotation

 

Prices for frozen egg products (most frequent price with a range in cents per pound) effective November 12th 2021 compared to the previous week were marginally higher for white:-

Whole Egg

$0.97 - $1.02

Unchanged

White

$0.63 - $0.66

$0.64-$0.66

Average for Yolks

$1.57 - $1.61

$1.57 - $1.62

 

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

 

COMMENTS

There are reports with increasing frequency in the E.U. of continued shedding of H5N1 and other H5 strains by migratory waterfowl with mortality recently in central and northern Holland and Italy, Poland, Romania and the U.K. in addition to isolation of AI virus from waterfowl, raptors and some wild species. Outbreaks of HPAI are occurring on commercial farms attributed to contact between wild birds and both domestic chicken, turkey and duck flocks, many of which are on pasture. Most veterinary authorities in Western Europe are advising or mandating flock confinement with no prospect of relaxation due to widespread recovery of H5N1 HPAI from migratory waterfowl in Serbia, the U.K. and the Netherlands. Avian influenza strains H5 and H7 persist in Western and Eastern Europe and both West and Southern Africa.

 

France is considering changing from their “annual eradication” program to vaccination against H5 and H7 strains of avian influenza. Free-range chickens and especially waterfowl maintained by the foie gras industry, comprising numerous small-scale family operations are devastated at almost annual intervals requiring indemnity payments for control including preemptive depletion.

 

A case of Low-pathogenicity H7 avian influenza was reported from a multi-species non-commercial farm in Stanislaus County, CA. in early October. This has had minimal impact on exports as receiving nations have imposed limited zone or county restrictions but denotes the danger of introducing infection.

 

Webinars have been presented by USPOULTRY and USDA-APHIS to increase the level of awareness for biosecurity on egg-producing farms. This recognizes the deteriorating situation in the E.U and the start of the Fall migration in the U.S.






















































































































































































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