Egg Monthly

09/09/2022

REVIEW OF AUGUST 2022 EGG PRODUCTION COSTS AND STATISTICS.

This monthly review comprises an interpretive consideration of USDA production statistics, input costs and prices for shell eggs, products and export data. The comprehensive report with figures illustrating trends can be downloaded by clicking on to the icon.

 

AUGUST HIGHLIGHTS

  • August 2022 USDA ex-farm blended USDA nest-run benchmark price was 190.6 cents per dozen, 29.7 percent lower than the July 2022 value of 271.0 cents per dozen. For comparison average USDA benchmark price for 2021 was 84.3 cents per dozen with a range of 58.0 cents per dozen in June to a high of 123.6 in December. Stock levels and prices prior to the onset of flock depletion due to HPAI indicated a relative seasonal balance between supply and demand. Prevailing wholesale prices will be largely dependent on consumer demand in an inflationary environment, with the potential to impact retail sales and margins. Other considerations include diversion to shell sales from the egg-breaking sector and fluctuation attributed to the amplification of changes in unit wholesale revenue due to the price discovery system. A moderate decline from unseasonal current levels is anticipated unless additional depletion of flocks occurs due to HPAI.
  • August 2022 USDA average nest-run production cost was 2.2 cents per dozen (2.7 percent) higher than in July 2022 to 82.5 cents per dozen, mainly attributable to a 3.8 percent higher average feed cost per dozen.
  • August 2022 USDA benchmark nest-run margin attained a positive value of 108.1 cents per dozen compared to a margin of 190.7 cents per dozen for July 2022.
  • July 2022 national flock in production (over 30,000 hens/farm) was up 1.1 percent or 3.2 million hens to 284.3 over a revised June 2022 value of 281.1 million. Approximately 2.5 million hens returned to production from molt in early June together with projected maturation of 24.0 million pullets, with this number offset by depletion of spent flocks. Through the end of the first week in June, 31.1 million hens were depopulated to control HPAI with an additional 3.0 million at the beginning of September.
  • July 2022 pullet chick hatch was down 1.2 percent or 3.3 million from June 2022 to 25.1 million.
  • July 2022 exports of shell eggs and products combined were down 13.2 percent from a low volume in June 2022 value to 244,000 case equivalents representing the theoretical production of 3.5 million hens.

INTRODUCTION.

 

Summary tables for the latest USDA August 2022 prices and flock statistics made available by the EIC on September 9th 2022 are arranged, summarized, tabulated and reviewed in comparison with values from the previous August 5th 2022 posting reflecting July 2022 costs and production data.

 

COSTS & REVENUE

Parameter

JULY 2022

 AUGUST 2022

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

80.3 c/doz

82.5 c/doz

Low

79. c/doz (SE & MW)

79.9 c/doz (SE)

High

85.4 c/doz (N.West)

89.0c/doz (N.West)

 

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

Note: 1. Rounded to decimal of a cent

JULY 2022

 AUGUST 2022

Feed

49.6 c/doz

51.5c/doz

Pullet depreciation

13.5 c/doz

13.7 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*

8.2 c/doz

8.3 c/doz


* Adjusted January 2022 and used as a rounding factor

 

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting August 2022:-

190.6 cents per dozen1- 82.5 cents per dozen = +108.1 cents per dozen (July 2022 comparison: 271.0 cents per dozen – 80.3 cents per dozen = +190.7 cents per dozen.)

Note 1: USDA Blended egg price

 

JULY 2022

AUGUST 2022

USDA

Ex-farm Price (Large, White)

271.0 c/doz (July)

190.6 c/doz (Aug.)

Cage-free to packing plant1

276.0 c/doz (July)

236.0 c/doz (Aug.)

Warehouse/Dist. Center

316.0 c/doz (July)

246.0 c/doz (Aug.)

Store delivered (estimate)

321.0 c/doz (July)

251.0 c/doz (Aug.)

Dept. Commerce Retail

270.7 c/doz (June)

294.0 c/doz (July)


  1. Negotiated price nest run loose

 

MONTH JULY 2022 AUGUST 2022

U.S. Average Feed Cost per ton* $311.67 $323.68

Low Cost Northeast $297.87 $309.29

High Cost Northwest $339.92 $360.29

Differential $ 41.95 $ 51.00

 

Pullet Cost*

 (19 Weeks) $5.06 JULY 2022 $5.15 AUGUST 2022

(16 weeks) $4.39 JULY 2022 $4.46 AUGUST 2022

* Values adjusted by EIC in February 2022

 

VOLUMES OF PRODUCTION

PARAMETER

JULY 2022

 AUGUST 2022

Table-egg strain eggs in incubators

45.4 million (July)

 49.9 million (Aug.)

Pullet chicks hatched

28.4 million (June)

 25.1 million (July)

Pullets to be housed 5 months after hatch

25.6 million (Nov.)

 22.6 million (Dec.)

2022 December 1st Flock Projection

323.4 million

321.2 million

National Flock in farms over 30,000 (2022)

282.4 million (June)

284.3 million (July)

National egg-producing flock (2022)

298.91 million (June)

301.1 million (July)

Cage-free flock excluding organic

87.0 million (July)

87.1 million (Aug.)

Proportion of flocks in molt or post-molt

14.0% (July)

13.4% (Aug.)

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

 243.9 million (June)

246.2 million (July)

  1. USDA revision from July report

 

Total U.S. Eggs produced (billion)

7.38 (June)

7.69 (July)

Total Cage-Free hens in production

105.0 million (July)

17.1% Organic

105.1 million (Aug.)

17.1% Organic

“Top-5” States hen population (USDA)1

139.6 million (June)

140.9 (July)

Notes 1. Texas excluded to maintain confidentiality

 

PROPORTION OF U.S. TOTAL HENS BY STATE, 20221

 

Based on a nominal denominator of 280 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

JUNE 2022

 JULY 2022

Iowa

12.3%

12.3%

Indiana

12.4%

12.4%

Ohio

12.5%

12.4%

Pennsylvania

7.7%

7.8%

Texas (estimate)

6.5% ?

6.7% ?

California

4.5%

4.6%

  1. Values rounded to 0.1%

 

Rate of Lay, weighted hen-week (USDA) 82.3% JULY 2022.  82.4% AUGUST 2022

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:- 285.4 (down 8.0 eggs from 2019)*

Estimated per capita egg consumption 2021:- 280.5 (down 4.9 eggs from 2020)*

Projected per capita  egg consumption 2022:- 278.3 (down 2.2 eggs from 2021 due to HPAI) Forecast per capita egg consumption 2023:- 289.7 (up 11.4 eggs from 2022)

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook August 18th 2022 taking into account the decreased demand from the food service sector and including an effect from HPAI depopulation.

 

Egg Inventories at beginning of AUGUST 2022:

Shell Eggs: 1.76 million cases up 9.2 percent from July 2022.

Frozen Egg Products: 593,097 case equivalents down 2.9 percent from July 2022

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

Eggs broken under FSIS inspection (million cases)

 

JUNE 2022, 6.75 JULY 2022, 6.58

Cumulative eggs broken under FSIS inspection 2021 (million cases) 76.2 JAN. to DEC.

Cumulative 2021: number of cases produced (million) 268.7 JAN. to DEC.

Cumulative 2021: proportion of total eggs broken 28.3% (30.1% 2020)

Cumulative 2022: number of cases produced (million) 149.9 JAN. to JULY

Cumulative 2022: proportion of total eggs broken 30.7 %

 

EXPORTS JULY 2022: (Expressed as shell-equivalent cases of 360 eggs).

Parameter

Quantity Exported

Exports:

2022

Shell Eggs (thousand cases)

JUNE 83 JULY 58

Products (thousand case equivalents)

JUNE 198 JULY 186

TOTAL (thousand case equivalents)*

JUNE 281 JULY 244

*Representing 1.1 percent of National production in JULY 2021.

 

COMMENTARY ON AUGUST 2022 COSTS AND STATISTICS

 

COST AND REVENUE DATA FOR AUGUST 2022

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. From March 2021 California costs were inexplicably excluded, representing an unjustified concealment of data. The three Pacific Coast states could be combined to maintain confidentiality while providing representative U.S. data. Costs including feed and depreciation were recalculated in January 2022.

 

  • The USDA ex farm benchmark blended egg price in August 2022 was 29.7 percent lower or 80.4 cents per dozen down from July 2022 to 190.6 cents per dozen. This contributed to a positive margin of 108.1 cents per dozen based on ‘nest-run’ eggs (delivered from the laying house) in August 2022, compared to a positive margin of 190.6 cents per dozen in July 2022. The August 2022 USDA benchmark price of 190.6 cents per dozen should be compared to 53.7 cents per dozen for the corresponding month in 2020 and 93.6 cents per dozen in July 2021. The relatively high values during the first and second quarters of 2022 compared to corresponding months for the two previous years were due to a rise in demand following relaxation of COVID restrictions.
  • During August 2022, the feed component of production cost averaged 51.5 cents per dozen, up 3.8 percent or 1.9 cents per dozen from July 2022. For 2021 average feed cost was 42.5 cents per dozen. In 2020 average feed price was 31.7 cents per dozen.
  • Combining data from the USDA and the EIC, producers recorded a positive margin of 108.1 cents per dozen at farm-level for generic-egg flocks during August 2022. This compares with a positive margin of 190.7 cents per dozen in July 2022. For 2021 the cumulative average algebraic margin was 91.0 cents per dozen; for 2020, 16.0 cents; for 2019, -2.8 cents and for 2018, 35.3 cents per dozen, against USDA benchmark ‘nest run’ values. During the first eight months of 2022 cumulative algebraic margin attained 875.9 cents per dozen.
  • The simple average price of feed in August 2022 over 5-regions was $323.68 per ton, $12.01 per ton or 3.9 percent higher (using revised monthly USDA-AMS data) compared to July 2022. 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 $360.29 per ton, up 5.7 percent from July. This may be compared to the lowest-cost region, the Southeast at $309.29 per ton, up 11.3 from the previous month. The average cost value for feed includes ingredients plus milling and delivery at a nominal $10 per ton.
  • The benchmark price of corn was $251.87 per ton in August 2022, up $9.33 per ton or 3.9 percent higher than the July 2022 price, taking into account the difference in basis paid by producers. The differential in corn price between the Northeast and the Northwest in August 2022 was $51.34 per ton. A 4.8 percent increase of $24.84 per ton in the price of soybean meal to $543.51 per ton in August added to the higher price of corn. The industry has experienced sharp increases in the cost of phosphate additives, fat and vitamins since March. During August 2022 there was a differential of $51.00 per ton in feed price between the Southeast and the Northwest compared to a difference of $41.95 per ton in July 2022.
  • Feed price will continue to be a major factor driving production cost and hence margin. WASDE #627 released on August 12th projected the volumes of the 2022 corn and soybean harvests, ingredient use, exports and ending stocks for the two commodities. Unknown factors influencing feed cost during the third and fourth quarters will include the consequences of the invasion of Ukraine with inevitable disruption in production and shipping from the region, coupled with the drought in the Midwest reducing corn yield and prices in international trade. The price of ingredients will be influenced by weather conditions as influenced by the persistent La Nina, export volume from the U.S. and especially to China, diversion of corn to ethanol combined with the remaining economic and logistic effects of COVID restrictions and inflation. There is obviously considerable recovery in the fuel sector with ethanol production hovering at the one-million barrel per day benchmark. Substantial exports of corn and soybeans to China, in market year 2021/2022 and orders for 2022/2023 have increased domestic price and hence cost of egg 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 0.35 cent per dozen.
  • The EIC calculated the 5-Region total nest-run production cost in August 2022 to be 82.5 cents per dozen, 2.2 cents per dozen or 2.7 percent higher than in July 2022. Production costs during August 2022 ranged from 79.9 cents per dozen in the Southeast up to 89.0 cents per dozen in the Northwest but higher than the Midwest region by 9.0 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 July 2022 averaged 293.6 cents per dozen, up 22.9 cents per dozen from June 2022. During July 2020 and 2021 retail prices were respectively 140.1 and 164.2 cents per dozen. Consistently since 2017 average 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.

 

PRODUCTION DATA FOR AUGUST 2022

  • According to USDA, the estimated average complement of U.S. hens in flocks over 30,000 during July 2022 amounted to 284.3 million, reflecting a net increase in flock size by 1.9 million hens during the month. Routine depletion and depopulation due to HPAI was partly offset by pullet replacements and retained flocks. The average total U.S. flock including hens in molt on all farms counted by the USDA amounted to 301.1 million in July 2022. This value will be adjusted subsequently following an accounting of depopulations and replacements. 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 2022 flock was projected to be 321.2 although this figure will be depressed by flock depopulation amounting to 31.1 million hens through the first week of June. An incident case of HPAI requiring depletion of 3 million hens was confirmed during the first week of September. In the absence of a vaccine only effective biosecurity will protect flocks during the remainder of 2022.
  • 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 reduction following retraction in the egg-liquid market. Hen population in Iowa stabilized at 46.9 million by May 2021 rising to 47.3 million in August 2021 but falling to 44.3 million in February 2022. The hen population was 21.2 percent lower (11.0 million hens) than the pre-COVID level. The decline in the population of hens in Iowa was accentuated by depopulation of 12.7 million in March to control outbreaks of HPAI. As of the end of July 2022 Iowa housed 35.1 million hens according to USDA figures.
  • Pullet chick hatch attained 25.1 million in July 2022, down 3.3 million from June 2022. It is anticipated that seasonal prices will be higher than for preceding years through the remainder of 2022, resulting in larger chick placements if available in addition to necessary replacement of depleted pullets and hens. It is understood that production of additional pullet chicks is unlikely given forward planning by hatcheries and full utilization of facilities
  • The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA attained 13.4 percent of the national flock in August 2022, compared to 14.0 percent in July 2022. Annual averages for molt and post-molt combined were 14.4 percent in 2021, 13.5 percent for 2020, 15.2 percent for 2019 and 17.4 percent for 2018. The historical high value of 23.8 percent in 2016 was due to the loss of hens during the 2015 HPAI epornitic. This situation will be revisited in 2022 and 2023.
  • During the first quarter of 2022 the average monthly transfer of pullets to laying houses was 21.3 million followed by 21.1 million in the second quarter with projections of 25.1 million and 24.7 million for the third and fourth quarters of 2022 respectively.
  • The projected hatchery supply flock (parent generation) peaked during 2022 at 3.1 million hens in June. The previous peak parent-flock of 3.1 million hens in production was in June 2015, coinciding with the end of the HPAI epornitic. Parent hens then declined to a low of 2.5 million during the fourth quarter of 2016. Parent flocks attained a monthly average of 3.1 million during the second quarter with projections of 2.9 million and 2.8 million during the during the third and fourth quarters respectively. The size of the parent flock is unlikely to be revised based on pullet chick orders influenced by demand to replace depopulated hens and in response to higher producer margins.
  • Average hen-week production of 82.4 percent in August 2022 compared to a value of 82.3 percent in July 2022 reflects a slightly higher proportion of younger hens in the national flock with many first-cycle hens and early second-cycle hens in production. Average rate of lay in 2021 was 82.0 percent, with 80.9 percent in 2020 and 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 the weighted flock age increases or conversely will rise due to early depletion thereby increasing the proportion of young hens in their first cycle.
  • The August 2022 USDA Poultry Slaughter Report documented 2.3 million light spent-hens processed under FSIS inspection during July 2022, 25.1 percent less than the previous month and 21.9 percent less than in July 2021. The reduction is attributed to the need to maintain flocks given high prices following depopulation due to HPAI. Provided space is available, prevailing high prices will result in retention of hens with fewer routine or previously scheduled flock depletions. 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 but this volume will decline as producers retain flocks to meet demand, subject to the availability of housing.

 

EXPORT DATA FOR JULY 2022.

  • According to USDA-FAS data, 58,000 cases of shell eggs were exported in July 2022, representing 0.3 percent of total production. The 30.1 percent decrease over a small base in June 2022 is inconsequential and attributed to decreased demand from Mexico and China.
  • During July 2022 the following regions were importers of shell eggs but compared to a low base:- For North America, Canada received 7.4 percent of exports but Mexico did not import shell eggs. East Asia, predominantly Hong Kong- China, imported 36.0 percent of shell egg volume and the Caribbean and Central America combined accounted for 48.2
  • Exports of egg products in July 2022 attained 186,000 case-equivalents, representing 0.9 percent of U.S. output. The following regions were the leading importers of egg products by proportion of volume shipped but on a smaller base compared to June:- Canada, (7 percent of exports, was 30.8 percent last month), East Asia comprising Japan, China and S. Korea (52.2 percent, was 59.6 percent),
  • Central America and the Caribbean increased their proportion of U.S. exports in July (12.9 percent, up from 6.1 percent). The E.U. represented 1.1 percent of U.S. exports of products in July. There were no shipments to the Middle East in July.
  • Collectively, exports of shell eggs and products in July 2022 represented the output from approximately 3.5 million hens in production during the month, attaining 244,000 case-equivalents, down 13.2 percent from June 2022 but was only 13.6 percent of combined exports during the first quarter of 2022. The major losses in shell eggs exported during June and July among traditional importers were due to contraction by Mexico, Canada and China. The major changes in destination of egg products during July compared to June were to Canada (-8.6%) and to Japan (-15.6%).
  • Maintaining export volume is attributed to cooperation between the AEB and USAPEEC, in existing, new and potential 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 July 2022 corresponded to 1.1 percent of a nominal national flock of approximately 310 million hens, (before HPAI depletions) 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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