USDA Weekly Egg Price and Inventory Report, January11th 2018.

01/11/2018

Hen Numbers in Production Stable at 316.7 Million. Inventory up 3.3 Percent. Early January Prices Lower by 22 Percent From Previous Week.

OVERVIEW

According to the USDA Egg Market News Reports posted on January 8 th the Midwest wholesale prices for Extra Large and Large sizes were down by 21.7 and 22.2 percent respectively from last week and Mediums were 11.6 percent lower. The market was influenced mainly by hen numbers and egg inventory on the supply side of the equation for the first nine months of 2017. Seasonal and weather-related factors emerged to stimulate consumption in mid-September with an upward trend in price through early October. The progression of prices during 2017 is depicted in the USDA chart reflecting three years of data, updated weekly.

The January 8th USDA Egg Market News Report (Vol. 65: No. 02) documented a USDA Combined Region value of $1.40 per dozen delivered to warehouses. This price lags Midwest Weekly values by one week. The USDA Combined range for Large, in the Midwest was $1.32 per dozen. At the high end of the range, the price in the South Central Region attained $1.47 per dozen. The USDA Combined Price last week was approximately 20 cents per dozen above the corresponding three-year average.

The number of producing hens this week was fractionally down at 316.7 million. The hen population is at a high level relative to non-seasonal consumer and industrial demand. The total U.S. egg-flock comprises 320.2 million hens including 2nd Cycle birds and those in molt on all farms.

Generic shell-egg stock rose by 3.3 percent compared to a decrease of 7.9 percent for the previous week. The rise in the number of producing hens during late November into early December suggests an increase in supply requiring a commensurate offtake by all segments of demand. To maintain prices the market will have to find a balance between supply and demand as we move through the first quarter of 2018.

Dried-egg inventory amounted to 17.9 million pounds (8,115 metric tons) as of November 30th 2017 (was 19.6 million lbs. on October 30 th 2017)

The National stock of frozen egg products as reported by the USDA on December 22nd attained 27.8 million pounds (12,644 metric tons) as of November 30th 2017 down 23.7 percent from November 30 th 2016.

INVENTORY

Cold storage stocks in selected regions on January 9th 2018 amounted to 3.072 million pounds (1,396 metric tons), 4.7 percent below the stock of 3.225 million pounds during the week of January 1 st. 2018.

The most recent monthly USDA Cold Storage Report released on December 22nd documented a total stock of 27,816 million pounds (12,644 metric tons) of frozen egg products on November 30th 2017. This value was down 23.5 percent from November 30th 2016. A total of 80.8 percent of combined inventory comprised the categories of "Whole and Mixed" (40.0 percent) and "Unclassified" (40.8 percent).

The national stock of generic shell eggs reflecting January 8th 2018 was up by 3.3 percent, compared to a rise of 7.9 percent in inventory during the previous week. Four regions reported higher stock levels. The Midwest Region was down by 2.7 percent compared to the previous week to 414,200 cases. This region was followed in decreasing order of stock level by the Southeast Region, up by 9.5 percent to 285,100 cases; the South Central Region down by 3.4 percent to 246,700 cases; the Northwest Region up by 9.4 percent to 163,700 cases, the Southwest up by 3.5 percent with 150,200 cases and the Northwest Region was up by 20.1 percent to 119,700 cases.

The total USDA Six-Area stock of commodity eggs comprised 1,712,700 cases, of which 80.6 percent were shell eggs. The inventory of breaking stock was up 4.8 percent to 333,100 cases with the price in the Central Region down 12.9 percent from the previous week reflecting a buildup of stock in this category. This confirms the availability of eggs from both mature and young flocks in relation to the demand for generic shell eggs.

As of Monday January 8th 2018 the inventory of other than generic eggs comprised:-

  • Specialty category, down 7.6 percent to 28,000 cases
  • Certified Organic, up 23.4 percent to 78,50000 cases
  • Cage Free, up 8.8 percent to 48,800 cases.

Recent data suggests a fluctuating build in the stock of cage free product. This is attributed to the increase in production fueled by 2016 commitments by members of the FMI, NCCR and NRA. Demand for cage-free is influenced by the relative shelf prices of the category and 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 $1.00 per dozen. Similarly, consumers purchase white-shelled generic eggs in preference to brown-shelled cage-free with a differential over $1.20 per dozen. The need for structured statistically relevant market research on willingness to pay for attributes such as housing, GM status and nutritional enrichment is self-evident.

During the past week the USDA benchmark retail price of cage-free brown rose by 1.6 percent or 4 cents per dozen to $2.61 per dozen. USDA Certified Organic fell by 13.5 percent or 57 cents per dozen to $3.60 per dozen, narrowing the price differential to $1.05 per dozen ($1.66 per dozen last week) suggesting an increased demand for Certified Organic and presumably non-GMO in the coming week. The differential between generic white Large and cage-free brown was $1.25 per dozen ($0.85 last week) which will attract higher income consumers to cage free product but demand for generic white will persist despite a price differential in excess of $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.

According to the latest monthly USDA Cage-free Hen Report for January 3 rd 2018 the number of hens held in other than conventional cages during December was as follows:-

Total U.S. flock held for USDA Certified Organic production = 14.7 million (Unchanged since Oct.)

Total U.S. flock held for cage-free production = 35.0 million ( Up 0.3 million or 0.9% from Nov.)

Total U.S. non-caged flock = 49.7 million (15.7 percent of a nominal 317 million U.S. flock but 24.1 percent of a presumed flock of 206 million held for shell-egg production)

For the week ending January 5th eggs processed under FSIS inspection increased by 2.7 percent compared to the previous week to a level of 1,400,529 cases. The proportion of eggs broken by in-line complexes attained 56.5 (was 58.5) percent. During the corresponding week in 2016 in-line breakers processed 58.4 percent of eggs broken.

The price range for breaking stock delivered to Central States plants on January 8th 2018 was down from the previous week by 12.9 percent with a range of 65 to 69 cents per dozen. The price of checks was 20.9 percent lower with a range of 50 to 58 cents per dozen. These values exceeded the production cost for nest-run, estimated by the EIC at 59.5 cents per dozen for December 2017.

PRODUCTION AND PRICES

The USDA Egg Market News Reports released on January 8 th 2017 documented the changes in price for the major grades from the Midwest, for Central States Breaking Stock and Certified USDA Organic. The following table lists the "most frequent" ranges of values as delivered to warehouses*:-

Size/Type

Current Week

Previous Week

Extra Large

103-106 cents per dozen

132-135 down 21.7%

Large

101-104 cents per dozen

130-133 down 22.1%

Medium

90-93 cents per dozen

102-105 down 11.6%

Certified Organic EL

275-310 cents per dozen

unchanged

Central States Breaking Stock

65-69 cents per dozen

77-78 down 12.9%

Checks

50-53 cents per dozen

63-68 down 20.9%

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

The January 8th 2018 regional (IA, WI, MN.) average FOB producer prices, for nest-run grade-quality white shelled eggs, with prices in rounded cents per dozen (last week in parentheses) were:-

EL. $1.00 ($1.20) estimate by proportion: L. $0.80 ($1.00): M. $0.68 ($0.81)

The following advertised retail prices for the week ending January 8 th 2018, (compared with the previous week in parentheses) were posted by the AMS for dozen packs:

  • USDA Certified Organic, Brown, Large: $3.66 ($4.29)
  • Cage-Free Brown, Large: $2.61 ($2.57)
  • Omega-3 Enriched Specialty, White, Large: $2.37 ($2.58)
  • Generic White, Large Grade AA $1.33 ($1.72)
  • Generic White, Large Grade A (Feature price) $1.51 ($1.80)

Retail prices as determined by the USDA-AMS for generic white Large AA were down 39 cents per dozen at $1.33 per dozen this past week which will increase demand through the second week of January 2018. Price will obviously be influenced by the population of producing hens contributing to supply. During the first nine months of 2017 retailers maintained disproportionately high prices at the shelf, taking advantage of low wholesale cost to inflate their margins. By this strategy, retailers have effectively depressed consumption thereby holding the industry to record-low price levels for generic eggs.

(See the text, tables and figures in the review of production and prices comprising the report on USDA December 2017 data posted in this edition of EGG-NEWS. The financial results posted by Cal-Maine Foods for the completed 2nd Quarter of Fiscal 2018, released January 5th can be retrieved from the SEARCH button on the toolbar.)

The USDA-AMS Shell Egg Demand Indicator for January 10th 2018 decreased numerically by 4.2 points from +0.5 in the last report to -3.3 with a 3.3 percent increase in inventory as determined by the USDA-ERS as follows:-

Productive flock

316,649,210 million hens

Average hen week production

80.1% (was 80.2%)

Average egg production

253,636,017 million per day

Proportion to shell egg market

71.6% (was 71.2%)

Total for in-shell consumption

504,454 cases per day

USDA Inventory

1,379,600 cases

26-week rolling average inventory

4.33 days

Actual inventory on hand

4.48 days (was 4.29 days)

Shell Egg Demand Indicator

-3.3 points (was +0.5 on January 3rd 2018 )

Prices for dried egg products (most frequent price with a range in $ per pound) effective December 29th 2017 were:-

Whole Egg

$3.05-$3.20

Down $0.35 on the low end, down $0.30 on the high end of the range

Yolk

$3.85-$4.00

Down $0.15 on the low end, down $0.10 on the high end of the range

Spray-Dried White

$3.00-$3.25

Down $0.10 on the low end of the range

Blends

$2.70-$2.75

Unchanged

Although steadily declining, U.S. dried egg inventory persists at a high level of 17.9 million lbs. (equivalent to 6-weeks production) on November 30th 2017, despite the 37 percent decrease compared to November 30th 2016. During the period October 29th through December 2nd 2017, dried egg processed under USDA inspection amounted to 11.3 million lbs. compared to 6.4 million lbs. during the previous month in 2017.

COMMENTS

It is apparent that the store recalls and regulatory action by authorities in the E.U. as a result of the fipronil contamination scandal firmed prices of eggs destined for the liquid market. U.S. breakers are still showing a positive return representing by a beneficial margin over breaking stock which increased in value over five weeks but now has stabilized. The escalation in price on both sides of the Atlantic has been transitory as non-contaminated eggs should by now have displaced recalled product. The exports of egg products for October and November were respectively 496 and 563 thousand case equivalents. Consignments to the E.U. for the two months fell from 74,600 to 59,700 case equivalents representing 15 and 11 percent of volume respectively for the two months.

Avian Influenza H5 strains have returned to Western Europe with reports from the U.K., France, Italy, Bulgaria and the Netherlands. Incident cases of H5N6 infection have emerged in South Korea in commercial ducks and more recently in layer flocks in this nation and in Japan suggesting a replay of 2016-2017. South Korea approved importation of shell eggs from the U.S. although our domestic industry will face considerable competition from India, Spain and Thailand offering brown-shelled eggs. There have not been any new cases reported from Japan

As in the U.S. and the E.U. reassortant strains of avian influenza virus are introduced into regions beneath flyways by migratory birds and then transmitted to commercial free-range flocks or to confined flocks by deficiencies in biosecurity. This was evidenced by the apparently now contained, outbreak of H5N8 HPAI in South Africa. Incident cases in the E.U., Asia and North Africa should be a warning to U.S. producers during winter and early spring of 2018 since the risk of infection necessitates enhanced and effective containment. This is impossible if flocks are allowed outside access during periods when migratory birds are shedding virus.

There have been no reports of either LPAI or HPAI for over nine consecutive months in the U.S. consistent with termination of shedding by waterfowl, enhanced biosecurity and a combination of these factors.

(SMS 056-18. January 11th 2018)






















































































































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