USDA Weekly Egg Price and Inventory Report, May 13th 2020.

• The U.S. flock in production was 323.2 million, down 0.8 million from the previous week.
• Shell inventory down by 2.2 percent after a 5.1 percent rise last week indicating  restoration of the supply to demand equilibrium. This is attributed to an increase in demand despite the size of the Nation’s producing flock and hence availability of eggs.
• USDA Midwest benchmark generic prices for Extra large and Large were down 2.2 percent to averages of 89.5 and 87.5 cents per dozen respectively. Mediums were up by 8.8 percent to an average of 61.5 cents per dozen. The market has stabilized after five successive weekly declines in price.
• The price of breaking stock in the Midwest was up 18.0 percent on average. Checks were up 46.1 percent.

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on May 11th 2020 the Midwest wholesale prices for Extra Large and Large as delivered to DCs were down 2.2 percent to averages of 89.5 and 87.5 cents per dozen respectively. Mediums were up 8.8 percent to 61.5 cents per dozen reflecting a restoration of balance between availability and demand across all sizes Prices should be compared with the USDA benchmark average 5-Region blended nest-run cost of 58.4 cents per dozen in April 2020, (excluding provisions for packing and transport). The progression of prices during 2018-2020 is depicted in the USDA chart reflecting three years of data, updated weekly.

The May 11th 2020 USDA Egg Market News Report (Vol. 67: No. 19) documented a USDA Combined Region value rounded to the nearest cent, of $0.99 per dozen delivered to warehouses for the week ending May 4th. This average price lags current Midwest weekly values by one week.  The USDA Combined range for Large in the Midwest was $0.90 per dozen. At the high end of the range, price in the South Central Region attained $1.05 per dozen. The USDA Combined Price last week was $0.13 per dozen above the three-year average of $0.86 per dozen and approximately $0.28 cents per dozen above the price during the corresponding week in 2019.

USDA Weekly Egg Price and Inventory Report, May 6th 2020.

• The U.S. flock in production was 324.0 million, up 0.7 million from the previous week.
• Shell inventory up by 5.1 percent after a 1.8 percent rise last week indicating an imbalance in the supply to demand equilibrium. This is attributed to an increase in the Nation’s producing flock and hence availability of eggs.
• USDA Midwest benchmark generic prices for Extra large and Large were unchanged to averages of 91.5 and 89.5 cents per dozen respectively. Mediums were up by 16.5 percent to an average of 56.5 cents per dozen. The market has stabilized after four successive weekly declines in price.
• The price of breaking stock in the Midwest was unchanged at 16.0 cents per dozen on average. Checks were unchanged at 6.5 cents per dozen. Both breaking stock and checks are significantly below the USDA March 2020 benchmark nest-run production cost of 60.6 cents per dozen.

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on May 4th 2020 the Midwest wholesale prices for Extra Large and Large as delivered to DCs were unchanged at averages of 91.5 and 89.5 cents per dozen respectively. Mediums were up 16.5 percent to 56.5 cents per dozen reflecting a restoration of balance between availability and demand across all sizes Prices should be compared with the USDA benchmark average 5-Region blended nest-run cost of 60.6 cents per dozen in March 2020, (excluding provisions for packing and transport). The progression of prices during 2018-2020 is depicted in the USDA chart reflecting three years of data, updated weekly.

The May 4th 2020 USDA Egg Market News Report (Vol. 67: No. 18) documented a USDA Combined Region value rounded to the nearest cent, of $0.99 per dozen delivered to warehouses for the week ending April 27th. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $0.90 per dozen. At the high end of the range, price in the South Central Region attained $1.05 per dozen. The USDA Combined Price last week was $0.13 per dozen above the three-year average of $0.86 per dozen and approximately $0.20 cents per dozen above the price during the corresponding week in 2019.

Flock Size

According to the USDA the number of producing hens this past week (rounded to 0.1 million) attained 324.0 million, 0.7 million higher than the past week. If USDA data is accurate, the producing flock is still increasing at the same time that prices are sharply declining. The hen population producing eggs is more than adequate to meet seasonal consumer and industrial demand although unprecedented retail consumption outpaced supply in March 2020. Any number above 320 million hens in production during late spring portends lower than average prices and increased inventory unless matched by proportional demand. The “March Madness” buying in response to COVID-19 concern is long since over and the Industry must face the downside of the roller coaster accentuated by an influx of shell eggs from the food service sector.

EGG-NEWS summarizes and comments on data and trends in the monthly USDA Cage-Free Report, supplementing the information posted weekly in the EGG-NEWS Egg Weekly Price and Inventory Report.

The USDA Cage Free Report for the month of April 2020 released on May 4th 2020 documented an unchanged population of hens producing under the Certified Organic seal since January. In contrast cage free flocks decreased by 0.5 percent after a 13.4 percent increase during the first quarter of 2020. The respective numbers of hens in organic and cage-free flocks should reflect the realities of supply and demand in the market over successive quarters.

Average flock production was raised to 76.0 percent for both categories of non-caged hens reflecting the decline from advancing age of flocks placed as chicks during August 2019 in anticipation of the Christmas market offset by higher production from October 2019-placed chicks for Easter 2020.

Based on the importance of cage-free production, the USDA-AMS issues the report on volumes and prices at monthly intervals for the information of Industry stakeholders. There is some doubt as to the accuracy of the individual monthly flock numbers especially when reports show either no change in the cage-free flock for sequential months or a large difference for the month at or after the end of a quarter. It is suggested that USDA consider a quarterly report with more accurate and consistent data as being more useful for the industry.

Subscribers are referred to weekly USDA wholesale and retail prices posted in the EGG-NEWS Egg Price and Inventory Report E-mailed each Friday. The previous Monthly Cage-Free Report is available under the STATISTICS Tab.

The USDA Economic Research Service issued an updated forecast of egg production on April 15th 2020 revising the previous March 16th 2020 report. The volume of eggs produced and per capita consumption in 2019 were increased by 3.9 and 2.9 percent respectively compared to 2018 data. The discrepancy between production and consumption represents over-supply and hence lower prices. The projected benchmark New York unit price for 2020 was increased 26.0 percent from 2019 due to the effect of COVID-19 in March.

Production data for 2016 and 2017 should be compared to 2015, impacted by the Spring outbreak of HPAI in the upper-Midwest. The price elasticity of eggs is denoted by the disparity in the decline in the New York price benchmark relative to volume of production in 2019. The latest data shows a moderate 0.5 percent increase in production from 2019 almost matched by a 0.4 percent increase in predicted consumption. The USDA forecast is sure to be revised in May following greater clarity on reopening of the economy. April data is shown in the table below:-

Source: Livestock, Dairy and Poultry Outlook –April 16th 2020

*Impacted by Spring 2015 HPAI outbreaks. Consumption in 2014, 267 eggs per capita

Subscribers to EGG-NEWS are referred to the postings depicting weekly prices, volumes and trends and the monthly review of prices and related industry statistics.

Review of March 2020 Egg Production Costs and Statistics.

• March 2020 USDA ex-farm blended nest-run benchmark price was an exceptional 159.7 cents per dozen, 131.8 percent higher than in February 2020 at 68.9 cents per dozen. The sharp upward price during March is attributed to COVID-19 panic buying. Predictably prices are responding negatively during early April as the supply pipeline is now full.
• March 2020 USDA average nest-run production cost was 0.2 cent per dozen higher than in February 2020 at 60.6 cents per dozen.
• March 2020 USDA benchmark nest-run margin attained a positive value of 99.1 cents per dozen compared to a positive margin of 8.5 cents per dozen in February 2020.
• February 2020 national flock ( over 30,000 hens/farm) was down 5.8 million hens or 1.8 percent to 316.6 million.
• February 2020 pullet chick hatch was down 8.8 percent from January 2020 to 24.1 million.
• February 2020 export of shell eggs and products combined was up 10.1 percent from January 2020 to 812,100 case equivalents representing the theoretical production of 11.9 million hens.

INTRODUCTION.

Summary tables for the latest USDA March 2020 prices and flock statistics made available by the EIC on April 8th 2020 are arranged, summarized, tabulated and reviewed in comparison with values from the previous March 11th 2019 posting reflecting February 2020 cost and production data.

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing January-February 2020 with the corresponding two months in 2019:-

                         U.S. SHELL EGG AND EGG PRODUCT EXPORTS DURING

              JANUARY-FEBRUARY 2019 COMPARED WITH JANUARY-FEBRUARY 2020

Source USDA-FAS/USAPEEC

SHELL EGGS

Shell egg exports from the U.S. during January-February 2020 increased by 52.6 percent in volume and increased 25.9 percent in total value compared to January-February 2019. Unit value was lower by 17.3 percent or 18 cents per dozen for the comparison between 2020 and 2019. The top two importers, Hong Kong and Mexico combined, represented 74.2 percent of volume and 70.0 percent of total value.

In a press release dated March 30th Cal-Maine Foods (CALM) announced results for the 3rd Quarter of Fiscal 2020 ending February 29th.

Results for CALM, a bellwether for U.S. shell-egg production and sales, reflect lower unit revenue experienced by the entire industry resulting in unfavorable comparisons with Q3 of 2019.

The following table summarizes the results for the period compared with the values for the corresponding quarter of the previous fiscal year (Values expressed as $ x 1,000 except EPS)

Notes:

1. $385,000 loss on disposal of fixed assets
2. $758,000 gain on sale of fixed assets
3. $12.83 million “other income” including patronage payments
4. $15.29 million “other income” including patronage payments

52-Week Range in Share Price: $30.74 to $47.00. 50-day moving average $37.34 Market Close Friday March 27th $42.40. Post release; Monday March 30th,13H00 $41.62

Approximately 31 percent of equity is held by insiders. Of the float, 15.5 percent was short on March 13th.

In reviewing the CALM quarterly report the following calculated values* represent key data for the most recent Quarter. (Q3 Fiscal 2019 and difference in parentheses):-

· Dozen shell eggs sold: 271,278,000 (271,805,000; -0.2%)

· Average selling price of all shell eggs: $1.23 per dozen; ($1.38 per dozen; -10.9%).

· Average selling price of specialty eggs calculated from data released: $1.90 cents per dozen; ($1.96 per dozen; -3.1%).

· Average selling price of generic eggs calculated from data released: $1.05 cents per dozen; ($1.21 cents per dozen; -13.2%).

· Differential between generic and specialty eggs: $0.85 cents per dozen; ($0.75 per dozen; -11.8%)

· Specialty eggs as a proportion of volume sold: 23.0%; (24.7%; -6.9%)

· Specialty eggs as a proportion of sales value: 35.0%; (35.0%; 0%)

· Proportion of eggs sold actually produced by Cal-Maine flocks: 88.1%; (81.8%; +7.5%).

· Feed cost per dozen 41 cents (42 cents; -2.4%)

*Assumes that 98 percent of sales value derived from shell eggs.

In commenting on results for the 3rd Quarter, Dolph Baker, Chairman and CEO of Cal-Maine Foods, Inc., stated, “Our results reflect more challenging market conditions than we experienced for the same period last year. However, we were pleased with our ability to execute our strategy in this environment and return to profitability for the quarter. While our sales volumes were in line with last year, our overall sales revenue was down due to the lower average selling prices compared with the same period of fiscal 2019. Since the end of the third quarter, market prices have moved significantly higher to record levels, and we expect to see continued price volatility through the end of our fiscal year.

Baker continued “An unfavorable balance of egg supply and demand continued to adversely affect market prices during the third quarter and year-to-date periods. However, hen numbers, as reported by the USDA Chickens and Eggs report on March 23, 2020, were 330.0 million, which is 11.8 million less hens than reported a year ago.

Baker concluded "We have worked hard to prepare Cal-Maine Foods to meet future customer requirements and the expected additional demand for cage-free eggs. This demand has been supported by legislation in California, Washington and Oregon requiring cage-free eggs, as well as three other states with similar laws defining minimum space requirements. We are committed to meeting the demands of our customers, and we have invested over $344 million to expand our cage-free production starting with our first facility in 2008. We are pleased with our progress to date, with expansion projects underway in Florida, Texas and Utah, which will provide significant additional processing, pullet and cage-free capacity upon completion.

“Looking ahead into the fourth quarter of fiscal 2020 and fiscal 2021, we believe we are taking all reasonable precautions in the management of our operations in response to the outbreak of COVID-19. To date, Cal-Maine Foods facilities are operating normally, and we have not experienced any supply chain or delivery disruptions. Our top priority is the health and safety of our employees, who work hard every day to produce eggs for our customers. As part of the nation’s food supply, we work in a critical infrastructure industry, and we have a special responsibility to maintain our normal work schedule. As such, we are providing supplemental pay to all of our employees to assist them and their families at this critical time. We are following published guidelines by the Centers for Disease Control (CDC) and other government health agencies in implementing procedures to protect our employees, and we have strict sanitation protocols and biosecurity measures in place throughout our operations with restricted access to visitors”.

OVERVIEW

Predictably the March 10th 2020 USDA WASDE Report was little changed from February and included accurate yields for corn and soybeans and relatively unaltered price projections for these commodities.

Corn and soybean harvests reflected in the March 2020 WASDE are based on actual yield and harvested area. The corn acreage harvested was 81.5 million acres, unchanged from the January and February 2020 WASDE reports (81.8 million in 2018). Soybeans were harvested from 75.0 million acres, unchanged from the January and February 2020 WASDE reports. (88.3 million acres in 2018)

The March 2020 WASDE projected corn yield was unchanged at 168 bushels per acre, (178.9 bushels in 2018). The relatively low value was due to late planting, delayed development and adverse weather before harvest. Soybean yield was unchanged at 47.4 bushels per acre from the January 2020 WASDE, (52.1 bushels in 2018). There is concern that a wet spring in 2020 may delay planting again this season.

The March USDA projection for the ending stock of corn was unchanged at 1,892 million bushels. Due to increased exports the ending stock for soybeans was projected to be 425 million bushels.

Projections for ending stocks of both corn and soybeans have influenced recent CME price quotations concurrently with conflicting reports on trade negotiations and the Phase-One of a trade agreement with China. It is presumed that projections are based on the assumption that China will delay commitments due to disruption caused by the COVID-19 outbreak. Reports on import volumes of commodities by China will be included in upcoming editions of CHICK-NEWS and in subsequent mailings as data becomes available.