WEEKLY ECONOMY, ENERGY AND COMMODITY REPORT: JULY 18^th 2024.

OVERVIEW

Prices for corn and soybeans were lower for the second consecutive week. Prices were influenced by more moderate weather conditions with continued heat in the Midwest and a derecho on July 15^th affecting five major production states. There was some technical selling arising from geopolitical concerns and over revised projections for harvests in Brazil and Argentine. Contributory factors included disruption in shipping in the Red Sea and Panama Canal, carryover from the 2023 U.S. crop, export orders and the predicted ending stocks of corn and soybeans for the 2024 crop. The July WASDE Report contained essentially unchanged values from the extensively revised May and June Reports. Corn has commenced silking and soybeans are blooming with superior crop condition as compared to 2023. The transition from a neutral phase to a La Nina event is expected during the fourth quarter. The July WASDE should provide updated projections on yields, exports and prices that should for the 2024 season.

At 12H00 EDT on July 18^th the CME corn quotation for September delivery was down 3.9 percent to 392 cents per bushel, compared to the previous week at 408 cents per bushel for July delivery. Corn price was influenced by acreage planted, ethanol demand and the proportionally high ending stock from the 2023 crop. Export orders for the current market year have increased in response to lower prices. Volumes and price are indirectly influenced by wheat availability as influenced by weather the Black Sea crop and events in the Red Sea. Orders by China resumed at the end of the 2022-2023 market-year and have continued through mid July despite a moderately higher Dollar Index and increased ocean freight. Total exports for the current market year are 28.8 percent higher than for the corresponding week during the 2022-2023 year.

Soybeans were priced at 1,042 cents per bushel for September 2024 delivery, down 9.0 percent compared to 1,145 cents per bushel for July delivery last week. Lower prices were attributed to reduced export orders, more farm selling and projections of availability from the 2024 U.S., Brazil and Argentine harvests. Total exports for the current market year are 16.3 percent lower than for the corresponding week in the 2022-2023 year.

Soybean meal closed at $319 per ton for September delivery, down 0.9 percent from $321 per ton last week for July delivery. Price was influenced by demand coupled with high crush volumes for consecutive months from December 2023 through May 2024 inclusive but with a lower volume in June. Price will fluctuate to reflect the CME price for soybeans and the demand for biodiesel despite the adverse financial situation in this sector. The market previously responded to the increased 2023 crop and higher stocks together with projections for 2024 in the extensively revised May and June WASDE Reports essentially unchanged in July.

On July 17^th WTI was $0.76 (-0.9 percent) lower from last week to $81.34. Price stability indicated a balance between supply and demand despite geopolitical uncertainties and tensions persisting in the Middle East. Other factors influencing price included restoration of drilling and refining in the Gulf region and a draw-down on reserves. The reduction in attacks on shipping in the Red Sea is due mostly to fewer vessels transiting the waterway to and from the Suez Canal. It is evident that U.S. production is a moderating influence on price, attaining an average of 13.3 million barrels per day in June with ample reserves. An upward trajectory in price will occur if production cuts by OPEC amounting to 2 million barrels per day and extended through July actually materialize. There was a fall in WTI price during the week with a range of $82.76 down to $79.71 per barrel. Crude oil inventory in the U.S., other than the Strategic Reserve, was down 2.6 percent to 32.7 million barrels last week. High U.S. production is constraining domestic and international prices. The recent decline in energy cost during the past month is reflected in deflation possibly influencing the FOMC in their eventual lowering of the benchmark interest rate.

Economic data released during the past quarter (Q1 GDP; PCE, Confidence, Productivity, Employment) confirmed slow growth of the economy but with a downward trajectory in inflation The data-driven Federal Reserve FOMC passed on lowering the benchmark rate on June 12^th and Federal Reserve Chair Jerome Powell and Reserve Bank Governors indicated one reduction in the 10-year rate during 2024 in the fall. Economists are now suggesting that the Fed is “behind the curve” again on adjusting rates downward with an 80 percent consensus for a 25 basis point reduction at the September meeting.

Factors influencing commodity prices in either direction over the past four weeks included:-

• Weather conditions in the Midwest over the past four weeks have raised questions over the size of the 2024 harvest. Unseasonal heat reduced growth and quality in early to late-June followed by heavy rain and flooding in mid-month. The July WASDE adjust corn acreage to be harvested up by 1.6 percent and soybeans down by 0.4 percent. Projected yields were unchanged from the June WASDE Report.

• Weather conditions in areas of the World growing corn and oilseeds especially in Brazil and also Argentine provided favorable rain recently under the influence of a strong El Nino event that has now officially ended. (Downward pressure on prices). Harvesting in South America was advanced for the “new” crop of 2024 but was disrupted by flooding in the southern production states mainly affecting Rio Grande do Sul where up to 25 percent of crops may have been lost. Transition to a La Nina will result in the onset of droughts in regions of South America during the 4^th quarter of 2024 onwards.

• Geopolitical considerations continue to move markets, especially in the Mideast and Baltic regions. Ongoing attacks on Ukraine port facilities have impacted prices of wheat, corn, oilseeds and vegetable oils. Loaded bulk vessels are sailing from Black Sea and Danube River ports using the ‘Humanitarian Corridor” to various destinations. This route is operational despite threats by the Russian Federation to mine the entrance to ports and deployment of airborne missiles. Grain production in Ukraine during the current year will be lower than for 2022/2023 (Downward pressure on corn and wheat and an indirect effect on soybeans)

• Macroeconomic U.S. factors:-
• Most economists in academia and the private sector are still confident of a “soft landing” for the economy despite the release of the Q1 2024 GDP and recent economic parameters including the ECI, CPI and PPI and with fluctuation in bond rates. Annual inflation as measured by CPI declined from 8.9 percent in June 2022 to 3.0 percent in June 2024. This is in part a response to a series of 11 FOMC rate raises that curbed inflation and cooled the labor market but without precipitating evident unemployment. There is obvious stability in the bank sectors in both the U.S. and Europe. Lower energy prices are contributing to deflation.
• The Federal Reserve held the benchmark interest rate steady at the monthly FOMC meeting on June 12^th, the seventh sequential pause. The Federal Reserve commentary indicated that the rate would be held at 5.25 percent until a pivot with possibly less than two reductions of 25 basis points each in 2024, expected at the September meeting. Chairman Powell in Congressional testimony and documented in FOMC minutes has indicated that decisions would be based on demonstrated progress in reducing inflation as confirmed by a basket of key economic data, towards an annual 2.0 percent target by mid-2025. Market optimism over projections of two reductions during 2024has returned.
• The July 11^th Bureau of Labor Statistics release of the June 2024 CPI confirmed a 0.1 percent decrease from May, 0.1 percent below forecast and the first monthly decline in four years. The annual increase of 3.0 percent was lower than the 3.1 percent projection. The increase in the core value (excluding food and energy) was up 0.1 percent from May and 3.3 percent for the 12-month period, both down 0.1 percent from estimates. Food at home was up 0.1 percent from the previous month. The category of ‘meat, fish and poultry’ was up collectively up 2.6 percent for the year. Food away from home was up 0.4 percent from May mainly in full service restaurants. On an annual basis all food was up 3.0 percent with food at home up 1.1 percent and food away from home up 4.1 percent. Energy was down 2.0 percent from May due to gasoline (-3.0 percent), electricity (-0.7) and natural gas (-2.4 percent) in May. The shelter category was up 0.2 percent for the month and 5.2 percent over the past year. The macro trend is inclining towards reduced inflation but constrained by the shelter category that is detracting from deflation. The CPI heavily influences FOMC rate decisions.
• The June 27^th release by the Bureau of Economic Affairs documented the third and final estimate of Q1 2024 GDP at 1.4 percent, above the May advanced estimate of 1.3 percent. The Q1 GDP value was influenced by increased imports and a fall in business inventories responsible collectively for a reduction in GDP of 1.2 percent. By comparison Q4 2023 GDP growth was 3.4 percent. Growth in GDP attained 2.5 percent in 2023 up from 1.9 percent in 2022.
• On June 28^th the Bureau of Economic Analysis released the May Personal Consumption and Expenditure Price Index. The core index (excluding food and energy) was up 0.1 percent from the previous month and 2.6 percent year-over-year. This was in line with estimates. The Headline PCE Index was unchanged from the previous month and 2.6 percent year-over-year. On a monthly basis the price of goods was down 0.4 percent, services were up by 0.2 percent, food up by 0.1 percent and energy down by 2.1 percent. The headline PCE is closely followed by the Federal Reserve and confirms persistent inflation holding above an annual target of 2.0 percent.
• The June Producer Price Index for Final Demand (PPI) released on July 12^th was up 0.2 percent from May compared to an expectation of a 0.1 percent increase. This was the result of a 0.6 percent increase in services but offset by a 0.8 percent decline in goods. The PPI was up 2.6 percent over the past 12-months. This is compared to a 6.4 percent increase in 2022. The core PPI value excluding volatile fuel and food, was unchanged from May and up 3.2 percent for the 12-month period. Food was down 0.3 and energy down 2.6 percent respectively from the previous month.
• A Federal Reserve release on July 17^th confirmed that industrial production rose 0.4 percent in June. Capacity utilization was slightly higher at 78.8 percent, 0.9 percent below the long run 1972-2020 average.
• The June 27^th report by the Census Bureau on Durable Goods Ordered during May 2024 was higher by 0.1 percent compared to a revised value of 0.2 percent in April. Computers and related equipment were up by 1.3 percent; Transportation and specifically defense aircraft orders and parts were up 22.6 percent. Excluding the Transportation component, new orders decreased by 0.1 percent in May compared to April against an expectation of a 0.5 percent decline.
• The July 16^th release of the advanced estimate of retail and food sales data for June was unchanged from the revised upward change of 0.3 percent in May. Retail sales in June. Food service was up 4.4 percent from the corresponding month in 2023. The Federal Reserve FOMC closely monitors retail sales as a measure of the trend in inflation.
• The July 2^nd release by the Institute for Supply Management (ISM®) recorded a fall in the Manufacturing Index for June to 48.5 down from 48.7 in May and further below the bifurcation point of 50 percent between contraction and expansion. The Prices Index fell to 52.1 in June, down from 57.0 in May denoting lower costs for production. U.S manufacturing continues to contract responding to prolonged high benchmark interest rates.
• On April 30^th the U.S. Bureau of Labor Statistics reported a 1.2 percent increase in the Employment Cost Index (ECI) over the 1^st quarter of 2024 against a consensus estimate of 0.9 percent. The year-over-year increase was 4.4 percent compared to an estimate of 4.0 percent and with benefit costs up by 3.7 percent. The March ECI of 1.2 percent compares with a value of 0.9 percent for the 4^th quarter of 2023. The ECI is closely followed by the Federal Reserve FOMC and further reduces the possibility of a rate cut before September at the earliest.
• The June 21^st release of the Headline S&P Global Composite U.S. Manufacturing PMI for June rose to 54.6 compared to revised 54.5 in May. This was the highest rise since April 2022.
• The Conference Board Consumer Confidence Index released on June 25^th for the month of June, fell inconsequentially to 100.4 points from a revised 101.3 for the preceding four-week period. The index was lower than a Reuters consensus estimate of 100.0. The Present Situation Index was higher to 143.5 in June compared to 143.1 in May. The Expectations Index fell 1.9 points to 73.0 from a revised 74.9 in May. Values below 80.0 suggest a future recession.
• The July 12^th University of Michigan Preliminary Index of Consumer Sentiment for July was statistically unchanged from June to 66.0 points, compared to a revised 68.2 points in June. down from a forecast value of 68.5. The Index was up 2.2 percent from the corresponding period in 2023. Both the Current Economic Index (64.1` down from 65.9 in June) and the Index of Consumer Expectations (67.2 down from 69.6 in June) denote a decline in consumer sentiment influenced by stable but high interest rates and inflation despite geopolitical concerns. Inflation expectations 12-months hence moved lower from 3.0 to 2.9 percent among the 500 surveyed.
• Non-farm payrolls added 206,000 in June, as documented by the Bureau of Labor Statistics in a July 5^th This was higher than the anticipated 200,000, and should be compared to the revised May value of 218,000. The moderate increase was attributed to workers hired in the health care, government and construction sectors. The unemployment rate rose to 4.1 percent with 6.8 million unemployed and with 1.5 million in the long-term category. Real average hourly earnings during June showed a 0.3 percent increase over May to $35.00. Average hours worked increased 0.3 percent to 34.3 per week in June. Labor participation was almost unchanged at 62.6 percent in April. Wage rates increased 3.9 percent over 12-months, the lowest gain since June 2021. Wage rates are followed closely by the Federal Reserve FOMC.
• The Bureau of Labor Statistics Job Openings and Labor Survey report released on July 2^nd estimated 8.10 million job openings at the end of May, compared with the revised April value of 8.06. The May job openings number was the lowest value since February 2021 and should be compared with the March 2022 value of 12.2 million job openings during COVID. The hiring rate was 3.6 percent (5.0 million hires) with an May quit rate of 3.4 percent (5.4 million).
• The seasonally adjusted initial jobless claims figure of 243,000 released on July 18^th for the week ending July 13^th increased by 20,000 from the previous week. The weekly value was higher than the Reuter’s estimate of 230,000. The four-week moving average was 234,750. The Bureau of Labor Statistics estimated 1.87 million, (1.85 last week), continuing claims for the week ending July 6^th the most since November 2021. There is clear evidence from data over the past three months that the labor market is cooling as confirmed by Chairman Powell in Congressional testimony. The jobs market is still tight, despite sporadic weekly fluctuation in new claims.
• The June 6^th Bureau of Labor Statistics report recorded a revised 0.2 percent increase in non-Farm Productivity for Q1 2024 down from 0.7 percent in Q4 2023. Labor cost increased 4.0 percent annualized, down from an initial estimate of 4.7 percent.
• The ADP® reported on July 3^rd that private payrolls increased by 150,000 in June, down 7,000 from the revised 157,000 in May and compared to the Dow Jones estimate of 160,000 jobs. The increase in employment was mostly in the hospitality and construction sectors with 90,000 positions combined. In contrast manufacturing lost 5,000 positions. Annual pay was down 4.9 percent year-over-year, and the lowest value since August 2021. The increase will not directly influence the probability of short-term future changes in interest rate since the ADP® is regarded as less reliable by the FOMC than the Bureau of Labor Statistics Monthly non-farm payroll report.

FACTORS INFLUENCING COMMODITY PRICES

• It is evident that both polarization in the closely divided chambers of Congress and intra-party conflict between and within both sides of the aisle in the House delayed adoption of appropriations bills. Passage of the 2023 Farm Bill will be contentious and is subject to a 12-month extension as a stop-gap measure. Progress on the 2023 Farm Bill has been impeded by contention over SNAP eligibility and other entitlements that collectively represent 75 percent of total expenditure. The August 2^nd downgrade of U.S. debt from AAA to AA+ by Fitch Ratings recognizes Congressional dysfunction. On November 10^th 2023 Moody’s downgraded U.S. credibility from ‘stable’ to ‘negative’ based on an inability to pass required fiscal legislation. After four Continuing Resolutions the House and Senate passed six appropriations bills including the FDA and USDA, avoiding a March 8^th partial shutdown of the Federal Government. Agreement was concluded on the remaining appropriations bills on March 23^rd maintaining Federal funding through October 2024.
• The delayed 2023 Farm Bill is mired in conflict in both the House and Senate. Despite the respective markup of the House and Senate versions. There is no consensus on major issues comprising the magnitude of SNAP payments and eligibility, allocation of funds for climate remediation and requested price supports for crops. The Chair of the Senate Agriculture Committee Sen. Debbie Stabenow (D-MI) is standing firm on maintaining both SNAP-WIC benefits and climate remediation even if the Farm Bill is delayed through to the 119^th This sentiment is now expressed by Glenn Thompson (R-PA) Chair of the House Agricultural Committee. There are now questions whether funding will be available for crop support payments as included in the House version.
• The July 12^th WASDE #650 Projected both corn and soybean production parameters with a potential near record soybean harvest for the 2024 crop. There will be ample world availability of ingredients although inequitable distribution will result in shortages in some nations. Soybean exports will comprise 38.0 percent of the 2024 U.S. crop with no increase in ending stock at 455 million bushels as projected in the June WASDE Report. The projection of corn exports suggests that exports will amount to 13 percent of the 2024 crop with ending stocks down 0.2 percent from June to 2,097 million bushels.
• Rabobank projected the soybean crop in Brazil at 153 million metric tons on April 4^th albeit before flooding. This value is higher than the projection by CONAB (the Soy production association in Brazil) at the midpoint of the soybean harvest, of 147 million metric tons (5,401 million bushels) down from a previous estimate of 155 million metric tons (5,695 million bushels). Exports of 100 million metric tons (3,674 million bushels). It is anticipated that Brazil will crush 56 million metric tons (2,057 million bushels). If CONAB is correct the harvest will be 7 million metric tons (269 million bushels) lower than the 2023 record crop. Brazil exported 7.0 million metric tons (257 million bushels) of soybeans to China over the first two months of 2024, double the quantity shipped to this nation over the corresponding two months in 2023.
• Corn production in Brazil for the 2023-2024 market year will attain 124 million metric tons (4,801 million bushels) from all three sequential harvests. But down seven percent from the previous year. Brazil is projected to export of 54 million metric tons (2,125 million bushels). Argentine will produce 50 million metric tons of corn (1,968 million bushels), double compared to the previous year impacted by drought. (Lower prices in the future subject to favorable reports on crop progress and actual harvests)

• The 2024 wheat crop from Russia will be down 11.8 percent from 2023 to 80.7 million metric tons. This is due to severe weather during winter followed by drought. The deficit will place upward pressure on coarse grains

• The Dollar Index (DXY) was 104.9 at 21H00 on July 10^th, down 0.5 point from last week based on recent U.S. economic data suggesting a cut in benchmark interest rate in September despite persistent high bond rates. The DXY has ranged from 99.6 to 107.3 over the past 52 weeks. The dollar index influences timing and volume of export orders and indirectly the price of WTI crude.

EXPORTS

The FAS Export Report for corn, released on July 18^th for the week ending July 11^th confirmed that outstanding export orders for corn amounted to 8.55 million metric tons (336.45 million bushels). Net orders for the past week for the 2023-2024 market year amounted to 0.44 million metric tons (17.24 million bushels) consistent with lower price. Shipments recorded during the past working week amounted to 1.10 million metric tons (43.30 million bushels). For the current market year to date cumulative export of 46.13 million metric tons (1,817 million bushels) is 28.8 percent higher compared to the equivalent week of the previous market year. For market year 2024-2025 outstanding orders attained 4.13 million metric tons (162.47 million bushels) with 485,700 metric tons (19.12 million bushels) ordered this past week

(Conversion 39.36 bushels per metric ton. Quantities in metric tons rounded to 0.1 million)

USDA Weekly Egg Price and Inventory Report, July 17^th 2024.

Market Overview

• The average wholesale unit revenue values for Midwest Extra-large and Large sizes were down 0.9 percent on average this past week. Medium size was down 7.8 percent. The 5-day rolling National wholesale price for graded loose on July 12^th at $1.85 per dozen was approximately $0.46 per dozen above the 3-year average of $1.45 per dozen and up $1.00 from the corresponding week in 2023 at $0.85 per dozen. This past week shell egg inventory was down 3.5 percent, reversing the rise of 1.5 percent in stock during the previous week. Despite decreased inventory but with slightly falling prices in early summer more stable margins can be expected for producers through the current quarter despite replacement of depleted flocks. Higher prices compared to 2023 are attributed to losses due to HPAI depletion reducing the national flock by 20 to 22 million hens.
• Although there are weekly transfers of mature pullet flocks to laying houses, hen numbers are constrained by depopulation due to HPAI. Close to 13 million hens were lost during the 4^th Quarter of 2023 that have not yet been completely replaced. During April 2024 almost 8.4 million hens were depopulated with an additional 5.7 million during May and 1.7 million in late June.
• This past week, chains apparently narrowed the spread between delivered cost and shelf price. This could result in a continued fall in generic stock given reduced supply despite softening demand. Stock level will depend on constant re-ordering to fill the pipeline through to the end of July. Discounters are holding prices on generics influencing mainstream retail stores. Eggs are still highly competitive in price against the comparable costs for other protein foods.
• Total industry inventory was down by 2.0 percent overall this past week at 1.54 million cases with a concurrent 3.6 percent increase in breaking stock, following a 5.5 percent rise during the preceding short processing week. Demand for egg products fell through late May into July attributed to less home-baking and entertaining.
• It is now apparent that the inventory held by chains and other significant distributors may be more important over the short term in establishing wholesale price compared to the USDA regional inventory figures. Changes in stock held by DCs and in the pipeline as determined by weekly orders are probably responsible for up to three percent cyclic fluctuation in weekly industry stock, especially into and after a holiday weekend.
• The number and extent of future possible HPAI outbreaks during coming months cannot be projected but sporadic cases in backyard poultry, isolation from wild migratory and predatory birds and more than 150 confirmed dairy herds in twelve states is a cause for concern. More surveillance information should be released by USDA-APHIS as it becomes available concerning the prevalence rate of avian carriers of H5N1 among resident domestic free-living birds together with a review of molecular and field epidemiology for the current spring and future fall waves of HPAI. The USDA has yet to identify and release specific modes of transmission for the 2022-2024 epornitic including likely airborne spread from wild birds and their excreta over short distances.
• The current relationship between producers and chain buyers based on a single commercial price discovery system constitutes an impediment to a free market. The benchmark price appears to amplify both downward and upward swings as evidenced over the past two years. A CME quotation based on Midwest Large, reflecting demand relative to supply would be more equitable. If feed cost is determined by CME ingredient prices then generic shell eggs should be subject to a Midwest Large quotation.
• On July 17^th the stated total flock of 304.4 million, down 0.1 million from last week, included about one million molted hens that will resume lay during coming weeks plus 4.5 to 5.0 million pullets scheduled to attain production. Given the latest figures for depopulation it is estimated that the total flock is at least 20 to 22 million hens lower than the 326 million before the onset of HPAI in 2022. The loss of 1.6 million in late June does not appear to be reflected in the latest release of data. Figures released on July 17^th may overestimate flock size especially if more recent losses are not included.
• The ex-farm price for breaking stock (rounded to one cent) was up 0.6 percent to $1.71 per dozen.Checks delivered to Midwest plants were unchanged at $1.61 per dozen this past week. Prices for breaking stock generally follow the wholesale price for shell eggs usually with a lag of one to two weeks.

The Week in Review

Prices

According to the USDA Egg Market News Reports released on July 15^th 2024, the Midwest wholesale price (rounded to one cent) for Extra-large was down 0.9 percent from last week to $2.28 per dozen. Large was down 0.9 percent to $2.26 per dozen. Mediums were down 7.8 percent to $1.67 per dozen delivered to DCs as young pullets commence production contributing to a 9.2 percent increase in this size over the past week. It is emphasized that these prices are for one week ago. 

Export of Shell Eggs and Products, January-May 2024.

The volume of exports of shell eggs are conditioned by the domestic needs of importers, price against competitors and regulatory disease and logistic restraints. This is demonstrated by the 182 percent drop in volume of shell egg exports from 2012 (198 million dozen) to 2022 (70 million dozen). Due to depletion of flocks in 2023, export prices increased 113 percent from $1.02 per dozen to $2.16 per dozen reflecting domestic prices. Depressed exports persisted in 2023 with 90 million dozen shell eggs exported at an average price of $1.80 per dozen as losses from HPAI rose in the last quarter with a consequential rise in domestic price.

It is questioned whether lost markets other than in the USMCA and Caribbean nations will be reclaimed over the intermediate term. Sporadic and short-term exports may be made to various nations based on supply disruption caused by HPAI or other factors.

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing 2024 with 2023:-

U.S. EXPORTS OF SHELL EGG AND EGG PRODUCTS DURING

JANUARY-MAY 2024 COMPARED WITH 2023

SHELL EGGS

Shell egg exports from the U.S. during the first five months of 2024 declined by 12.5 percent in volume and 26.6 percent in total value compared to the corresponding months in 2023. Unit value declined 16.4 percent to $1.95 per dozen compared to the corresponding period in 2023.

Canada was the leading importer of shell eggs during January-May 2024, with 23.8 million dozen representing 70.6 percent of volume and 67.9 percent of the $65.8 million total value of U.S. shipments of shell eggs. Unit price over January-May 2024 was $1.87 per dozen compared to $2.78 per dozen for consignments in January-May 2023. Imports by Canada are driven by consumer demand balanced against availability through the controlled supply situation. This inhibits flexibility, necessitating imports from the U.S. to cater for demand especially when additional losses occur due to HPAI. During May 2024 Canada imported 5.4 million dozen up 92.9 percent over the corresponding month in 2023. Value was up 206 percent to $9.2 million. Unit value was 58.9 percent lower to $1.70 per dozen.

USDA Data On Cage-Free Production For June 2024

EGG-NEWS summarizes and comments on data and trends in the monthly USDA Cage-Free Report. This data is correlated and interpreted in the Weekly Egg Price and Inventory Report posted on EGG-NEWS mailed on Fridays each week.

The USDA Cage-Free Report covering June 2024, released on July 1^st 2024, documented the complement of hens producing under the Certified Organic Program to be 19.8 million (rounded to 0.1 million), down 0.6 million hens or 3.0 percent from May 2024. This is despite depopulation carried out as a result of HPAI in previous months. The number of hens classified as cage-free (but excluding Certified Organic) and comprising aviary, barn and other systems of housing apparently declined by 0.9 million hens or 0.9 percent from April 2024 to 101.4 million, despite previous flock depopulation and an unexpected high value in May. Hen numbers posted by the USDA for June are questioned as to accuracy taking into account chick placements and depopulation figures released by APHIS. Since April 1^st 6.1 million hens in the cage-free category have been depleted in addition to 1.9 million hens under the Certified Organic program.

The number of eggs collected is accepted as accurate but since the values for average hen-week  production are unacceptably high this suggests that the denominator reflecting the number of hens is probably incorrect. Alternatively if conventional eggs from cages are deceptively marketed as cage-free, or if cage free eggs are packed as certified Organic, assuming an accurate number of hens over a given month, the apparent hen-week value would be disproportionally high. The respective numbers of hens claimed for organic and cage-free flocks should reflect the net contribution of chick placements 20-weeks previously, HPAI depopulation and age-related depletion and should correspond to monthly supply data and inventory extending over successive quarters. Unlike conventional cage production cage-free hens are not generally molted reducing this possible reason for error in calculating rates of production.

Average weekly production for Certified Organic eggs in June 2024 was down 0.6 percent compared to May 2024 with a questionably high average weekly production of 83.7 percent, down from 84.2 percent in May. Average weekly flock production for cage-free flocks other than Certified Organic was down 1.4 percent in June 2024, but with a more reasonable high average hen-month production of 82.5 percent, down from 83.4 percent. Seasonally, younger flocks increase the availability of cage-free and organic eggs in response to pullet chick placements 20 weeks previously in anticipation of peak seasonal demand periods. May 2024 data may have reflected a presumed higher proportion of younger flocks derived from pullet chicks placed during early January 2024 in anticipation of Easter 2024 demand. Since the proportion of pullets according to housing type is not indicated in the monthly USDA Chickens and Eggs report, it is not possible to assess the relative sizes of flocks producing under the certified organic label or other categories. There is no adequate explanation for the high production rate especially if the stated number of hens is lower than actual, especially with undercounted HPAI flock depopulation.

Negotiated nest-run grade-ready cage-free price for June 2024 averaged $2.61 per dozen, up by 43.1 percent from $1.51 per dozen in May 2024, reflecting presumably lower supply relative to demand. The June 2024 advertised U.S. retail price for cage-free eggs over six regions (excluding AK. and HI.) was $3.02 per dozen down 43 cents per dozen (12.5 percent) from May 2024 over 6,662 stores. This compares with 1,426 stores in May confirming more promotions in June.    

The apparent difference between a recorded average wholesale price of $2.16 per dozen plus a provision of 60 cents per dozen for packaging, packing and transport, results in a price of $2.76 per dozen delivered to CDs. The average six-region advertised retail price of $3.02 corresponds to an average retail margin of 9.5 percent (63.5 percent last month) over the average wholesale delivered price. Margins are presumed higher for pastured and other specialty eggs at shelf prices reaching $9.00 per dozen in high-end supermarket chains. Retailers that are maximizing margins especially on Certified Organic, free-range and pastured categories restrict the volume of sales, ultimately disadvantageous to producers.

Based on the importance of cage-free production, the USDA-AMS issues the Cage-Free report on volumes and prices at monthly intervals for the information of Industry stakeholders. There is obvious doubt as to the accuracy of individual monthly flock numbers especially when reports show a marked change at the end of a quarter or from the previous month without obvious cause, or alternatively when there is no change in the cage-free flock for sequential months.

The current report apparently does not account for flock depopulations as a result of HPAI in May and reflects a population higher than would be attained from early January 2024 pullet chick placements.

It is suggested that USDA should consider a quarterly report with more accurate hen data. This would be more useful to the industry for planning and marketing decisions. Price data is available each week from other USDA reports.

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

Status of the 2024 Corn and Soybean Crops

The USDA Crop Progress Report released on June 24^th documented planting and emergence for the 2024 season for corn (now complete) and for soybeans (97 percent, advanced four percent).

Based on the sum of the “Adequate” and “Surplus” categories, surface and subsoil moisture levels were higher than during the corresponding week in 2023. For the past week surface and subsoil moisture values were 71 and 73 percent for the two highest categories of ‘Adequate’ and ‘Surplus’ representing an acceptable situation for emergence and early growth in 2024. These levels were down 4 percent from the previous week responding to hot and dry conditions. This was reflected in deterioration in crop condition. Corresponding values of 54 and 52 percent were recorded for the two highest categories for topsoil and subsoil moisture respectively in 2023.

It is to early in the expected transition to a La Nina event to predict any impact on crop condition in coming months. If prolonged dry and hot weather in corn and soy areas occurs, yield will be depressed depending on timing and severity.  A long-range forecast in the form of two charts is provided predicting rainfall and temperature during the growing season.

Reference is made to the June 12^th WASDE Report #649 and the weekly Commodity, Economy and Energy Report, both in this edition, documenting acreage to be harvested, yields, weekly prices and ending stocks. The July WASDE will be reviewed in the July 19^th edition.

WEEK ENDING   Corn Status (18 states) * June 16th  2024        June 23rd  2024 5-Year Average  Corn Planted (%) 100 100 100 Corn Emerged (%) 93 97 96 Corn Silking (%) 0 4 3 Soybean Status (18 states)       Soybean planted (%) 93 97 95 Soybean Emerged (%) 82 90 87 Soybeans Blooming 0 8 6 *92% of 2023 acreage planted	Emerging Soybean Plants
Crop Condition  V. Poor Poor Fair Good Excellent Corn  2024 (%) 2 5 24 55 14 Corn  2023 (%) 4 11 35 42 8             Soybeans  2024 (%) 2 6 25 56 11 Soybeans  2023 (%) 3 11 35 45 6	Emerging Corn Plants
Parameter  48 States V. Short Short Adequate Surplus Topsoil Moisture:         Past Week 7 22 59 12 Past Year 16 30 49 5 Subsoil Moisture:         Past Week 6 21 62 11 Past Year 16 32 49 3

EGG-NEWS will report on the progress of the two major crops as monitored by the USDA through to the end of the 2024 harvest in November.

Updated June 2024 USDA Projection for U.S. Egg Production and Consumption. 

On June 18^th 2024 the USDA Economic Research Service (ERS) issued actual values for egg production during 2023 with a projection for 2024 and a forecast for 2025. Production, consumption and prices were slightly revised from the previous May 2024 report.

Projected egg production for 2024 was lowered to 7,787 million dozen This will be 1.0 percent lower than in 2023 despite progressive replacement of the 44 million hens depleted due to HPAI over the period extending from early spring through mid-December 2022. Losses caused by HPAI depletion during the last quarter of 2023 reduced the annual total. The per capita consumption of shell eggs and liquids combined for 2024 will be 275.6 eggs down 1.3 percent from 2023. The projected average 2024 benchmark New York bulk unit price was raised to 230.9 cents per dozen.

Subsequent USDA projections will provide greater clarity on the recovery in consumption in an economy that is undergoing deflation. The 2023 Midwest in-carton national wholesale price peaked at $5.17 per dozen on January 3^rd 2023 but fell precipitously to a market bottom of $0.78 per dozen on May 8^th 2023. Price was restored during late February 2024 and settled at $2.15 per dozen Midwest graded Large on May 31^st 2024, higher than normal for the post-Easter period. This was above the USDA/EIC projection of the combined nest-run May 2024 cost of 77.9 cents per dozen for caged white Large, plus a provision for processing, packaging and transport of 60 cents per dozen amounting to $1.38 cents per dozen delivered to a distribution center.

Restoration in flock size after HPAI flock depletions in 2022 progressed at a rate of approximately 0.5 million per week but placements were limited by the availability of pullet chicks and in some companies the rate of conversion to alternative housing systems. Restoration of the national flock was compromised by a resurgence of HPAI with 13.0 million layers depleted during the 4^th quarter of 2023 representing 4.0 percent of the nominal producing flock of 325 million hens, mainly on complexes averaging over one million hens. Unpredictable factors affecting price will include the extent of losses during the remainder of 2024 due to a reemergence of avian influenza. Approximately 8.5 million hens were lost to HPAI during April and 5.7 million in May. Exports of eggs and products at approximately two percent of total production will not materially affect the domestic price.

The USDA forecast for 2025 includes production of 8,150 million dozen, up 4.7 percent from 2023. Consumption of 286.6 per capita, would be a speculative 11.0 egg increase over 2024 (4.0 percent) and presumably relating to a 70.9 cent per dozen reduction in the NY-Large benchmark price to $1.60 per dozen from the 2024 average for packed eggs of $2.31 per dozen.

During 2023 shell egg exports attained 89.4 million dozen, up 28.6 percent compared to 2022 when high domestic prices prevailed. Egg products were up 18.2 percent to 20,814 metric tons compared to 2022. For the first quarter of 2024 shell egg exports were up 7.8 percent in volume to 21.8 million dozen, but down 28.3 percent in value to $43.4 million compared to the corresponding months in 2023. Unit value was down 31.1 percent to $1.99 per dozen.

June 2024 USDA data is shown in the table below:-

*Data influenced by HPAI losses

Source: Livestock, Dairy and Poultry Outlook released June 18^th 2024

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

OVERVIEW

The USDA provided updated projections for the production of corn and soybeans in the June 12^th World Agriculture Supply and Demand Estimates (WASDE) #649, reflecting the anticipated 2024 crop. Production values for corn and soybeans were understandably unchanged from the May edition since they were based on the March 28^th Prospective Planting Report despite the advanced stage of planting. Projections are based on acreage, yield, carry-forward levels from 2023, and with the latest assumptions of domestic use and exports giving rise to ending stocks.

The June 12^th WASDE report predicted that corn would be harvested from 82.1 million acres, unchanged from May but down 4.4 percent from the April projection. The soybean crop will be harvested from 85.6 million acres, unchanged from May but up 3.7 percent from the previous April report.

The June WASDE held the yield value for the 2024 corn crop at 181.0 bushels per acre. By comparison yield was 174.9 bushels per acre in 2023. The June soybean yield was held at 52.0 bushels per acre compared to 49.9 bushels per acre in 2023.

The June 2024 USDA projection for the ending stocks of corn was unchanged at 2,102 million bushels. The June 2024 USDA projection for the ending stock of soybeans was raised 2.2 percent to 455 million bushels.

The June 2024 WASDE held the projection of corn price at 440 cents per bushel. The projected average season price for soybeans was unchanged at 1,120 cents per bushel. Soybean Meal was projected at $330 per ton. Unchanged prices suggest stable feed costs for livestock and poultry producers but lower income for farmers. This has contributed to an impasse in the decisions of the respective House and Senate Agriculture Committees regarding allocation of funding for nutrition support and conservation over farm commodity price supports in the delayed Farm Bill.

Projections for world production included in the June 2024 WASDE report reflect the most recent estimates for the production and export of commodities in the Southern Hemisphere with an emphasis on Argentine and Brazil. Economists also evaluated the likely impacts from hostilities in Ukraine following extensive destruction of agricultural infrastructure by the Russian Federation. It is evident that production and hence exports of wheat, corn and sunflower from Ukraine will be reduced compared to pre-war averages.

It is accepted that USDA projections for export are also based on the perceived intentions and needs of China. This Nation has sharply curtailed purchases of commodities and especially U.S. soybeans during the current market year despite drought and taking into effect relaxation of COVID restrictions on consumers expected to have created higher demand.

Reports on volumes of commodities exported are included in weekly editions of EGG-NEWS, derived from USDA-FAS sales data. Weekly Crop Progress reports will be posted through late November

CORN

Based on current yield and acreage projections for the 2024 corn harvest, the June WASDE Report predicted a crop of 14,860 million bushels compared to 15,234 million bushels for the previous 2023 record harvest. The “Feed and Residual” category was held at 5,750 million bushels. The Food and Seed category was retained at 1,405 million bushels. The Ethanol and Byproducts Category was unchanged at 5,450 million bushels consistent with estimated demand for E-10 and higher blends for summer driving. Gasoline consumption is now less restrained despite high prices and changes in commuting patterns reflecting a recovery from COVID restrictions. Projected corn exports were held at 2,200 million bushels, based on recent orders, and ongoing shipments to China and taking into account the anticipated lower availability of coarse grains from Eastern Europe. Effective May 31^st exports of U.S. corn are 23.9 percent higher during the current market year to date compared to the corresponding week in the previous market year. The USDA considers world weather patterns in developing projections including the effect of a transition to a La Nina event by the third quarter of 2024. The anticipated ending stock of corn in the June WASDE report was unchanged at 2,102 million bushels.

The forecast USDA average season farm price for corn in the June WASDE report covering the 2024 crop was held at 440 cents per bushel. At 16H00 on June 12^th after the noon release of the WASDE the CME spot price for corn was 453 cents per bushel, down 3.2 percent from the quotation on May 10^th and up 3.0 percent from the June USDA projection.

JUNE 2024 WASDE #649 Projections For The 2024 Corn Harvest:

1 metric ton = 39.368 bushels

Average Farm Price: 440 cents per bushel. (Unchanged from the May WASDE Report reflecting the 2024 projected crop)

SOYBEANS

Based on a prediction of increased acreage to be planted and adjusted yield, the USDA June WASDE projected the 2024 soybean crop at 4,450 million bushels with an estimated yield of 52.0 bushels per acre from 85.6 million acres harvested. Crush volume was unchanged from the May WASDE report at 2,425 million bushels. Projected exports were held at 1,825 million bushels despite reduced exports to China. Effective May 31^st shipments for the current market year are down 17.4 percent from the corresponding week of the previous market year. Ending stocks were anticipated to be 455 million bushels, up 2.2 percent from the May WASDE report based on a corresponding 10 million bushel increase in beginning stock.  

There is uncertainty over orders from China for the current market year. This is attributed to competition from Brazil and an assumption of lower requirements for animal feed due to restrictions on pork production by the Central Government. In reality traders in China are obligated to order on a stable or declining market unless faced with shortages. Prior to 2018, China, the largest trading partner for U.S. agricultural commodities, imported the equivalent of 25 percent of U.S. soybeans harvested.

The USDA June 2024 projection for the ex-farm price for soybeans for the 2024 harvest was unchanged from May at 1,120 cents per bushel. At 16H00 on June 12^th following release of the WASDE, the CME spot price was 1,177 cents per bushel, down 3.4 percent compared to the May 10^th quotation and 5.0 percent above June USDA projection.

JUNE 2024 WASDE #649 PROJECTION FOR THE 2024 SOYBEAN HARVEST:-

1 metric ton = 36.74 bushels

Average Farm Price: 1,120 cents per bushel (Unchanged from the May 2024 WASDE Report)

SOYBEAN MEAL

The projected production of soybean meal from the 2024 soybean crop will be 57.08 million tons unchanged from the May WASDE and consistent with the projected crush volume for soybeans at 2,425 million bushels. This figure also corresponds with increased demand for biodiesel and with a proportional increase in U.S. crushing capacity. Production is driven both by exports and domestic consumption for livestock feed and for soy oil supplying the food and biodiesel segments. The projection of domestic use was lowered 0.5% percent to 40.12 million tons. Exports were raised 1.1 percent to 17.5 million tons.

The USDA held the ex plant price of soybean meal at $330 per ton as an average for the season based on supply and demand considerations as reflected in a stable ending stock of 450,000 tons representing 0.8 percent of supply.

At 16H00 on June 12^th the CME spot price for soybean meal was $360 per ton, down 0.4 percent compared to the May 10^th CME quotation and 9.0 percent higher than the WASDE projection of $380 per ton.

JUNE 2024 WASDE #649 PROJECTION OF SOYBEAN MEAL PRODUCTION AND USE

(Quantities in thousand short tons)

Average Price ex plant:  $330 per ton (Unchanged from the May WASDE Report)  

IMPLICATIONS FOR PRODUCTION COST

The price projections based on CME quotations for corn and soybeans suggest lower feed production costs for broilers and eggs.  Going forward, prices of commodities will be determined by World supply and demand and U.S. domestic yield, use and exports.

For each 10 cents per bushel change in corn:-

• The cost of egg production would change by 0.45 cent per dozen
• The cost of broiler production would change by 0.25 cent per live pound

      For each $10 per ton change in the cost of soybean meal:-

• The cost of egg production would change by 0.35 cent per doze
• The cost of broiler production would change by 0.30 cent per live pound.

WORLD SITUATION

With respect to world coarse grains and oilseeds the June 2024 WASDE Report included the following appraisals by USDA:-

COARSE GRAINS:

“Global coarse grain production for 2024/25 is forecast 1.4 million tons lower to 1.511 billion. This month’s foreign coarse grain outlook is for lower production, slightly higher trade, and smaller ending stocks relative to last month. Foreign corn production is marginally higher, with increases for Ukraine and Zambia partially offset by a reduction for Russia. Corn area is raised for Ukraine but lowered for Russia. Zambia is higher reflecting increases to both area and yield”.

Major global trade changes for 2024/25 include larger corn exports for Ukraine and Tanzania but a reduction for Russia. Corn imports are raised for Malawi, Zambia, and Mozambique. For 2023/24, corn exports are raised for South Africa, Russia, the EU, and Uruguay. Barley exports for 2024/25 are lowered for Argentina, Russia, and the EU but raised for Australia. Barley imports are raised for China. Foreign corn ending stocks are down relative to last month, mostly reflecting reductions for South Africa, Russia, and Tanzania. Global corn ending stocks, at 310.8 million tons, are down 1.5 million”.

OIL SEEDS:

“Global oilseed production for 2024/25 is lowered 1.3 million tons to 685.8 million mainly on lower rapeseed production for Australia and the European Union. Rapeseed production is lowered for Australia on lower harvested area while production in the EU is lowered on a reduced yield for France”.

“The 2024/25 global soybean outlook includes lower beginning and ending stocks. Higher beginning stocks for the U.S. are offset by lower stocks for Brazil and Paraguay. Brazil’s stocks are lowered on a downward revision to 2023/24 production, down 1.0 million to 153.0 million, reflecting further in-country assessments of flooding in Rio Grande do Sul by Brazil’s state agency Emater. Paraguay’s 2024/25 beginning stocks are lowered on higher exports for the prior marketing year. Global soybean ending stocks are lowered 0.6 million tons to 127.9 million”.

*Values rounded to one million metric ton

  (1 metric ton corn= 39.37 bushels)  (“ton” represents 2,000 pounds)

REVIEW OF MAY 2024 EGG PRODUCTION COSTS AND STATISTICS

Commencing in January 2024 the EIC justifiably separated the production costs and unit revenue values for eggs derived from caged and cage-free flocks. Accordingly, EGG-NEWS will continue to summarize data but will consolidate production and export statistics for the U.S. egg industry as a total and compare financial data for the two shell-egg categories.

MAY HIGHLIGHTS

• May 2024 USDA ex-farm blended USDA nest-run, benchmark price for conventional eggs from caged hens was 135 cents per dozen, down 55 cents per dozen or 28.9 percent from the April 2024 value of 190 cents per dozen. For comparison, average monthly USDA benchmark price over 2023 was 146.0 cents per dozen with a range of 323 cents per dozen in January down to a low of 57 cents in May. Stock levels and prices prior to the onset of flock depletions due to HPAI indicated a relative seasonal balance between supply and demand. Future nest-run and wholesale prices will be largely dependent on consumer demand for shell eggs and products and the rate of replacement of pullets and hens depleted due to HPAI. Other considerations include diversion to shell sales from the egg-breaking sector in an interconnected industry.

• Fluctuation in wholesale price is attributed in part to the amplification of upward and downward swings associated with the commercial benchmark price discovery system in use. A substantial but transitory rise in price occurred during February but with a sharp decline thereafter to a mid-March plateau, extending into late April. A 30 percent decline occurred over the first two weeks of May with recovery thereafter. An unknown factor in future pricing will be the incidence rate and severity of highly pathogenic avian influenza in June as northward migration of waterfowl ceases. Close to 13 million hens and 2.5 million pullets were depopulated during the fourth quarter of 2023 among five states with heavy losses in California. Approximately 8.4 million hens were depleted in two outbreaks (TX and MI) through mid-April followed by 5.7 million during May in MM and IA).

• May 2024 USDA average nest-run production cost for conventional eggs from caged flocks over four regions (excluding SW and West), applying updated inputs was up 2.3 cents per dozen to 77.9 cents per dozen compared to the April 2024 value of 75.6 cents per dozen, mainly attributable to a 5.9 percent higher average feed cost per dozen.  Approximately 60 cents per dozen should be added to the USDA benchmark nest-run cost to cover processing, packing material and transport to establish a realistic price as delivered to warehouses.

• May 2024 USDA benchmark nest-run margin for conventional eggs attained a positive value of 57.1 cents per dozen compared to a positive margin of 114.7 cents per dozen for April 2024. Average nest-run monthly margin over 2023 was 64.2 cents per dozen compared to 155 cents per dozen in 2022. This differential was mainly due to higher prices following HPAI-depletion of flocks. It is emphasized that the U.S. benchmark price reflects nest-run conventional eggs.

• The May 2024 national flock in production (over 30,000 hens per farm) was stated by the USDA to be down 3.8 million hens (rounded) to 293.6 compared to the revised April 2024 value of 297.4 million. This figure apparently fails to record hens depleted since April 2024. Approximately 3.0 million hens returned to production from molt in May together with projected maturation of 21.4 million pullets, with this number offset by depletion of spent flocks.

• April 2024 pullet chick hatch of 28.9 million was up 2.1 percent or 0.6 million chicks from March 2024.

• April 2024 exports of shell eggs and products combined was down 27.5 percent from March 2024 to 405,700 case equivalents representing the theoretical production of 5.4 million hens. The decrease was attributed to lower demand for shell eggs by Canada and was offset by increased imports of egg products by Japan among other importing countries.

TABLES SHOWING KEY PARAMETERS FOR MAY 2024

Summary tables for the latest USDA May 2024 flock statistics, costs and unit prices made available by the EIC on June 7^th 2024 are arranged, summarized, tabulated and compared with values from the previous May 8^th 2024 posting reflecting April 2024 costs and production data as applicable. Monthly comparisons of production data and costs are based on revised USDA value

VOLUMES OF PRODUCTION REFLECTING THE ENTIRE INDUSTRY

* USDA Revised

 * Revised USDA/EIC

Note 1. Texas excluded to maintain confidentiality    

PROPORTION OF U.S. TOTAL HENS BY STATE, 2024¹        

Based on a nominal denominator of 295 million hens in flocks over 30,000 covering 94.9 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

1. Values rounded to 0.1% 

*USDA data is questioned based on known values for hen depopulation and pullet placements with discrepancies in stated values during the 4^th quarter of 2023 and thereafter.

Rate of Lay, weighted hen-week (USDA)          82.6% May 2024.    82.8% April 2024

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook May 17^th 2023 taking into account demand from the food service sector and presumably including the effect of HPAI depopulation.

EGG INVENTORIES AT BEGINNING OF MAY 2024:

EGGS BROKEN UNDER FSIS INSPECTION (MILLION CASES)

 APRIL 2024,  6.56       March 2024,  6.39                       

EXPORTS APRIL 2024: (Expressed as shell-equivalent cases of 360 eggs).

*Representing 1.9 percent of National production in April 2024 (2.8 percent in March 2024).                    

COSTS AND UNIT REVENUE VALUES¹ FOR CONVENTIONAL EGGS FROM CAGED HENS

Notes:   1. Excludes SW and West

Components of Production cost per dozen:-

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting MAY 2024:-

135.0 cents per dozen¹- 77.9 cents per dozen = 57.1 cents per dozen        

(March 2024 comparison:   190.0 cents per dozen – 75.6 cents per dozen = 114.7 cents per dozen.

Note 1:  USDA Blended nest-run egg price

*USDA Revision

COSTS AND UNIT REVENUE FOR EGGS FROM CAGE-FREE HENS

Components of Production cost for cage-free eggs, per dozen:-

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting May 2024:-

Cage-Free brown          198 cents per dozen¹- 97.9 cents per dozen =  100.1 cents per dozen

                April 2024      212  cents per dozen – 95.3 cents per dozen =  116.7 cents per dozen  

1. Contract price, nest-run loose Range 135 to 235 c/doz.

* Conventional (non-organic) feed

Feed prices used were the average national and regional values for caged flocks. Excludes Organic feeds.

COMMENTARY ON MAY 2024 STATISTICS AND COSTS

The USDA reports data for five regions, respectively comprising the Northeast, Southeast (Mid-Atlantic), South Central, Midwest, and West (NW and California combined or deleted in some tables).

From January 2024 three Pacific Coast states were combined as the West Region. Southwest excluded to maintain confidentiality while providing representative U.S. data. Costs include fixed components (interest, depreciation and overhead) and variable components (feed, pullet depreciation, labor) recalculated in May 2023 by the EIC based on surveys. An adjustment factor reflecting transport was introduced in February 2024. Some USDA data reflecting retail prices, pullet hatch, exports and flock numbers is delayed by a month

PRODUCTION DATA FOR MAY 2024 COMBINING CAGED AND CAGE-FREE FLOCKS

• According to USDA, the estimated average complement of U.S. hens in flocks over 30,000 during April 2024 amounted to 293.6 million, reflecting a net 3.5 million hen (1.2 percent) decrease in flock size during the month. Data for 2024 to date reflect the previously delayed adjustments for depopulations during the fourth quarter of 2023 that were not incorporated in weekly USDA reports. Losses in April have yet to be recorded (see comments in the weekly EGG-NEWS in this edition). Routine depletion was offset by pullet replacements, second cycle hens and retained flocks. The average total U.S. flock including hens in molt on all farms counted by the USDA amounted to 309.3 million in April 2024. The average end-of-year flock sizes over the past five years respectively were:- 2019, (341.6 million); 2020, (325.5 million); 2021, (331.6 million); 2022, (310.0 million) and 2023, (311.4 million). The December 1^st 2024 flock was projected to be an unrealistically high 327.0 million hens in the June report applying the EIC model. With replacements, molting and delayed depopulation it is estimated that the national flock now comprises 18 to 20 million fewer hens than the value of 326 million before the advent of the H5N1 HPAI epornitic in 2022. In the absence of a vaccine only effective biosecurity will help protect flocks going forward.

• Pullet chick hatch attained 28.9 million in April 2024, up 0.6 million from an adjusted March 2024 value. During the 1^st Quarter of 2024 egg prices rose above the seasonal average possibly influencing demand for chicks together with the need to compensate for depopulated pullet and hen flocks.

• The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA increased to 11.3 percent of the national flock in May 2024, compared to 11.0 percent for the previous month. Annual averages for molt and post-molt combined were 12.8 percent in 2023; 14.0 percent in 2022 and 14.4 percent in 2021. 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 not be revisited in 2024.

• During the fourth quarter of 2023 the average monthly transfer of pullets to laying houses was 25.2 million compared to 24.9 million in the third quarter. Revised data anticipate the transfer of 23.1 million pullets per month during the first quarter and 22.0 million in the second quarter of 2024. Pullet transfer in the 3^rd Quarter will increase to 26.0 million per month.

• The projected hatchery supply flock (parent generation) peaked at 3.1 million hens in June 2022. The previous high parent-flock of 3.1 million hens in production was in June 2015, coinciding with the end of the HPAI epornitic in that year. Parent hens thereafter declined to a low of 2.5 million during the fourth quarter of 2016. During 2023 the flock size for parent hens averaged 2.4 million over the fourth quarter of 2023 and is projected at 2.5 million during the 1^st through the 3^rd quarters of 2024. The size of the parent flock is unlikely to be revised based on pullet chick orders influenced by the demand to replace depopulated pullets and hens and in response to possible higher producer margins. It is understood that production of additional pullet chicks is unlikely given forward planning by breeder-hatcheries and full utilization of facilities.

• Average hen-week production of 82.6 percent in May 2024 compares to a revised value of 82.8 percent in April 2024. This reflects a high proportion of younger hens in the national flock with many first-cycle hens and early second-cycle hens in production. (Alternatively the USDA may be under-counting hens). Average rate of lay in 2023 was 81.8 percent. 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 declines 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 May 24^th edition of the USDA Poultry Slaughter Report documented 2.84 million light spent-hens processed under FSIS inspection during April 2024, 10.1 percent more than the previous month of March 2024 but 0.7 percent lower than in April 2023. These differences are an indication that flocks are being retained.  Slaughter in U.S. plants represents a small proportion in comparison to the presumed depletion of 15 million hens per month with most hens either rendered or consigned to landfills. Provided housing space is available, prevailing prices will result in retention of flocks with more routine or previously scheduled flocks molted.

MAY 2024 COST AND UNIT REVENUE DATA FOR CONVENTIONAL EGGS FROM CAGED FLOCKS.

• The USDA ex farm benchmark blended egg price in May 2024 was 31.5 percent lower at 135 cents per dozen from the April 2024 value of 190 cents per dozen. This contributed to a positive margin of 57.1 cents per dozen based on ‘nest-run’ generic eggs (ungraded as delivered from the laying house) during May 2024, compared to a positive margin of 114.7 cents per dozen in March 2024. The May 2024 USDA benchmark price of 135 cents per dozen should be compared to 57.1 cents per dozen for the corresponding month in 2023 and 207 cents per dozen in May 2022 influenced by reduced supply due to HPAI depopulation and higher demand. The relatively high values from the second through fourth quarters of 2022 compared to corresponding periods for the two previous years were due to depletion of hens following the emergence of HPAI coupled with a rise in demand following relaxation of COVID restrictions and the amplification of price rises due to the benchmark costing system.  

• During May 2024, the feed component of production cost averaged 37.9 cents per dozen, up 5.9 percent or 2.1 cents per dozen from April 2024. During 2023 average feed cost was 46.4 cents per dozen compared to 50.1 cents per dozen in 2022 and 42.5 cents per dozen in 2021.

• Combining data from the USDA and the EIC, producers recorded a positive margin of 57.1 cents per dozen at farm-level for generic-egg flocks during May 2024. This compares with a margin of 114.7 cents per dozen in April 2024. Cumulative average monthly algebraic nest-run margin year-to-date is 109.5 cents per dozen. Over 2023 the average monthly margin attained 71.5 cents. During 2022 cumulative average monthly algebraic margin attained 1,887 cents. For 2021 the cumulative average algebraic margin was 9.1 cents per dozen against USDA benchmark ‘nest run’ values.

• The simple average price of feed in May 2024 over 5-regions was $249.39 per ton, higher by $13.02 per ton or 5.5 percent adding to the 0.8 percent rise in April 2024.  Southwest data is no longer disclosed to avoid compromising a company that predominates in Texas. The highest cost among five regions was the West at $295.93 per ton, up 4.3 percent from April 2024. This may be compared to the lowest-cost region, the Midwest at $228.95 per ton, $12.68 per ton or 5.9 percent higher than the previous month. The average cost for feed includes ingredients plus milling and delivery charges.

• The benchmark price of corn was $181.66 per ton in May 2024, up $6.71 per ton or 3.8 percent from the average April 2024 price, taking into account the difference in basis paid by producers. The differential in corn price between the Midwest and the West in May 2024 was $67.98 per ton. A 9.8 percent increase of $36.88 per ton in the price of soybean meal to $414.53 per ton in May 2024 added to the higher price of corn in raising feed price and hence production cost. During May 2024 there was a differential of  $66.98 per ton in feed price between the Midwest and the West compared to a difference of $67.78 per ton in April 2024 The industry experiences regular increases in the cost of phosphate additives, fat and vitamins.

• Feed price will continue to be a major factor driving production cost and hence margin. The May WASDE #648, released on May 10^th projected volumes for the 2024 corn and soybean harvests, ingredient use, exports and ending stocks for the two major feed ingredients. A summary of WASDE # 648 can be viewed under the statistics TAB.. Unknown factors influencing feed cost during the third quarter of 2024 will include:-

• Continued consequences of conflict in Ukraine and the Middle East with inevitable disruption in production and especially for shipping through the Black Sea and the Suez Canal.

• Projections of U.S. crop yields in 2024 based on acreage planted and weather conditions. Transition to a La Nina event by mid-year may result in hot and dry weather in the Midwest
• The projected large harvests in Brazil and Argentina.
• Damage to the wheat crop in Russia projected to be down by 12 percent due to early frost followed by unseasonal drought, indirectly impacting the price of corn.
•  Demand by China will influence prevailing prices in international trade.
• The availability and hence prices of ingredients will also be influenced by weather conditions in the Southern Hemisphere
• Export volume from the U.S.
•  Diversion of corn to ethanol and of soy oil to biodiesel.
• The economic and logistic effects associated with inflation especially in energy and interest rates.

There is obviously higher demand for ethanol with production projected by the U.S. Energy Information Administration at 970,000 barrels per day but with an average exceeding one-million barrels per day during 2023 extending through the first half of 2024. Substantial exports of soybeans, although with lower volumes to China, during the current 2023-2024 market year is supporting domestic price and hence contributing to the cost of egg production. Each $10 per ton difference in feed cost represents approximately 1.70 cents per dozen. A change of $1 per ton (2.8 cents per bushel) in the price of corn is reflected in a 0.11 cent per dozen change 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 4-Region (excluding the West and Southwest) adjusted total nest-run production cost in May 2024 to be 77.9 cents per dozen, 2.3 cent per dozen higher than April 2024. Production costs for conventional eggs from caged flocks during May 2024 ranged from 76.33 cents per dozen in the Midwest up to a calculated value of 86.0 cents per dozen in the West, higher than the Midwest region by approximately 10.0 cents per dozen. During 2023 the average monthly cost of production was 85.9 cents per dozen and was 81.0 cents per dozen in 2022.

Deletion of Southwest and West data is considered a substantial deficiency of the EIC Report. Given the price of feed and with appropriate assumptions values for these regions could be determined. Exclusion of cost data skews the mean for the U.S.

• National retail egg prices as determined by the Department of Commerce for April 2024 averaged 286 cents per dozen, down 13 cents per dozen for conventional white-shelled Large eggs compared to March 2024. During April 2022 and 2023 retail prices were respectively 252 and 327 cents per dozen. From 2017 through 2021 average retail prices did not decline in proportion to ex-farm prices, with chains imposing higher margins at retail, thereby depressing demand. Conventional supermarkets have recently demonstrated some restraint in pricing possibly due to competition from deep discounters and club stores, despite sustained demand.

MAY 2024 COST AND UNIT REVENUE DATA FOR EGGS FROM CAGE-FREE FLOCKS*.

• The USDA ex farm benchmark blended egg price in May 2024 was 14 cents per dozen or 6.6 percent lower at 198 cents per dozen compared to the April 2024 value of 212 cents per dozen. This contributed to a positive margin of 100.1 cents per dozen based on ‘nest-run’ eggs (ungraded as delivered from the laying house) in May 2024, compared to a positive margin of 116.7 cents per dozen in April 2024. The May 2024 USDA benchmark nest-run price of 198 cents per dozen should be compared to 97 cents per dozen for the corresponding month in 2023 and 222 cents per dozen in May 2022 influenced by HPAI depopulation and heightened demand.

• The EIC calculated the 4-Region (excluding the West and Southwest) adjusted total nest-run production cost in May 2024 to be 97.9 cents per dozen, 2.6 cent per dozen higher than April 2024. Production costs for eggs from cage-free flocks during April 2024 ranged from 93.8 cents per dozen in the Midwest up to a value of 102.2 cents per dozen in the West, higher than the Midwest region by 13.4 cents per dozen.

• National retail egg prices for cage-free brown as determined by the Department of Commerce for April 2024 averaged 345 cents per dozen, down 2 cents per dozen compared to March 2024. During April 2022 and 2023 retail prices were respectively 250 and 399 cents per dozen.

*Excludes Certified Organic and pastured flocks

EXPORT DATA FOR APRIL 2024 COMBINING ALL EGG CATEGORIES

• The monthly Export Report is posted in this edition and under the STATISTICS Tab thereafter during June.

• It is presumed that almost all exports of white-shelled eggs and products are derived from caged flocks.

• According to USDA-FAS data, 126,000 cases of shell eggs were exported in April 2024, representing 0.6 percent of total production.  This was a 59.1 percent decrease compared to March 2024 attributed to higher prevailing domestic prices. The lower export value was mainly attributed to fewer cases to Canada, (-183,000)

• Exports of egg products in April 2024 attained 279,000 case-equivalents, down 10.9 percent from the previous month and representing 1.3 percent of U.S. output. Decreases were attributed to lower volumes (expressed as case equivalents) to Canada (-25,000); the E.U. (-17,000); Mexico (-9,000) and Asia excluding Japan and Korea, (-9,000). Decreases in exports were offset by increased shipments to Japan (+54,000)

• Collectively, exports of shell eggs and products in April 2024 comprised the output from approximately 5.4 million hens in production during the month. Exports attained 405,700 case-equivalents, down 34.6 percent from March 2024 and 27.5 percent less than combined exports during the pre-HPAI first quarter of 2022 averaging 596,300 case equivalents per month.

• 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 April 2024 corresponded to 1.9 percent of a nominal national flock of approximately 305 million producing 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 H5 or H7 avian influenza or velogenic Newcastle disease in a specific state or country.

EGG-NEWS summarizes and comments on data and trends in the monthly USDA Cage-Free Report. This data is correlated and interpreted in the WeeklyEggPrice and Inventory Report posted on EGG-NEWS mailed on Fridays each week.

The USDA Cage-Free Report covering April 2024, released on May 1^st 2024, documented the complement of hens producing under the Certified Organic Program to be 16.7 million (rounded to 0.1 million), down 8.2 percent from March 2024. This is due to depopulations carried out as a result of HPAI. The number of hens classified as cage-free (but excluding Certified Organic) and comprising aviary, barn and other systems of housing apparently declined by 6.8 percent from March 2024 to 99.2 million, also due to flock depopulation. Hen numbers posted by the USDA for April are considered accurate in relation to known depopulation figures released by APHIS.

The number of eggs collected is accepted as accurate but since the values for average weekly production are unacceptably high suggesting that the denominator reflecting the number of hens is probably incorrect. Alternatively if conventional eggs from cages are deceptively marketed as cage-free, or if cage free eggs are packed as certified Organic, assuming an accurate number of hens over a given month, the apparent hen-week value would be incorrectly high. The respective numbers of hens claimed for organic and cage-free flocks should reflect chick placements, HPAI depopulation and age-related depletion and should correspond to monthly supply data and inventory extending over successive quarters. Unlike conventional cage production cage-free hens are not generally molted reducing this possible reason for error in calculating rates of production.

Average weekly production for Certified Organic eggs in April 2024 was down 7.5 percent compared to March 2024 with a questionably high average weekly production of 84.4 percent, down from 83.8 percent in March. Average weekly flock production for cage-free flocks other than Certified Organic was down 6.2 percent in April 2024, also with a questionably high average hen month production of 83.4 percent, up from 83.8 percent. Seasonally, younger flocks increase the availability of cage-free and organic eggs in response to pullet chick placements 22 weeks previously in anticipation of peak seasonal demand periods. April 2024 data may have reflected a presumed higher proportion of younger flocks derived from pullet chicks placed during late December 2023 and early January 2024 in anticipation of Easter 2024 demand. Since the proportion of pullets according to housing type is not indicated in the monthly USDA Chickens and Eggs report, it is not possible to assess the relative sizes of flocks producing under the certified organic label or other categories. There is no adequate explanation for the high production rate especially if the stated number of hens is lower than actual, especially with undercounted HPAI flock depopulation. This raises the question of possible illegal diversion of caged eggs into the cage-free or cage-free eggs into the organic supply.

Negotiated nest-run grade-ready cage-free price for April 2024 averaged $1.93 per dozen, down by 22.8 percent from $2.50 per dozen in March 2024, reflecting lower demand relative to supply. The April 2024 advertised U.S. retail price for cage-free eggs over six regions (excluding AK. and HI.) was $3.47 per dozen up 19 cents per dozen (5.8 percent) from March 2024 over 4,473 stores.

The apparent difference between a recorded average wholesale price of $1.93 per dozen plus a provision of 60 cents per dozen for packaging, packing and transport results in a price delivered to CDs of $2.53 per dozen. The average six-region advertised retail price of $3.47 corresponds to an average retail margin of 37.2 percent (5.5 percent last month) over the average wholesale delivered price. Margins are presumed higher for pastured and other specialty eggs at shelf prices reaching $9.00 per dozen. Chains that are maximizing margins especially on Certified Organic, free-range and pastured categories restrict the volume of sales, ultimately disadvantageous to producers.

Based on the importance of cage-free production, the USDA-AMS issue the Cage-Free report on volumes and prices at monthly intervals for the information of Industry stakeholders. There is obvious doubt as to the accuracy of individual monthly flock numbers especially when reports show a marked change at the end of a quarter or from the previous month without obvious cause, or alternatively when there is no change in the cage-free flock for sequential months.

The May 1^st report has accounted for flock depopulations as a result of HPAI in April

It is suggested that USDA should consider a quarterly report with more accurate hen data. This would be more useful to the industry for planning and marketing decisions. Price data is available each week from other USDA reports.

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

The USDA quarterly Grain Stocks Report released on March 28^th 2024, documented storage of corn and soybeans, classified according to on-site and remote facilities including elevators and commercial installations. Quantities of the two major ingredients as determined by USD-NASS, relevant to the cost of poultry production were:-

“Corn stocks in all positions on March 1, 2024 totaled 8.35 billion bushels equivalent to 54.4 percent of the 2023 crop, up 13 percent from March 1, 2023. Of the total stocks, 5.08 billion bushels (60.8 percent of total) were stored on farms, up 24 percent from a year earlier. Off-farm stocks, at 3.27 billion bushels, are down 1 percent from a year ago. The indicated December 2023 to February 2024 disappearance is 3.82 billion bushels, compared with 3.42 billion bushels during the same period last year”.

“Soybeans stored in all positions on March 1, 2024 totaled 1.85 billion bushels equivalent to 44.5 percent of the 2023 crop, up 9 percent from March 1, 2023. Soybean stocks stored on farms are estimated at 933 million bushels, (50.4 percent of total) up 24 percent from a year ago. Off-farm stocks, at 912 million bushels, are down 3 percent from last March. Indicated disappearance for the December 2023 - February 2024 quarter totaled 1.16 billion bushels, down 13 percent from the same period a year earlier”.

Prices and commentary are incorporated in the Weekly Energy, Economy and Commodity Report posted each week and a summary of the WASDE #646 released on March 8^th is retrievable under the STATISTICS tab.

THE USDA Agricultural Prices Report released October 31^st posted September prices for agricultural commodities and expenditures.

September Prices Received Index, down 2.9 percent from August

 The USDA ERS summarized prices as follows:-“The September Prices Received Index 2011 Base (Agricultural Production), at 122.6, decreased 2.9 percent from August and 7.1 percent from September 2022. At 113.9, the Crop Production Index was down 4.2 percent from last month and 11 percent from the previous year. The Livestock Production Index, at 133.1, decreased 0.9 percent from August, and 2.6 percent from September last year. Producers received lower prices for corn, hogs, soybeans, and lettuce during September, but higher prices for broilers, milk, grapes, and broccoli. In addition to prices, the volume change of commodities marketed also influences the indexes. In September, there was decreased marketing of cattle, wheat, cotton, and peaches and increased monthly movement for soybeans, corn, dry beans, and apples”.

September Prices Paid Index, Up 0.1 Percent from August

“The September Prices Paid Index for Commodities and Services, Interest, Taxes, and Farm Wage Rates (PPITW), at 138.8, is up 0.1 percent from August 2023 but unchanged from September 2022. Higher prices in September for feeder cattle, feeder pigs, diesel, and nitrogen more than offset lower prices for feed grains, complete feeds, concentrates, and hay & forages”.

Corn farmers received $5.21 per bushel in September 2023 compared to $5.73 per bushel in August 2023, down 9.1 percent. The price received in September 2022 was $7.09 per bushel

Soybean farmers received $13.20 per bushel in September 2023 compared to $14.10 per bushel in August 2023, down 6.8 percent. The price received in September 2022 was $14.20 per bushel

The September 2023 egg price received by farmers was $ 1.22 per dozen for table eggs lower than $1.35 per dozen in August 2023 and compared to $2.65 per dozen in September 2022. The sharp year-on-year increase is attributed to disequilibrium between supply and demand. Highly pathogenic avian influenza resulted in depletion of 44 million hens with a reduction of 20 million producing birds in the supply flock on average from mid 2022 onwards. This situation was coupled with increased demand as consumers increased purchases of eggs representing a competitively priced protein source in an inflationary environment.

The June 30^th 2023 Planted Acreage report documented the respective areas planted to corn and soybeans, the two commodities of relevance to the poultry industry. The USDA confirmed:-

Corn-planted area for all purposes in 2023 is estimated at 94.1 million acres, up six percent or 5.52 million acres from last year. This represents the third highest planted acreage in the United States since 1944. Compared with last year, planted acreage is expected to be up or unchanged in 43 of the 48 estimating States. Area harvested for grain, at 86.3 million acres, is up nine percent from last year.

Soybean-planted area for 2023 is estimated at 83.5 million acres, down five percent from last year. Compared with last year, planted acreage is down or unchanged in 21 of the 29 estimating States.

Together with the Grain Stocks report the Planted Acreage data moved the market for corn and soybeans by about five percent but in contrasting directions.

For corn the acreage was above the most optimistic projection although offset by a lower stock. At 14H30 on the CME after the release of the two USDA reports, corn was down 25 cents per bushel to 556 cents for July delivery and for September, corn was down 34 cents per bushel to 489 cents.

For soybeans the reduced acreage and consequently lower ending stocks was bullish for the new crop. At 14H30 CME soybeans were up 75 cents per bushel to 1,558 cents for July delivery and for September the soybean price was up 73 cents per bushel to 1,354 cents.

According to USDA economists, retail egg prices increased by 8.5 percent in January 2023, approximately 70.1 percent above January 2022.  The USDA-ERS now predicts that egg prices will increase by 37.8 percent in 2023 but with a wide range of 18.3 to 62.3 percent attributed to volatility.  Concurrently the USDA-ERS predicted a 4.7 percent increase in the price of meats, 7.2 percent for dairy products and 12.8 percent for cereals and bakery products.

Wholesale farm-level egg prices are predicted to increase by 7.4 percent in 2023 with a wide prediction interval of -32.6 to 76.1 percent.  Egg prices are extremely volatile, complicating reliable predictions.

EGG-NEWS will monitor weekly USDA wholesale prices by region and average retail prices to document retail margins.