WEEKLY ECONOMY, COMMODITY & ENERGY REPORT: September 26^th 2024.

OVERVIEW

The prices for corn and soybeans were moderately higher over the recent week continuing the trajectory from previous week. Corn and soybean prices were influenced by uncertainty over yields in Brazil and Argentine; the September 2024 WASDE Report; the August Pro Farmer Crop Tour and by farmers selling to avoid further declines and to make room for the approaching 2024 harvest beginning in strength this week. Warmer weather suggested lower corn and soybean yields and proportionally higher prices deviating from the September WASDE. There was some technical selling arising from geopolitical concerns and in response to revised projections for harvests in Brazil and Argentine. Contributory pricing factors included ongoing 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 from the 2024 crop. Sixty percent of the 2024 corn crop is now mature with 14 percent harvested. Concurrently 65 percent of the soybean crop is dropping leaves and 13 percent has been harvested in advance of the five-year average and apparently with superior crop condition as compared to 2023. The transition from a neutral phase to a La Nina event has commenced and will intensify during the fourth quarter but will not affect the 2024 harvest. The October WASDE, incorporating the September remote USDA Survey and the Pro Farmer August field evaluations should provide updated projections of yields, with USDA updates for anticipated exports and adjusted prices for the 2024 crop.

At 12H00 EDT on September 26^th the CME corn quotation for December delivery was up 2.5 percent to 416 cents per bushel and remaining above the 400 cent comfort level. Corn price was influenced by acreage planted, ethanol demand and the ending stock from the 2023 crop. Farm selling has increased, given the need to make room for the 2024 crop. It is estimated that 61 percent of corn stock was held on farms at the end of July. 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 affecting the Black Sea wheat and corn crops and events in the Red Sea. Orders by China resumed at the end of the 2022-2023 market-year and continued through August, with recent declines in the Dollar Index, albeit with increased ocean freight. Total exports for the new 2024-2025 market year were 8.6 percent above the first three weeks 2023-2024 year.

Soybeans were priced at 1,051 cents per bushel for November 2024 delivery, remaining above the 1,000-cent psychological threshold. Price was up 3.8 percent compared to 1,013 cents per bushel last week for November delivery. Higher prices were attributed to the projection of ending stock, despite farm selling and taking into account recent export orders and projections of availability from the 2024 U.S., Brazil and Argentine harvests. Total exports for the 2024-2025 market year are 7.9 percent lower than for the corresponding first three weeks of market year 2023-2024.

Soybean meal was priced at $327 per ton for December delivery, up $5 per ton (+1.6 percent) from last week. Price is influenced by demand coupled with an unexpectedly low crush volume in August reversing the processing trend during the first half of 2024. Price will fluctuate to reflect the CME price for soybeans and the depressed demand for biodiesel due to oversupply and the consequential 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 Revised September WASDE Reports updated from August.

On September 26^th at 13H00 EDT the price for WTI was down $3.29 (-4.6 percent) from last week to $68.00. Price today does not reflect concern over Hurricane Helene. It is estimated that 20 percent of Gulf crude production and 30 percent of natural gas recovery were negatively impacted by Hurricane Francine. Current price is enigmatically not affected by uncertainties and tensions in the Middle East. Over the longer term price reflects moderate world demand for crude as economies and especially that of China have retracted requiring stimulation this past week. It is evident that U.S. production is a moderating influence on World price, attaining a record average of 13.4 million barrels per day in July with ample reserves. There was a steady downward trend in the price of WTI during the week resulting in a range of $67.29 for the high retracting to $67.29 at the open on September 26^th.

High U.S. crude production is constraining domestic and international prices. The recent decline in energy costs during the past month contributed to deflation influencing the FOMC in their decision to lower the benchmark interest rate at the September meeting.

Economic data released during the past quarter (Q2 GDP; PCE, Confidence, Productivity, Employment) confirm a slowing economy but with a downward trajectory in inflation. Second Quarter GDP was revised upward to 3.0 percent from the previous projection of 2.8 percent. The data-driven Federal Reserve FOMC lowered the benchmark interest rate by 50 basis points on September 18^th. Federal Reserve Chair Jerome Powell and Reserve Bank Governors indicated one or two additional reductions in the 10-year rate during 2024. The August and September Non-farm Payrolls and labor data clearly indicated the danger of prolonging the high benchmark interest rate that was negatively impacting the U.S. economy.

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 Q2 2024 GDP and the August 21^st preliminary revision of 2023/2024 job creation, coupled with 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 2.5 percent in August 2024. This is in part a response to a series of 11 FOMC rate raises and eight pauses 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 lowered the benchmark interest rate by 0.5 percent at the monthly FOMC meeting on September 18^th, the first of a series of actions after eighth sequential pauses. The Federal Reserve commentary indicated that progress has been made in reducing the rate of inflation with subsequent reductions of 25 basis points at the two remaining meetings in 2024 and extending into 2025. Chairman Powell in Congressional testimony, and at the post-meeting press conference and also documented in FOMC minutes 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. This now appears feasible.
• The August 29^th release by the Bureau of Economic Affairs documented the revised preliminary estimate of Q2 2024 GDP of 3.0 percent up from 2.8 percent, and above the Q1 value of 1.4 percent. The preliminary Q2 GDP value was influenced by higher consumer spending.
• On September 11^th the Bureau of Economic Analysis released the August Personal Consumption and Expenditure Price Index. The core CPI (excluding food and energy) was up 0.3 percent from the previous month, above a 0.2 percent estimate and attained 3.2 percent year-over-year in line with consensus. Headline CPI was up 0.2 percent from July and 2.5 percent from July 2023. Food was up 0.1 percent from July and 2.1 percent from July 2023. The protein category (meat, poultry and fish) was up 0.8 percent from July. Eggs were expectedly up 4.8 percent but with moderation anticipated for September. Food at home was up 0.3 percent from July and 0.9 percent from July 2023. Food away from home was up 0.3 percent from July and 4.0 percent over the year. Personal income was up 0.2 percent from July. The headline PCE is closely followed by the Federal Reserve and confirms that inflation is progressively moderating but still above an annual target of 2.0 percent.
• The August Producer Price Index for Final Demand (PPI) released on September 12^th was up 0.2 percent from July consistent with expectations. This was attributed in part to a 0.4 percent increase in services and a 0.2 percent increase in goods. The PPI was up 1.7 percent over the past 12-months ending in August compared with 2.2 percent for the 12-month period through July. This is compared to a 6.4 percent increase in 2022. The core PPI value excluding volatile fuel and food, was up 0.3 percent from July and 3.3 percent over the previous 12 months.
• A Federal Reserve release on September 17^th confirmed that industrial production was higher by 0.9 percent in August compared to a decrease of 0.6 percent in July. Capacity utilization was higher at 77.2 percent and 1.1 percent below the long run 1972-2020 average.
• The September 26^th report by the Department of Commerce, Census Bureau on Durable Goods Ordered during August 2024 showed no change from July compared to a forecast fractional decline. August sales should be viewed against the 9.9 percent increase in July attributed to the Transportation segment and specifically aircraft orders and parts that were up 34.6 percent. Excluding the Transportation component, new orders in August increased by 0.5 percent compared to a decrease of 0.3 percent in July. Shipments of durable goods in the non-defense category were up 0.1 percent in August from the previous month ultimately to be reflected in the quarterly GDP.
• In a September 4^th release the Census Bureau confirmed that factory orders for U.S. manufactured goods rose 5.0 percent in July against an estimate of 4.7 percent and compared to a fall of 3.3 percent in June.
• The September 15^thS. Census Bureau release of the advanced estimate of retail and food sales data for August was up 0.1 percent from the revised July value and up 2.1 percent over 12 months. Food service sales were unchanged from July and up 2.7 percent over 12 months. Grocery store sales were down 0.6 percent from the revised July value and up 1.5 percent over the past 12-months. The Federal Reserve FOMC closely monitors retail sales as a measure of the trend in inflation.
• The September 23^rd. release of the Global PMI Report for September showed fractional declines in all three segments that were below consensus estimates. Manufacturing PMI was down from 47.9 in August to 47.0 in September on lower orders. The Services PMI was down from 55.7 to 55.4. The Composite PMI was down from 54.6 to 54.4. Values below 50.0 represent contraction.
• The September 3^rd release by the Institute for Supply Management (ISM®) recorded a rise in the Manufacturing Index for August to 47.2 against an expected value of 47.5 but up from 46.8 in July. The August value was still below the bifurcation point of 50 percent between contraction and expansion. The Prices Index rose by 1.1 to 54.0 in August, denoting higher costs for production. U.S manufacturing continues to contract despite an improved economy, attributed to prolonged high benchmark interest rates. The Production Index for August was down from 45.9 in July to 44.8 in August.
• On July 31^st the U.S. Bureau of Labor Statistics reported a 0.9 percent increase in the Employment Cost Index (ECI) over the 2^nd quarter of 2024 against a consensus estimate of 1.0 percent. The year-over-year increase was 4.1 percent and with benefit costs up by 3.8 percent. The July ECI of 0.9 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 this data justified in part the 50 basis point drop in the benchmark interest rate in September and strengthens the possibility of additional rate cuts in the 4^th quarter as suggested by Federal Reserve Chairman Powell.
• The September 24^th Consumer Confidence report prepared by The Conference Board for the period ending September 17^th, confirmed a substantial decrease to 98.7 from the revised August value of 105.6, with all segments down, representing the largest decline since September 2021. The Present Situation Index measuring perceptions of current business conditions fell to 124.3 from 133.4 in August. The Expectations Index fell from a revised August value of 86.3 to 81.7 but the third consecutive month above 80. Values below this threshold over consecutive months and with a downward trajectory are regarded as predictive of a recession.
• The September 13^th University of Michigan Preliminary Index of Consumer Sentiment for September increased for the second consecutive month to 69.0 from a revised August value of 67.9. The Current Economic Index was 62.9 up from 61.3 in August. This suggests alleviation of concerns among respondents. The Index of Consumer Expectations was 73.0 up from 72.1 in August, denoting an improvement in consumer sentiment influenced by an anticipation of rate cuts and lower inflation despite geopolitical factors. Inflation expectations 12-months hence were down to 2.7 percent from 2.8 percent last month as assessed by the 500 surveyed.
• Non-farm payrolls added 140,000 in August, as documented by the Bureau of Labor Statistics in a September release. This was far lower than the anticipated 161,000, and should be compared to the revised July value of 114,000. Of concern was the downward revision for June from 179,000 to 118,000 jobs added. The August decrease was attributed to workers in the private sector although reductions in health care and construction were constrained. The unemployment rate fell to 4.2 from 4.3 percent with 7.1 million unemployed and with 1.5 million in the long-term category. Real average hourly earnings during July showed a 0.4 percent increase over June to $35.21. Average hours worked increased 0.1 percent to 34.3 hours per week in August. Labor participation was unchanged at 62.7 percent in August. Wage rates increased 3.8 percent over 12-months. Wage rates are closely followed by the Federal Reserve FOMC.
• The August 21^st preliminary revision of job growth by the Bureau of Labor Statistics based on state data suggested that 818,000 fewer jobs were actually created from April 2023 through March 2024 than previously estimated. The discrepancy represented an apparent overstatement of 68,00 new jobs per month on average. Less than half of the overestimate was in the Professional and Business category (358,000); Leisure and Hospitality, (150,000) and Manufacturing (115,000). The preliminary revision that has mainly political implications should increase the magnitude of the reduction in benchmark rate at the September FOMC Meeting.
• The Bureau of Labor Statistics Job Openings and Labor Survey report released on September 4^th estimated 7.67 million job openings at the end of July, below the forecast of 8.10 million and lower than the revised June value of 7.91. The July job openings number was the lowest value since February 2021 and should be compared with July 2023 at 8.81 million and the peak March 2022 value of 12.2 million job openings during COVID. The hiring rate was 3.5 percent (5.4 million hires); the July total separation rate, 3.4 percent (5.4 million); the quit rate 2.1 percent (3.3 million); and the layoff rate 1.1 percent, (1.8 million).
• The seasonally adjusted initial jobless claims figure of 218,000 released on September 26^th for the week ending September 21^st was unexpectedly down by 4,000 from the revised value for the previous week and the lowest for four months. The weekly value was higher than the Reuters estimate of 225,000, settling market concern over a rapidly slowing economy. The four-week moving average was 224,750. The Bureau of Labor Statistics estimated 1.834 million continuing claims for the week ending September 14^th (up 13,000 from the revised value for last week), compared to a peak on November 27^th 2021 at 1.928 million. The August unemployment rate declined to 4.2 percent from 4.3 percent in July. 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 and release of downward revised figures for job creation. The jobs market is still tight, but with sporadic weekly fluctuation in new claims due to weather or scheduled plant shutdowns.
• The September 5^th Bureau of Labor Statistics report recorded a 2.5 percent increase in non-Farm Productivity for Q2 2024 up from 0.4 percent in Q1 2024. Labor cost increased by 0.9 percent compared to 4.0 percent for Q1 2024. Output was up by 3.5 percent and hours worked were 1.0 percent higher.
• The ADP® reported on September 5^th that private (excluding government data) payrolls increased by 99,000 in August, down 11,000 from the revised 110,000 in July and compared to the Dow Jones estimate of 140,000 jobs. The increase in employment was mostly in the transportation, utilities, construction and hospitality sectors with 25,000 positions combined and an additional 18,000 in Financial Activities. In contrast losses were recorded in Professional and Business Services (-16,000) and Information (-14,000) Annual pay was up 4.8 percent year-over-year for ‘job-stayers’, unchanged from June and the lowest value since August 2021. The decrease as reported by ADP will not directly influence the probability of short-term future changes in interest rate since their number excluding public sector jobs is regarded as less reliable by the FOMC than the Bureau of Labor Statistics Monthly non-farm payroll report to be considered next week.

STATUS OF THE 2024 CROP

The September 12^th 2024 WASDE #652 projected:-

• Corn area planted for all purposes in 2024 (‘new crop’) will attain 90.7 million acres. According to the September WASDE, yield was projected at 183.6 bushels per acre with a resulting production of 15,186 million bushels with 2,057 million bushels as ending stock. The USDA lowered the average ex-farm price to 410 cents per bushel for the 2024 crop.
• Soybean area to be planted for 2024 will attain 87.1 million acres. According to the September WASDE, yield was estimated at 53.2 bushels per acre with production of 4,886 million bushels with 550 million bushels as ending stock. The USDA held the average season price to 1,080 cents per bushel.
• Crushers are expected to produce 57.08 million tons of soybean meal in 2024. Ending stocks will attain 400,000 tons. The USDA held the average season price at $330 per ton.
• Preliminary data from the Pro Farmer crop tour suggests a corn yield of 181.1 bushels per acre approximately 2.5 bushels lower than the USDA projection in the September WASDE. The estimated yield for soybeans was 54.9 bushels per acre approximately 1.7 bushels higher than in the September WASDE.

The preference for planting soybeans in 2024 was based on a favorable projection of the soy to corn benefit ratio despite lower prospects for exports but with higher domestic demand for crushing.

Status of 2024 Corn and Soybean Crops

The USDA Crop Progress Report released on September 23^rd recorded 65 percent of the soybean crop dropping leaves and 13 percent harvested. Sixty one percent of the corn crop is now mature and 14 percent has been harvested. Both crops were slightly ahead of the 5-year averages for the corresponding week.

Days suitable for field-work attained 6.7 per week for the nine states with the highest corn and soybean production expediting harvest. This compares with 6.3 days for the corresponding week in 2023.

Consistent with seasonal temperatures and rainfall across the Midwest and Plains states, crop condition was almost unchanged during the past week. Corn and soybeans attained 65 and 64 percent respectively for the two highest categories of “Good” and “Excellent.” The September 23^rd values for corn and soybean quality were considerably higher than the 53 and 50 percent recorded for both corn and soybean crops respectively for the two highest categories during the corresponding week in 2023. Prospects for high yields were reflected in lower price projections in the September WASDE and for CME future prices for November and December (‘new crop’) delivery following the release of the report.

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 lower, at 50 percent each for the two highest categories of ‘Adequate’ and ‘Surplus’ combined. Average topsoil moisture this past week was up two percent on average across 18 major row-crop states following rain but still with an acceptable outlook for growth and quality in 2024 given the late stage in production. Corresponding values of 47 and 42 percent were recorded for the two highest categories for topsoil and subsoil moisture respectively in 2023.

It is unlikely that the expected transition to a La Nina event will have any impact on crop condition through harvest. Prolonged dry and hot weather apparent at this time will not depress corn and soy yields depending on timing and severity.

Heat stress that occurred during silking predisposes corn to fungal infection leading to mycotoxin contamination of kernels. Unseasonal rain during the pre-harvest period for corn will also result in elaboration of mycotoxins. The status of the 2024 crop will require monitoring at harvest in affected areas and especially if unseasonal precipitation occurs during the pre-harvest period.

Reference is made to the September 13^th WASDE Report #652 and the weekly Commodity, Economy and Energy Report, both in this edition, documenting acreage to be harvested, yields, weekly prices and ending stocks. WASDE #653 will be reviewed in the October 18^th Edition.

Before the end of September the NASS intends to report on the annual remote survey to estimate yields and final production. Pro Farmer completed their annual crop tour in mid-August. The August 23^rd report estimated a corn yield of 181.1 bushels per acre with a projected crop of 14.98 billion bushels. The corresponding values for soybeans were yield of 54.9 bushels per acre contributing to a 2024 crop of 4.74 billion bushels.

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

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

On September 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 revised from the previous August 16^th 2024 report.

Projected egg production for 2024 was adjusted downward from the August 2024 Report to 7,801 million dozen This will be 0.8 percent less than in 2023 due to progressive depletion of hen flocks due to HPAI through July with no cases for the past 8 weeks. The per capita consumption of shell eggs and liquids combined for 2024 will be 274.8 eggs down 4.5 eggs (-1.6 percent) from 2023. The projected average 2024 benchmark New York bulk unit price was raised 86.9 cents to 278.9 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. Midwest Large wholesale price was restored during May 2024 and despite substantial declines during late August through September attained $2.50 per dozen for eggs in cartons delivered to DCs on September 18^th 2024. The Midwest wholesale Large value should be compared to the USDA/EIC projection of the combined nest-run July 2024 cost of 73 cents per dozen for caged white Large, plus a provision for processing, packaging and transport of 60 cents per dozen amounting to $1.33 cents per dozen.

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 326 million hens, mainly on complexes averaging over one million hens. Unpredictable factors affecting price will include the extent of anticipated losses during the fall migratory season. Approximately 17 million hens were lost to HPAI year-to-date in four states. At present the national egg-producing flock is down by 18 to 20 million hens compared to the complement at the beginning of the 2022 epornitic.

Exports of eggs and products at approximately 2.4 percent of total production over the first half of 2024 did not materially affect the domestic price.

The USDA forecast for 2025 includes production of 8,125 million dozen, up an optimistic 4.1 percent from 2024. Projected consumption of 285.9 per capita, would be a speculative 11.1 egg (4.0 percent) increase over 2024 This forecast probably presumes complete control of HPAI and an adequate supply of replacement chicks and pullets, both unrealistic assumptions. The increase, if it were to transpire would depress the NY Large benchmark price to $1.87 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.

Over the first half of 2024, 39.9 million cases of eggs were exported valued at $64.6 million. Volume and value were 14.8 and 5.9 percent respectively lower compared with the corresponding months in 2023.

Over the first half of 2024, 14,503 metric tons of egg products were exported valued at $80.6 million. Volume and value were 11.7 and 12.8 percent respectively lower compared with the corresponding months in 2023.

Updated September 2024 USDA data is shown in the table below:-

*Data influenced by HPAI losses. Recovery in 2025 considered unrealistic

Source: Livestock, Dairy and Poultry Outlook released September 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.

USDA Weekly Egg Price and Inventory Report, September 18^th 2024.

Market Overview

• The average wholesale unit revenue values for Midwest Extra-large and Large sizes were down 28.3 percent on average this past week. Medium size was down 18.0 percent. The 5-day rolling National wholesale price for graded loose on September 16^th at $1.37 per dozen was 35.8 percent down from last week. This value was approximately $0.13 per dozen below the 3-year average of $1.50 per dozen and up $0.52 from the corresponding week in 2023 at $0.85 per dozen. This past week shell egg inventory was up 1.0 percent, following a rise of 4.6 percent during the previous week. Small fluctuation in inventory with incremental weekly decreases in price during late summer suggests lower margins for producers through the current quarter as demand ebbs and depleted flocks are replaced. Relatively higher prices compared to 2023 are attributed to losses due to HPAI depletion reducing the national flock by 20 million hens despite reduced seasonal demand expected to increase in October.
• Although there are weekly transfers of mature pullet flocks to laying houses, the size of the producing flock is 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 3.0 million in July.
• This past week, chains apparently widened the spread between delivered cost and shelf price. There is a presumption that buyers held back on orders in the face of high prices to “bend” the trajectory of the benchmark price to their advantage before the Labor Day weekend. This is evidenced by the short-term increase in inventory despite reduced supply albeit with softening demand. The cessation of incident cases of HPAI has probably provided buyers with the confidence to hold orders and run down stock. Inventory levels will depend on constant re-ordering to fill the pipeline through late September. 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, but highlighted as a factor in food price inflation.
• Total industry inventory was up by 3.1 percent overall this past week at 1.70 million cases with a concurrent 11.8 percent increase in breaking stock, following an 6.2 percent rise during the preceding week associated with reduced processing.
• It is now apparent that the inventory held by chains and other significant distributors may be more important on a weekly basis 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 possible HPAI outbreaks during coming months cannot be projected but the industry has moved into a quiescent period. Close to 210 confirmed cases of bovine influenza H5N1 in dairy herds in fourteen states and spreading in California 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 three 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 September 18^th the stated total flock of 307.3 million, was up by 0.5 million from last week, including 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 approximately 19 million hens lower than the 326 million before the onset of HPAI in 2022.
• The ex-farm price for breaking stock (rounded to one cent) was down a substantial 25.8 percent to $1.28 per dozen.Checks delivered to Midwest plants were down 38.2 percent to $1.37 per dozen this past week. Prices for breaking stock generally follow the wholesale price for shell eggs but with a lag of one to two weeks that may be shorter with a wide swing in price in either direction.

The Week in Review

Prices

According to the USDA Egg Market News Reports, released on September 16^th 2024, the Midwest wholesale price (rounded to one cent) for Extra-large was down 28.2 percent from last week to $2.92 per dozen. Large size was down 28.4 percent to $2.90 per dozen. Mediums were down 18.0 percent to $2.51 per dozen delivered to DCs. It is emphasized that these prices are for the previous week. 

As more replacement pullets advance in production, the stock of Medium size rose by 0.2 percent but the inventory of Small size increased by 7.8 percent over the past week suggesting pullet flocks are maturing but with additional younger pullets entering production. This has implications for prices during late September and October.

Prices should be compared to the USDA benchmark average 4-Region blended nest-run cost of 73.3 cents per dozen as determined by the Egg Industry Center based on USDA data for August 2024. This value excludes provisions for packing, packaging materials and transport, amounting to 57 cents per dozen as determined in mid-2023 from an EIC survey (with a low response) and now realistically 60 cents per dozen.

Currently producers of generic shell eggs should be operating with positive margins irrespective of region and customer-supply agreements. The progression of prices for loose eggs during 2023 and 2024 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

The September 6^th edition of the USDA Egg Markets Overview confirmed that the USDA Combined Region value in cartons (rounded to the nearest cent), was down 7.0 percent to $4.14 per dozen delivered to warehouses one week ago. The USDA Combined range for Large in the Midwest was $4.05 per dozen. At the high end of the range, the price in the South Central region attained $4.21 per dozen.

OVERVIEW

The USDA provided updated projections for the production of corn and soybeans in the September 12^thWorld Agriculture Supply and Demand Estimates (WASDE) #652, reflecting the anticipated 2024 crop. Production values for corn and soybeans were updated from the August edition and are based on actual field data. Projections of crop size and ending stocks are derived from acreage planted, estimates of yields, carry-forward levels from 2023, and with the latest assumptions relating to domestic use and exports.

The September 12^th WASDE report predicted that corn would be harvested from 82.7 million acres, unchanged from the August projection. The soybean crop will be harvested from 86.3 million acres, unchanged from the August report.

The September WASDE increased the yield value for the 2024 corn crop by 0.3 percent to 183.6 bushels per acre. By comparison yield was 174.9 bushels per acre in 2023. The July soybean yield was unchanged at 53.2 bushels per acre compared to 49.9 bushels per acre in 2023.

The September USDA projection for the ending stocks of corn was down 0.8 percent to 2,057 million bushels. The September USDA projection for the ending stock of soybeans was down 1.8 percent to 550 million bushels.

The September 2024 WASDE reduced the projection of corn price by 10 cents to 410 cents per bushel. The projected average season price for soybeans was held at 1,080 cents per bushel. The price of soybean meal was unchanged at $320 per ton. Projected commodity prices suggest stable to lower feed costs for livestock and poultry producers. Row crop farmers will experience lower margins or in some areas corn will be below break-even given relative production costs and per bushel price. This situation has contributed to an impasse in the decisions of the respective House and Senate Agriculture Committees regarding allocation of funding for the combination of nutrition support and conservation over farm commodity price supports in the delayed Farm Bill.

Projections for world output included in the September 2024 WASDE report, reflect the most recent estimates for the production and export of commodities especially in the Southern Hemisphere with an emphasis on Argentine and Brazil. Economists also evaluated the likely impacts from ongoing 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 an anticipated transition to a La Nina event and recovery of the Nation’s economy influencing consumer demand for food and fuel.

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 September WASDE Report predicted a crop of 15,186 million bushels, up 0.3 percent from August and compared to 15,234 million bushels for the previous 2023 record harvest. The “Feed and Residual” category was held at 5,825 million bushels. The Food and Seed category was unchanged at 1,390 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 fall driving needs. Projected corn exports were held at 2,300 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. For market year 2023-2024 exports of U.S. corn were 36.9 percent higher, compared to the previous market year. The USDA considers world weather patterns in developing projections including the effect of the transition to a La Nina event during the fourth quarter of 2024. The anticipated ending stock of corn in the September WASDE report was down 0.8 percent from the August WASDE to 2,057 million bushels.

The forecast USDA average season farm price for corn in the September WASDE report covering the 2024 crop was reduced 10 cents to 410 cents per bushel. At the close on September 12^th after the noon release of the WASDE the CME spot price for corn was 409 cents per bushel, down 2.0 percent from the quotation on August 12^th and down 0.8 percent from the September USDA projection.

September 2024 WASDE #652 Projections For The 2024 Corn Harvest:

1 metric ton = 39.368 bushels

Average Farm Price: 410 cents per bushel. (Down 10 cents per bushel from the August WASDE Report reflecting the 2024 projected crop)

SOYBEANS

Based on a prediction of increased acreage to be planted and adjusted yield, the USDA August WASDE projected the 2024 soybean crop at 4,586 million bushels, down 0.1 percent from August with an estimated yield of 53.2 bushels per acre from 86.3 million acres harvested. Crush volume was unchanged from the August WASDE report at 2,425 million bushels despite increased industry capacity. Projected exports were unchanged at 1,850 million bushels despite reduced exports to China. For market year 2023-2024 exports were down 14.9 percent from the previous market year. Ending stocks were anticipated to be 550 million bushels, down 1.8 percent from the August WASDE report. This was mainly due to the projected increase in production and carry over as compared to the projection in the August WASDE.

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

The volume of exports of shell eggs is 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. This situation persisted through the first half of 2024 but with prospects for improved volume based on decreasing prices.

It is probable that 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-JULY 2024 COMPARED WITH 2023

SHELL EGGS

Shell egg exports from the U.S. during the first seven months of 2024 declined by 5.8 percent in volume and 11.3 percent in total value compared to the corresponding months in 2023. Unit value increased by 0.5 percent to $2.07 per dozen compared to the corresponding period in 2023.

Shell egg exports from the U.S. during July 2024 declined by 6.5 percent in volume but were higher by 87.8 percent in total value compared to the corresponding month in 2023. Unit value increased by 101.7 percent to $2.40 per dozen compared to July 2023.

Canada was the leading importer of shell eggs during the first seven months of 2024, with 32.4 million dozen representing 71.1 percent of volume and 68.7 percent of the $94.5 million total value of U.S. shipments of shell eggs. Unit price over January-July 2024 was $2.00 per dozen compared to $2.50 per dozen for all consignments in January-July 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 supply shortfalls especially when additional losses occur due to HPAI or under conditions of high demand. This model assures the approximately 1,000 independent producers a stable income but is supported by higher prices to consumers. During July 2024 Canada imported 4.1 million dozen up 86.4 percent over the corresponding month in 2023. Value was up 259 percent to $9.7 million. Unit value was 91.9 percent higher to $2.36 per dozen.

The Caribbean Region (Bahamas, Netherlands Antilles, Cayman Islands, and others) was a distant second in shell egg imports from the U.S. valued at $17.3 million during January-July 2024, with 7.6 million dozen representing 16.7 percent of volume and 18.2 percent of the total value of U.S. shipments of shell eggs. Unit price over January-July 2024 was $2.28 per dozen

Mexico was the third-ranked importer of shell eggs in January-July 2024 with a volume of 1.5 million dozen representing 3.3 percent of export volume and 2.8 percent of value. Unit value of $1.69 per dozen is compared to an average value of $2.07 per dozen for all exports. During July Mexico did not import shell eggs from the U.S. that are normally used for breaking.

The average 12-month trailing USDA benchmark price for nest-run large shell eggs was $1.70* per dozen weighted by high prices caused by shortages during the first quarter of 2023 from depletion of flocks infected with HPAI.

*USDA 12-month USDA benchmark nest-run unit prices per dozen: August, $0.90; September, $1.00; October, $0.89; November, $1.65; December, $1.81; January 2024, $1.72; February, $2.51; March, $1.87; April, $1.35; May $1.35; June $2.07 and July $3.33.

EGG PRODUCTS

The total volume of exported egg products during the first seven months of 2024 decreased 15.9 percent to 16,162 metric tons compared to January-June 2023. Total value of $71.9 million was lower by 11.9 percent compared to January-July 2023. Unit value increased by 4.8 percent to $4,448 per ton compared to January-July 2023. During 2023 the U.S. exported 29,814 metric tons of egg products valued at $134.3 million with a unit price of $4,505 per metric ton. Fluctuation in unit price reflects the composition of exports and the relationship between World supply and demand. Ukraine is now restrained in production but India continues as a significant exporter.

Japan was the leading importer by volume of U.S. egg products during January-July 2024 receiving 4,657 metric tons from the U.S. valued at $21.2 million representing 28.8 percent of volume and 29.4 percent of value with a unit price of $4,552 per metric ton. Volume for January-July 2024 was down by 33.3 percent and value was lower by 37.1 percent compared to the corresponding months in 2023. During July 2024 Japan imported 510 metric tons, down 37.3 percent over the corresponding month in 2023. Value was down 47.8 percent to $2.4 million but unit value was 16.8 percent higher to $4,705 per metric ton. During 2023 Japan imported 10,352 metric tons of egg products from the U.S., valued at $49.9 million. With the conclusion of a bilateral trade agreement, the U.S. should no longer be at a competitive disadvantage with respect to the E.U.

Mexico was the 2^nd ranked importer from the U.S. during January-July 2024 based on a volume of 3,393 metric tons with a value of $12.8 million, representing 21.0 percent of volume and 17.8 percent of the total value of U.S. exports of egg products. Exports to Mexico were up by 9.3 percent in volume but 17.4 percent lower in value compared to January-July 2023. The unit value of $3,772 per metric ton can be compared with the average unit value for U.S. exports of all egg products at $4,448 per metric ton. During July Mexico imported 362 metric tons valued at $1.4 million. Volume was 27.2 percent lower and value was 48.2 percent below July2023 with a unit value of $4,230 per metric ton.

Canada was the 3^rd-ranked importer in January-July 2024 based on a volume of 2,346 metric tons with a value of $8.4 million. Canada represented 14.5 percent of volume and 11.7 percent of value with a unit price of $3,580 per metric ton. During July Canada was 3^rd- ranked as an importer with 302 metric tons representing 18.2 percent of exports of egg products up 43.1 percent from July 2023. Value was $0.9 million or 12.3 percent of the monthly total, up 125 percent from July 2023 with a unit revenue of $2,980 per metric ton. Volumes shipped reflect restoration of the institutional and food service sectors and the relative availability of domestic product in Canada.

The E.U.-27 advanced to the 4^th-ranked importer of egg products over the first seven months of 2024 with 1,384 metric tons. Value was $12.0 million with a high unit price of $8,670 per metric ton. During July the E.U. imported 109 metric tons of egg products valued at  $1.0 million with a unit price of $9,174 per metric ton.

South Korea was ranked 5^th among importers of egg products during January-July 2024 with a volume of 1,291 metric tons. Export value was $5.2 million with a unit value of $4,028 per metric ton. Comparing these values with the corresponding months in 2023, volume was 108.9 percent higher and value was up by 67.7 percent. Most flocks in South Korea have been restored to production after depopulation following 2022-3 outbreaks of HPAI. Import volume may have been influenced by recent limited but rising flock depletion. South Korea imported 91 metric tons during July 2024. During 2023 South Korea imported 1,141 metric tons valued at $5.3 million. Depending on severity, the return of HPAI may result in a disparity between local availability and demand requiring imports in 2024 as in 2022.

Australia has emerged as an importer of egg products with 725 metric tons shipped during the first seven months of 2024 valued at $2.3 million with a unit price of $3,172 per metric ton. There were no imports in April, but 151 metric tons were shipped during both May and June but nothing in July. Depending on the HPAI situation that has required depopulation of 7 percent of the Nation’s hens, additional orders for shell eggs and products may be forthcoming.

COMMENTS

Exports to Canada and Mexico combined in 2022 amounted to $126.5 million in value equivalent to 47.5 percent of the total value of shell eggs and products shipped. During 2023 exports valued at $150.7 million represented 50.8 percent of shell egg and egg products amounting to $296.5 million. Canada represented 59.0 percent of the $162.2 million for shell eggs and 10.3 percent of egg products valued at $121.2 million, consigned during 2023, emphasizing dependence on this USMCA partner. During the first seven months of 2024 the USMCA imported shell eggs and products valued at $88.7 million. This represented 53.4 percent of all U.S. egg and product exports valued at $166.4 million.

Aspirational volumes of exports in excess of five percent of domestic production are unrealistic. The E.U., Japan, South Korea and Taiwan will indent according to their needs for undifferentiated shell eggs and products based on landed price in a competitive World market. Purchase decisions for commodities are determined by FOB price, freight, duty and broker margins. Shell eggs and the various categories of egg products are essentially commodities and generally do not respond to promotion. The recent appointment of a manager responsible for promoting exports and trade-related missions (‘junkets’) are inconsistent with prudent use of check-off funds. This opinion is based on an understanding of the factors motivating imports comprising need and price. The reality is that U.S. exports are heavily concentrated among our two USMCA partners in addition to the Caribbean region based on proximity and price.

Exports will be dependent on the willingness of importers to accept the World Organization for Animal Health (WOAH) principle of regionalization (zoning) in the event of outbreaks of exotic Newcastle disease or isolation of either H5 or H7 avian influenza (AI), in commercial flocks, irrespective of pathogenicity. Most importing nations are now applying regionalization and permitting imports on a zonal, county or state-exclusion basis following H5 or H7 AI infection. Canada and the U.S. operate according to a 2018 bilateral agreement to maintain trade in the event of outbreaks of catastrophic exotic diseases including HPAI and END.

Generally pasteurized egg products should not be subject to any embargo imposed following reports of AI or Newcastle disease in a region.

REVIEW OF AUGUST 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.

AUGUST HIGHLIGHTS

• August 2024 USDA ex-farm blended USDA nest-run, benchmark price for conventional eggs from caged hens was 333 cents per dozen, up 129 cents per dozen or 63.2 percent from the July 2024 value of 204 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. Highly pathogenic avian influenza will not be a consideration until the fall migration of waterfowl resumes. 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 17 million hens and 1.5 million pullets have been depleted year to date.
• August 2024 USDA average nest-run production cost for conventional eggs from caged flocks over four regions (excluding SW and West), applying updated inputs was down 2.3 cents per dozen to 73.3 cents per dozen compared to the USDA revised July 2024 value of 75.6 cents per dozen, mainly attributable to a 5.6 percent lower 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.
• August 2024 USDA benchmark nest-run margin for conventional eggs attained a positive value of 259.7 cents per dozen compared to a revised positive margin of 128.4 cents per dozen in July 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 July 2024 national flock in production (over 30,000 hens per farm) was stated by the USDA to be down 1.2 million hens (rounded) to 288.7 compared to the revised June 2024 value of 289.9 million. This figure may not reflect flocks depleted in July. Approximately 3.0 million hens returned to production from molt in July together with projected maturation of 21.5 million pullets, with this number offset by depletion of an unknown number of spent hens.
• July 2024 pullet chick hatch of 28.6 million was up 0.7 percent or 0.2 million chicks from June 2024.
• July 2024 exports of shell eggs and products combined was down 26.2 percent from June 2024 to 384,600 case equivalents representing the theoretical production of 5.1 million hens. The substantial decrease was due to lower imports of products by Japan, the EU, Mexico and South Korea.

TABLES SHOWING KEY PARAMETERS FOR AUGUST 2024.

Summary tables for the latest USDA August 2024 flock statistics, costs and unit prices made available by the EIC on September 6^th 2024 are arranged, summarized, tabulated and compared with values from the previous August 9^th 2024 release reflecting July 2024 costs and production data as applicable. Monthly comparisons of production data and costs are based on revised USDA value

USDA Data On Cage-Free Production For July 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 WeeklyEggPrice and Inventory Report posted on EGG-NEWS mailed on Fridays each week.

The USDA Cage-Free Report covering July 2024, released on August 1^st 2024, documented the complement of hens producing under the Certified Organic Program to be 19.6 million (rounded to 0.1 million), down 0.2 million hens or 0.9 percent from June 2024. This is due to 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 0.7 million hens or 0.9 percent from June 2024 to 100.7 million, despite previous flock depopulation and an unexpected high value in June. Hen numbers posted by the USDA for July are questioned as to accuracy taking into account chick placements and depopulation figures released by APHIS.

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 July 2024 was down 0.9 percent compared to June 2024 with a questionably high average weekly production of 83.8 percent, up from 83.7 percent in June. Average weekly flock production for cage-free flocks other than Certified Organic was down 0.6 percent in June 2024, but with a more reasonable high average hen-month production of 82.5 percent, up from 82.4 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 and June 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 July 2024 averaged $2.27 per dozen, up by 5.1 percent from $2.16 per dozen in June 2024, reflecting presumably lower supply relative to demand. The July 2024 advertised U.S. retail price for cage-free eggs over five regions (excluding NW, AK. and HI.) was $3.30 per dozen up 28 cents per dozen (9.2 percent) from June 2024 over 3,527 stores. This compares with 6,677 stores in June confirming fewer promotions in July.

The apparent difference between a recorded average wholesale price of $2.27 per dozen plus a provision of 60 cents per dozen for packaging, packing and transport, results in a price of $2.87 per dozen delivered to CDs. The average five-region advertised retail price of $3.30 corresponds to an average retail margin of 15.0 percent (9.5 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.

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.