The USDA Economic Research Service issued an updated forecast of egg production on December 16th, updating the previous November 15 th report. The volume of eggs produced and per capita consumption in 2019 were increased by 2.9 and 1.9 percent respectively compared to 2018 data. Consistent with this disparity, the benchmark New York price was reduced by 31.9 percent in unit value. Production data reflecting 2016 and 2017 should be compared to 2015, impacted by the Spring outbreak of HPAI in the upper-Midwest. The price elasticity of eggs is denoted by the disparity in the decline in the New York price benchmark relative to forecast volume of production. The latest data is reflected in the table below:-

Source: Livestock, Dairy and Poultry Outlook –December 16th 2019

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

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

OVERVIEW

Predictably the December 10th 2019 USDA WASDE Report was unchanged from November but with lower price projections for soybeans and soybean meal.

Corn and soybean harvests reflected in the December WASDE are based on actual yield and harvested area. The corn acreage harvested was 89.9 million acres (81.8 million in 2018) unchanged from the November WASDE. Soybeans were harvested from 75.6 million acres, unchanged from the November WASDE. (88.3 million acres in 2018)

The December USDA projected corn yield was retained at 167.0 bushels per acre, (178.9 bushels in 2018) The low value was due to late planting, delayed development and adverse weather before harvest. Soybean yield was retained at 46.9 bushels per acre from the November WASDE, (52.1 bushels in 2018). The November USDA projection for the ending stock of corn was retained at 1,910 million bushels. Ending stock for soybeans will be unchanged from the November estimate to 475 million bushels.

Projections for ending stocks of both corn and soybeans have influenced recent CME price quotations concurrently with conflicting reports on trade negotiations with China. It is presumed that projections are based on the assumption that there will be no comprehensive settlement of the trade dispute with China in 2019. It is hoped that some concessions on tariffs will be incorporated into an anticipated "Phase-1" accord. China failed to commit to purchase commodities following the June meeting between President Trump and Premier Xi at the G-20 Meeting in Osaka. No substantial orders have been placed by China since the mid-October negotiations in Washington. Some orders representing four percent of projected 2019 exports of soybeans were forthcoming in September after the August G-7 Summit in France. In mid-September, China rescinded a ban on all agricultural imports from the U.S. imposed on August 4th. This followed the announcement of a delay in introducing a September 1st threatened tariff of 10 percent on imports from China valued at $300 billion not already subject to duty.

CORN

The corn harvest for 2019 documented in the December WASDE Report #595 is projected to be 13,661 million bushels consistent with acreage planted, crop progress and estimated yield. The projection for 2019 can be compared to the 2018 harvest of 14,420 million bushels and is down 9.0 percent from the 2016 record harvest of 15,148 million bushels. The "Ethanol and Byproducts" category was retained from November at 5,375 m. bushels despite the prospect of year-round use of E-15 but eroded by Small Refinery Exemptions and reduced domestic demand for E-10. Exports were held at 1,850 million bushels taking into account intense competition from Brazil and Argentine and increased World domestic coarse grain production relative to demand. The "Feed and Residual" category was retained at 5,275 million bushels. Ending stocks were projected to be 1,910 m. bushels. The forecast USDA farm price was unchanged at 385 cents per bushel. Near close of trading on December 10th after release of the WASDE the CME quotations for December 2019 and March 2020 corn were 364 cents and 367 cents per bushel respectively. December corn was down 3.5 percent from trade levels following the release of the December 10th WASDE.

December 2019 WASDE #595 ESTIMATES FOR THE 2019 CORN HARVEST:

Average Farm Price: $3.85 per bushel. (unchanged from the November 2019 WASDE Report)

SOYBEANS and SOYBEAN MEAL

USDA projected the 2019 soybean crop to be 3,550 million bushels, unchanged from the November WASDE estimate, based on a yield of 46.9 bushels per acre, down 2.1 percent from the earlier September projection. Use parameters were unchanged from the November 2019 WASDE Report with crushings at 2,105 m. tons. Projected exports were retained at 1,775 million bushels, presumably not anticipating any resolution of the trade conflict with China during 2019. The export projection appears speculative given that negotiations are still in progress although China has rescinded the complete ban on importation of U.S. agricultural products imposed in August. The U.S. has identified and is supplying alternative markets to China. It is ironic that some of this volume is probably transshipped to China. In recent years our largest trading partner imported the equivalent of 25 percent of U.S. soybeans. Ending stocks were held at 460 million bushels.

The USDA projection of the ex-farm price for soybeans for the 2019 harvest is 885 cents per bushel, down 15 cents per bushel from the November WASDE estimate. Near close of trading on December 10th following release of the WASDE the CME quotations for soybeans for January 2020 and March 2020 delivery were 900 cents and 915 cents per bushel. January 2020 soybeans were 2.1 percent lower from the December trade level, following the release of the December 10th WASDE.

Projected output of soybean meal was held at 49.5 million tons. Domestic use was unchanged at 36.7 million tons. Exports were retained at 13.4 million tons despite an uncertain trade environment. The USDA reduced the ex plant price of soybean meal by $15 per ton from the November WASDE to $310 per ton. Near close of trading on December 10th CME quotations for December 2019 and March 2020 deliveries of soybean meal were $297 and $302 respectively. The December 2019 quotation on December 10 th was 2.6 percent lower than the November 8th quotation following the release of the November WASDE.

DECEMBER 2019 WASDE #595 ESTIMATE FOR THE 2019 SOYBEAN HARVEST AND SOYBEAN MEAL PRODUCTION:

Average Farm Price: 885 cents per bushel (Down 15 cents per bushel from the November WASDE Report)

Soybean Meal

Average Price ex plant : $310 (Down $15 per ton from the November WASDE Report)

IMPLICATIONS FOR PRODUCTION COST

The price projections based on CME quotations for corn and soybeans suggest lower 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:-

  o The cost of egg production would change by 0.45 cent per dozen

  o 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:-

  o The cost of egg production would change by 0.40 cent per dozen

  o The cost of broiler production would change by 0.25 cent per live pound.

WORLD SITUATION

Global coarse grain production for 2019/2020 was raised by 6.8 million m. tons to 1,401 million m. tons. Higher output from Russia, China and Bolivia will be partly offset lower production in Mexico and Canada. The 2019/2020 season will be characterized by higher production and trade in coarse grains and raised ending stocks. Brazil will increase exports to traditional U.S. markets including Japan, S. Korea and Mexico.

The global projection for oilseeds was increased by 3.3 m. metric tons to 574 million m. tons including 1.0 million metric tons additional soybeans from China but lower production in the U.S. The production of sunflower was lower in Canada and Australia but higher in Russia and Ukraine. Updated World production and use of total grains and oilseeds is summarized for the 2019/2020 season taking into account Northern and Southern Hemisphere production:-

(1 metric ton corn= 40 bushels) ("ton" represents 2,000 pounds)

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing the first ten months of 2019 with the corresponding period in 2018:-

U.S. SHELL EGG AND EGG PRODUCT EXPORTS DURING

JANUARY-OCTOBER 2019 COMPARED WITH 2018

Source USDA-FAS/USAPEEC

Review of November 2019 Production Costs and Statistics.

• November 2019 USDA ex-farm blended nest-run benchmark price was up 47 cents per dozen or 118.0 percent from October 2019 to 106.8 cents per dozen. Higher price is consistent with seasonal purchase trends but moderated in extent and timing by oversupply.
• November 2019 USDA average nest-run production cost was 0.4 percent lower than October 2019 at 59.8 cents per dozen due to decreased feed costs.
• November 2019 USDA benchmark nest-run margin increased to a positive value of 47.0 cents per dozen from a loss in October of 11.2 cents per dozen, representing a swing of 58.2 cents per dozen.
• October national flock ( over 30,000 hens/farm) was up 2.4 million or 0.8 percent to 319.5 million.
• October pullet chick hatch was up 4.3 percent from September to 26.2 million.
• October exports of shell eggs and products were up 32.7 percent to 957,300 case equivalents representing the theoretical production of 14.9 million hens.

Based on the importance of cage-free production, the USDA-AMS issues a monthly report on volumes and prices for the information of Industry stakeholders. There is some doubt as to the accuracy of the individual monthly flock numbers especially with reports that show either no change or a significant increase in the cage-free flock for a specific month. It is questioned whether it would not be more informative to post accurate quarterly data in place of questionable monthly figures.

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

The USDA Cage Free Report for the month of November 2019 released on December 2nd documented a 0.6 percent increase in hens producing under the Certified Organic seal. The National cage-free flock increased by 0.7 percent. (Accepting USDA data). The respective numbers of hens in organic and cage-free flocks should reflect the realities of supply and demand in the market over successive quarters. Average flock production was increased to 76.3 percent for both categories of non-caged hens reflecting younger flocks placed to mature for the Christmas market.

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