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 profound doubt as to the accuracy of the monthly flock numbers and the question is raised as to the desirability of posting accurate quarterly data in place of erratic 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 Weekly Price and Inventory Report.

The USDA Cage Free Report for the month of July 2018 released on September 4th 2018 documented no increase in hens producing under the Certified Organic seal and no change in cage-free flocks as compared to July 2018. Organic egg production was up less than 0.1 percent from July. Cage-free egg production was unchanged from the previous month. 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 unchanged at 75 percent (accepting USDA data):-

Kindly refer 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.

• July 2018 USDA Ex-Farm Benchmark Price up 24 Percent from June Consistent with Demand.

• Production Cost Down 0.9 Percent with Feed Lower by 1.9 Percent.

• Positive Nest-run Margin Increased to 32.2 Cents per Dozen

INTRODUCTION.

Summary tables for the latest USDA July 2018 statistics and prices made available by the EIC on August 6th are arranged, summarized, tabulated and discussed in comparison with values from the previous July 9th 2018 posting reflecting June 2018 data.

COSTS & REVENUE

The USDA Economic Research Service issued an updated July 16th 2018 forecast of egg production. The volume of eggs produced and per capita consumption in 2019 were increased by 1.8 and 1.1 percent respectively over 2018. Consistent with this disparity the benchmark New York price was reduced by 12.6 percent in unit value Production data reflecting 2016 and 2017 should be compared to 2015 which was impacted by the Spring outbreak of HPAI in the upper-Midwest. For reasons which are unclear the USDA amended per capita egg consumption for 2015 through 2017. The latest data is reflected in the table below.

Source: Livestock, Dairy and Poultry Outlook - June 18th 2018

*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

The July 12th 2018 USDA WASDE projections for the 2018 corn and soybean harvests are based on actual planting data, crop progress, long-range weather forecasts and historical records. Harvest areas for corn and soybeans were updated from the June projection to 81.8 million acres (83.1 million in 2017) and 88.9 million acres, (89.5 million acres in 2017) respectively. The USDA held corn yield to 174.0 bushels per acre (175.4 bushels in 2017). Soybean yield was retained at 48.5 bushels per acre (49.5 bushels in 2017). The USDA July projection of ending stock for corn was reduced 0.3 percent to 1,552 million bushels. Ending stock for soybeans was raised 50.6 percent to 580 million bushels compared to the June 2018 WASDE Report.

The USDA projections of ending stocks and prices take into account current uncertainties concerning announced tariffs on U.S. products.

CORN

The projection of the corn harvest decreased by 1.3 percent from the June 2018 Report to 14,230 million bushels consistent with the reality that the crop is now in the stage of silking. The projection for 2018 can be compared to the 2017 harvest of 14,577 million bushels and is down 7.3 percent from the 2016 near-record harvest of 15,148 million bushels. The “Ethanol and Byproducts” category was lowered 0.9 percent to 5,625 m. bushels and exports were raised 25 m bushels to 2,225 million bushels. “Feed and Residual” was raised by 75 m. bushels to 5,425 million bushels resulting in a corresponding decrease of 1.6 percent in ending stocks to 1,552 m. bushels. The projected USDA range in farm price was reduced by 10 cents per bushel on both ends of the range to 330 to 430 cents per bushel. At 14H30 on July 13th CME quotations for July and September 2018 corn were 332 cents and 340 cents per bushel respectively.

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing January-June 2018 with the corresponding period in 2017:-

U.S. SHELL EGG AND EGG PRODUCT EXPORTS IN JANUARY-

JUNE 2018 COMPARED WITH JANUARY-MAY 2017

Source USDA-FAS/USAPEEC

SHELL EGGS

Shell egg exports from the U.S. during January-June 2018 decreased by 2.2 percent in volume but increased 22.5 percent in total value compared to January-June 2017. Unit value was higher by 25.8 percent or 25 cents per dozen for the comparison between 2017 and 2018. The top four importing nations represented 86.6 percent of volume and 79.4 percent of value.

Hong Kong displaced Canada was the leading importer over six months, with 21.4 million dozen representing 39.2 percent of volume and 31.9 percent of value of U.S. shipments of shell eggs with an average unit value of $0.99 cents per dozen. Hong Kong increased imports in June 2018 by 104 percent in volume and 61.5 percent in value ($0.89 per dozen) compared to June 2017.

Canada fell to second-place for January-June 2018 importing 20.8 million dozen, (38.2 percent of U.S. volume exported) at a value of $26.7 million (40.2 percent of total) and a unit value of $1.28 per dozen.

Mexico was a distant third in rank during the first six months of 2018 with 5.3 percent of volume and 4.5 percent of value,

The Caribbean Region represented 19.2 percent of export volume in January-June 2018. This region was down 59.8 percent in volume and 9.5 percent in value compared with January-June 2017. The unit value of shell eggs exports to the Caribbean averaged $2.21 per dozen in January-June 2018 which appears inordinately high, warranting validation of USDA data or an investigation of the price discrepancy.

EGG PRODUCTS

The total volume of exported egg products during the first six months of 2018 decreased by 22.5 percent but total value was higher by 9.5 percent compared to January-June 2017. Unit value increased by 55.0 percent to $3,635 per ton from $2,570 in January-June 2017, reflecting the relationship between World supply and demand. Export volume during 2017 was influenced by the fipronil crisis and by avian influenza in the E.U.

During January-June 2018, Japan represented 37.1 percent of the total U.S. export volume with 6,228 m. tons, an increase of 6.8 percent during the first half of 2017.

Mexico continued as the 2nd-ranked importer with 2,352 m. tons representing 14.0 percent of volume and 11.1 percent of value at $683 million. Mexico decreased volume in January-June 2018 by 23.2 percent but value increased by 17.2 percent compared to the corresponding six months in 2017. In June 2018 imports of egg products by Mexico fell by 66.3 percent compared to June 2017 falling to 4th place among destinations.

For January-June 2018, 4th-ranked E.U-28 imported 1,150 m. tons of egg products, representing 6.9 percent of the volume during the first six months of 2018. Volume of 1,841 m. tons in 2017 was presumably influenced by supply to demand disequilibrium due to shortages occasioned by HPAI. The transitory impact of fipronil contamination ceased in early 2018 as flocks were replaced in Holland and Belgium.

South Korea posted a 77 percent lower volume for January-June 2018 compared with the first six months of the previous year. Value declined by 48.4 percent with a unit value of $4,942 per m. ton which is far in excess of the average value denoting a special product mix.

COMMENTS

As prospects for re-negotiation of NAFTA fade it is relevant to recognize that exports of shell eggs and egg products to our neighbors were valued at $74.7 million in 2017.

Prospects for long-term exports of shell eggs will be limited by the willingness of importers to accept the World Organization for Animal Health (OIE) principle of regionalization in the event of exotic Newcastle disease and H5 and H7 avian influenza irrespective of pathogenicity. This concern follows the early 2017 cases of North American-lineage H7N9 HPAI in broiler breeders and some backyard flocks. Most importing nations, with the noted exception of China, are now applying regionalization and permitting imports on a nationwide or state-exclusion basis following H5 or H7 AI infection. The statutory 90-day period following depletion of affected flocks has expired.

The recent diagnoses of END in 70 backyard flocks in San Bernardino and surrounding Counties, in California should not impact exports since importers are complying with the OIE principle of regionalization.

Generally pasteurized egg products should not be subject to any embargo imposed following reports of AI.