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

The USDA Cage-Free Report for the month of August 2021, released nearly two weeks late on August 13th documented a 1.7 percent increase (0.3 million) in the population of hens producing under the Certified Organic seal to 17.8 million (rounded to 0.1 million). Cage-free flocks that apparently remained unchanged from April through July 2021 at 68.5 million increased by 7.2 percent (5.0 million hens) to 73.5 million. 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. It is evident that a noteworthy proportion of organic and cage-free eggs are down-priced to the generic category when comparing Nielsen retail sales data with potential production based on hen numbers as documented by the USDA.

Average flock production was unchanged at 79.5 percent for both categories of non-caged hens. This reflects flocks of constant average age compared to July. Seasonally, younger flocks increase the availability of cage-free and organic eggs in response to pullet chick placements in anticipation of both pre-Christmas and pre-Easter demand. Average flock production in August represented the balance between older flocks and the relative production from pullet chicks placed during late February to early March 2021 together with molted flocks resuming production during the month.

* July figures correspond exactly to May 2021

Negotiated nest-run cage-free price for August averaged $1.00 per dozen. August retail prices were higher than July consistent with increased demand for eggs from all flocks. In reality a substantial proportion of both cage free and organic eggs are downgraded to conventional categories.

The disparity between wholesale and retail prices indicates that retailers are maximizing margins. This strategy restricts volume of sales and is to the disadvantage of producers.

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

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

OVERVIEW

The September WASDE documented the 2021growing season with incremental changes in harvest acreage of corn and soybeans. The USDA ERS revised the projected ending stocks of corn, soybeans and meal based on crop conditions, weather, export trends and harvests in Brazil and in the Southern hemisphere. The corn acreage to be harvested is currently estimated at 85.1 million acres (84.5 million acres in August WASDE) Soybeans will be harvested from 86.4 million acres, (86.7 in August).

The September 2021 WASDE estimate of corn yield was raised 1.0 percent to 176.3 bushels per acre, (175.8 bushels per acre in 2020). The estimate of soybean yield was raised 1.2 percent to 50.6 bushels per acre. (50.7 bushels per acre in 2020). Final yield values will be adjusted subsequently based on weather conditions and crop health.

The September 2021 USDA projection for the ending stock of corn was raised by 13.4 percent to 1,408 million bushels based on a larger harvest. Greater supply and lower domestic crush partly offset by higher exports, resulted in a projection of ending stock for soybeans being raised 20 percent to 185 million bushels.

Projections for ending stocks of both corn and soybeans have influenced recent CME price quotations concurrently with fluctuation in exports. China has placed orders in accordance with their needs and central government policy rather than compliance with the Phase-One trade agreement of January 2020. The September WASDE projection lowered the price of corn by 30 cents per bushel to $5.45 per bushel. Soybeans were reduced 80 cents per bushel to 1290 cents per bushel.

It is accepted that projections are based on the reality that China sharply increased purchases of commodities during the recently concluded market year partly to cover low stock caused by COVID-related disruptions in imports during the first quarter of 2020. China booked substantial orders for corn and soybeans from September 2020 onwards for the 2020-2021market year and is placing orders now for the subsequent market year. Reports on volumes of commodities exported to China and other nations are included in weekly editions of CHICK-NEWS and EGG-NEWS as USDA data is released.

CORN

The corn harvest for 2021 projected in the August 2021 WASDE Report #616 is 14,996 million bushels up 1.6 percent from the August report consistent with a 1.0 percent higher yield. The projected 2021 harvest can be compared to 14,507 million bushels in 2020 and is projected to be 1.0 percent lower than the previous 2016 record harvest of 15,148 million bushels. The “Feed and Residual” category was raised 1.3 percent from the July report to 5,700 million bushels. The “Ethanol and Byproducts” category was held at 5,200 million bushels despite higher domestic demand for E-10 and other blends following relaxation of COVID-19 restrictions. Projected corn exports were increased 3.1 percent or 75 million bushels to 2,475 million bushels. Ending stocks were raised by 13.4 percent to 1,408 million bushels.

REVIEW OF AUGUST 2021 EGG PRODUCTION COSTS AND STATISTICS.

HIGHLIGHTS

• August 2021 USDA ex-farm blended USDA nest-run benchmark price was 93.6 cents per dozen, 28.8 percent higher than the July 2021 value of 72.7 cents per dozen. The average monthly USDA benchmark ex-farm price for 2020 was 76.5 cents per dozen with a range of 52.9 cents per dozen in January to 159.7 cents per dozen in March during COVID demand. Currently stock levels and prices indicate relative balance between supply and demand. Prevailing wholesale prices are largely dependent on retail sales despite moderate over-production, continued diversion from the egg-breaking sector and downward distortions attributed to the price discovery system.
• August 2021 USDA average nest-run production cost was 0.8 cents per dozen lower than in July 2021 to 69.7 cents per dozen, attributable to a 1.6 percent lower feed cost.
• August 2021 USDA benchmark nest-run margin attained a positive value of 23.9 cents per dozen compared to a positive margin of 2.2 cents per dozen for July 2021.
• July 2021 national flock in production (over 30,000 hens/farm) was up 0.8 million hens to 302.7 million. There are approximately 3.0 million hens due to return to production from molt in September with this number to be offset by depletion of older flocks.
• July 2021 pullet chick hatch was down 15.2 percent or 4.1 million from June 2021 to 22.8 million indicating concern over recent low prices.
• July 2021 export of shell eggs and products combined was down 3.7 percent from June 2021 to 924,200 case equivalents representing the theoretical production of 13.4 million hens. Increased imports by South Korea will be temporary as flocks depleted by HPAI are progressively restored.

INTRODUCTION.

Summary tables for the latest USDA August 2021 prices and flock statistics made available by the EIC on September 10th 2021 are arranged, summarized, tabulated and reviewed in comparison with values from the previous August 6th 2021 posting reflecting July 2021 cost and production data.

COSTS & REVENUE

Components of USDA 6-Region 1stCycle nest-run Cost of Production:-

Notes: 1. Rounded to decimal of a cent

* Adjusted January 2021 and used as a rounding factor

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting AUGUST 2021:-

93.6 cents per dozen1- 69.7 cents per dozen = +23.9 cents per dozen

(July 2021 comparison 72.71 cents per dozen – 70.5 cents per dozen = +2.2 cents per dozen.)

Note 1: USDA Blended egg price

1. Value not released for July by USDA

 MONTH JULY AUGUST

U.S. Average Feed Cost per ton $266.69 $262.50

Low Cost Midwest $257.37 $250.43

High Cost Northwest $285.22 $287.86

Differential $ 27.85 $ 37.43

Pullet Cost

$4.52 July 2021 (19 Weeks) $4.49 AUGUST 2021

$3.92 July 2021 (16 weeks) $3.90 AUGUST 2021

VOLUMES OF PRODUCTION

Notes 1. USDA Revision 2. Not Released

Notes 1. Texas excluded to maintain confidentiality 2. Not Released

PROPORTION OF U.S. TOTAL HENS BY STATE, 20201

Based on a nominal denominator of 310 million hens in flocks over 30,000 covering 95.2 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%

Rate of Lay, weighted hen-week (USDA) 81.8% (JULY) 82.0% (AUGUST)

Actual per capita egg consumption 2016:- 275.3 (up 19.8 eggs from 2015, HPAI )

Actual per capita egg consumption 2017:- 282.1 (up 6.8 eggs from 2016)

Actual per capita egg consumption 2018:- 287.8 (up 5.7 eggs from 2017)

Revised per capita egg consumption 2019:- 293.4 (up 5.6 eggs from 2018)

Revised per capita egg consumption 2020:- 286.5 (down 6.9 eggs from 2019)*

Estimated per capita egg consumption 2021:- 284.3 (down 2.2 egg from 2020)*

Projected per capita egg consumption 2022:- 287.9 (up 3.6 eggs from 2021)*

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook August 18th 2021 taking into account the decreased demand from the food service sector

Egg Inventories at beginning of AUGUST 2021:

Shell Eggs: 1.84 million cases down 3.9 percent from July 2021.

Frozen Egg Products: 692,691 case equivalents down 6.0 percent from July 2021

Dried Egg Products: Not disclosed since March 2020. Assume moderate level of inventory

Eggs broken under FSIS inspection (million cases) JUNE 2021 , 6.67 JULY 2021, 6.63

Cumulative eggs broken under FSIS inspection 2020 (million cases) 74.8 JAN. to DEC.

Cumulative 2020: number of cases produced (million) 268.0 JAN. to DEC.

Cumulative 2020: proportion of total eggs broken 27.9% (30.1% 2020)

Cumulative 2021: number of cases produced (million) 155.1 through JULY.

Cumulative 2021: proportion of total eggs broken 28.1% through JULY. 

EXPORTS JULY 2021: (Expressed as shell-equivalent cases of 360 eggs).

*Representing 4.1 percent of National production in July 2021.

COMMENTARY ON AUGUST 2021 COSTS AND STATISTICS

AUGUST 2021 COST AND REVENUE DATA

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

From March 2019 onward some state data was withheld to maintain confidentiality where a company predominates in a specific state or region. From March 2021 California costs were inexplicably excluded, representing an unjustified concealment of data. The three Pacific Coast states could be combined to maintain state confidentiality while providing representative U.S. data.

• The USDA ex farm benchmark blended egg price in August 2021 was higher by 28.7 percent or 20.9 cents per dozen from July 2021 to 93.6 cents per dozen, contributing to a positive margin of 23.9 cents per dozen based on ‘nest-run’ eggs (delivered from the laying house) in August, compared to a positive margin of 2.2 cents per dozen in July 2021. The August 2021 USDA benchmark price of 93.6 cents per dozen should be compared to 57.6 cents per dozen for the corresponding month in 2019 and 53.7 cents per dozen in August 2020. The price rise was due to moderate flock depletion and higher demand attributed to lifting of COVID restrictions.

• During August 2021, the feed component of production cost averaged 41.7 cents per dozen, down 1.6 percent from July 2021. For yewr-to-date average feed cost is 43.5 cents per dozen. In 2020 average feed price was 31.7 cents per dozen and for 2019, cost was 31.4 cents per dozen.
• Combining data from the USDA and the EIC, producers recorded a positive margin of 23.9 cents per dozen at farm-level, for generic-egg flocks during August 2021. This compares with a positive margin of 2.2 cents per dozen in July 2021. For 2012 YTD the cumulative algebraic margin is 31.9 cents per dozen. For 2020 the cumulative algebraic annual margin was a positive 191.8 cents per dozen. The cumulative algebraic margin for 2019 was -33.3 cents per dozen or an average monthly loss of 2.8 cents per dozen. The cumulative margin for 2018 was a positive 424.0 cents per dozen or a monthly average of 35.3 cents per dozen against USDA benchmark ‘nest run’ values.

• The simple average price of feed in August 2021 over 5-regions was $262.50 per ton, 1.6 percent lower (using USDA-AMS data) corresponding to $4.19 per ton compared to July 2021. Southwest data is no longer disclosed to avoid compromising a company that predominates in Texas. The highest cost among five regions was the Northwest at $287.86 per ton. This may be compared to the lowest-cost region, the Midwest at $250.43 per ton. It is stressed that the deliberate exclusion of California data distorts average U.S. values. It is suggested that the EIC combine data for California, Oregon and Washington into a single “Pacific States” region. The average cost figure for feed includes ingredients plus milling and delivery at a nominal $10 per ton.
• The benchmark price of corn was $221.18 per ton in August 2021, down $5.97 per ton or 2.6 percent lower than the July 2021 price, taking into account the difference in basis paid by producers. A 0.2 percent decrease of $0.86 per ton in the price of soybean meal to $380.96 per ton in August 2021 complemented the decrease in corn price on feed cost. During August there was a differential of $37.48 per ton in feed price between the Midwest and the Northwest compared to a difference of $27.48 per ton between the Midwest and the Northwest (the highest priced region) in July. The differential in corn price between the Midwest and the Northwest in August 2021 was $35.62 per ton.
• Feed price will continue to be a major factor driving production cost and hence margin. Unknown factors influencing feed cost during the third and fourth quarters of 2021 will include uncertainty over corn and soybean yields in 2021 due to weather; volume and prices of international trade and especially exports to China; diversion of corn to ethanol coupled with the remaining economic and logistic effects of coronavirus restrictions. There is obviously considerable recovery in the fuel sector with ethanol production ranging from 900,000 to 1 million barrels per day since April. Substantial exports of corn and soybeans to China, in market year 2020/2021 beginning September 2020 have increased domestic price and hence cost of production. Each $10 per ton difference in feed cost represents approximately 1.70 cents per dozen. A change of 10 cents per bushel in the price of corn is reflected in a 0.45 cent per dozen difference in production cost. A $10 per ton change in the price of soybean meal affects production cost by 0.44 cent per dozen.

• The EIC calculated the 5-Region total nest-run production cost in August 2021 to be 69.7 cents per dozen, 0.8 cents per dozen or 1.1 percent lower than in July 2021. Production costs during August 2021 ranged from 67.6 cents per dozen in the Midwest up to 74.3 cents per dozen in the Northwest, higher than the Midwest region by 6.7 cents per dozen. Deletion of California costs is considered a substantial deficiency of the EIC Report.

• Retail egg prices as determined by the Department of Commerce for July 2021 averaged 164.2 cents per dozen, unchanged from June 2021. During July 2019 and 2020 retail prices were respectively 124.3 and 140.1 cents per dozen. Consistently since 2016 retail prices have not declined in proportion to ex-farm prices, allowing higher margins at retail, thereby depressing demand. Retailers have recently demonstrated some restraint in pricing possibly due to competition from deep discounters and club stores, despite sustained demand.

AUGUST 2021 PRODUCTION DATA

• According to USDA data, the estimated average complement of U.S. hens in flocks over 30,000 during July 2021 amounted to 302.7 million, reflecting seasonal adjustment in flock size. The average total U.S. flock including hens in molt on all farms counted by the USDA amounted to 319.1 million in July 2021. The average end-of-year flock sizes over the past seven years respectively were, 2014 (311 million); 2015 (291 million post-HPAI losses); 2016 (319 million); 2017 (329.6 million); 2018 (341.6 million); 2019 (341.6 million) and 2020 (325.5 million). The December 1st 2021 flock is projected to be 327.0 million, up 1.5 million from December 2020. Prevailing margins through fall will however determine flock size early in the 4th quarter of 2021.

• The effect of COVID restrictions on the egg-breaking segment of the industry is noted in the decline in the flock size in Iowa. In January 2020 the state had 56.4 million hens with a progressive decline to 44.8 million in July. In December 2020 the Iowa flock comprised 46.3 million hens. Hen population stabilized at 46.4 million by March rising to 44.5 million in July 2021, but still 15.7 percent lower than the pre-COVID level.

• Pullet chick hatch attained 22.8 million in July 2021, down 4.1 million or 15.2 percent from June 2021. It is evident that if relatively low seasonal prices persist with further declines through the third quarter of 2021, future flock placements will be constrained by some producers cancelling pullet-chick orders.

• The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA attained 15.2 percent of the national flock in August 2021, down 2.2 percent from July 2021. Producers molted flocks in response to the drop in price of generic eggs following the end of the April 2020 surge in demand. Annual averages for molt and post-molt combined were 13.5 percent for 2020, 15.2 percent for 2019, 17.4 percent for 2018 and 18.0 percent in 2017. An historical high value of 23.8 percent in 2016 was due to the loss of hens during the 2015 HPAI epornitic.

• The average monthly projection for pullets to be transferred to laying houses during the second quarter of 2021 was 22.4 million with an increase to 27.1 million in the third quarter and 24.3 million for the fourth quarter.

• The projected hatchery supply flock (parent generation) attained 3.0 million hens in January 2021. Peak parent-flock placements of 3.1 million hens in production in June 2015, coinciding with the end of the HPAI epornitic, to a low of 2.5 million hens during the fourth quarter of 2016. Projections show a monthly average of 3.2 million parent breeder hens during the third quarter of 2021 and 3.1 million in the fourth quarter. The size of the parent flock may be revised depending on pullet chick orders as influenced by margins.

• Average hen-week production of 82.0 percent in August 2021 compared to 81.8 percent in July 2021 reflects a slightly higher proportion of younger hens in the national flock with more first-cycle hens and early second-cycle hens in production. Currently many pullet flocks are past peak production as reflected in the availability and hence price of Medium-sized eggs. Average rate of lay in 2020 attained 80.9 percent compared to 79.2 percent during 2019. 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 will fall as weighted flock age increases or conversely will rise due to early depletion thereby increasing the proportion of young hens in their first cycle.

• The August 24th USDA Poultry Slaughter Report documented 3.0 million light spent-hens processed under FSIS inspection during July 2021, 0.6 million less than the previous month and down 1.4 percent from July 2020 after hens were depleted following previously high prevailing egg prices. Spent-hens are shipped live to Canada from Northern-tier U.S. states or are rendered or composted in other regions. Approximately 14 million spent hens are disposed of each month.

JULY 2021 EXPORT DATA.

• According to USDA-FAS data, 519,000 cases of shell eggs were exported in July 2021, representing 2.3 percent of total production. This value should be compared to 409,700 cases in March 2015 prior to the onset of HPAI. The 3.4 percent increase compared to June 2021 is attributed to higher demand from South Korea until flocks depleted by HPAI are restocked.

• During July 2021 the following regions were the leading importers:- North America, comprising the two neighboring USMCA nations, but predominantly Mexico (28.0 percent of exports, was 27.3 percent last month). East Asia, mainly Hong Kong, China and predominantly South Korea, (64.7 percent, was 62.5 percent). The Caribbean and Central American Region combined represented 3.4 percent of shell egg exports in July. (See monthly Egg Export Report under the STATISTICS Tab)
• Exports of egg products in July 2021 attained 405,000 case-equivalents, representing 1.8 percent of U.S. output. The following regions were the leading importers of egg products by proportion of volume shipped:- North America, our USMCA neighbors, (3 percent of exports, was 33.9 percent last month), East Asia comprising China, Japan and S. Korea (60.7 percent, was 56.8 percent), Central America and the Caribbean were lower in July (5.7 percent was 7.6 percent). The Middle East received 1.0 percent of shipments of egg products and egg liquid shipped in July.
• Collectively, exports of shell eggs and products in July 2021 represented the output from approximately 13.4 million hens in production during the month, attaining 924,200 case-equivalents, down 3.7 percent from June 2021. This can be compared to monthly average shipments of 960,000 case-equivalents over the first four months of 2015 prior to the advent of HPAI, indicating that a proportion of international markets have been regained. The major contributors to the July volume other than traditional importers was South Korea receiving shell eggs and egg products following flock losses due to HPAI and renewed demand from Canada as the economy of our northern neighbor is restored.

Maintaining export volume is attributed to cooperation between the AEB and USAPEEC, both in existing and new 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 July 2021 corresponded to 4.1 percent of a nominal national flock of approximately 315 million hens in production 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 avian influenza or END in a state or country.

USDA Weekly Egg Price and Inventory Report, September 8th 2021

• Shell inventory was up by 2.7 percent, following a rise of 1.8 percent for the previous week reflecting increasing oversupply relative to demand, consistent with addition of 0.4 million hens to the producing flock this week and 3.0 million over two weeks. Increased consumer activity prior to the Labor Day Weekend and more intense buying before Hurricane Ida moved stock from shelves but predictably prices are now falling. Midwest prices for generics are still comfortably above breakeven taking into account the combined costs of nest-run, grading, packaging and delivery. Chains spread their purchases and preempted anticipated price rises before the Independence weekend and attempted to do so again after Labor Day. It is possible that with a large National flock this strategy will suppress traditional pre-Christmas increases. Industry observers and participants expect buyers to adjust purchases only in response to retail demand and will hold down inventories in their DCs and stores. Since the beginning of 2021 generic eggs have been consistently priced at a high level by many chains to maximize margin. This strategy has depressed the volume of sales to the disadvantage of the industry. Market data suggests that chains have manipulated shelf prices for generic white eggs in response to holiday demand and are not featuring generic Large or Extra large.

• Currently inventory comprises close to five days of production. Price movement over the past four months defies conventional supply to demand relationships and indicates extraneous factors affecting price. Wholesale Midwest prices for Extra- large and Large were unchanged this past week after sequential rises extending over four weeks. This suggests a plateau in prices and an anticipated decline following the Labor Day weekend. The commercial shell-egg price discovery system is obviously used by buyers to negotiate lower prices, serving as a self-fulfilling prophecy and a de facto instrument of potential indirect, but not necessarily intentional, collusion. The current relationship between producers and chain buyers based on a single price discovery system constitutes an impediment to a free market. The benchmark price amplifies both downward and upward swings and functions to the detriment of the industry. A CME quotation based on Midwest Large, responding to demand relative to supply would be more equitable.

• The U.S. flock in production was up 0.1 percent (0.4 million hens) from the week of September 1st to 315.6 million despite seasonal depletions, with about 3.0 million molted hens having resumed production during the past month. The Industry previously demonstrated beneficial restraint in flock placement with continued depletions and non-restocking of some complexes or houses. The trend going forward is for a larger flock but per dozen margins will continue to decline for commodity eggs unless matched with increased demand despite prevailing seasonal wholesale price over the past four weeks.

• The USDA average Midwest benchmark prices for generic Extra Large and Large were unchanged over the past week at 132.5 and 130.5 cents per dozen respectively. Mediums were down 2.4 percent to 80.5 cents per dozen. Second quarter prices reflected static demand, offset by decreases in the U.S. flock in production. The trajectory of prices into September suggests a decline following the Labor Day weekend and then moving lower through the month. Margins going forward will be shaved as feed costs plateau but with higher labor and fuel costs especially when unit revenue erodes.

• There is some prospect of a return of the food service sector with both frozen and dried-egg prices marginally higher. The economy is reopening despite a rise in COVID incidence rates and hospitalizations in many regions. There is some optimism over the rate of deployment and acceptance of the three approved vaccines especially in rural areas and inner city zones. Reopening of the economy and schools in areas with low population immunity has resulted in a surge in the incidence rate of COVID. This is especially the case following the introduction and dissemination of the Delta variant of SARS-CoV-2 virus that is more infectious and possibly with higher pathogenicity than the original strain among the non-immunized proportion of the population.

• The Midwest price for breaking stock was down 0.7 percent to an average of 70.5 cents per dozen. Checks in the Midwest were unchanged at an average of 62.5 cents per dozen. It is anticipated that these prices will fluctuate in response to market trends and gradual recovery of the breaking sector.

OVERVIEW

Prices

According to the USDA Egg Market News Reports released on September 7th, the Midwest wholesale prices for Extra-large were unchanged at an average of 132.5 cents per dozen; 1`Large were also unchanged at130.5 cents per dozen; Mediums were down 2.4 percent at 80.5 cents per dozen as delivered to DCs. Prices should be compared with the USDA benchmark average 6-Region blended nest-run, (excluding provisions for packing, packaging materials and transport) cost of 70.5 cents per dozen in July 2021 but probably now up a further two cents per dozen on feed and other costs reflecting an inflationary environment. The progression of prices during 2021 to date is depicted in the USDA chart reflecting three years of data, updated weekly.

The September 7th 2021 edition of the USDA Egg Market News Report (Vol. 68: No. 36) documented a USDA Combined Region value rounded to the nearest cent, of $1.41 per dozen delivered to warehouses for the week ending August 30th 2021. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $1.31 per dozen. At the high end of the range, price in the South Central Region attained $1.49 per dozen. The USDA Combined Price last week was 27 cents per dozen above the 3-year average. This past week Midwest Large was approximately 54 cents above the corresponding week in 2020.

Updated August USDA Projections for U.S. Egg Production

The USDA Economic Research Service issued an updated forecast of egg production on August 18th 2021 revising the previous July 16th 2021 report. The August projection of production for 2021 was increased by 0.1 percent to 8,067 million dozen with a per capita consumption of shell eggs and liquids combined of 284.3 down 0.8 percent compared to 2020. The average 2021 benchmark New York bulk unit price was raised to 113 cents per dozen taking into account higher prices during the first quarter and in August to date. The USDA provided a long-term forecast for 2022 of 8,185 million dozen produced with a consumption of 287.9 per capita. Subsequent USDA forecasts will provide greater clarity on reopening of the economy that is still depressed with moderate unemployment attributed to COVID restrictions.

August 2021 data is shown in the table below:-

Source: Livestock, Dairy and Poultry Outlook  released August 18th 2021

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.

The American Egg Board (AEB) as a service to the industry recently made available Nielsen data reflecting 52-week rolling sales and consumption of eggs and egg products for the week ending July 17th 2021.  Nielsen data captures retail volume and sales value of shell eggs, consumer-packed liquid and cooked peeled eggs. Data is derived from supermarkets, groceries, dollar outlets, drug and convenience stores all with annual sales in excess of $2 million. Some club warehouses provide data but Costco is excluded.
 

The data assembled by Nielsen and distributed by the AEB for the past 52-weeks to July 17th documented 3.22 billion dozen egg-equivalents over the 52-week period. This represents 39.9 percent of 2020 egg production totaling 8.06 billion dozen or capture of approximately 65 percent of the shell egg segment of the industry.

• For the 52-week period, retail sales of all egg categories (shell, consumer liquid, hard cooked, peeled) expressed as egg-equivalents decreased 2.5 percent.  Dollar value was 1.7 percent lower than the previous 52-week period.  Per capita consumption in 2020 advanced to 286.5 eggs representing a 2.4 percent decline as a result of COVID restrictions during the 1st Quarter of 2020. Direct comparisons between 2020 and 2021 are distorted by the late March and April 2020 panic buying in response to COVID restrictions. The projected per capita consumption of 285.3 eggs in all egg forms in 2021, is down 0.4 percent from 2020.

• On a rolling 52-week basis, the volume captured by Nielsen comprising retail shell-egg sales attained 3.10 billion egg equivalent dozens representing a 2.9 percent decrease in volume and a 2.3 percent decrease in dollar value to $5.93 billion.  Egg alternatives including liquid, frozen and powdered egg products converted to equivalent dozens attained 94.2 million a 9.9 percent increase over the previous 52-week period and an 8.5 percent increase in value to $304.9 million. Rolling 52-week hard boiled peeled egg sales attained 30.7 million dozen amounting to a 3.6 percent increase in volume and a disproportionate 1.7 percent decline in value.

• In classifying retail sales by product segment, conventional eggs represented 84.6 percent, cage-free 12.5 percent and organic 2.9 percent by proportion. Rolling 52-week conventional egg sales decreased 11.1 percent in volume and 14.3 percent in value.  Cage-free eggs decreased 0.4 percent in volume and increased 18.0 percent in value.  Organic eggs decreased 4.7 percent in volume and rose 16.3 percent in value.

• With respect to volume of other than generic shell eggs, 52-week rolling branded egg sales comprised 29.2 percent of retail sales compared to 70.8 percent for private label.  Branded eggs generated 42.9 percent of dollar value compared to private label at 57.1 percent.  Branded eggs declined by 9.3 percent in volume and 8.4 percent in value.

• In analyzing retail channels for shell eggs, 52-week rolling values compared to the previous period, supermarkets and groceries decreased by 11.7 percent, drugstores declined by 27.8 percent, convenience stores were down by 8.6 percent and the combination of club stores and dollar stores (excluding Costco- an important deletion given their volume) decreased by 6.3 percent presumably with the largest contribution from big-box club stores other than Costco.

In reviewing July USDA data there are 68.5 million hens in barns and aviary houses producing cage-free eggs, excluding 17.5 million non-caged hens under the Certified Organic program. The complement of cage-free hens represents 30.4 percent of an assumed population of 225 million hens in the shell-egg segment of production. If USDA data on hens under cage-free housing (aviaries and barns) are accurate and accepting the Nielsen data indicating a sales proportion of 12.5 percent for this category, more than half of cage-free eggs are down-marketed to conventional brown and white shelled product. If the Nielsen data is accurate the situation with Certified Organic is even more extreme with 7.8 percent of 225 million hens producing under the category but representing 2.9 percent of shell egg sales YTD. The differences between potential production and recorded sales cannot be ascribed to use of cage-free and organic eggs in egg liquids. The nominal (pre-COVID) complement of hens producing eggs for the breaking segment is estimated at 95 million, predominantly as generics.

Export of Shell Eggs and Products, January-June 2021.

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 2021 with the corresponding months in 2020:-

U.S. SHELL EGG AND EGG PRODUCT EXPORTS DURING JANUARY-JUNE 2021 COMPARED WITH 2020

Source USDA-FAS/USAPEEC

SHELL EGGS

Shell egg exports from the U.S. during January-June 2021 increased by 51.7 percent in volume and 68.1 percent in total value compared to the corresponding months in 2020. Unit value was 10.0 cents higher to $1.01 per dozen for the comparison between 2020 and 2021. The top two importers, Hong Kong and Mexico combined, represented 56.6 percent of volume and 47.2 percent of total value.

The USDA quarterly Grain Stocks Report released on June 30th 2021 documented storage of commodities produced in the U.S., classified according to on-site and remote facilities including elevators and commercial installations. Quantities of corn and soybeans, the two major commodities relevant to poultry production were stated to be:-

“Corn stocks in all positions on June 1st 2021 totaled 4.11 billion bushels, down 18 percent from June 1st 2020. Of the total stocks, 1.74 billion bushels are stored on farms, down 39 percent from a year earlier. Off-farm stocks, at 2.37 billion bushels, are up 11 percent from a year ago. The indicated disappearance March to May 2021 is 3.58 billion bushels, compared with 2.95 billion bushels during the same period last year”.

“Soybeans stored in all positions on June 1st 2021 totaled 767 million bushels, down 44 percent from June 1st 2020. On-farm stocks totaled 220 million bushels, down 65 percent from a year ago. Off-farm stocks, at 547 million bushels, are down 27 percent from a year ago. Indicated disappearance for the March - May 2021 quarter totaled 795 million bushels, down nine percent from the same period a year earlier”.

The Grain Stocks report taken in conjunction with the Planted Acreage report sent both corn and soybeans to limit-up on June 30th on the CME. Prices and commentary are incorporated in the Weekly Commodity Report in this edition and will be documented in the mid-month WASDE for July

The eagerly anticipated USDA Prospective Planting Report released March 31st sent corn and soybeans into limit-up mode. Corn closed at 565 cents per bushel and soybeans at 1,237 cents per bushel. Corn price held on Thursday with May contracts at 567 cents per bushel contrasted to soybeans that backtracked 1.2 percent to 1,420 at 11H00 EDT.

The USDA release documented:-

“Corn planted area for all purposes in 2021 is estimated at 91.1 million acres, up less than 1 percent or an increase of 325,000 acres from last year. Compared with last year, planted acreage is expected to be up or unchanged in 24 of the 48 estimating States”.

“Soybean planted area for 2021 is estimated at 87.6 million acres, up 5 percent from last year. Compared with last year, planted acreage is up or unchanged in 23 of the 29 estimating States.”