The USDA Economic Research Service issued an updated forecast of egg production on February 18th 2020 updating the previous January 16th 2020 report. The volume of eggs produced and per capita consumption in 2019 were increased by 3.3 and but retained at 2.1 percent respectively compared to 2018 data. The discrepancy between production and consumption represents over-supply and hence lower prices. The benchmark New York price was accordingly reduced by 28.9 percent in unit value from 2019. 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 –February 18th 2020

*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.

Review of January 2020 Egg Production Costs and Statistics.

• January 2020 USDA ex-farm blended nest-run benchmark price was 52.9 cents per dozen, 34.7 percent lower than in December 2019 at 81.0 cents per dozen. Falling prices during January are consistent with seasonal purchase trends but the reality in 2020 was accentuated by oversupply.
• January 2020 USDA average nest-run production cost was 0.9 cent per dozen higher than in December 2019 at 60.8 cents per dozen.
• January 2020 USDA benchmark nest-run margin attained a negative value of 7.9 cents per dozen compared to a positive margin of 21.1 cents per dozen in December 2019.
• December national flock ( over 30,000 hens/farm) was up 1.4 million hens or 0.4 percent to 325.1 million.
• December pullet chick hatch was down 2.5 percent from November to 23.4 million.
• December exports of shell eggs and products were down 3.0 percent from November to 772,000 case equivalents representing the theoretical production of 10.4 million hens.

INTRODUCTION.

Summary tables for the latest USDA January 2020 prices and flock statistics made available by the EIC on February 11th 2020 are arranged, summarized, tabulated and reviewed in comparison with values from the previous January 14th 2019 posting reflecting January 2020 cost and production data.

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

U.S. SHELL EGG AND EGG PRODUCT EXPORTS DURING

2019 COMPARED WITH 2018

Source USDA-FAS/USAPEEC

SHELL EGGS

Shell egg exports from the U.S. during 2019 increased by 19.4 percent in volume but declined 10.9 percent in total value compared to 2018. Unit value was lower by 25.0 percent or 27 cents per dozen for the comparison between 2018 and 2019. The top two importers, Hong Kong and Canada combined represented 69.7 percent of volume and 67.6 percent of total value.

Hong Kong was the leading importer of shell eggs in 2019, with 52.6 million dozen representing 36.1 percent of volume and 37.0 percent of the total value of U.S. shipments of shell eggs. Average unit value was $0.83 cents per dozen, above the average USDA benchmark price for nest-run during the third quarter.

Canada was the 2nd-ranked importer during 2019 with 49.0 million dozen representing 33.6 percent of volume and 30.6 percent of total value at $36.1 million with a unit value of $0.74 per dozen. Shell eggs shipped to Canada represent the difference between domestic demand and production, limited by their national controlled marketing system

Mexico was a distant third in rank during 2019 with 18.5 percent of volume and 15.8 percent of total value and with a unit value of $0.69 per dozen. Prospects for additional sales will depend on acceptance of washed eggs held under refrigeration for retail sale, announced in September 2018. For 2019 imports of shell eggs by Mexico increased by 289 percent and value by 251 percent compared to 2018. In December Mexico imported 1.8 million dozen, up 800 percent from December 2018.

The Caribbean Region represented 4.5 percent of export volume for 2019. This region was down 9.5 percent in volume and 36.8 percent in total value, an obvious decline compared with 2018. The unit value of shell eggs exports to the Caribbean averaged $1.35 per dozen in 2019 ($1.93 over entire 2018) which appears high compared with the average export realization, warranting validation of USDA data or an investigation of the price. It is most probable that a proportion of shell eggs enumerated may have been either fertile hatching eggs or enriched specialty eggs.

The Middle East Region imported 6.0 million dozen during 2019 valued at $4.8 million with a unit price of $0.88 per dozen. Volume and value were respectively lower by 14.3 percent and 17.1 percent compared to 2018. Southern E.U. nations in addition to India and Ukraine have a transport advantage over the U.S in this market.

EGG PRODUCTS

The total volume of exported egg products during 2019 decreased by 3.5 percent and total value was lower by 8.5 percent compared to 2018. Unit value decreased by 12.4 percent to $3,042 per ton from $3,474 obtained in 2018. This decline reflected the relationship between World supply and demand with Ukraine and India as significant exporters.

During 2019, 1st-ranked Japan represented 26.9 percent of the total U.S. export volume with 8,855 metric tons, a decrease of 14.5 percent compared with 2018. The high unit value of $3,896 per metric ton reflects the product mix including yolks.

Mexico was the second ranked importer in 2019 receiving 6,397 metric tons comprising 19.4 percent of volume and 13.8 percent of value exported with a unit price of $2,157 per metric ton

Canada represented a close 3rd in rank among importers purchasing 5,358 m. tons comprising 19.3 percent of volume and 12.2 percent of value ($12.3 million) exported with a unit price of $1,935 per metric ton. During 2019 Canada increased volume by 19.8 percent but value fell by 0.7 percent compared to 2018.

COMMENTS

Successful conclusion of negotiations to replace NAFTA led to the trilateral USMCA, announced on September 30th 2018. The since-modified agreement will have to be ratified by the Parliament of Canada 17 months after after signing the basic trade pact. Exports of shell eggs and egg products to our neighbors were valued at $74.7 million for 2017, $89.7 million for 2018 and $80.8 million in 2019.

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 or isolation of either H5 or H7 avian influenza, irrespective of pathogenicity. Most importing nations are now applying regionalization and permitting imports on a county or state-exclusion basis following H5 or H7 AI infection.

The twenty one -month ongoing series of incident cases of END involving four small commercial units and 473 backyard flocks comprising a high proportion of game fowl (fighting cocks) is not yet over. Extension of the infection to four commercial farms in Southern California in late 2018 did 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 or Newcastle disease.

OVERVIEW

Predictably the January 10th 2020 USDA WASDE Report was updated from December with more accurate yields for corn and soybeans but with relatively unaltered price projections for these commodities.

Corn and soybean harvests reflected in the January 2020 WASDE are based on actual yield and harvested area. The corn acreage harvested was 81.5 million acres, 0.4 percent down from the December 2019 WASDE (81.8 million in 2018). Soybeans were harvested from 75.0 million acres, 0.8 percent down from the December 2019 WASDE. (88.3 million acres in 2018)

The January 2020 WASDE projected corn yield was raised by 0.6 percent to 168 bushels per acre, (178.9 bushels in 2018). The relatively low value was due to late planting, delayed development and adverse weather before harvest. Soybean yield was raised 1.1 percent to 47.4 bushels per acre from the December 2019 WASDE, (52.1 bushels in 2018).

The November USDA projection for the ending stock of corn was lowered 0.9 percent to 1,892 million bushels. Ending stock for soybeans will be unchanged from the December estimate at 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 continued trade in accordance with the Phase-1 agreement on trade with China in 2020. 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.

To date there has been no announced commitment on either volumes or prices of commodities to be imported by China in 2020.

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 suggested that a quarterly report with more accurate and consistent data would be suitable for the industry.

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 December 2019 released on January 6th 2020 documented a static population of hens producing under the Certified Organic seal and for generic cage-free production (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 held at 76.3 percent for both categories of non-caged hens reflecting younger flocks placed in anticipation of 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.