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USDA Weekly Egg Price and Inventory Report, December 6th 2018.

12/06/2018
  • Hen Numbers in Production increased 0.3 million to 324.4 million.
  • Shell Inventory Up by 4.4 Percent from Previous Week.
  • USDA Midwest Benchmark Generic Prices for Extra Large, Large and Medium down 1.3, 0.8, and 5.9 Percent Respectively Compared to Past Week.

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on December 3 rd the Midwest wholesale prices for Extra Large, Large and Medium sizes were lower by 1.3, 0.8 and 5.9 percent respectively compared to the past week. The progression of prices during 2018 is depicted in the USDA chart reflecting three years of data, updated weekly.

The December 3rd USDA Egg Market News Report (Vol. 65: No. 49) documented a USDA Combined Region value rounded to the nearest cent, of $1.28 per dozen delivered to warehouses week ending November 30th. This price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $1.20 per dozen. At the high end of the range, price in the South Central Region attained $1.35 per dozen. The USDA Combined Price last week was 38 cents per dozen below the three-year average and 60 cents per dozen below the corresponding week in 2017. Weekly Combined Regional price is not increasing with the same velocity during 4th Quarter of 2018 compared to the corresponding weeks in 2017.

Flock Size

The number of producing hens this week was 324.4 million, an increase of 0.3 million. The hen population is more than adequate to meet early fall seasonal consumer and industrial demand but any number above 325 million in production over the short term at this time of year portends lower prices and increased inventory unless matched by proportional demand. The total U.S. egg-flock comprises 329.4 million hens including 2nd Cycle birds and those in molt on all farms, up 0.4 million from last week. The 5.0 million difference between hens in production and total hens represents 1.5 percent of the national flock. This suggests that there are fewer pullets and molted flocks soon to come back into production with implications for price given current supply and seasonally moderate demand.

Stock levels

Generic shell-egg stock rose 4.4 percent to 1,427,700 cases following a 9.5 percent increase over the previous week. To maintain prices the market, will have to find a balance between supply and demand as the Industry moves through the fourth quarter, generally characterized by increasing flock size but with demand and hence prices higher during fall moving towards the holiday season.

The National stock of frozen egg products as reported by the USDA on November 21st 2018 attained 30.2 million pounds (13,721 metric tons) on October 31st 2018 down 8.3 percent from October 31st 2017.

Dried-egg inventory increased by 2.4 percent during October to 13.0 million lbs. (5,921 metric tons) as of October 31st 2018 (was 12.7 million lbs. on September 30th 2018)

INVENTORY

Cold Storage

Cold storage stocks in selected regions on December 4th 2018 amounted to 2.857 million pounds (1,299 metric tons), 0.6 percent less than the stock of 2.875 million pounds during the week of November 1 st. 2018.

The most recent monthly USDA Cold Storage Report released on November 21st 2018 documented a total stock of 30.3 million pounds (13,721 metric tons) of frozen egg products on October 31st 2018. This value was down 8.3 percent from October 31 st 2017. A total of 90.0 percent of combined inventory comprised the categories of "Whole and Mixed" (44.9 percent) and "Unclassified" (45.1 percent). The lack of specificity in classification suggests a more diligent approach is required to enumerate and report inventory by the USDA.

Shell Inventory

The national stock of generic shell eggs reflecting December 3rd 2018 was higher by 4.4 percent, following a 9.5 percent increase in inventory during the previous week and a 2.5 percent decrease during the preceding week. This suggests that buyers purchased in anticipation of the Thanksgiving weekend and filled the supply chain although stock level decreased with minimal reduction in price. The market is temporarily oversupplied relative to demand and availability is exacerbated by molted hens coming back into production and the contribution of pullet chicks placed in mid-May in anticipation of the holiday season..

Five of six USDA Regions reported higher stock levels. The Midwest Region was up 8.9 percent (was 21.5 percent) compared to the previous week to 444,800 cases. This region was followed in decreasing order of stock level by the South Central Region, up 4.7 percent to 290,500 cases; the Southeast Region up 1.6 percent to 283,200 cases; the Northeast Region up 1.0 percent to 164,000 cases; the Southwest Region up 4.2 percent to 159,300 cases and the Northwest Region down 2.3 percent to 85,900 cases.

The total USDA Six-Area stock of commodity eggs comprised 1,740,400 cases, of which 82.0 percent were shell eggs. The inventory of breaking stock was down 2.2 percent to 312,700 cases consistent with a full week of operation after the Thanksgiving holiday coupled with the trend in shell-egg price in recent weeks. The value of breaking stock and hence availability from both mature and young flocks will be influenced by the demand for generic shell eggs and contract obligations with breakers.

As of Monday December 3rd 2018 the inventory of other than generic eggs, compared to the previous week in parentheses, comprised:-

  • Specialty category, up 13.0 percent to 37,800 cases. (down 20.3% to 33,400)
  • Certified Organic, down 5.9 percent to 76,800 cases. (down 8.6% to 81,600)
  • Cage-Free, up 2.3 percent to 76,000 cases. (up 2.5% to 74,300)

Recent data suggests a weekly fluctuation in demand for cage free products. This is attributed to an increase in production of this category in 2016 and 2017, motivated by commitments by members of the FMI, NCCR and NRA. Recent announcements by major egg producers indicate a pause in conversion of existing facilities and a short-term moratorium in erecting new complexes and houses until sale of eggs from non-caged flocks rises. There are indications from equipment manufacturers that some expansion is either planned or is in progress supported by quarterly statistics and the November 6th 2018 passage of California Proposition #12. Demand for cage-free eggs is influenced by the relative shelf prices of the category in comparison with generic white-shelled eggs from caged flocks. At the other end of the price range, consumers will purchase less-expensive brown cage-free product over organic eggs when there is a differential in price greater than $1.20 per dozen. Similarly, consumers purchase white-shelled generic eggs in preference to brown-shelled cage-free with a differential of over $1.20 per dozen. The need for structured statistically relevant market research on willingness to pay for attributes such as housing, GM status and nutritional enrichment is self-evident.

Relative Prices of Shell-egg Categories

During the past week the USDA benchmark advertised retail price of Cage-Free brown fell by 8.2 percent or 23 cents per dozen to $2.56 per dozen, continuing the downward move of last week. Certified Organic fell 0.2 percent or 1 cent per dozen to $3.97 per dozen widening the price differential by 24 cents to $1.41 per dozen ($1.17 per dozen last week) suggesting continued demand for certified organic over cage-free brown during the current week. The differential between generic white Large and Cage-Free brown was $1.73 per dozen ($1.88 per dozen last week) which will continue to favor demand for generic white over cage-free brown. Preference for generic white over cage-free brown is evident with a price differential greater than $1.20 per dozen. Large week-to-week percentage fluctuations can be expected in the stock of specialty and organic eggs based on the small base of these categories. The low stock of specialty eggs is noted in the section on inventory.

USDA Cage-Free Data

According to the latest monthly USDA Cage-free Hen Report released December 3rd 2018 the number of hens held in other than conventional cages in November changed as follows:-

Total U.S. flock held for USDA Certified Organic production = 15.7 million (unchanged since Sept.)

Total U.S. flock held for cage-free production = 41.5 million (was 41.4 million, Oct.)

Total U.S. non-caged flock = 57.2 million This value represents 17.9 percent of a nominal 320 million U.S. flock in production but 25.4 percent of a presumed flock of 225 million held for shell-egg production

Processed Eggs

For the week ending December 1st 2018 eggs processed under FSIS inspection increased by 14.3 percent compared to the previous week to a level of 1,601,665 cases. The proportion of eggs broken by in-line complexes was 52.6 percent (was 58.0 percent) attributable to resumption of collection from Contract farms after the Thanksgiving holiday and to a lesser degree denoting a balance in consignment of non-contracted eggs to breaking from packing in response to prevailing spot prices. During the corresponding week in 2017 in-line breakers processed 54.7 percent of eggs broken due to higher wholesale prices for generic eggs.

Eggs broken YTD attained 73.9 million cases, 3.9 percent more than the corresponding period in 2017.

PRODUCTION AND PRICES

Breaking Stock

The price range for breaking stock delivered to Central States plants on December 3rd was lower by 2 percent compared to the previous week with a range of 71 to 74 cents per dozen. Checks were unchanged over a range of 54 to 59 cents per dozen. The revenue for checks was lower than the production cost for nest-run, estimated by the EIC at 60.0 cents per dozen during October 2018.

Shell Eggs

The USDA Egg Market News Reports released on November 30 th 2018 documented the changes in price for the major grades from the Midwest, for Central States Breaking Stock and Certified USDA Organic. The following table lists the "most frequent" ranges of values as delivered to warehouses*:-

Size/Type

Current Week

Previous Week

Extra Large

119-121 cents per dozen

120-123 down 1.3%

Large

117-120 cents per dozen

118-121 down 0.8%

Medium

94-97 cents per dozen

100-103 down 5.9%

Certified Organic EL

275-310 cents per dozen

unchanged long term

Breaking stock

71-74 cents per dozen

73-75 down 2.0%

Checks

54-59 cents per dozen

unchanged

*Store Delivery approximately 5 cents per dozen more than warehouse price

The December 3rd 2018 Regional (IA, WI, MN.) average FOB producer prices, for nest-run grade-quality white shelled eggs, with prices in rounded cents per dozen (last week in parentheses) were unchanged:-

EL. $1.05 ($1.07) estimated by proportion: L. $1.01 ($1.02): M. $0.74 ($0.82)

The following advertised retail prices for the week ending November 30 th 2018, (compared with the previous week in parentheses) were posted by the AMS for dozen packs:

 

  • USDA Certified Organic, Brown, Large: $3.97 ($3.98)
  • Cage-Free Brown, Large: $2.56 ($2.79)
  • Omega-3 Enriched Specialty, White, Large: $2.59 ($2.38)
  • Generic White, Large Grade AA $0.83 ($0.91)
  • Generic White, Large Grade A (Feature price) $1.34 ($1.18)

The retail price as determined by the USDA-AMS for generic white Large AA last week was down 8 cents per dozen to $0.83 per dozen. The price for generics is following seasonal trends.

(See the text, tables and figures in the review of production and prices comprising the report on USDA October 2018 data, posted under the STATISTICS Tab. A report on the financial results attained by Cal-Maine Foods for the 1st Quarter of Fiscal 2019, is posted under the STATISTICS Tab)

Shell-Egg Demand Indicator

The USDA-AMS Shell Egg Demand Indicator for December 6th 2018 was numerically lower by 6.6 points from the last weekly report to +5.1 with a 4.4 percent decrease in inventory as determined by the USDA-ERS as follows:-

Productive flock

324,447,068 million hens

Average hen week production

80.2 % (was 80.4%)

Average egg production

260,206,549 million per day

Proportion to shell egg market

68.2% (was 72.2%)

Total for in-shell consumption

493,670 cases per day

USDA Inventory

1,427,700 cases

26-week rolling average inventory

4.76 days (was 4.78)

Actual inventory on hand

4.53 days (was 4.28)

Shell Egg Demand Indicator

+5.1 points (was +11.7 on November 28th 2018)

Dried Egg Products

Prices for dried egg products (most frequent price with a range in $ per pound) effective November 30th 2018 were:-

Whole Egg

$3.10-$3.25

Down $0.05 on both ends of the range

Yolk

$3.05-$3.20

Unchanged

Spray-Dried White

$5.25-$5.45

Down $0.05 on both ends of the range

Blends

$2.75-$2.80

No new quotation

Although declining, U.S. dried egg inventory as reported on November 9 th was at a moderate level on October 31st attaining 13.0 million lbs. (5,921 metric tons), equivalent to slightly less than 4-weeks current production. This was 34 percent lower compared to October 31st 2017. During the period September 30th 2018 through November 3rd 2018, dried egg processed under USDA inspection amounted to 12.3 million lbs. (10.1 million lbs. in September 2018). Lower shell-egg prices over the past few weeks diverted non-contracted eggs from packing to breaking.

COMMENTS

Newcastle Disease (END)

A total of 185 exotic Newcastle disease (END=vvND) cases in small multi-species backyard flocks were confirmed between May 18th and November 15th in the Southern California Counties of San Bernardino (104), Riverside (39), Los Angeles (41) and Ventura (1). An isolate of END was obtained from a live bird market in Los Angeles on routine surveillance one month ago. Pre-emptive slaughter of all "birds" (presumed to be domestic galliformes and anseriforms) in each of one community in Los Angeles, Riverside and San Bernardino Counties has commenced under the direction of the State Veterinarian for California. The incidence rate for END has fallen sharply since mid-October.

The END situation did not disrupt exports of raw poultry, breeding stock, hatching or table eggs and egg products to Mexico. Following negotiations after the index case of END was diagnosed in Los Angeles County during mid-May, authorities in Mexico accepted regionalization and on May 23 rd restored importation of raw poultry from other than the restricted Counties in California. There is absolutely no reason to embargo pasteurized egg products derived from a USDA-FSIS inspected plant.

Avian Influenza

As in the U.S. and the E.U. reassortant strains of avian influenza virus are introduced into regions beneath flyways by migratory birds and then transmitted to backyard and commercial free-range flocks or to confined flocks by deficiencies in biosecurity. Incident cases in the E.U., Asia and North Africa should be a warning to U.S. producers during the fall and early winter of 2018 since the risk of infection necessitates enhanced biosecurity and effective containment.

Four cases of LPAI H7N3 were diagnosed in organic turkey growing farms in Stanislaus County, California in early September. Cases of H5N2 LPAI were diagnosed in flocks of commercial turkeys in Kandiyohi (4) and Stearns Counties (4) in Minnesota, during late-October through mid-November. There is a presumption that migratory waterfowl cease shedding AI virus by the first week of April, re-commencing in the fall. Accordingly, enhanced biosecurity is required under the Pacific, Central and Mississippi flyways. Flocks allowed outside access during periods when migratory birds are shedding virus are vulnerable to infection.