REVIEW OF DECEMBER PRODUCTION STATISTICS AND COSTS.

01/11/2019
  • December 2018 USDA Ex-Farm Benchmark Price Down 5 Percent from November, Inconsistent with Seasonal Trends Due to Oversupply.

  • USDA Average Nest-run Production Cost Fractionally Higher than November at 60.9 cents per dozen.

  • Positive USDA Benchmark Nest-run Margin Decreased 14 Percent from November to 29.0 cents per dozen

 

INTRODUCTION.

Due to the Federal shutdown some monthly reports from December 26thwere not issued. EGG-NEWS has assembled available USDA market data to produce the December report. The normal format will be posted when USDA publications resume.

Summary tables for the latest USDA December 2018 statistics and prices made available by the EIC on January 9th 2019 are arranged, summarized, tabulated and reviewed in comparison with values from the previous December 10th 2018 posting reflecting November 2018 data.

COSTS & REVENUE

Parameter

NOVEMBER 2018

DECEMBER 2018

5-Region Cost of Production ex farm (1st Cycle)

60.67 c/doz

60.85 c/doz

Low

55.23 c/doz (MW)

55.66c/doz (MW)

High

76.71 c/doz (CA)

77.77 c/doz (CA)

 

Components of 6-Region 1stCycle Cost of Production:-

 

NOVEMBER 2018

DECEMBER 2018

Feed

32.23 c/doz

32.39c/doz

Pullet depreciation

10.92 c/doz

10.94 c/doz

Labor

4.00 c/doz

4.00 c/doz

Housing

5.30 c/doz

5.30 c/doz

Miscellaneous and other*

8.22 c/doz

8.22 c/doz

 


* adjusted February 2018

Ex Farm Margin according to USDA values reflecting DECEMBER 2018:-

89.9 cents per dozen1- 60.9 cents per dozen = +29.0 cents per dozen

(November 2018 comparison 94.5 1 cents per dozen - 60.7 cents per dozen = +33.8 cents per dozen.)

Note 1: USDA Blended egg price

   

NOVEMBER 2018

DECEMBER 2018

USDA

Ex-farm Price (Large, White)

94.5 c/doz

89.9 c/doz

 

Cage-free to packing plant

160.0 c/doz

156.0 c/doz

 

Warehouse/Dist. Center

123.0 c/doz (Oct.)

Not released

 

Store delivered (estimate)

128.0 c/doz (Oct.)

Not released

 

Dept. Commerce Retail

166.0 c/doz (Oct.)

159.6 c/doz (Nov.)

 

 

Layer Feed Cost

NOVEMBER 2018

DECEMBER 2018

U.S. Average

$205.31/ton

$206.29/ton

High

$240.00/ton (SE)

Not posted-estimate

$241.20/ton (SE)

Not posted-estimate

Low

$174.84/ton (MW)

$177.23/ton (MW)

Differential

$ 65.16/ton

$ 63.97/ton

 

Pullet Cost (19 Weeks) $3.82 NOVEMBER 2018 $3.77 DECEMBER 2018

 

 

VOLUMES OF PRODUCTION

PARAMETER

NOVEMBER 2018

DECEMBER 2018

Egg-strain eggs in incubators

45.1 million (Nov.)

50.8 million (Dec.)

Pullet chicks hatched

27.5 million (Oct.)

23.4 million (Nov.)

Pullets to be housed in 5 months

24.8 million (Mar. '19)

21.1 million (Apr. '19.)

     

National Flock in farms over 30,000

308.3 million (Oct.)

311.2 million (Nov.)

National egg-producing flock

326.6 million (Oct.)

329.6 million (Nov.)

     

Proportion flock in molt or post-molt

16.5% (Oct.)

15.6% (Nov.)

Total of hens in flocks over 30,000, 1st cycle (estimate)

266.7 (Oct.)

262.7 million (Nov.)

Total U.S. Eggs produced

8.07 billion (Oct.)

7.92 billion (Nov.)

Cage-Free hens in production

57.2 million (Oct.)

27.4% Organic

57.2 million (Nov.)

27.4% Organic

"Top-6" States hen population (USDA)

176.48million (Oct.)

179.1 million (Nov.)

PROPORTION OF U.S. TOTAL HENS BY STATE, 2018

Based on a denominator of 311.0 million hens in flocks over 30,000.

 

STATE

OCT. 2018

NOV. 2018

Proportion by region (Nov. 2018)

Iowa

17.9%

18.1%

MW 54.9%

Indiana

10.1%

10.3%

NE 10.8%

Ohio

10.1%

10.7%

SE 9.1%

Pennsylvania

8.0%

8.2%

SC 12.5%

Texas

5.7%

5.8%

CA 4.5%

California

4.4%

4.5%

NW 2.9%

(Values rounded to 0.1%)

Rate of Lay, weighted hen-week (USDA) 79.8% (NOVEMBER) 80.4% (DECEMBER.)

Actual USDA-ERS 2015 U.S. per capita annual egg consumption revised due to HPAI:- 255.8 eggs (-11.7 from 2014)

Actual USDA-ERS 2016 U.S. per capita annual egg consumption:- 271.6 eggs (+15.8 from 2015)

Actual USDA-ERS 2017 U.S. per capita annual egg consumption:- 276.3 eggs (+4.7 from 2016)

Estimated USDA-ERS 2018 U.S. per capita annual egg consumption to be:- 279.5 eggs (+3.2 from 2017)

Projected USDA-ERS 2019 U.S. per capita annual egg consumption to be:- 280.1 eggs (+0.6 from 2018)

 

Eggs broken under FSIS inspection (million cases) OCTOBER 7.027 DECEMBER not released

Cumulative 2018: number of cases produced 216.1 million through November

Cumulative 2018: proportion of total eggs broken 30.8%

 

EXPORTS: NOVEMBER DATA NOT RELEASED

October values retained for reference.

 

Parameter

Quantity Exported

Exports:

 

Shell Eggs (thousand cases)

OCT. 471 SEPT. 363

Products (thousand case equivalents)

OCT. 286 SEPT. 316

TOTAL (thousand case equivalents)

OCT. 757 SEPT. 679

*Representing 3.2 percent of National production in October 2018

 

 

COMMENTARY ON DECEMBER 2018 COSTS AND STATISTICS

The following comments and comparisons are provided on December 2018 USDA values:-

DECEMBER 2018 COST AND REVENUE DATA

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

  • The USDA ex farm benchmark blended egg price in December 2018 decreased by 4.6 cents per dozen from November 2018 (4.9 percent) to 89.9 cents per dozen, contributing to a positive margin of 29.0 cents per dozen as delivered 'nest-run' (from the laying house). The December 2018 value of 89.9 cents per dozen should be compared to 124.1 cents per dozen for the corresponding month in 2017 and 73.3 cents per dozen in December 2016.

  • During December 2018 the feed component of production cost averaged 32.4 cents per dozen higher by 1.9 percent from November. The 2018 average feed cost was 33.3 cents per dozen compared with an average feed cost of 32.0 cents per dozen in 2017.
  • Combining data from the USDA and the EIC producers recorded a positive margin of 29.0 cents per dozen at farm level for flocks in December 2018 compared to a positive margin of 33.8 cents per dozen in November 2018. The cumulative margin for 2018 was 424.0 cents per dozen. The algebraic margin for 2017 was a positive 39.2 cents per dozen, with the first eight months negative comparing production cost against USDA benchmark 'nest run' values. The algebraic average margin for 2016 was a loss of 9.6 cents per dozen with negative values recorded for eight consecutive months.

  • The simple average price of feed for December 2018 over 5-regions was $206.29 per ton, higher by $0.98 per ton (up 0.5 percent) compared to November 2018. The Southeast presumably recorded the highest cost among five regions at an estimated price of $241.20 per ton compared to the lowest region, compared to the Midwest at $177.23 per ton. The average figure includes ingredients plus milling and delivery at approximately $10 per ton. The benchmark price of corn was $154.52 per ton in December 2018, up 0.8 percent from November 2018. An increase of 2.5 percent in the price of soybean meal from $328.59 per ton in November 2018 to $336.66 per ton in December 2018 contributed to a higher feed cost offsetting the decrease in corn price. There was a $60.41 per ton differential in corn price between the Midwest and the Northwest in December 2018.

  • Feed price will continue to be a major factor driving production cost and hence margin. Unknown factors influencing feed cost during the first quarter of 2019 will include disruption of international trade due to tariffs imposed by China. Each $10 per ton difference in feed cost represents 1.75 cents per dozen.

  • The EIC-calculated the 6-Region total nest-run production cost in December 2018 to be 60.9 cents per dozen, 0.2 cent per dozen more than in November 2018. Production costs during December 2018 ranged from 55.7 cents per dozen in the Midwest up to 77.8 cents per dozen in California which was higher than the Midwest region by 22.1 cents per dozen.

  • Retail egg prices as determined by the Department of Commerce for November 2018 averaged 159.6 cents per dozen, 6.4 cents per dozen more than in October 2018. During November 2016 and 2017 retail prices were respectively 132.1 and 150.6 cents per dozen. During entire 2016 and extending through August 2017, retail prices did not decline in proportion to ex-farm prices allowing higher margins at retail thereby depressing demand.

 

 

DECEMBER 2018 PRODUCTION DATA

  • According to USDA data, the estimated average complement of U.S. hens in flocks over 30,000 during November 2018 amounted to 311.2 million, 2.9 million more than in October 2018 reflecting a seasonal adjustment in flock size. The total U.S. flock including hens in molt on all farms counted by the USDA amounted to 329.6 million in November 2018. The average end-of-year flock sizes over the past five years respectively were, 2012 (299 million); 2013 (308 million); 2014 (311 million); 2015 (291 million post HPAI losses) and in 2016 (319 million). The EIC predicts the December 2018 total egg production flock will be 330.6 million.

  • Pullet chick hatch was down 14.7 percent in November 2018 to 27.5 million compared to the previous month at 27.5 million. The high October value was in anticipation of the Easter 2019 market. It is evident that if lower prices prevail during winter months flock placements will decline due to some producers cancelling pullet-chick orders.

  • The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA fell to 15.6 percent of the national flock in December 2018, compared to 16.5 percent in October and 17.1 percent for 2018 averages of 17.4 percent in 2017 and 23.8 percent in 2016.

  • Average monthly pullet transfer to laying houses during the third and fourth quarters of 2018 amounted to 26.0 and 24.7 million respectively. The monthly projection for pullets to be transferred to laying houses during the first quarter of 2019 is 23.2 million. Cancellation of pullet chick orders are unlikely if wholesale prices continue above production cost.

  • The hatchery supply flock decreased from a level 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 4 th Quarter of 2016. Projections show monthly averages of 2.5 and 2.4 million breeder hens in production during the third and fourth quarters of 2018 respectively. A further reduction to an average of 2.1 million hens is projected for the first and second quarters of 2019.

  • Average rate of lay attained 78.7 percent during 2016 and increased to 79.8 percent in 2017. Average production of 80.4 percent in December 2018 reflected the number of young pullets approaching and attaining peak production as evidenced by the volume and hence price of mediums. The average rate of lay during a 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 will rise due to early depletion and restricting production to the first cycle.

  • Here were no figures available for monthly slaughter of spent light hens for November. USDA data indicated 750,000 hens processed during the week ending January 5th 2019 proportionately lower than the 4.2 million in October 2018 and 4.1 million in 2017. 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.

NOVEMBER EXPORT DATA UNAVAILABLE.

Due to the Federal shut-down export figures for November were unavailable. Figures posted in the report for October are retained for reference

 

  • According to USDA-FAS data, 471,100 cases of shell eggs were exported in October, (363,200 in September 2018) representing 2.1 percent of total production. This value should be compared to the high value of 409,700 cases in March 2016 prior to the onset of HPAI. During October 2018 the following regions were the leading importers:- North America comprising the two neighboring NAFTA/USMCA nations (53.5 percent), East Asia (39.8 percent.). Shipments in October to the Middle East decreased to 2.5 percent of monthly volume at 11,900 cases, down from 14,100 cases in September 2018. Neither the E.U. nor Southeast Asia imported shell eggs in October
  • Exports of egg products in October 2018 were down 9.5 percent from September 2018 to 286 million case-equivalents representing 1.3 percent of U.S. output. The following regions were the leading importers of egg products by proportion of volume shipped in October:- North America or NAFTA/USMCA neighbors (received 30.8 percent), East Asia (40.2 percent), the EU-28 (12.7 percent, was 17.5 percent) and the Caribbean (3.0 percent).
  • Collectively, exports of shell eggs and products in October 2018 represented the equivalent of approximately 11.9 million hens in production during the month, attaining 757,100 case-equivalents (was 679,000 in September). This was a 29.3 percent decrease compared to monthly average shipments of 960,000 case-equivalents exported over the first four months of 2015 prior to the advent of HPAI, indicating the need to re-build markets. Efforts in this respect are in progress due to cooperation between the AEB and USAPEEC both in existing and new markets with the potential to import U.S. product based on landed price in a competitive World market. Exports of both egg-products and shell eggs in October 2018 corresponded to 3.8 percent of a nominal national flock of 308 million hens in production on commercial farms holding more than 30,000 hens.
  • There is no scientific 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.

 

 






























































































































































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