USDA Weekly Egg Price and Inventory Report, June 5th 2019.

06/06/2019
  • Hen Numbers in Production Almost Unchanged at 329.6 million .
  • Increase in Shell Inventory of 1.4 Percent following a 5.3 Percent Decline for the Previous Week.
  • USDA Midwest Benchmark Generic Prices for Extra Large, Large and Medium Unchanged Compared to the Past Week.
  • Price of Breaking Stock and Checks Unchanged. Both Categories Substantially Below Cost of Production

OVERVIEW

Prices

According to the USDA Egg Market News Reports posted on June 3 rd the Midwest wholesale prices for Extra Large, Large and Medium sizes were unchanged compared to the past week, continuing below production cost. The progression of prices during 2019 is depicted in the USDA chart reflecting three years of data, updated weekly.

The June 3rd USDA Egg Market News Report (Vol. 66: No. 22) documented a USDA Combined Region value rounded to the nearest cent, of $0.46 per dozen delivered to warehouses for the week ending May 27 th and reflects the sharply lower early summer prices during that week despite a lower stock level for three consecutive weeks. This average price lags current Midwest weekly values by one week. The USDA Combined range for Large in the Midwest was $0.41 per dozen, below the cost of production. At the high end of the range, price in the Northeast Region attained $0.49 per dozen. The USDA Combined Price last week was $0.89 per dozen below the three-year average and $0.37 per dozen below the corresponding week in 2018.

Flock Size

The number of producing hens this week was almost unchanged at 329.6 million. The hen population is more than adequate to meet seasonal consumer and industrial demand in early summer but any number above 330 million in production over the short term portends lower prices and increased inventory unless matched by proportional demand. The total U.S. egg-flock comprised 337.7 million hens including 2nd Cycle birds and those in molt on all farms. The high level of 8.1 million hens is the difference between hens in production and total hens representing 2.4 percent of the national flock unchanged from last week. This suggests molting flocks are soon to come back into production with implications for price given current supply, stock level and seasonally moderate to depressed demand.

STOCK LEVELS

Generic shell-egg stock rose 1.4 percent to 1,487,600 cases following a 5.3 percent decrease during the previous week. To maintain prices the market, will have to find a balance between supply and demand as the Industry moves through the end of the second quarter of 2019, Seasonally the sixth month of the year is characterized by stable or decreasing flock size but low prices.

The National stock of frozen egg products as reported by the USDA on May 22 nd 2019 attained 36.1 million pounds (16,407 metric tons) on April 30th 2019

Dried-egg inventory reported on May 10th increased by 1.6 percent during April 2019 to 18.1 million lbs. (8,211 metric tons) as of April 30th 2019 (was 17.8 million lbs. on March 31st 2019)

INVENTORY

Cold Storage

Cold storage stocks in selected regions on June 3rd amounted to 2.766 million pounds (1,257 metric tons), corresponding to the equivalent volume of 2.766 million pounds on June 1st 2019.

The most recent monthly USDA Cold Storage Report released on May 22nd documented a total stock of 36.1 million pounds (16,407 metric tons) of frozen egg products on April 30th 2019. This value was up 30.0 percent from April 30th 2018. A total of 89.3 percent of combined inventory comprised the categories of "Whole and Mixed" (48.6 percent) and "Unclassified" (40.7 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 June 3rd 2019 was up by 1.4 percent, following a decrease of 5.3 percent during the past week and a decrease of 1.8 percent for the previous week. The market will only move into balance relative to supply if old flocks are now depleted not simply molted. Hen numbers increased prematurely in anticipation of Easter and the national flock is too high for the "summer doldrums" Availability of shell eggs increased over the past month from the contribution of newly transferred pullets and molted hens coming back into production. In addition pullet chicks placed during mid-December 2018 in anticipation of Easter are now producing large and extra-large sizes.

Three of six USDA Regions reported higher stock levels. The Midwest Region was up 5.6 percent compared to the previous week to 479,100 cases. This region was followed in decreasing order of stock level by the South Central Region, down 0.7 percent to 269,200 cases; the Southeast Region down 5.9 percent to 246,900 cases; the Southwest Region up 0.8 percent to 200,400 cases; the Northeast Region up a noteworthy 12.2 percent to 181,900 cases and the Northwest Region down 7.4 percent 110,000 cases.

The total USDA Six-Area reported stock of commodity eggs comprised 1,850,000 cases, of which 80.4 percent were shell eggs. The inventory of breaking stock was down 5.1 percent to 362,400 cases consistent 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 June 3rd 2019 the inventory of other than generic eggs (with previous week in parentheses) comprised:-

  • Specialty category, up 26.4 percent to 54,900 cases. (was up 5.2% to 43,400 cases)
  • Certified Organic, up 2.6 percent to 105,700 cases. (was down 3.8% to 103,000 cases)
  • Cage-Free, down 4.6 percent to 101,200 cases. (was down 1.4% to 106,000 cases)

Recent data suggests a weekly fluctuation in demand for cage free products. This is attributed to an increase in production of this category starting in 2017, motivated by commitments by members of the FMI, NCCR and NRA. In mid-2018 announcements by major egg producers indicated a pause in conversion of existing facilities and a moratorium on erecting new complexes and houses until sale of eggs from non-caged flocks rose in competition with generic white. There are now firm indications from equipment manufacturers and builders and evidenced by interest at the 2019 IPPE and especially the Midwest Poultry Federation Convention, that expansion is either planned or is in progress despite low prices. It is estimated that orders for 7 million to 9 million hen places have been signed, mainly for aviaries. This projected increase is supported by quarterly USDA statistics, the November 6th 2018 passage of California Proposition #12 and the failure of the Supreme Court to consider the multi-state challenge to California Proposition #2 and Massachusetts ballot outcomes. The Third Quarter financial report from Cal-Maine released on April 1st indicated that the company would house 4.4 million hens in cage-free systems representing replacement of existing flocks and new facilities, requiring conversions and erection of housing and packing plants to the value of $185 million.

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 about $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

The following advertised retail prices for the week ending June 6 th 2019, (compared with the previous week in parentheses) were posted by the AMS on May 31st for dozen packs:

        • USDA Certified Organic, Brown, Large: $4.21 ($3.82)
        • Cage-Free Brown, Large: $2.98 ($2.96)
        • Omega-3 Enriched Specialty, White, Large: $2.42 ($2.43)
        • Generic White, Large Grade AA $0.76 ($0.89)
        • Generic White, Large Grade A (Feature price) $0.79 ($0.90)

The retail price as determined by the USDA-AMS for generic white Large AA last week was down $0.13 per dozen to $0.76 per dozen but may not materially increase demand for this category. The price for generics is sharply down, exceeding seasonal trends.

During the past week the USDA benchmark advertised retail price of Cage-Free rose 0.7 percent corresponding to 2 cents per dozen to $2.98 per dozen, continuing the upward move of the previous week. Certified Organic rose by 10.2 percent or $0.39 per dozen to $4.21 per dozen widening the price differential to $1.23 per dozen ($0.86 per dozen last week) suggesting short-term demand for certified organic over cage-free brown during the current week. The differential between generic white Large and cage-free brown was $2.22 per dozen ($2.07 per dozen last week) continuing to favor 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.

USDA Cage-Free Data

According to the latest monthly USDA Cage-free Hen Report released April 3 rd 2019 the number of hens held in other than conventional cages in May 2019 was higher by 0.3 million hens (corresponding to 0.5 percent) as follows:-

Total U.S. flock held for USDA Certified Organic production = 15.8 million (15.7 million April).

Total U.S. flock held for cage-free production = 50.9 million (50.7 million April).

Total U.S. non-caged flock = 66.7 million (66.4 million April).

This value represents 20.2 percent of a nominal 330 million U.S. flock in production but 29.6 percent of a presumed flock of 225 million held for shell-egg production

Processed Eggs

For the processing week ending June 5th 2019 eggs processed under FSIS inspection decreased by 5.2 percent compared to the previous week to a level of 1,530,855 cases. The proportion of eggs broken by in-line complexes was 57.1 percent (was 53.8 percent). With lower prices for shell eggs there is a trend to divert non-contracted eggs from packing to breaking as evidenced by data this past week. During the corresponding processing week in 2018 in-line breakers processed 54.2 percent of eggs broken.

Eggs broken YTD 2019 attained 34.38 million cases, 5.3 percent more than the corresponding period during 2018. The difference is in part due to significantly higher prevailing shell-egg prices in 2018.

PRODUCTION AND PRICES

Breaking Stock

The price range for breaking stock delivered to Central States plants was unchanged on June 3rd compared to the previous week over a range of 15 to 19 cents per dozen. Checks were unchanged at a 'throw away' range of 2 to 5 cents per dozen. The revenue for both breaking stock and checks was far lower than the benchmark production cost for nest-run, estimated by the USDA at 59.5 cents per dozen during April 2019.

Shell Eggs

The USDA Egg Market News Report released on Jume 3rd documented changes in prices 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

41-44 cents per dozen

Unchanged

Large

39-42 cents per dozen

Unchanged

Medium

38-41 cents per dozen

Unchanged

Certified Organic EL

275-310 cents per dozen

Unchanged long term

Breaking stock

15-19 cents per dozen

Unchanged

Checks

2-5 cents per dozen

Unchanged

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

The June 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. $0.29 ($0.29) estimated by proportion: L. $0.23 ($0.23): M. $0.20 ($0.20)

(See the text, tables and figures in the review of production and prices comprising the report on USDA April 2019 cost data, posted under the STATISTICS TAB. A report on the financial results attained by Cal-Maine Foods for the 3rd. Quarter of Fiscal 2019, is also posted under the STATISTICS TAB.

Shell-Egg Demand Indicator

The USDA-AMS Shell Egg Demand Indicator for June 5th 2019 was numerically higher by 1.0 points from the last weekly report to -3.2 with a 1.4 percent increase in inventory as determined by the USDA-ERS as follows:-

Productive flock

329,563,815 million hens

Average hen week production

80.3% (was 80.3%)

Average egg production

264,369,743 million per day

Proportion to shell egg market

70.3% (was 68.6%)

Total for in-shell consumption

516,783 cases per day

USDA Inventory

1,487,600 cases

26-week rolling average inventory

4.57 days

Actual inventory on hand

4.72 days (was 4.77 days)

Shell Egg Demand Indicator

-3.2 points (was -4.3 on May 29th 2019)

Dried Egg Products

Prices for dried egg products (most frequent price with a range in $ per pound) effective May 31st 2019 were:-

Whole Egg

$2.00-$2.10

Unchanged.

Yolk

$1.95-$2.10

Unchanged.

Spray-Dried White

$4.60-$4.80

Down $0.20 on both ends of the range.

Blends

$2.75-$2.80

No new quotation

U.S. dried egg inventory on April 30th 2019, as reported on May 10th 2019 was 44 percent lower than on April 30th 2018 attaining 18.1 million lbs. (8,211 metric tons), equivalent to approximately 2-weeks current production. Inventory was 1.6 percent higher compared to March 31st 2019. During the period March 31 st 2019 through April 27th 2019, dried egg processed under USDA inspection amounted to 11.4 million lbs. Lower shell-egg prices over the past few weeks diverted non-contracted eggs from packing to breaking.

COMMENTS

Newcastle Disease

A total of 444 exotic velogenic viscerotropic Newcastle disease (vvND = END) cases in small multi-species backyard flocks mainly comprising gamefowl (fighting cocks) were confirmed between May 18th and May 31st in the Southern California Counties of San Bernardino (141), Riverside (258), Los Angeles (44), Ventura (1) and Alameda (1). This case was confirmed in northern California during the week of March 8 th. Pre-emptive slaughter of all "birds" (presumed to be domestic galliformes and some anseriforms) in four communities in Los Angeles, Riverside and San Bernardino Counties was conducted under the direction of the State Veterinarian for California in November. This probably resulted in dissemination of infection by owners moving birds. A case of vvND was diagnosed in a flock of non-commercial chickens, presumed to be fighting cocks in Utah County, UT on January 18th. An investigation was initiated to ascertain whether there was any direct or indirect contact with similar flocks in Southern California but no results have been released.

The incidence rate for END fell sharply after mid-October 2018 with only 17 new cases in November. A surge of incident cases was detected in Riverside County during mid-December 2018 with 43 incident cases diagnosed during the month. There were 86 new cases in January 2019, 48 in February, 22 during March, 17 in April and 20 in May. In late March the USDA released funds from the 2015 HPAI outbreak but this may be characterized as too-little and too-late after 13 months. The outbreak is apparently declining in incidence rate. This is less attributed to the "control procedures" carried out by APHIS/CDFA than to immunity developing in flocks from vaccination and exposure of vaccinated flocks that will remain non-clinically affected reservoirs shedding virus in a cycle of exposure. Clearly many flocks are not identified or diagnosed given the relationship of owners of fighting cocks to federal and state agencies.

A flock of 103,000 pullets aged 6 weeks located near Perris in Riverside County was depleted following PCR-diagnosis of vvND during the third week of December 2018. A second commercial flock comprising 180,000 egg-producing hens in Riverside County was diagnosed with vvND during the first week of January 2019 followed by two other laying flocks located about 5 miles from the previous case.

As yet the END situation has not disrupted 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 23rd 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 during 2018 should be a warning to U.S. producers during the early winter of 2019 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 2018. 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 with an additional case in Chippewa County in February 2019. The affected flocks have since been depleted following application of "controlled marketing". There is a presumption that migratory waterfowl cease shedding AI virus by the first week of April, re-commencing in December. 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.


















































































































































































Top