Egg Industry News

      

MARCH 2017 USDA EX-FARM BENCHMARK PRICE RISES BUT NEGATIVE MARGINS PERSIST

Apr 10, 2017

    

Introduction.

Comments supplementing the production summary tables for the latest series reflecting USDA March 2017 statistics and prices made available by the EIC on April 5th 2017, are tabulated together with comparison values from the previous March 13th 2017 posting.

  

EGG-CITE summarizes weekly USDA data on egg production and prices in each edition.

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 March 2017 rose 19.4 percent to 45.0 cents per dozen, compared to February yielding a negative margin of 15.2 cents per dozen as delivered from the laying house. The March 2017 value should be compared to 66.9 cents per dozen for the corresponding month in 2016 and 124.1 cents per dozen in March 2015. It is noted that from November 2014 through March 2015, prices were inflated in anticipation of implementation of California Proposition #2 effective January 1st 2015 and then at the end of this period by the seasonal pre-Easter rise. Thereafter prices responded positively to shortages caused by HPAI in the upper Midwest with a peak in August 2015.
  • During March 2017 feed price averaged 32.3 cents per dozen and averaged 32.6 cents per dozen during the first Quarter of 2017. Feed cost during 2015 averaged 34.9 cents per dozen. The average feed cost in 2014 was 43.2 cents per dozen in contrast to 2013 which was considerably higher at 50.12 cents per dozen, reflecting the drought-affected crop of 2012.
  • Combining data from the USDA and the EIC (formerly data from the University of California), producers recorded a negative margin of 15.2 cents per dozen at farm level for flocks in March compared to a negative margin of 23.5 cents per dozen in February. The cumulative loss for the first Quarter of 2017 was 50.8 cents per dozen. The algebraic average margin for 2016 was -9.6 cents per dozen with losses experienced for eight consecutive months.  Ex-farm margin for 2015 amounted to a monthly average of 74.5 cents per dozen. For 2014, average ex-farm contribution margin was 33.9 cents per dozen with all months positive.
  • The simple average price of feed for March 2017 over 5-regions was $205.75, 2.5 percent lower than February. The Southeast recorded the highest cost among five regions at $238.54 compared to the lowest region, the Midwest at $174.37 per ton. The average figure includes ingredients plus milling and delivery at approximately $10 per ton. The benchmark price of corn was $179.9 per ton in March, unchanged from February. A decrease of 3.1 percent in the price of soybean meal from $354 per ton in February to $343 per ton in March contributed to the fall in the cost of feed. There was a $71 per ton differential in corn price between the Midwest and the Southeast in March. Feed price will continue to be the major factor driving production cost and hence margin. 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 March to be 60.24 cents per dozen, 1.5 percent lower than 61.18 cents per dozen recorded in February. Production costs during March ranged from 54.63 cents per dozen in the Midwest up to 76.42 cents per dozen in California which was higher than the Midwest region by 21.2 cents per dozen. The differential in feed cost between the extremes, the Southeast and the Midwest regions was 10.1 cents per dozen in March, unchanged from February.
  • Retail egg prices as determined by the Department of Commerce for February 2017 averaged 146.4 cents per dozen, down by 8.4 percent or 13.5 cents per dozen compared to January 2016. During February 2015 and 2016 retail prices were 208.8 cents per dozen (post-CA. Prop. #2) and 226.7 cents per dozen (post-AI restocking)  During 2016 and early 2017 retail prices did not decline in proportion to ex-farm prices allowing higher margins at retail thereby depressing demand.

Read the Full Report at http://egg-cite.com/statistics/single.aspx?contentID=9067