Egg Industry News and Commentary

  —  Mar 3

 
USDA Weekly Egg Price and Inventory Report, February 23rd 2017

    

OVERVIEW

According to the USDA Egg Market News Report (Vol.64: No. 8) posted on February 21st Midwest-wholesale prices for Extra Large and Large decreased by 3 percent this past week reverting to the prices pertaining five weeks ago. The progression of prices during 2017 is depicted in the USDA chart reflecting three years of data, updated weekly.

  

The latest USDA Egg Market News Reports released documented a USDA Combined Region value of $0.65 per dozen delivered to warehouses. This price lags Midwest Weekly values by one week, and is compared to a peak price of $2.20 per dozen in late November 2015.  The USDA Combined range for Large, in the Midwest was $0.60 per dozen. At the high end of the range, the price in the South Central Region, attained $0.69 per dozen. The current USDA Combined Price was approximately 75 cents per dozen below the three-year average. In early 2016 the average was inflated by the rise in prices attributed to the post-HPAI shortage of all eggs.

Hen numbers continue to rise relative to demand attaining approximately 311.6 million in production. Hens in lay increased from 303 million in early December 2016. For the past week the number of hens increased by 1.5 million. The total egg-flock comprises 316.7 million including hens in molt and small flocks. Generic shell-egg stock increased by 0.4 percent reflecting the balance between demand and production. Dried-egg inventory of 29.4 million pounds as of December 31st is extremely high, as is the National stock of frozen egg products at 35.8 million pounds.    

INVENTORY

 Cold storage stocks in selected regions on February 13th 2017 amounted to 2.963 million pounds, 1.5 percent above the stock of 3.009 million pounds during the week of February 1st. 2017.

The latest monthly USDA Cold Storage Report released on January 24th documented a total stock of 35.821 million pounds of frozen egg products on December 31st 2016. This was down 12.4 percent from December 31st 2015. Approximately 83 percent of inventory comprised the categories of “Whole and Mixed” (31.7 percent) and “Unclassified” (51.4 percent).

The national stock of generic shell eggs was up 0.4 percent this past week, compared to a 0.8 percent increase in inventory during the previous week. Four of the six regions showed decreases in inventory. The Midwest Region was up 0.9 percent compared to the previous week to 374,400 cases. This region was followed in decreasing order of stock level by the Southeast Region up 13.7 percent to 307,700 cases; the South Central Region decreased by 1.3 percent to 249,600  cases; the Southwest Region down by 7.4 percent to 162,200 cases, the Northeast Region down 9.2 percent to 129,000 cases and the Northwest down 4.6 percent to 123,400 cases

The total USDA Six-Area stock of commodity eggs comprised 1,622,200 cases, of which 83.0 percent were shell eggs. The inventory of breaking stock was down 3.4 percent to 275,500 cases. The relatively stable price for breaking stock this week reflects the availability of eggs from both mature and young flocks in relation to the demand for generic eggs.

Specialty egg inventory was up 2.7 percent to 178,300 cases with organic stock comprising 32.2 percent of inventory. Recent data suggests a fluctuating build in the stock of USDA Certified Organic product. This is attributed to an apparent trend by consumers to purchase less-expensive brown cage-free product over more costly organic eggs. During the past week the retail price of cage-free brown rose 19.1 percent, or 53 cents per dozen to $3.23 per dozen while USDA Certified Organic increased by 9.3 percent or 35 cents per dozen to $4.08 per dozen, with a price differential to $0.85 per dozen.  Large week-to-week fluctuations can be expected in the stock of specialty and organic eggs based on the small base of these categories.

According to the monthly USDA Cage-free Hen Report for February 6th the number of hens held in other than conventional cages during January was unchanged suggesting that the hen population is determined quarterly. The non-confined segments comprised:-

Total U.S. flock held for USDA Certified production = 14.1 million   (was 13.5 million, October & November 2016)

Total U.S. flock held for cage-free production            =  23.5 million    (was 17.0 million, October & November)

Total U.S. non-caged flock                                         = 37.6 million (12.5 percent of a nominal 300 million flock but 18.8 percent of a nominal flock of 200 million held for shell-egg production)                                                                                                                    

For the week ending February 18th eggs processed under FSIS inspection decreased 2.9 percent from the previous week to a level of 1,522,239 cases. The proportion of eggs broken by in-line complexes reached 56.4 percent, an increase from 55.1 percent last week. During the corresponding week in 2015 in-line breakers processed 47.6 percent of eggs including imports, denoting the severe mortality affecting approximately eight large in-line complexes affected by HPAI in 2015. 

The price range for breaking stock delivered to Central plants for the week ended February 21st declined to a range of 22 to 24 cents per dozen. The price of checks remained at 11 to 13 cents per dozen representing a throw-away price well below the average cost of production for nest-run, estimated by the EIC at 60 cents per dozen for January 2016.

 

PRODUCTION AND PRICES

The USDA Egg Market News Reports released on Tuesday 22nd February 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

  58-61 cents per dozen

    60-63  Down 3%

Large

  56-59 cents per dozen

    58-61  Down 3%

Medium

  46-49 cents per dozen

    48-51  Down 4%

Certified Organic EL

275-310 cents per dozen

   Unchanged

Central States Breaking Stock

  22-24  cents per dozen

   20-26            0%

Checks

  11-13  cents per dozen

   Unchanged

 

 

The February 21st National 5-day rolling average FOB producer prices, for white shelled eggs, with prices in rounded cents per dozen for the past week were:-

                                   EL. $0.41 (est.):  L. $0.38: M. $0.28

The following advertised retail prices for the week ending February 21st, (compared with the previous week in parentheses) were posted by the AMS for dozen packs:

  • USDA Certified Organic, Brown, Large:            $4.08  ($3.73)
  • Cage-Free Brown, Large:                                    $3.23  ($2.78)
  • Omega-3 Enriched Specialty, White, Large:       $2.27  ($2.33)
  • Generic White, Large  Grade AA                        $0.88  ($1.04)
  • Generic White, Large  Grade A (Feature price)      $0.89  ($1.12)                                 

 Retail prices for generic white Large AA were 23 cents per dozen lower this past week, according to the USDA-AMS. In past months retailers have maintained disproportionately high prices at the shelf, taking advantage of low wholesale cost to boost margins. By this strategy, retailers have effectively depressed consumption thereby holding the industry to record-low price levels for generic eggs. 

(See the text, tables and figures in the review of production and prices comprising the report on USDA January 2017 data posted in the February 16th Edition of EGG-CITE now listed under the STATISTICS tab. The financial results posted by Cal-Maine Foods for the completed 2nd Quarter of Fiscal 2017 posted in the December 21st Edition can be retrieved through the SEARCH feature entering “Cal-Maine”

The USDA-AMS Shell Egg Demand Indicator for February 22nd 2017 increased numerically by 1.8 points from +1.7 in the last report to +3.5 with a 2.6 percent higher inventory calculated by the USDA-ERS as follows:-  

 

Productive flock

311,648,975 million hens

Average hen week production

81.3%

Average egg production

253,370,617 million per day

Proportion to shell egg market

69.0 %

Total for in-shell consumption

486,331 cases per day

USDA Inventory

1,346,700 cases

26-week rolling average inventory

4.70 days

Actual inventory  on hand

                           4.54 days

Shell Egg Demand Indicator

+3.5 points (was +1.7 in the last report)

 

 

 

Prices for dried egg products (most frequent price with a range in $ per pound) posted February 21st were:-

Whole Egg

$1.55-$1.65

 

Yolk

$1.95-$2.05

 

Spray-Dried White

$2.10-$2.15

  

Blends

$1.70-$1.75

 

 

 

The problem of a high inventory of dried egg is apparent from the 140 percent increase to 30.12 million lbs. on January 31st 2016 compared to January 31st 2015.  During the period January 4th through January 31st 2017, dried egg processed under USDA inspection amounted to 11.9 million lbs. (up from 10.1 million lbs. in December 2016), corresponding to approximately a quantity equivalent to three-months inventory.

 

COMMENTS

The H5N8 HPAI situation is still deteriorating in Western and Central Europe involving 23 EU Nations. Infection with H5N6 in Asia is affecting both South Korea and Japan with both strains introduced by migratory birds and then transmitted to commercial free-range flocks. This should be a warning to U.S. producers. Possible introduction of AI must be considered during the first Quarter of 2017 necessitating enhanced and effective biosecurity. This is emphasized by the isolation of Eurasian strain H5N2 avian influenza virus from a hunter-killed mallard in Montana in early January. The USDA and USAPEEC have worked with counterparts in South Korea to ship eggs and products to compensate for losses due to the HPAI epornitic resulting in depletion of 28 million hens, exceeding the Nation’s flock mortality from a previous outbreak in 2014.