Egg Industry News and Commentary

  —  Jun 16

 
USDA Weekly Egg Price and Inventory Report, June 15th 2017.

    

Hen Numbers Stable but prices fall back to pre-Memorial Day levels.

OVERVIEW

According to the USDA Egg Market News Reports posted on June 12th the Midwest wholesale prices for Extra Large and Large sizes fell 11 percent from the previous week.

The market will be influenced by  hen inventory on the supply side of the equation. The progression of prices during 2017 is depicted in the USDA chart reflecting three years of data, updated weekly.

  

The June 12th USDA Egg Market News Report documented a USDA Combined Region value of $0.68 per dozen delivered to warehouses. This price lags Midwest Weekly values by one week, and is compared to a trailing 18-month peak price of $2.20 per dozen in late November 2015.  The USDA Combined range for Large, in the Midwest was $0.63 per dozen.

At the high end of the range, the price in the Northeast Region, attained $0.70 per dozen. The current USDA Combined Price was approximately 75 cents per dozen below the three-year average. During the first Quarter of 2016 the average was inflated by the rise in prices attributed to the post-HPAI shortage of all eggs but the price dropped 15 cents per dozen during the first two weeks of April 2016.

Hen numbers this week were stable for the second week after successive declines over the prevs three weeks. The population is at a high level relative to demand with approximately 298.2 million hens in production. Hens-in-lay increased from 303 million in early December 2016. The total egg-flock comprises 306.2 million including hens in molt and small flocks

Generic shell-egg stock fell by 5.4 percent compared to a rise of 3.9 percent for the previous week confirming fluctuation between demand and production. Dried-egg inventory amounted to 28.0 million pounds (12,723 metric tons) as of May 31st 2017. This is extremely high, as is the National stock of frozen egg products reported on May 22nd confirming a stock of 41.2 million pounds (18,176 metric tons) on April 30th.  

INVENTORY

Cold storage stocks in selected regions on June 5th 2017 amounted to 3.296 million pounds (1,498 metric tons), 7.0 percent below the stock of 3.543 million pounds during the week of May 1st. 2017.

The latest monthly USDA Cold Storage Report released on May 22nd documented a total stock of 41.176 million pounds (18,176 metric tons) of frozen egg products on April 30th 2017. This value was up 22.3 percent from April 30th 2016. Approximately 85 percent of inventory comprised the categories of “Whole and Mixed” (29.9 percent) and “Unclassified” (56.7 percent).

The national stock of generic shell eggs on June 12th was lower by 5.4 percent this past week, compared to a 3.9 percent increase in inventory during the previous week. Five regions showed decreases in stock levels. The Midwest Region was down 0.5 percent compared to the previous week to 391,600 cases. This region was followed in decreasing order of stock level by the Southeast Region down by 3.4 percent to 253,600 cases; the South Central Region down by 7.9 percent to 239,300 cases; the Southwest Region down by 19.1 percent to 171,900 cases, the Northeast Region up by 3.3 percent to 128,600 cases and the Northwest down by 5.2 percent to 124,600 cases

The total USDA Six-Area stock of commodity eggs comprised 1,635,700 cases, of which 80.1 percent were shell eggs. The inventory of breaking stock was up 2.2 percent to 326,000 cases. The price of 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 by 0.8 percent (down 3.4 percent last week) to 200,000 cases with organic stock comprising 57.1 (was 50.0) 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 organic eggs when there is a wide differential in price. During the past week the USDA benchmark retail price of cage-free brown fell by 8.1 percent, or 33 cents per dozen to $2.66 per dozen while USDA Certified Organic fell by 6.8 percent or 26 cents per dozen to $3.83 per dozen, widening the price differential to $1.17 per dozen ($1.11 per dozen last week).  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 latest monthly USDA Cage-free Hen Report for June 5th the number of hens held in other than conventional cages during May increased 0.7 percent for organic and increased 2.6 percent for cage-free flocks.:-

Total U.S. flock held for USDA Certified production = 14.6 million   (14.5 million, April)

Total U.S. flock held for cage-free production            =  27.3 million   ( 26.6 million, April)

Total U.S. non-caged flock                                         =  41.9 million (13.6 percent of a nominal 307 million flock but 21.0 percent of a presumed flock of 200 million held for shell-egg production)                                                                                                                     

For the week ending June 10th eggs processed under FSIS inspection increased by 7.2 percent compared to the previous week to a level of 1,525,125 cases. The proportion of eggs broken by in-line complexes reached 56.0 percent (was 58.0 percent last week). During the corresponding week in 2016 in-line breakers processed 51.3 percent of eggs including limited imports, denoting recovery from the severe mortality affecting approximately nine large in-line complexes affected by HPAI in 2015. 

The price range for breaking stock delivered to Central plants on June 12th was unchanged last week at a range of 37 to 39 cents per dozen. The price of checks was unchanged in a range of 23 to 25 cents per dozen, still representing a throw-away price well below the average cost of production for nest-run, estimated by the EIC at 60.2 cents per dozen for April 2016.

 

PRODUCTION AND PRICES

The USDA Egg Market News Reports released on June 14th 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

 56-59 cents per dozen

    63-66  -11%

Large

 54-57 cents per dozen

    61-64  -11%

Medium

 48-51 cents per dozen

    50-51  - 4%

Certified Organic EL

275-310 cents per dozen

    unchanged

Central States Breaking Stock

  37-39  cents per dozen

    unhanged

Checks

  23-25  cents per dozen

    unchanged

 

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

The June 12th regional average FOB producer prices, for nest-run gradable white shelled eggs, with prices in rounded cents per dozen (last week in parentheses) were:-

                              EL. $0.47 ($0.50):  L. $0.38 ($0.45):  M. $0.30 ($0.32)

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

  • USDA Certified Organic, Brown, Large:            $3.83  ($4.09)
  • Cage-Free Brown, Large:                                    $2.66  ($2.99)
  • Omega-3 Enriched Specialty, White, Large:       $2.07  ($2.17)
  • Generic White, Large  Grade AA                        $0.91  ($0.96)
  • Generic White, Large  Grade A (Feature price)      $0.81  ($1.83)

                                 

 Retail prices for generic white Large AA were 5 cents per dozen higher 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 April 2017 data posted in the May 12th Edition of EGG-CITE. The financial results posted by Cal-Maine Foods for the completed 3rd Quarter of Fiscal 2017 were posted in the March 31st Edition)

The USDA-AMS Shell Egg Demand Indicator for June 14th 2017 increased numerically by 2.6 points from -10.5 in the last report to -7.9 with a 5.4 percent decrease in inventory as determined by the USDA-ERS as follows:-  

 

Productive flock

298,198,414million hens

Average hen week production

77.6%

Average egg production

231,394,985million per day

Proportion to shell egg market

                            66.1%

Total for in-shell consumption

424,867 cases per day

USDA Inventory

1,309,700 cases

26-week rolling average inventory

4.65 days

Actual inventory on hand

                           5.06 days

Shell Egg Demand Indicator

-7.9 points (was -10.5 in the June 7th report)

 

 

Prices for dried egg products (most frequent price with a range in $ per pound) posted April 24th were:-

Whole Egg

$1.55-$1.65

Unchanged

Yolk

$2.05-$2.15

Unchanged

Spray-Dried White

$2.05-$2.15

Unchanged

Blends

$1.70-$1.75

Unchanged

 

 

The problem of a high inventory of dried egg is apparent from the 71 percent increase to 28.0 million lbs. on May 31st.th 2017 compared to May 31st 2016.  During the period April 30th through June 3rd 2017, dried egg processed under USDA inspection amounted to 11.4 million lbs. (compared to 13.7 million lbs. during the previous month in 2017).

 

COMMENTS

The H5N8 HPAI situation is easing in Western and Central Europe with restrictions lifted in France. The incidence rate of strain H5N6 infection has declined sharply in commercial flocks in both South Korea and Japan although South Korea recorded an outbreak of H7N8 HPAI this past week. As in the U.S. and the E.U. virus is introduced into regions beneath flyways by migratory birds and then transmitted to commercial free-range flocks or to confined flocks by deficiencies in biosecurity. This should be a warning to U.S. producers since the presence of infection necessitates enhanced and effective containment, impossible if flocks are allowed outside access.

Early 2017 cases of H7N9 North American lineage LPAI and HPAI in broiler breeder flocks in contiguous areas of Tennessee and Alabama and in Northwest Georgia and a case of LPAI in a Southwest Kentucky free-range egg production flock were quickly contained by depletion. Veterinary officials have warned operators to securely house flocks in at-risk states under the Mississippi flyway. There have been no reports of either LPAI or HPAI for six consecutive weeks suggesting lower shed rates among waterfowl, enhanced biosecurity or a combination of these factors.

In early January the USDA and USAPEEC worked with counterparts in South Korea to ship eggs and products to compensate for losses due to the HPAI epornitic resulting in depletion of 30 million hens, exceeding that Nation’s flock mortality from a previous outbreak in 2014. Exports of shell eggs to South Korea ceased following imposition of embargos due to AI. Australia is currently the major supplier to South Korea.