Egg Industry News and Commentary

  —  Aug 18

 
USDA Weekly Egg Price and Inventory Report, August 16th 2017.

    

Hen Numbers Increase by 0.4 Million; Prices Recede After a Modest Upward Move.

OVERVIEW

According to the USDA Egg Market News Reports posted on August 16th the Midwest wholesale prices for Extra Large and Large sizes were down 5 percent and 4 percent respectively from the previous week. The market will be influenced mainly 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 August 11th USDA Egg Market News Report documented a USDA Combined Region value of $0.91 per dozen delivered to warehouses. This price lags Midwest Weekly values by one week, and can be compared to a trailing peak price of $2.20 per dozen in late November 2015.  The USDA Combined range for Large, in the Midwest was $0.85 per dozen.

At the high end of the range, the price in the Southeast and South Central Regions, attained $0.94 per dozen. The current USDA Combined Price was approximately 65 cents per dozen below the corresponding three-year average. During the second Quarter of 2016 the average was inflated by the rise in prices attributed to the post-HPAI shortage of shell eggs and breaking stock.

The number of producing hens this week was 0.4 million higher at 305.4 million consistent with retention of flocks into the second cycle and by pullets placed six months ago attaining production. The hen population is high level relative to current consumer and industrial demand. The total egg-flock comprises 312.6 million including hens in molt and small flocks, approximately 0.6 million more than last week.

Generic shell-egg stock fell by 1.0 percent compared to an increase of 0.2 percent for the previous week suggesting a balance between supply and demand albeit at a low price. Dried-egg inventory amounted to 27.9 million pounds (12,682 metric tons) as of July 31st 2017. The National stock of frozen egg products as reported on July 24th attained 41.7 million pounds (18,960 metric tons) on June 30th.

 

INVENTORY

Cold storage stocks in selected regions on August 7th 2017 amounted to 3.270 million pounds (1,486 metric tons), 3.0 percent above the stock of 3.176 million pounds during the week of July 1st. 2017.

The latest monthly USDA Cold Storage Report released on July 24th documented a total stock of 41,712 million pounds (18,960 metric tons) of frozen egg products on June 30th 2017. This value was up 9.9 percent from June 30th 2016. Approximately 85 percent of inventory comprised the categories of “Whole and Mixed” (33.6 percent) and “Unclassified” (51.6 percent).

The national stock of generic shell eggs on August 14th was down by 1.0 percent, compared to a 0.2 percent increase in inventory during the previous week. Four regions showed increases in stock level. The Midwest Region was up 3.4 percent compared to the previous week to 381,200 cases. This region was followed in decreasing order of stock level by the South Central Region down 4.3 percent to 250,500 cases; the Southeast Region down by 2.1 percent to 241,700 cases; the Southwest Region down by 4.7 percent to 173,800 cases, the Northeast Region down by 9.1 percent to 114,900 and the Northwest Region up by 11.6 percent to 107,700 representing the second consecutive double-digit weekly increase.

The total USDA Six-Area stock of commodity eggs comprised 1,574,300 cases, of which 80.7 percent were shell eggs. The inventory of breaking stock was down 2.6 percent to 304,400 cases although the price of breaking stock in the Central Region remained unchanged. 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 down by 1.7 percent compared to a rise of 2.5 percent for the previous week to 176,300 cases with organic stock comprising 38.4 (was 38.7) 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 differential in price over $1.00 per dozen During the past week the USDA benchmark retail price of cage-free brown rose by 12.6 percent, or 52 cents per dozen to $3.08 per dozen while USDA Certified Organic fell by 12.2 percent or 50 cents per dozen to $3.61 per dozen, narrowing the price differential to $0.53 per dozen ($1.35 per dozen last week) suggesting larger purchases of the Organic category in the coming week at the expense of  cage-free eggs.  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.

According to the latest monthly USDA Cage-free Hen Report for August 8th the number of hens held in other than conventional cages during June was stable for organic and cage-free flocks.:-

Total U.S. flock held for USDA Certified Organic production = 14.6 million (May through July)  

Total U.S. flock held for cage-free production                          =  27.5 million (July)   (27.3 million, June)

Total U.S. non-caged flock                                                      =  42.1 million (13.8 percent of a nominal 305 million flock but 21.1 percent of a presumed flock of 200 million held for shell-egg production)                                                                                                                     

For the week ending August 12th eggs processed under FSIS inspection increased by 1.1 percent compared to the previous week to a level of 1,516,488 cases. The proportion of eggs broken by in-line complexes reached 54.9 percent (was 55.1 percent last week). During the corresponding week in 2016 in-line breakers processed 52.5 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 August 14th was unchanged compared to the past week at 39 to 41 cents per dozen. The price of checks was also unchanged over a range of 27 to 29 cents per dozen, still representing a throw-away price well below the average cost of production for nest-run, estimated by the EIC at 59.9 cents per dozen for June 2017.

 

PRODUCTION AND PRICES

The USDA Egg Market News Reports released on August 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

 81-84 cents per dozen

   85-88    down 5%

Large

 79-82 cents per dozen

   83-86    down 4%

Medium

 47-50 cents per dozen

    unchanged

Certified Organic EL

275-310 cents per dozen

    unchanged

Central States Breaking Stock

  39-41  cents per dozen

    unchanged

Checks

  27-29  cents per dozen

    unchanged

 

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

The August 14th regional average FOB producer prices, for nest-run grade-quality white shelled eggs, with prices in rounded cents per dozen (last week in parentheses) were:-

                              EL. $0.66 ($0.73) estimate:  L. $0.61 ($0.67):  M. $0.29 ($0.29)

The following advertised retail prices for the week ending August 7th, (compared with the previous week in parentheses) were posted by the AMS for dozen packs:

  • USDA Certified Organic, Brown, Large:            $3.61  ($4.11)
  • Cage-Free Brown, Large:                                    $3.08  ($2.56)
  • Omega-3 Enriched Specialty, White, Large:       $2.04  ($2.22)
  • Generic White, Large Grade AA                         $0.96  ($0.84)
  • Generic White, Large Grade A (Feature price)       $1.04  ($1.04)

                                 

 Retail prices as determined by the USDA-AMS for generic white Large AA were up 12 cents per dozen this past week which will depress consumption despite “loss leaders offered in areas with new Lidl stores and in regional Midwest markets. In past months retailers have maintained disproportionately high prices at the shelf, taking advantage of low wholesale cost to inflate 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 July 2017 data posted in the August 12th Edition of EGG-CITE. The financial results posted by Cal-Maine Foods for the completed 4th Quarter and Fiscal 2017 were posted on July 28th)

The USDA-AMS Shell Egg Demand Indicator for August 16th  2017 increased numerically by 0.7 points from +4.5 in the last report to +5.2 with a 1.0 percent decrease in inventory as determined by the USDA-ERS as follows:-  

 

Productive flock

305,419,234 million hens

Average hen week production

80.8% (was 80.7%)

Average egg production

246,778,741 million per day

Proportion to shell egg market

                   68.4 (was 68.7%)

Total for in-shell consumption

468,880 cases per day

USDA Inventory

1,269,900 cases

26-week rolling average inventory

4.67 days

Actual inventory on hand

                           4.44 days

Shell Egg Demand Indicator

+5.2 points (was +4.5 in the August 9th report)

 

Prices for dried egg products (most frequent price with a range in $ per pound) posted              July 17th were:-

Whole Egg

$1.55-$1.65

Unchanged

 Yolk

$2.05-$2.15

Unchanged

Spray-Dried White

$2.00-$2.10

Unchanged

Blends

$1.70-$1.75

Unchanged

 

The problem of a high inventory of dried egg remains high but stable as denoted by the 10 percent increase to 27.9 million lbs. on July 31st 2017 compared to July 31st 2016.  During the period July 2nd through July 29th 2017, dried egg processed under USDA inspection amounted to 9.9 million lbs. compared to 9.6 million lbs. during the previous month in 2017.

 

COMMENTS

The H5N8 HPAI situation has eased in Western and Central Europe. The incidence rate of strain H5N6 infection has declined sharply in commercial flocks in both South Korea and Japan. South Korea has lowered their emergency status with respect to AI. And has approved importation of shell eggs from the U.S. 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 for early spring of 2018 since the presence of infection necessitates enhanced and effective containment. This is impossible if flocks are allowed outside during periods of high risk when migratory birds are shedding virus.

There have been no reports of either LPAI or HPAI for over three consecutive months consistent with termination of shedding by waterfowl, enhanced biosecurity and a combination of these factors.