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FEBRUARY 2016 MARGINS FRACTIONALLY HIGHER THAN JANUARY.

  

Mar 9, 2016

    

NATIONAL FLOCK UP TO 291 MILLION BUT DEFICIT FROM HPAI PERSISTS.

Introduction

Comments supplementing the production summary tables for the latest series reflecting January and February 2016 statistics and prices made available by the EIC on March 4th 2016 are tabulated together with comparison values from the previous February 23rd 2016 posting on EGG-CITE which also details USDA data on egg production and prices each week.

  

Disease.

Avian influenza remains a major concern to the Industry which has yet to recover from the 2015 epornitic of H5N2 which claimed 38.5 million hens and 3.5 million pullets on 46 layer farms representing 12 percent of all hens in flocks over 30,000 birds and 6 percent of rearing pullets. During early January 2016 a sporadic but limited outbreak of H7N8 avian influenza was diagnosed in ten turkey growing flocks in DuBois County, IN. One farm was diagnosed with a highly pathogenic H7N8 the other nine farms, identified by surveillance were infected with a low-pathogenicity strain of the virus. Rapid response by state and federal authorities applying the lessons learned in the 2015 epornitic resulted in rapid control and a declaration of eradication by mid-February. No additional infected flocks were identified on either commercial or backyard farms despite diligent surveillance over a 20 km radius from the index farm.

Surveillance of approximately 37,000 waterfowl has yielded a 10 percent rate of recovery of all serotypes of avian influenza virus including a 1 percent prevalence of low-pathogenicity H5 isolates. Two high-pathogenicity influenza viruses from hunter-killed mallards in Utah and Oregon were recovered in 2015.

France has recorded over 60 cases of H5 AI in the southwest region of the nation mostly involving commercial waterfowl held for foie gras production.

  

February 2016 Cost Data

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 blended egg price in February 2016 at 91.7 cents per dozen, was virtually unchanged from January at 91.6 cents per dozen. The February 2016 value should be compared to 106 cents per dozen for the corresponding month in 2015 and 111.1 cents per dozen in December 2014. It is noted that from November 2014 through February 2015 values were inflated due to implementation of California Proposition #2 in January 2015.
  • There was no difference in average feed cost expressed as a component of the first cycle production cost per dozen over the 5-regions monitored by the USDA, attaining 31.5 cents per dozen in both January and February 2016 compared to 31.7 cents per dozen in December 2015. Feed cost during 2015 amounted to 34.9 cents per dozen. The average feed cost in 2014 was 43.2 cents per dozen in contrast to feed cost during 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 from the University of California), producers recorded a positive margin of 32.33 cents per dozen at farm level for flocks in February 2015 compared to31.23 cents per dozen in January.  Farm profit for 2015 amounted to a monthly average of 74.5 cents per dozen. For 2014, average ex-farm contribution was 33.9 cents per dozen with all months positive. During 2013, a monthly algebraic average margin of 15.3 cents per dozen was earned.

 

  • The simple average price of feed for February over the 5-regions at $200.88 was almost identical to January. The Southeast recorded the highest cost among regions at $238.54 compared to the lowest region, the Midwest at $170.37 per ton. The average figure includes ingredients plus milling and delivery of $10.90 per ton.  A 1.5 percent decrease in the price of soybean meal from $313 per ton in January 2016 to $308 per ton in February contributed to a lower feed cost. The 5-region average cost of corn increased one percent to $157 per ton compared to January at $155 per ton. There was a $65.57 per ton differential in corn price between the Midwest and the Southeast in February 2016. Average feed cost during 2012 was $315.80 per ton compared to $300.80 for 2013.  Average feed cost per dozen during 2014 was 43.1 cents per dozen with an average price of feed of $259.10 per ton. 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 February 2016 to be 59.37 cents per dozen, unchanged from January.  Production costs during February ranged from 53.92 cents per dozen in the Midwest up to 74.66 cents per dozen in California which was higher than the Midwest region by 20.74 cents per dozen. The differential in feed cost between the Southeast and the Midwest regions was 16.5 cents per dozen in February 2016.
  • Retail egg prices as determined by the Department of Commerce for January 2016 averaged 232.8 cents per dozen, down by 15.4 percent or 42.3 cents per dozen from December 2015. In January 2014 and 2013 retail prices were 211.3 and 202.8 cents per dozen respectively.

February 2016 production Data

  • According to EIC data, the estimated complement of U.S. hens in flocks over 30,000 amounted to 282.8 million. The total U.S. flock amounted to 291.1 million on February lst 2016. The average annual flock sizes for 2014, 2013 and 2012 were 303.0, 289.1 and 285.3 million hens respectively. The advent of HPAI with unprecedented mortality has complicated all models projecting future flock sizes and prices. The EIC estimates a flock size of 315.9 million hens in December 2016 based on pullet chick placements and patterns of depletion.
  • The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA increased by 1.5 percent in February 2016 to 20.4 percent of the national flock compared to the 2015 average of 20.6 percent.
  • The inability of existing hatcheries to supply extra chicks over the short and intermediate term and the time-related biological restraints of rearing will dictate retention of a higher proportion of hens through the second cycle as cage capacity will outstrip availability of replacements in areas affected by HPAI. USDA statistics show an encouraging increase of 8.9 million pullets or an increase of 117.0 percent hatched during August through November 2015 compared to the corresponding months in 2014. Operators of parent-multiplier farms have increased their collective output by using molting, leased housing and other improvisations to maximize output over the short term. The hatchery supply flock increased from a level of 2.6 million hens in production in September to 2.9 million hens in November with projections showing 2.7 million to 3.0 million over the first half of 2016.
  • Slaughter of hens under USDA-FSIS inspection rose from 3.8 million in November 2015  to 5.4 million in January 2016 compared to the pre-HPAI monthly average of 6.0 million hens over the period including January through May 2015. Depending on availability of housing, flocks were retained from June onwards to take advantage of higher prices. Regular mortality and alternative methods of flock disposal including landfills,  rendering and shipment of live hens to Canada from approved states, accounts for the majority of depletion amounting to an average of 12 to 13 million hens per month. With longer cycles and additional molting, the number of hens slaughtered should not exceed 5.5 million per month through the first half of 2016.
  • Average rate of lay ranged from 77.2 percent to 77.9 percent over the last seven months of 2015 and attained 78.2 percent in January as new pullets transferred in late November and early December 2015 achieved peak production.  Average production reflects the balance between placement of pullets, their ages and the rate of depletion of flocks or retention of molted hens for a second cycle. Average flock production will decline as weighted flock age advances with extended retention and molting of older flocks.

December 2015 Export Data

Since the EIC issued February 2016 data on March 4th the export statistics for January had not been released by USDA FAS. Accordingly December 2015 data is posted with a subsequent update when figures are available.

  • According to USDA-FAS data, 262 thousand cases of shell eggs were exported in December 2015 representing 1.4 percent of total production.  North America (69.1 percent of exports) and East Asia (23.9 percent) comprised the major importing regions. (See concurrent report on egg exports for December and 2015 in this edition of EGG-CITE)

 Both Canada and Mexico imposed regional embargos on U.S. states with confirmed HPAI although Canada has relaxed restrictions following declarations of eradication by the USDA and expiry of the 90-day period following depletion.

  • Exports of egg products in December 2015 represented 1.7 percent of U.S. output with North America (51.7 percent of exports), East Asia (14.6 percent, was 21.5 percent November) and the EU (25.9 percent, was1.5 percent in November) comprising the principal importing regions. Due to the shortage of breaking stock and reduced capacity through large in-line units, exports were curtailed in 2015 and volume decreased by 34.8 percent attaining 1.7 percent of total U.S. output. The USDA allowed importation of pasteurized liquid from the Netherlands and breaking stock from the EU, Mexico and Canada equivalent to the production of 8.5 million hens at peak to compensate for deficiencies in supply to bakeries and food service customers who have adopted egg substitutes where practical.
  • Collectively, exports of shell eggs and products in December 2015 represented the equivalent of approximately 7.9 million hens (was 5.9 million in November) in production during the month, attaining 586 thousand case-equivalents. This was a decrease compared to monthly average shipments of 960 thousand case equivalents exported over the first four months of 2015 prior to the advent of HPAI.

 

FEBRUARY 2016 STATISTICS

COSTS & REVENUE                                                                                         

Parameter                                                                                               JANUARY 2016          FEBRUARY 2016

5-Region Cost of Production ex farm (1st Cycle)                           59.37 c/doz                59.37 c/doz

                Low                                                                                          54.29c/doz (MW)      53.92c/doz  (MW)      

                High                                                                                         74.53 c/doz  (CA)       74.66 c/doz  (CA)         

Components of 6-Region 1stCycle Cost of Production:-

                                                                    JANUARY 2016                               FEBRUARY 2016.

                Feed                                              31.54c/doz                                          31.54 c/doz

                Pullet depreciation                     10.68 c/doz                                         10.68 c/doz

                Labor                                              4.00 c/doz                                           4.00 c/doz

                Housing                                          5.30 c/doz                                           5.30 c/doz

                Miscellaneous and other            7.85 c/doz (adjusted Nov. ‘15)               7.85 c/doz

Ex Farm Contribution according to USDA values reflecting costs for February 2016:-

                                              91.70 cents per dozen1- 59.37 cents per dozen = 32.33 cents per dozen                                                        (Jan. 90.601 cents per dozen – 59.37 cents per dozen =  31.23 cents per dozen.)

Note 1:  USDA Blended egg price

 

                                                                                                                JANUARY 2016         FEBRUARY 2016

USDA     ex-farm Price (Large)                                                                 91.60c/doz                 91.70 c/doz               

                Warehouse/Dist. Center                                                          106.71c/doz              131.8c/doz

                Store delivered                                                                             112.21c/doz              137.3 c/doz

       

Dept. Commerce retail                                                                          275.1 c/doz  (Dec.)   232.8c/doz (Jan.)

 

5-Region Layer Feed Cost 

Layer Feed Cost (Average)                                                                   $200.90/ton                 $200.88/ton

                High                                                                                           $237.86/ton (SE.)        $238.54/ton (SE.)

                Low                                                                                           $172.43/ton (MW)      $170.37 /ton (MW)

               Differential                                                                            $  65.43/ton                  $  68.17/ton

                                                                                                                  (equivalent to 16.1 cents per dozen)

Pullet  Cost   (19 weeks)                                                                            $3.68                                $3.68

 

VOLUMES OF PRODUCTION                                                                           

Parameter                                                                                JANUARY 2016                 FEBRUARY 2016

Egg-strain eggs in incubators                                                47.97 million  (Jan.)       47.06 million (Feb.)

Pullet chicks hatched                                                              23.65 million  (Dec.)      23.79 million (Jan.)            

Pullets to be housed in 5 months                                        21.3 million     (May.)     21.5 million   (Jun.)

Actual National Flock, Total hens on 1st Month                291.1 million  (Jan ‘16)    293.5million (Feb.)                              

Proportion of flock in or post-molt                                                               20.4%                (Feb. 2016)

No. of hens in 1st cycle                                                                                  233.6 million      (Feb. 2016)                               

5-Region proportion of molted hens                                                            20.4%                        20.4%                 

                High                                                                                        (S.Cen.) 23.5%                        (CA)   35.0%      

                Low                                                                                             (NE)       4.0%                        (NE)      3.5%

Hens processed under FSIS inspection                                              5.1 million (Dec.)       5.4 million (Jan.)    

Eggs produced                                                                                       6.99 billion (Dec)     7.01 billion  (Jan.)

 Table-egg hens in flocks over 30,000 (97.2% of total U.S.)           278.6 million (Dec.)      282.8 million (Jan.)

“Top-6”  States hen population (USDA)                                     148.9 million (Dec.)       152.6 million (Jan.)

               

Proportion of U.S. Total by state, 2016                                                                    

*(over 30,000 hen flocks)

                   STATE                        DECEMBER 2016       JANUARY 2016                              Proportion by region (JANUARY 2016.)

               Iowa                            13.1%                 13.8%                                              MW      49.9%

               Ohio                            11.1%                 11.3%                                               NE       11.2%

               Indiana                       10.6%                 10.2%                                               SE        11.7%                                                                                                                                                                    

               Pennsylvania               8.8 %                   8.5%                                               SC        11.4%

               Texas                            5.9%                     4.2%                                              CA          4.2%    

               California                     4.9%                    5.8%                                                

               

                 (Values rounded to 0.1%)

Rate of Lay, weighted hen-week (USDA)                                                       77.8% (DEC.)      78.2% (JAN.)                                                                                                         

Projected USDA-ERS 2015 U.S. per capita annual consumption revised due to HPAI:-  250.1 eggs (-12.9 from 2014)

Projected USDA-ERS 2016  U.S. per capita annual consumption projected to be:-         258.3 eggs   (+8.2 from 2015)

Eggs broken under FSIS inspection (million cases)

                                                                             December 2015 5,749  5,354   JANUARY 2016 5,635                          

Cumulative proportion of total eggs                                                31.3%                      28.9%

 

EXPORTS

Parameter                                                                                                               Quantity Exported 

Exports:-                             

Shell Eggs (thousand cases)                                                  DECEMBER 2015  262    NOVEMBER 2015  279       

                                                                                               

Products (thousand case equivalents)                               DECEMBER 2015  324    NOVEMBER 2015  157          

                                                                                                                                               

Total       (thousand case equivalents)                                  DECEMBER 2015  586    NOVEMBER 2015  436

                                                              

  *Representing 3.7 percent of National production in December 2015