Share via Email

 
* Email To:      (Separate multiple addresses with a semicolon)
* Email From:    (Your IP Address is 54.158.80.117 )
* Email Subject:    (personalize your message)
* Required:  
ID=6776  
Email Body:   
 

MARCH 2016 MARGINS PLUMMET ON LOWER EX-FARM PRICES

  

Apr 15, 2016

    

NATIONAL FLOCK UP TO 299 MILLION

HEN DEFICIT FROM HPAI NARROWING.

Introduction.

Comments supplementing the production summary tables for the latest series reflecting February- USDA and March 2016 statistics and prices made available by the EIC on April 12th 2016 are tabulated together with comparison values from the previous March 9th 2016 posting.  EGG-CITE also details USDA data on egg production and prices each week.

  

Disease.

No outbreaks of avian influenza have been reported in commercial poultry flocks since mid-January 2016. The disease remains a major concern to the Industry which has yet to recover completely 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 from all four flyways. Two high-pathogenicity influenza viruses from hunter-killed mallards in Utah and Oregon were recovered in 2015.

    

To support contract operations in India supplying organic and cage-free eggs, Herbrucks Poultry Ranch of Saranac, MI. has announced that it intends to erect a feed mill and service center in Topeka, IN.  The location is in the North-central region of the state between Fort Wayne and South Bend in an area with a high number of existing and potentially available contract growers.

  

Herbrucks proposes to erect a 20,000 square foot facility which will include a feed mill and a service depot similar to the facility in Berlin, MI. to allow for decontamination and storage of equipment and personnel.

Greg Herbruck, Vice President of Herbruck Poultry Ranch stated “logistic advantage, high-quality workforce, ease to do business and proximity to customers make this decision very easy for us.  Our relationship with the town of Topeka and LaGrange County will play a role in future expansion projects for our company as well.” 

Herbruck’s Poultry Ranch is a third generation company producing generic, enriched specialty and USDA Certified organic eggs distributed in the Midwest with McDonald’s Corporation and Meijer’s Supermarkets among major customers.

  

 March 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 March 2016 at 64.6 cents per dozen, was 29.6 percent lower than the 91.7 cents per dozen in February. The March 2016 value should be compared to 124 cents per dozen for the corresponding month in 2015 and 111 cents per dozen in March 2014. It is noted that from November 2014 through March 2015 values were inflated due to implementation of California Proposition #2 in January 2015 and also 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.
  • During the first quarter of 2016 there was no material change in average feed price expressed as a component of the first cycle production cost per dozen over the five regions monitored by the USDA, attaining 31.5 cents per dozen from January through March. 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 5.30 cents per dozen at farm level for flocks in March 2016 compared to 32.33 cents per dozen in February.  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 March over the 5-regions at $200.50 was almost identical to both January and February. The Southeast recorded the highest cost among regions in March at $238.73 compared to the lowest region, the Midwest at $170.15 per ton. The average figure includes ingredients plus milling and delivery at approximately $10 per ton.  A 1.0 percent increase in the price of soybean meal from $308 per ton in February 2016 to $312 per ton in March was offset by a 1.3 percent decrease in the cost of corn to $155 per ton compared to February at $157 per ton. There was a $67.90 per ton differential in corn price between the Midwest and the Southeast in March 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 the prevailing price of feed of $259.10 per ton for the five regions. 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 2016 to be 59.30 cents per dozen, virtually unchanged from 59.37 in February. Production costs during March ranged from 53.88 cents per dozen in the Midwest up to 74.56 cents per dozen in California which was higher than the Midwest region by 20.68 cents per dozen. The differential in feed cost between the Southeast and the Midwest regions was 12.2 cents per dozen in March 2016.
  • Retail egg prices as determined by the Department of Commerce for February 2016 averaged 226.7 cents per dozen, down by 2.6 percent or 6.1 cents per dozen from January 2016. In February 2015 and 2014 retail prices were 208.8 and 199.8 cents per dozen respectively.

March 2016 production Data

  • According to USDA data, the estimated complement of U.S. hens in flocks over 30,000 during March amounted to 287.7 million. The total U.S. flock based on EIC data amounted to 291.4 million on March 1st 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 320.5 million hens in December 2016, up from 315.9 projected in the February EIC report 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 6.0 percent in March 2016 to 20.4 percent of the national flock compared to 19.7 percent in February and the 2015 average of 20.6 percent. Hens were molted due to the early Easter and the sharp downturn of prices early in the month.
  • 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 through mid-2016. USDA statistics show an encouraging increase of 8.9 million pullets or an increase of 17.0 percent hatched during August through November 2015 compared to the corresponding months in 2014. Pullet chicks hatched during January 2016 (23.8 million) and February (25.23 million) represent 7.8 percent and 17.1 percent increases respectively over the corresponding months in 2015.Operators of parent-multiplier farms have increased their collective output by expansion, 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 2015 to 2.9 million hens in November with projections showing 2.7 million to 3.0 million breeder hens in production during 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 but declined to 5.2 million in February. This compares to the pre-HPAI monthly average of 6.0 million hens over the period extending from 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 78.0 percent in February as new pullets transferred in late December and early January 2016 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.

February 2016 Export Data

  • Export statistics for January and February 2016 released by USDA FAS are included in this report.
  • According to USDA-FAS data, 298 thousand cases of shell eggs were exported in February 2016 representing 1.6 percent of total production.  North America (44.2 percent of exports) and East Asia (29.6 percent) comprised the major importing regions. (See concurrent report on egg exports 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 February 2016 represented 0.9 percent of U.S. output with North America (32.2 percent of exports), East Asia (51.6 percent) and the EU (10.0 percent,) 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.
  • Collectively, exports of shell eggs and products in February 2016 represented the equivalent of approximately 6.2 million hens in production during the month, attaining 461 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.

 

MARCH 2016 STATISTICS

COSTS & REVENUE                                                                                         

Parameter                                                                                                  MARCH 2016          FEBRUARY 2016

5-Region Cost of Production ex farm (1st Cycle)                           59.30 c/doz                59.37 c/doz

                Low                                                                                          53.88c/doz (MW)      53.92c/doz  (MW)      

                High                                                                                         74.56 c/doz  (CA)       74.66 c/doz  (CA)         

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

                                                                        MARCH 2016                               FEBRUARY 2016.

                Feed                                              31.48c/doz                                          31.54 c/doz

                Pullet depreciation                     10.67 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 March 2016:-

                                              64.6 cents per dozen1- 59.30 cents per dozen = 5.3 cents per dozen

               (February comparison 91.701 cents per dozen – 59.37 cents per dozen = 32.33 cents per dozen.)

Note 1:  USDA Blended egg price

 

                                                                                                                   MARCH 2016         FEBRUARY 2016

USDA     ex-farm Price (Large)                                                                  64.6c/doz                91.7 c/doz               

                Warehouse/Dist. Center                                                           93.1c/doz              131.8 c/doz  

                Store delivered                                                                              98.6c/doz              137.3 c/doz

       

Dept. Commerce retail                                                                          226.7 c/doz  (Feb.)   232.8c/doz (Jan.)

 

5-Region Layer Feed Cost 

Layer Feed Cost (Average)                                                                   $200.50/ton                 $200.88/ton

                High                                                                                           $238.73/ton (SE.)        $238.54/ton (SE.)

                Low                                                                                           $170.15/ton (MW)      $170.37 /ton (MW)

               Differential                                                                            $  68.58/ton                  $  68.17/ton

                                                                                                                  (equivalent to 16.9 cents per dozen)

Pullet  Cost   (19 weeks)                                                                            $3.68                                $3.68

 

VOLUMES OF PRODUCTION                                                                           

Parameter                                                                                  MARCH 2016                 FEBRUARY 2016

Egg-strain eggs in incubators                                                51.15 million  (Mar.)      47.06 million (Feb.)

Pullet chicks hatched                                                             25.23 million   (Feb.)      23.79 million  (Jan.)            

Pullets to be housed in 5 months                                        24.3 million     (Jul.)         21.5 million   (Jun.)

Actual National Flock (EIC), Total hens on 1st Month       299.4 million   (Mar.)      295.0 million (Feb.)                              

Proportion of flock in or post-molt                                                               22.3%                (Mar. 2016)

No. of hens in 1st cycle                                                                                  240.4 million      (Mar. 2016)                               

5-Region proportion of molted hens                                                            20.4%                                19.7%        

                High                                                                                             (CA)  33.0%                        (CA)  35.0%       

                Low                                                                                               (NE)     4.4%                        (NE)   3.7%

Hens processed under FSIS inspection                                              5.2 million (Feb.)       5.4 million (Jan.)    

Eggs produced                                                                                       6.72 billion (Feb)     7.02 billion  (Jan.)

 Table-egg hens in flocks over 30,000 (97.2% of total U.S.)           287.7 million (Feb)        283.6 million (Jan.)

“Top-6”  States hen population (USDA)                                     156.9 million (Feb.)       152.6 million (Jan.)

               

Proportion of U.S. Total by state, 2016                                                                    

*(over 30,000 hen flocks)

                   STATE                           February 2016       JANUARY 2016                              Proportion by region (FEBRUARY 2016.)

               Iowa                            15.2%                 13.8%                                              MW     50.7%

               Ohio                            11.2%                 11.3%                                               NE       11.0%

               Indiana                       10.0%                 10.2%                                               SE        11.4%                                                                                                                                                                    

               Pennsylvania               8.3 %                   8.5%                                               SC        11.1%

               Texas                            5.7%                     4.2%                                              CA          4.1%    

               California                     4.1%                    5.8%                                                

               

                 (Values rounded to 0.1%)

Rate of Lay, weighted hen-week (USDA)                                                       78.0% (FEB.)      78.2% (JAN.)                                                                                                         

Actual USDA-ERS 2015 U.S. per capita annual consumption revised due to HPAI:-  253.2 eggs (-12.9 from 2014)

Projected USDA-ERS 2016  U.S. per capita annual consumption projected to be:-   263.0 eggs   (+9.8 from 2015)

 

Eggs broken under FSIS inspection (million cases)

                                                                             February 2015 5,484       JANUARY 2016 5,635                        

Cumulative proportion of total eggs                             29.1%                               28.9%

 

EXPORTS

Parameter                                                                                                               Quantity Exported 

Exports:-                             

Shell Eggs (thousand cases)                                             FEBRUARY 2015  298    JANUARY  2015  272       

                                                                                               

Products (thousand case equivalents)                         FEBRUARY 2015  163    JANUARY 2015   170          

                                                                                                                                               

Total       (thousand case equivalents)                            FEBRUARY  2015 461    JANUARY 2015   442

                                

  *Representing  2.3 percent of National production in February 2015