Low-pathogenicity H5 avian influenza has been identified in live bird markets in New Jersey, New York and Pennsylvania in recent weeks. This implies that supply farms in the Northeast have infected flocks requiring trace back.
A minor outbreak of LPAI involving one turkey growing farm in Jasper County, Missouri was reported in early May but was rapidly controlled by flock depletion with no additional cases detected by surveillance. Avian influenza 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.
Surveillance of approximately 37,000 waterfowl during the second half of 2015 yielded a 10 percent rate of recovery of all serotypes of avian influenza virus including a one 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.
June 2016 Cost and Revenue 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 June 2016 rose to 31.8 cents per dozen, 4.0 percent more than in May but less than the re-stated value of 41.8 cents per dozen value for April and in turn only 52.4 percent of the 66.9 cents per dozen in March. The June 2016 value should be compared to 172.1 cents per dozen for the corresponding month in 2015 and 85.9 cents per dozen in June 2014. It is noted that from November 2014 through March 2015, prices 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 with August at a peak of 204.5 cents per dozen.
During the first four months 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. During May feed cost rose 10.3 percent over April to 35.75 cents per dozen. Feed cost during June 2016 rose an additional 3.8 percent to 37.12 cents per dozen. 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 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 negative margin of -33.9 cents per dozen at farm level for flocks in June compared to a negative margin of -33.6 cents per dozen in May. The average margin for the first half of 2016 stands at -13 cents per dozen with losses experienced each month in the second quarter. Ex-farm margin for 2015 amounted to a monthly average of 74.5 cents per dozen. For 2014, average ex-farm contribution margin 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 June over the 5-regions at $236.44 was 3.8 percent higher than May. The Southeast recorded the highest cost among regions in June at $271.19 compared to the lowest region, the Midwest at $206.33 per ton. The average figure includes ingredients plus milling and delivery at approximately $10 per ton. A 6.2 percent increase in the price of soybean meal from $409 per ton in May to $433 per ton in June was the principal driver of the cost increase. The price of corn increased 2.9 percent to $168 per ton in June. There was a $68.04 per ton differential in corn price between the Midwest and the Southeast in June 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 June to be 65.72 cents per dozen, 2.5 percent higher than 64.15 cents per dozen in May. Production costs during June ranged from 60.34 cents per dozen in the Midwest up to 81.29 cents per dozen in California which was higher than the Midwest region by 18.62 cents per dozen. The differential in feed cost between the Southeast and the Midwest regions was 9.3 cents per dozen in June.
Retail egg prices as determined by the Department of Commerce for May averaged 168.4 cents per dozen, down by 6.1 percent or 10.9 cents per dozen compared to April. In May 2015 and 2014 retail prices were 196.2 and 199.6 cents per dozen respectively.
Retail prices are not declining in proportion to ex-farm price allowing higher margins at retail. Ex-farm price in May was down 36.6 percent from April compared to the decline in retail price of 6.1 percent during this month. The six-fold differential in percentage favoring retailers is impeding consumption since shelf-price is artificially high.
June 2016 Production Data
According to USDA data, the estimated average complement of U.S. hens in flocks over 30,000 during May amounted to 292.4 million. The total U.S. flock based on EIC data amounted to 302.0 million on June 1st 2016. The average annual flock sizes for 2012, 2013 and 2014 were 285.3, 289.1 and 303.0 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 326.7 million hens in December 2016, up from 323.8 projected in the May 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 decreased by 1.0 percent in June 2016 to 19.9 percent of the national flock compared to 20.1 percent in May and the 2015 average of 20.6 percent. Hens were molted in late March due to an early Easter and the sharp downturn in prices.
USDA statistics show an anticipated increase of 16.4 million pullets to be housed during June through October 2016 compared to the corresponding months in 2015. Pullet chicks hatched during January 2016 (23.8 million), February (25.23 million) , March (23.7 million), April (24.2 million) and May (28.6 million) collectively represent an 11.3 percent increase, or 13.5 million pullets over the corresponding months in 2015. The hatchery supply flock increased from a level of 2.6 million hens in production in June 2015, coinciding with the end of the HPAI epornitic to 2.9 million hens in November 2015. Projections show a monthly average of 3.0 million breeder hens in production during the third quarter of 2016.
Slaughter of hens under USDA-FSIS inspection attained 5.2 million in May. This is lower than the pre-HPAI monthly average of 5.8 million hens over the period extending from January through May 2015. Depending on availability of housing, flocks were retained from June through December to take advantage of higher prices. Regular mortality and alternative methods of flock disposal including landfills, rendering and shipment of live hens to Canada, accounts for the majority of depletion amounting to an average of 12 to 13 million hens per month.
Average rate of lay attained 78.1 percent over the first five months of 2016 and achieved 78.6 percent in May as new pullets transferred in late March and early April 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.
May 2016 Export Data
According to USDA-FAS data, 267 thousand cases of shell eggs were exported in May 2016 representing 1.3 percent of total production. North America (37.2 percent of exports) and East Asia (31.3 percent) comprised the major importing regions. Exports of shell eggs during the first quarter of 2016 were 35 percent lower than the monthly average for the corresponding period in 2015 before the advent of HPAI. Exports will depend on lifting of embargos, availability of eggs, international competition and domestic prices.
Exports of egg products in May 2016 amounting to 222 million case equivalents represented 1.1 percent of U.S. output with North America (31.8 percent), East Asia (41.7 percent) and the EU (18.4 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 compared with 2014, attaining 1.7 percent of total U.S. output.
Collectively, exports of shell eggs and products in May 2016 represented the equivalent of approximately 6.2 million hens in production during the month, attaining 489 thousand case-equivalents. This was a 26.9 percent 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.
JUNE 2016 STATISTICS
COSTS & REVENUE
Parameter MAY 2016 JUNE 2016
5-Region Cost of Production ex farm (1st Cycle) 64.15 c/doz 65.72 c/doz
Low 58.69c/doz (MW) 60.34c/doz (MW)
High 79.24 c/doz (CA) 81.29 c/doz (CA)
Components of 6-Region 1stCycle Cost of Production:-
MAY 2016 JUNE 2016.
Feed 35.75c/doz 37.12 c/doz
Pullet depreciation 11.26 c/doz 11.44 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 Loss according to USDA values reflecting June 2016:-
31.8 cents per dozen1- 65.7 cents per dozen = -33.9 cents per dozen
(May comparison 30.61 cents per dozen – 64.2 cents per dozen = -33.6 cents per dozen.)
Note 1: USDA Blended egg price
MAY 2016 JUNE 2016
USDA ex-farm Price (Large) 30.6c/doz 31.8 c/doz
Warehouse/Dist. Center 56.3c/doz 46.2 c/doz
Store delivered 61.8c/doz 51.7 c/doz
Dept. Commerce retail 179.0 c/doz (April) 168.4c/doz (May)
5-Region Layer Feed Cost
Layer Feed Cost (Average) $227.68/ton $236.44/ton
High $265.49/ton (SW) $271.19/ton (SE.)
Low $197.07/ton (MW) $206.33 /ton (MW)
Differential $ 68.42/ton $ 64.86/ton
(equivalent to 17.1 cents per dozen)
Pullet Cost (19 weeks) $3.88 $3.77
VOLUMES OF PRODUCTION
Parameter MAY 2016 JUNE 2016
Egg-strain eggs in incubators 52.53 million (May) 54.91 million (June)
Pullet chicks hatched 24.70 million (April) 28.6 million (May)
Pullets to be housed in 5 months 22.3 million (Sep.) 25.8 million (Oct.)
Actual National Flock (EIC), Total hens on 1st Month 301.9 million (May) 302.0 million (June)
Proportion of flock in or post-molt 19.9% (June)
No. of hens in 1st cycle 241.9 million (June)
5-Region proportion of molted hens 20.1% 18.3%
High (CA) 33.5% (CA) 32.5%
Low (NE) 3.7% (NE) 4.2%
Hens processed under FSIS inspection 5.3 million (April) 5.2 million (May)
Eggs produced 7.10 billion (April) 7.36 billion (May)
Table-egg hens in flocks over 30,000 (97.2% of total U.S.) 292.9 million (April) 292.4 million (May)
“Top-6” States hen population (USDA) 162.4 million (April) 152.4 million (May)
Proportion of U.S. Total by state, 2016
*(over 30,000 hen flocks)
STATE APRIL 2016 May 2016 Proportion by region (MAY 2016.)
Iowa 16.3% 16.6% MW 52.1%
Ohio 10.8% 10.7% NE 11.2%
Indiana 10.0% 10.0% SE 10.8%
Pennsylvania 8.7 % 8.6% SC 10.8%
Texas 5.6% 5.6% CA 4.1%
California 4.0% 4.1% NW 3.1%
(Values rounded to 0.1%)
Rate of Lay, weighted hen-week (USDA) 78.2% (April) 78.6% (May)
Actual USDA-ERS 2015 U.S. per capita annual egg consumption revised due to HPAI:- 252.9 eggs (-13.7 from 2014)
Projected USDA-ERS 2016 U.S. per capita annual egg consumption projected to be:- 262.8 eggs (+19.9 from 2015)
Eggs broken under FSIS inspection (million cases)
APRIL 2015 6.255 MAY 2016 6.576
Cumulative proportion of total eggs 30.2% 30.6%
Parameter Quantity Exported
Shell Eggs (thousand cases) APRIL 2016 335 MAY 2016 267
Products (thousand case equivalents) APRIL 2016 234 MAY 2016 222
Total (thousand case equivalents) APRIL 2016 569 MAY 2016 489
*Representing 2.4 percent of National production in May 2016