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USDA Weekly Egg Price and Inventory Report, February 8th 2017

  

Feb 10, 2017

    

OVERVIEW

According to the USDA Egg Market News Reports posted on February 6th Midwest-wholesale prices for Extra Large and Large decreased by 4 percent this past week reverting to the prices pertaining two weeks ago. The progression of prices during 2017 is depicted in the USDA chart reflecting three years of data, updated weekly.

  

The USDA Egg Market News Report (Vol 64: No. 06) released on February 6th documented a USDA Combined Region value of $0.84 per dozen delivered to warehouses. This price lags Midwest Weekly values by one week, and is compared to a peak price of $2.20 per dozen in late November 2015.  The USDA Combined range for Large, in the Midwest was $0.76 per dozen. At the high end of the range, the price in the South Central Region, attained $0.88 per dozen. The current USDA Combined Price was approximately 62 cents per dozen below the three-year average. In early 2016 the average was inflated by the rise in prices attributed to the post-HPAI shortage of all eggs.

Hen numbers continue to rise relative to demand attaining approximately 310.1 million in production. Hens in lay increased from 303 million in early December 2016. For the past week the number of hens increased by 0.7 million. The total egg-flock comprises 315.2 million including hens in molt and small flocks. Generic shell-egg stock increased by 8 percent reflecting the balance between demand and production. Dried-egg inventory of 29.4 million pounds as of December 31st is extremely high, as is the National stock of frozen egg products at 35.8 million pounds.   

  

INVENTORY

 Cold storage stocks in selected regions on January 30th 2017 amounted to 3.026 million pounds, 1.1 percent above the stock of 2.945 million pounds during the week of January 1st. 2017.

The latest monthly USDA Cold Storage Report released on January 24th documented a total stock of 35.821 million pounds of frozen egg products on December 31st 2016. This was down 12.4 percent from December 31st 2015. Approximately 83 percent of inventory comprised the categories of “Whole and Mixed” (31.7 percent) and “Unclassified” (51.4 percent).

The national stock of generic shell eggs was up a noteworthy 8.0 percent this past week, compared to a 2.1 percent decrease in inventory during the previous week. All of the six regions showed increases in inventory with two in double digits. The Midwest was up 12.3 percent compared to the previous week to 364,300 cases. This region was followed in decreasing order of stock level by the South Central region  up 5.7 percent to 273,500 cases; the Southeast which increased by 4.0 percent to 269,200 cases; the Southwest Region up by 1.9 percent to 172,700 cases, the Northeast Region up 24.4 percent to 145,100 cases and the Northwest up by 2.3 percent to 115,800 cases

The total USDA Six-Area stock of commodity eggs comprised 1,630,400 cases, of which 82.2 percent were shell eggs. The inventory of breaking stock was down 9.0 percent to 289,900 cases. The relatively stable price for 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 4.0 percent compared to an increase of 3.0 percent the previous week, to 172,800 cases with organic stock comprising 40.8 percent of inventory (48.0 percent for the previous week). 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 more costly organic eggs. During the past week the retail price of cage-free brown rose 7.9 percent, or 22 cents per dozen to $3.00 per dozen while USDA Certified Organic increased by 5.9 percent or 24 cents per dozen to $4.26 per dozen, widening the price differential to $1.26 per dozen ($1.24 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 monthly USDA Cage-free Hen Report for February 6th the number of hens held in other than conventional cages during January was unchanged suggesting that the hen population is determined quarterly. The non-confined segments comprised:-

Total U.S. flock held for USDA Certified production = 14.1 million   (was 13.5 million, October & November 2016)

Total U.S. flock held for cage-free production            =  23.5 million    (was 17.0 million, October & November)

Total U.S. non-caged flock                                         = 37.6 million (12.5 percent of a nominal 300 million flock but 18.8 percent of a nominal flock of 200 million held for shell-egg production)                                                                                                                    

For the week ending January 28th eggs processed under FSIS inspection increased 0.2 percent from the previous week to a level of 1,497,969 cases. The proportion of eggs broken by in-line complexes reached 55.3 percent, an increase from 54.6 percent last week. During the corresponding week in 2015 in-line breakers processed 46.1 percent of eggs including imports, denoting the severe mortality affecting approximately eight large in-line complexes affected by HPAI in 2015. 

The price range for breaking stock delivered to Central plants for the week ended February 7th declined to a range of 25 to 26 cents per dozen. The price of checks fell to a range of 8 to 13 cents per dozen representing a throw-away price well below the average cost of production for nest-run, estimated by the EIC at 59 cents per dozen for January 2016.

PRODUCTION AND PRICES

The USDA Egg Market News Reports released on Monday 30th January 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

  75-78 cents per dozen

    78-81  Down 4%

Large

  73-76 cents per dozen

    76-79  Down 4%

Medium

  63-66 cents per dozen

    65-68  Down 4%

Certified Organic EL

275-310 cents per dozen

   Unchanged

Central States Breaking Stock

  26-27  cents per dozen

   26-27  Down 4%

Checks

  8-13  cents per dozen

   12-14  Down 24%

 

 

The February 6th National 5-day rolling average FOB producer prices, for white shelled eggs, with prices in rounded cents per dozen for the past week were:-

                                   EL. $054 (est.):  L. $0.51: M. $0.39

The following advertised retail prices for the week ending January 27th, (compared with the previous week in parentheses) were posted by the AMS for dozen packs:

  • USDA Certified Organic, Brown, Large:            $4.26  ($4.02)
  • Cage-Free Brown, Large:                                    $3.00  ($2.78)
  • Omega-3 Enriched Specialty, White, Large:       $2.15  ($2.53)
  • Generic White, Large  Grade AA                        $1.57  ($0.92)
  • Generic White, Large  Grade A (Feature price)      $1.17  ($1.02)                                 

 Retail prices for generic white Large AA were 65 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 December 2016 data posted in the January 13th Edition of EGG-CITE now listed under the STATISTICS tab. The financial results posted by Cal-Maine Foods for the completed 2nd Quarter of Fiscal 2017 posted in the December 21st Edition can be retrieved through the SEARCH feature entering “Cal-Maine”

The USDA-AMS Shell Egg Demand Indicator for February 8th 2017 decreased numerically by 9.1 points from +10.8 in the last report to +1.7 with a 7.9 percent lower inventory calculated by the USDA-ERS as follows:-  

 

Productive flock

310,115,395 million hens

Average hen week production

80.9%

Average egg production

250,883,354 million per day

Proportion to shell egg market

68.2% (was 69.1%)

Total for in-shell consumption

475,285 cases per day

USDA Inventory

1,340,500 cases

26-week rolling average inventory

4.70 days

Actual inventory  on hand

                4.62 days (was 4.25 days)

Shell Egg Demand Indicator

+1.7 points (was +10.8 in the last report)

 

 

 

Prices for dried egg products (most frequent price with a range in $ per pound) posted January 20th were:-

Whole Egg

$1.60-$1.65

   Up $0.05 on low end of the range

Yolk

$1.95-$2.05

   Down $0.05 on both ends of the range

Spray-Dried White

$2.15-$2.25

   Up $0.05 on both ends of the range

Blends

$1.70-$1.75

   Unchanged

 

 

The problem of a high inventory of dried egg is apparent from the 179 percent increase to 29.43 million lbs. on December 31st 2016 compared to December 31st 2015.  During the period December 4th through December 31st 2016, dried egg processed under USDA inspection amounted to 10.1 million lbs. (down from 13.8 million lbs. in November), corresponding to approximately a three-month inventory level.

 

COMMENTS

The H5N8 HPAI situation is still deteriorating in Western and Central Europe involving 22 EU Nations. Infection with H5N6 in Asia is affecting both South Korea and Japan with both strains introduced by migratory birds and then transmitted to commercial free-range flocks. This should be a warning to U.S. producers. Possible introduction of AI must be considered during the first Quarter of 2017 necessitating enhanced and effective biosecurity.

This is emphasized by the isolation of Eurasian strain H5N2 avian influenza virus from a hunter-killed mallard in Montana in early January. The USDA and USAPEEC have worked with counterparts in South Korea to ship eggs and products to compensate for losses due to the HPAI epornitic resulting in depletion of 28 million hens, exceeding the Nation’s flock mortality from a previous outbreak in 2014.