Egg Industry Statistics and Reports

      

MARCH 2017 USDA EX-FARM BENCHMARK PRICE RISES BUT NEGATIVE MARGINS PERSIST.

Apr 10, 2017

    

Introduction.

Comments supplementing the production summary tables for the latest series reflecting USDA March 2017 statistics and prices made available by the EIC on April 5th 2017, are tabulated together with comparison values from the previous March 13th 2017 posting.

  

EGG-CITE summarizes weekly USDA data on egg production and prices in each edition.

March 2017 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 benchmark blended egg price in March 2017 rose 19.4 percent to 45.0 cents per dozen, compared to February yielding a negative margin of 15.2 cents per dozen as delivered from the laying house. The March 2017 value should be compared to 66.9 cents per dozen for the corresponding month in 2016 and 124.1 cents per dozen in March 2015. It is noted that from November 2014 through March 2015, prices were inflated in anticipation of implementation of California Proposition #2 effective January 1st 2015 and then 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 a peak in August 2015.
  • During March 2017 feed price averaged 32.3 cents per dozen and averaged 32.6 cents per dozen during the first Quarter of 2017. Feed cost during 2015 averaged 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 data from the University of California), producers recorded a negative margin of 15.2 cents per dozen at farm level for flocks in March compared to a negative margin of 23.5 cents per dozen in February. The cumulative loss for the first Quarter of 2017 was 50.8 cents per dozen. The algebraic average margin for 2016 was -9.6 cents per dozen with losses experienced for eight consecutive months.  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.
  • The simple average price of feed for March 2017 over 5-regions was $205.75, 2.5 percent lower than February. The Southeast recorded the highest cost among five regions at $238.54 compared to the lowest region, the Midwest at $174.37 per ton. The average figure includes ingredients plus milling and delivery at approximately $10 per ton. The benchmark price of corn was $179.9 per ton in March, unchanged from February. A decrease of 3.1 percent in the price of soybean meal from $354 per ton in February to $343 per ton in March contributed to the fall in the cost of feed. There was a $71 per ton differential in corn price between the Midwest and the Southeast in March. 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 to be 60.24 cents per dozen, 1.5 percent lower than 61.18 cents per dozen recorded in February. Production costs during March ranged from 54.63 cents per dozen in the Midwest up to 76.42 cents per dozen in California which was higher than the Midwest region by 21.2 cents per dozen. The differential in feed cost between the extremes, the Southeast and the Midwest regions was 10.1 cents per dozen in March, unchanged from February.
  • Retail egg prices as determined by the Department of Commerce for February 2017 averaged 146.4 cents per dozen, down by 8.4 percent or 13.5 cents per dozen compared to January 2016. During February 2015 and 2016 retail prices were 208.8 cents per dozen (post-CA. Prop. #2) and 226.7 cents per dozen (post-AI restocking)  During 2016 and early 2017 retail prices did not decline in proportion to ex-farm prices allowing higher margins at retail thereby depressing demand.

 

MARCH 2017 Production Data

  • According to USDA data, the estimated average complement of U.S. hens in flocks over 30,000 during March 2017 amounted to 307.6 million, down 1.1 million from February 2016. The total U.S. flock based on USDA data amounted to 317.1 million on March 1st 2016. The average end-of-year flock sizes over the past five years were:- 2012 (299 million); 2013 (308 million); 2014 (311 million); 2015 (291 million) and 2016 (318 million). The emergence of HPAI with unprecedented mortality has complicated all models projecting future flock sizes and prices.
  • Pullet chick placements were up 6.8 percent in February to 24.1 million compared to the previous month. It is now evident that low prevailing prices will result in flock reduction due to some producers ceasing operation or from early depletion or adoption of single-cycle programs.
  • The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA attained 17.4 percent of the national flock in March almost the same as in January and February but may be contrasted to the 2016 average of 20.8 percent.
  • USDA statistics show an anticipated increase of 2.3 million started pullets to be housed during September 2016 through April 2017 compared to the corresponding months in 2015-2016. Pullet chicks hatched during 2016 (average of 22.7 million) exceeded the average monthly placements during the corresponding period in 2015 by 3.1 million pullets per month.
  • The large increases in pullet placements from February through June 2016 compared to corresponding months in 2015 is attributed to restocking after HPAI losses in 2015. Average monthly pullet chick placements for the first six months of 2016 amounted to 28.7 million compared to an average of 28.3 million for the second half of 2016, representing a 1.4 percent reduction. Monthly pullet placements for the 2nd Quarter of 2017 are projected to average 19.5 million respectively unless cancellations occur.
  • The hatchery supply flock increased from a level of 2.7 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 monthly average of 2.54; 2.62 and 2.64 million breeder hens in production during the first three quarters of 2017 respectively. With decreased demand parent flocks will be depleted earlier than planned.
  • Average rate of lay attained 78.9 percent during 2016 and increased to 80.2 percent in January 2017 as new pullets transferred in late November and early December 2016 achieved peak production.  Average production in February attained 79.8 percent reflecting the balance between placement of pullets, their age at transfer and the rate of depletion of flocks or retention of molted hens for a second cycle. Average flock production will rise as weighted flock age is reduced by early depletion and restricting production to the first cycle.

February 2017 Export Data

  • According to USDA-FAS data, 273,900 cases of shell eggs were exported in February 2017 representing 1.4 percent of total production. This value should be compared to 298,000 cases in February 2016. North America (20.2 percent of exports, was 35.7 percent last month), the Caribbean (26.5 percent), East Asia (33.1 percent) and the Middle East (17.9 percent, was 2.6 percent) comprised the major importing regions.
  • Exports of shell eggs during the fourth quarter of 2016 attained an average of 321,200  cases per month compared to 290,000 cases during the corresponding 3rd Quarter of 2015 and 495,100 cases during the 1st Quarter of 2015 before the emergence of HPAI. Exports will depend on progress by authorities in controlling H5N6 HPAI in South Korea and Japan, possible future embargos, if HPAI emerges in the U.S., availability of eggs, promotional activities by USAPEEC and the AEB, the value of U.S. currency, international competition and domestic prices.
  • Exports of egg products in February 2017 amounting to 387.5 million case-equivalents represented 2.0 percent of U.S. output. North America (19.9 percent, was 45.6 percent), East Asia (37.4 percent) and the EU-28 (27.0 percent) comprised the principal importing regions with increases attributed to avian influenza in the EU and Asia. 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. For 2016 export volume was 12.0 percent lower than in 2015. 
  • Collectively, exports of shell eggs and products in February 2017 represented the equivalent of approximately eight million hens in production during the month, attaining 661,400 case-equivalents. This was a 31.1 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. Exports of both egg-products and shell eggs corresponded to 3.4 percent of a nominal national flock of 309 million producing hens.
  • Future exports will rise due to the ongoing outbreak of H5N6 HPAI in South Korea and to a lesser extent in Japan. South Korea has to date depleted 28 million hens and restoration of production to pre-HPAI levels will require replacement over a 13 to 15 month period as in the U.S. During this time the U.S. will compete with other suppliers including Spain and India (brown-shelled) and the Ukraine (white shelled) for the available market. Unless South Korea adopts regionalization this market will be closed to U.S. shell eggs. There is no scientific reason why any nation should embargo pasteurized egg products from an approved plant based on avian influenza.

STATISTICS

COSTS & REVENUE                                                                                         

Parameter                                                                                                MARCH 2017           FEBRUARY 2017

5-Region Cost of Production ex farm (1st Cycle)                           60.24 c/doz                 61.18 c/doz

                Low                                                                                          54.63 c/doz (MW)      55.68c/doz  (MW)     

                High                                                                                         76.42 c/doz  (CA)        76.80 c/doz  (CA)         

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

                                                                        MARCH 2017                           FEBRUARY 2017

                Feed                                              32.30c/doz                                          33.13 c/doz

                Pullet depreciation                     10.78 c/doz                                         10.90 c/doz

                Labor                                              4.00 c/doz                                           4.00 c/doz

                Housing                                          5.30 c/doz                                           5.30 c/doz

                Miscellaneous and other            7.86 c/doz (adjusted Nov. ‘15)              7.85 c/doz

Ex Farm Margin according to USDA values reflecting MARCH 2017:-

                                              45.0 cents per dozen1- 60.2 cents per dozen = -15.2 cents per dozen

       (February comparison 37.7 1 cents per dozen – 61.2 cents per dozen = -23.5 cents per dozen.)

Note 1:  USDA Blended egg price

 

                                                                                                                MARCH 2017     FEBRUARY 2017

USDA     ex-farm Price (Large, White)                                                      45.0c/doz.               37.7c/doz.

               Cage-free to packing plant                                                       164.0/doz.               164.0/doz.               

                Warehouse/Dist. Center                                                           69.0c/doz.               71.1 c/doz. 

                Store delivered (estimate)                                                        74.0c/doz.               76.0 c/doz.

                       

Dept. Commerce retail                                                                           145.4 c/doz (Feb.)   159.9c/doz (Jan.)

 

5-Region Layer Feed Cost in March

Layer Feed Cost (Average)                                                                   $205.75/ton                 $211.04/ton

                High                                                                                           $238.54/ton (SE)       $244.59/ton (SE)

                Low                                                                                           $174.37/ton (MW)      $180.21 /ton (MW)

               Differential                                                                            $  64.17/ton                  $  64.38/ton

                                                                                                                  (equivalent to 21.4 cents per dozen)

Pullet Cost   (19 weeks)                                                                            $3.73                                $3.76

 

 

                                                                                                                             

 

VOLUMES OF PRODUCTION                                                                           

Parameter                                                                               MARCH 2017                 FEBRUARY 2017

Egg-strain eggs in incubators                                                51.50 million   (March.)      48.0 million  (Feb.)

Pullet chicks hatched                                                             24.10 million   (Feb.)           21.7 million (Jan.)   

Pullets to be housed in 5 months                                         24.00 million   (July.)          18.9 million  (June)

National Flock in farms over 30,000                                   307.6 million   (Feb.)      309.0 million (Jan.)

National egg-producing flock                                               317.1 million   (Feb.)      318.1 million (Jan.)                             

 

Proportion of flock in molt or post-molt                                                      17.4%                   (March)

Total of hens in flocks over 30,000, 1st cycle (estimate)                           256.0 million       (March)

Inventories 1st of Month                                                             APRIL                      February                 March

Shell eggs  (millions)                                                                 609.2                          561.6                     604.3

Frozen egg products (million egg equivalents)                    351.8                          316.2                     351.8

Dried egg (million egg equivalents)                                       1,290                           1,272                     1,290                        

 

Eggs produced                                                                                       7.84 billion (Dec.)     7.91 billion  (Jan.)

 Table-egg hens in flocks over 30,000 (97% of total U.S.)             307.6 million (Feb.)        309 million (Jan.)

“Top-6” States hen population (USDA)                                      159.6 million (March.)   167.3 million  (Feb.)

               

Proportion of U.S. Total by State, 2017                                                                    

*(over 30,000 hen flocks)

                   STATE                             FEBRUARY 2017    JANUARY 2017            Proportion by region (FEBRUARY 2017)

               Iowa                            17.7%                 17.6%                                              MW     52.3%

               Ohio                              9.7%                   9.8%                                               NE       10.8%

               Indiana                        10.2%                10.2%                                               SE        10.1%                                                                                                                                                                    

               Pennsylvania                8.2%                   8.2%                                                SC       12.3%

               Texas                             5.6%                   5.5%                                                CA         3.8%    

               California                      3.8%                   3.8%                                               NW        3.0%  

               

                 (Values rounded to 0.1%)

Rate of Lay, weighted hen-week (USDA)                                                       79.8% (Feb.)      80.2% (JAN.)                                                          

Actual USDA-ERS 2015 U.S. per capita annual egg consumption revised due to HPAI:- 256.3 eggs (-11.2 from 2014)*

Projected USDA-ERS 2016 U.S. per capita annual egg consumption:-                                274.7 eggs (+18.4 from 2015)

Forecast USDA-ERS 2017 U.S. per capita annual egg consumption projected to be:-     275.8 eggs  (+1.1 from 2016)

Eggs broken under FSIS inspection (million cases)

                                                                                FEBRUARY    6.192         JANUARY 6.539                                

Cumulative proportion of total eggs                             30.6%                               29.8%

 

 

 

 

EXPORTS

Parameter                                                                                                             Quantity Exported 

Exports:-                             

Shell Eggs (thousand cases)                                          FEBRUARY     274            JANUARY   193

                                                                                               

Products (thousand case equivalents)                        FEBRUARY    388             JANUARY   334                                                                                                                                             

Total       (thousand case equivalents)                         FEBRUARY    662             JANUARY  527  

                                                                                                                               

  Representing 2.9 percent of National production in February 2017