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Egg Monthly

08/07/2019

Review of July 2019 Production Costs and Statistics.

July 2019 USDA ex-farm blended nest-run benchmark price was down 22.4 percent from June 2019 to 29.7 cents per dozen still below the cost of production. Low price is consistent with seasonal purchase trends but accentuated by oversupply.

  • July 2019 USDA average nest-run production cost was 1.2 percent higher than June 2019 at 62.7 cents per dozen.

  • July 2019 USDA benchmark nest-run loss increased from June 2019 to 33.0 cents per dozen.

  • July national flock ( over 30,000 hens/farm) was down 5.1 million or 1.6 percent to 313.9 million.

INTRODUCTION.

Summary tables for the latest USDA July 2019 prices and flock statistics made available by the EIC on August 7th 2019 are arranged, summarized, tabulated and reviewed in comparison with values from the previous July 11th 2019 posting reflecting June 2019 cost and production data.

 

COSTS & REVENUE

 

Note:

From January 2019 onwards EIC has used USDA-AMS data for regional corn, soybean and standard feed prices. The basis for corn will be cash payment except for California (10-day delivery) and Louisiana and Oregon (30-day delivery). For soybean meal a similar approach is applied with 20-days for Minnesota. It is noted that January 2019 prices are not directly comparable with December 2018. Month-to-month comparisons in 2019 will be valid.

Parameter

JULY 2019

JUNE 2019

5-Region Cost of Production ex farm (1st Cycle)

62.74 c/doz

63.17 c/doz

Low

59.6 c/doz (MW)

60.02c/doz (MW)

High

80.80 c/doz (CA)

80.58 c/doz (CA)

Components of USDA 6-Region 1stCycle nest-run Cost of Production:-

 

JULY 2019

JUNE 2019

Feed

33.52 c/doz

33.91c/doz

Pullet depreciation

11.26 c/doz

11.31 c/doz

Labor (estimate)

4.00 c/doz

4.00 c/doz

Housing (estimate)*

5.00 c/doz

5.30 c/doz

Miscellaneous and other*

8.66 c/doz

8.95 c/doz


* Adjusted February 2019 and used as a rounding factor

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting JULY 2019:-

29.7 cents per dozen1- 62.7 cents per dozen = -33.0

(June 2019 comparison 38.5 1 cents per dozen - 63.2 cents per dozen = -24.7 cents per dozen.)

Note 1: USDA Blended egg price

   

JULY 2019

JUNE 2019

USDA

Ex-farm Price (Large, White)

29.7 c/doz

38.5 c/doz

 

Cage-free to packing plant

154.0 c/doz (June)

156.0 c/doz. (May)

 

Warehouse/Dist. Center

57.0 c/doz (June)

61.0 c/doz (May)

 

Store delivered (estimate)

62.0 c/doz (June)

65.0 c/doz (May)

 

Dept. Commerce Retail

120.3 c/doz (June)

136.2 c/doz (May)

Layer Feed Cost

JULY 2019

JUNE 2019

See note on source of data: now USDA

U.S. Average

$213.53/ton

 

$215.96/ton

High

$241.01/ton (West)

$239.89/ton (West)

Low

$195.87/ton (MW)

$198.28/ton (MW)

Differential

$ 45.14/ton

$ 41.61/ton

Pullet Cost (19 Weeks) $3.88 JULY 2019 $3.90 JUNE 2019

 

VOLUMES OF PRODUCTION

PARAMETER

JULY 2019

JUNE 2019

Table-egg strain eggs in incubators

47.6 million

51.6 million

Pullet chicks hatched

25.9 million (June)

30.4 million (May)

Pullets to be housed in 5 months

23.4 million (Nov.)

27.4 million (Oct.)

     

National Flock in farms over 30,000

313.9 million (June)

319.0 million (May)

National egg-producing flock

329.5 million (June)

334.5million (May)

     

Proportion flock in molt or post-molt

15.3% (July)

15.5% (June)

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

279.1 million (June)

270.5 million (May)

* No December data

Total U.S. Eggs produced

7.99 billion (June)

8.34 billion (May)

Cage-Free hens in production

67.1 million (July)

23.5% Organic

67.1 million (June)

23.6% Organic

"Top-5" States hen population (USDA)

160.6* million (June)

163.2 (May)

* Texas excluded to maintain confidentiality

PROPORTION OF U.S. TOTAL HENS BY STATE, 2019

Based on a denominator of 320 million hens in flocks over 30,000.

USDA has amended inclusion of specific states in regions and eliminated Texas data to protect confidentiality of Company flock sizes

 

STATE

JUNE 2019

MAY 20191

Proportion by region (FEB. 2019)

Iowa

17.7%

17.8%

MW 53.7%

Indiana

10.4%

10.9%

NE 10.4%

Ohio

10.9%

10.4%

SE 6.7%

Pennsylvania

8.2%

8.0%

SC 5.2% (exc. TX)

Texas (estimate)

5.8%

?%

CA 4.1%

California

4.0%

4.0%

NW 2.9%

1. Values rounded to 0.1%

Rate of Lay, weighted hen-week (USDA) 80.2% (JULY) 81.0% (JUNE)

Actual USDA-ERS 2016 U.S. per capita annual egg consumption post HPAI:- 271.6 eggs (+15.8 from 2015)

Actual USDA-ERS 2017 U.S. per capita annual egg consumption:- 276.3 eggs (+4.7 from 2016)

Estimated USDA-ERS 2018 U.S. per capita annual egg consumption to be:- 278.8 eggs (+2.5 from 2017)

Projected USDA-ERS 2019 U.S. per capita annual egg consumption to be:- 279.9 eggs (+1.1 from 2018)

Egg Inventories at beginning of JULY:

Shell Eggs: 1.69 million cases down 9.4 percent from June.

Egg Products: 3.12 million case-equivalents up 6.1 percent from June.

Eggs broken under FSIS inspection (million cases) JUNE 6.914 MAY 7,369

Cumulative 2019: number of cases produced (million) 135.3 January-June

Cumulative 2019: proportion of total eggs broken 30.6%

 

EXPORTS: JUNE 2019 Data.

Parameter

Quantity Exported

Exports:

 

Shell Eggs (thousand cases)

JULY 359 MAY 411

Products (thousand case equivalents)

JULY 374 MAY 327

TOTAL (thousand case equivalents)

JULY 733 MAY 738

*Representing 3.2 percent of National production in March 2019.

 

COMMENTARY ON JULY 2019 COSTS AND STATISTICS

The following comments and comparisons are provided on July 2019 USDA statistics:-

JULY 2019 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).

From March 2019 onward some state data is withheld to maintain confidentiality where a company predominates in a specific state or region.

  • The USDA ex farm benchmark blended egg price in July 2019 decreased by 22.4 percent or 8.8 cents per dozen from June 2019 to 29.7 cents per dozen, contributing to a loss of 33.0 cents per dozen based on 'nest-run' eggs (delivered from the laying house). The July 2019 USDA benchmark price of 29.7 cents per dozen should be compared to 94.4 cents per dozen for the corresponding month in 2018 and 50.9 cents per dozen in June 2017 post-recovery following HPAI.

  • During July 2019 the feed component of production cost averaged 33.5 cents per dozen lower by 1.2 percent from June 2019. Year-to-date average feed price is 31.8 cents per dozen. The 2018 average feed cost was 33.3 cents per dozen compared with an average feed cost of 32.0 cents per dozen in 2017.
  • Combining data from the USDA and the EIC, producers recorded a loss of 33.0 cents per dozen at farm-level for flocks in July 2019 compared to a negative margin of 24.7 cents per dozen in June. The aggregate algebraic margin for the first seven months of 2019 was -86.4 cents per dozen or an average monthly loss of 12.3 cents per dozen.

    The cumulative margin for entire 2018 was 424.0 cents per dozen or a monthly average of 35.3 cents per dozen. The algebraic margin for entire 2017 was a positive 39.2 cents per dozen, with the first eight months negative comparing production cost against USDA benchmark 'nest run' values. The algebraic average margin for entire 2016 was a loss of 9.6 cents per dozen with negative values recorded for eight consecutive months.

  • The simple average price of feed for July 2019 over 5-regions was $213.53 per ton, 1.1 percent lower (using USDA-AMS data) by $2.43 per ton compared to June 2019. Southwest data will no longer be disclosed to avoid compromising a company that predominates in Texas. The highest cost among five regions was in the West at $241.01 per ton compared to the lowest region, the Midwest at $195.87 per ton. The average figure includes ingredients plus milling and delivery at approximately $10 per ton. The benchmark price of corn was $169.29 per ton in July 2019, down 9 cents per ton or under 0.1 percent from June taking into account the difference in basis. A decrease of $10.79 per ton or 3.3 percent in the price of soybean meal from $332.09 per ton in June to $321.30 per ton in July contributed to a lower feed cost. There was a $48.72 per ton differential in corn price between the Midwest and the West in July 2019.

  • Feed price will continue to be a major factor driving production cost and hence margin. Unknown factors influencing feed cost during the second quarter of 2019 will include disruption of international trade due to tariffs imposed by China alternatively an unlikely possible settlement of the ongoing dispute. 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 July 2019 to be 62.7 cents per dozen, 0.5 cents per dozen less than in June. Production costs during July 2019 ranged from 59.6 cents per dozen in the Midwest up to 80.8 cents per dozen in California which was higher than the Midwest region by 21.2 cents per dozen.

  • Retail egg prices as determined by the Department of Commerce for June 2019 averaged 120.3 cents per dozen, 15.9 cents per dozen less than in May 2019. During June 2017 and 2018 retail prices were respectively 133.2 and 162.8 cents per dozen. During entire 2016 and extending through mid-2018, retail prices did not decline in proportion to ex-farm prices allowing higher margins at retail thereby depressing demand.

 

JULY 2019 PRODUCTION DATA

 

  • According to USDA data, the estimated average complement of U.S. hens in flocks over 30,000 during June 2019 amounted to 314.0 million, reflecting a seasonal adjustment in flock size. The average total U.S. flock including hens in molt on all farms counted by the USDA amounted to 329.5 million in June. The average end-of-year flock sizes over the past five years respectively were, 2012 (299 million); 2013 (308 million); 2014 (311 million); 2015 (291 million post HPAI losses) and in 2016 (319 million). The EIC predicts the December 2019 total flock will attain 340.3 million, down 1.6 million from the June forecast.

  • Pullet chick hatch was down 14.5 percent in June 2019 to 26.0 million compared to the previous month at 30.4 million. The June reduction is consistent with the historical trend for the month. This notwithstanding, the difference between May and June in 2019nwas 2.2 million more than in 2018. The high October 2018 value of 27.4 million was in anticipation of the Easter 2019 market. It is evident that if lower prices prevail during mid-to late summer flock placements will be constrained by some producers cancelling pullet-chick orders.

  • The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA attained 15.3 percent of the national flock in July 2018, compared to 15.5 percent in June. Annual averages were 17.4 percent for 2018 and 18.0 percent in 2017. The high value of 23.8 percent in 2016 was due to the loss of hens in the 2015 HPAI epornitic.

  • The average monthly projection for pullets to be transferred to laying houses during the second and third quarters of 2019 will be 22.0 million and 26.2 million respectively.

  • The projected hatchery supply flock decreased by 27,000 hens to 2.22 million in June 2019. Peak parent-flock placements attained 3.1 million hens in production in June 2015, coinciding with the end of the HPAI epornitic, to a low of 2.5 million hens during the 4th Quarter of 2016. Projections show monthly averages of 2.3 and 2.4 million breeder hens in production during the third and fourth quarters of 2019.

  • Average production of 80.7 percent in July 2019 is reflected in the number of young pullets approaching and attaining peak production. This is evidenced by the volume and hence price of mediums. Average rate of lay attained 78.7 percent during 2016 and increased to 79.8 percent in 2017. The average rate of lay during any period is a function of the proportion of pullets placed, the rate of depletion of flocks and retention of molted hens for a second cycle. Average flock production will fall as weighted flock age increases or will rise due to early depletion and restricting production to the first cycle.

  • Slaughter of spent light hens in plants under FSIS inspection during June 2019 was down 18.8 percent from May 2019 attaining 2.6 million. In June 2018 4.0 million light hens were slaughtered under FSIS inspection. Spent-hens are shipped live to Canada from Northern-tier U.S. states or are rendered or composted in other regions. Approximately 14 million spent hens are disposed of each month.

 

JUNE 2019 EXPORT DATA.

  • According to USDA-FAS data, 359,000 cases of shell eggs were exported in June 2019, compared to 411,300 in May 2019, representing 1.8 percent of total production. This value should be compared to the high value of 409,700 cases in March 2016 prior to the onset of HPAI. During June 2019 the following regions were the leading importers:- North America, comprising the two neighboring NAFTA/USMCA nations (40.1 was 51.8 percent), East Asia (54.5 percent, was 43.9 percent.). Shipments in June 2019 to the Middle East decreased to 0.3 percent of monthly volume with 1,000 cases, down from 3,000 cases in May 2019.
  • Exports of egg products in June 2019 were up 14.3 percent from May 2019 to 373,500 case-equivalents representing 1.7 percent of U.S. output. The following regions were the leading importers of egg products by proportion of volume shipped in June:- North America, our NAFTA/USMCA neighbors (received 40.2 percent), East Asia (30.3 percent), Southern Asia (11.0 percent), the EU-28 (6.0 percent) and the Caribbean (3.0 percent, was 2.4 percent).

  • Collectively, exports of shell eggs and products in June 2019 represented the equivalent of approximately 11.4 million hens in production during the month, attaining 732,500 case-equivalents, down less than 0.1percent from May. This was a 23.6 percent decrease compared to monthly average shipments of 960,000 case-equivalents exported over the first four months of 2015 prior to the advent of HPAI, indicating the need to re-build markets. 
    Efforts in this respect are in progress attributed to cooperation between the AEB and USAPEEC both in existing and new markets. Specific attention is directed to nations with the potential to import U.S. product based on landed price against competition. Exports of both egg-products and shell eggs in June 2019 corresponded to 2.9 percent of a nominal national flock of approximately 320 million hens in production on commercial farms holding more than 30,000 hens.

  • There is no scientifically justifiable reason why any nation should embargo pasteurized egg products from an approved plant, based on a diagnoses of avian influenza or END in a state or country.