REVIEW OF MARCH 2023 EGG PRODUCTION COSTS AND STATISTICS.

MARCH HIGHLIGHTS

• March 2023 USDA ex-farm blended USDA nest-run benchmark price was 273.7 cents per dozen, up 28.0 percent from the February 2023 value of 213.8 cents per dozen. For comparison average USDA benchmark price for 2022 was 236.1 cents per dozen with a range of 191.1 cents per dozen in June to a high of 439.1 cents in December. Stock levels and prices prior to the onset of flock depletion due to HPAI indicated a relative seasonal balance between supply and demand. Prevailing wholesale prices will be largely dependent on future consumer demand in an inflationary environment. Other considerations include diversion to shell sales from the egg-breaking sector and fluctuation attributed to the amplification of changes in unit wholesale price due to the price discovery system. A significant decline from unseasonal current levels is anticipated into mid- 2023 unless additional depletion of flocks occurs due to HPAI.
• March 2023 USDA average nest-run production cost, applying updated inputs was down 2.9 cents per dozen (3.1 percent) to 91.5 cents per dozen compared to the February 2023 updated value of 94.4 cents per dozen, mainly attributable to a 4.9 percent lower average feed cost per dozen.
• March 2023 USDA benchmark nest-run margin attained a positive value of 182.2 cents per dozen compared to an updated margin of 119.4 cents per dozen for February 2023. Average nest-run monthly margin for 2022 was 155 cents per dozen.
• The February 2023 national flock in production (over 30,000 hens/farm) was up 1.0 percent or 2.7 million hens to 293.9 from the January 2023 value of 291.2 million. Approximately 2.5 million hens returned to production from molt in February together with projected maturation of 22.0 million pullets, with this number offset by depletion of spent flocks. From February through mid-December 2022, approximately 44 million hens were depopulated to control HPAI reducing the producing flock by an approximate ongoing weekly average of 20 million hens.

• February 2023 pullet chick hatch was up 2.4 percent or 0.6 million from January 2023 to 26.0 million.
• February 2023 exports of shell eggs and products combined were down 3.4 percent from a low volume in January 2023 to 313,000 case equivalents representing the theoretical production of 4.4 million hens.

TABLES SHOWING KEY PARAMETERS FOR MARCH 2023.

Summary tables for the latest USDA March 2023 prices and flock statistics made available by the EIC on April 12^th 2023 are arranged, summarized, tabulated and compared with values from the previous March 11^th 2023 posting reflecting February 2023 costs and production data.

COSTS & REVENUE

Components of USDA 6-Region 1^stCycle nest-run Cost of Production updated by the EIC for 2023 following an industry survey:-

Note: 1. Rounded to decimal of a cent

* Adjusted January 2023

Ex Farm Margin (rounded to nearest cent) according to USDA values reflecting March 2023:-

273.7 cents per dozen¹- 91.5 cents per dozen =+182.2 cents per dozen (February 2023 comparison: 213.8 cents per dozen – 94.4 cents per dozen = +119.4 cents per dozen.)

Note 1: USDA Blended egg price

1. Negotiated price nest run loose

MONTH MARCH 2023  FEBRUARY 2023*

U.S. Average Feed Cost per ton $315.24 $331.07

Low Cost Midwest $293.05 $307.98

High Cost Northwest $360.63 $378.28

Differential $ 67.58 $ 70.30

Pullet Cost*

 (19 Weeks)  $5.32 MARCH 2023 $5.45 FEBRUARY 2023

(16 weeks) $4.68 MARCH 2023 $4.79 FEBRUARY 2023

* Values adjusted by EIC in March 2023

VOLUMES OF PRODUCTION

* USDA Revision

Notes 1. Texas excluded to maintain confidentiality

* USDA Revision

PROPORTION OF U.S. TOTAL HENS BY STATE, 2023¹

Based on a nominal denominator of 290 million hens in flocks over 30,000 covering 95.0 percent of the U.S complement.

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

Sizes

1. Values rounded to 0.1%

Rate of Lay, weighted hen-week (USDA) 80.7% MARCH 2023. 80.8% FEBRUARY 2023

Revised per capita egg consumption 2019:- 293.4 (up 5.6 eggs from 2018)

Revised per capita egg consumption 2020:- 285.6 (down 7.8 eggs from 2019)*

Estimated per capita egg consumption 2021:- 282.5 (down 3.1 eggs from 2020)*

Projected per capita  egg consumption 2022:- 279.0 (down 3.5 eggs from 2021 due to HPAI) Forecast per capita egg consumption 2023:- 285.9 (up 6.9 eggs from 2022 assuming recovery from HPAI)

*Revised, using data from USDA Livestock, Dairy and Poultry Outlook March 4^th 2023 taking into account demand from the food service sector and including the effect of HPAI depopulation.

Egg Inventories at beginning of MARCH 2023:

Shell Eggs: 1.63 million cases down 2.4 percent from February 2023.

Frozen Egg Products: 673,014 case equivalents down 9.1 percent from February 2023

Dried Egg Products: Not disclosed since March 2020 following market disruption due to COVID. Assume moderate level of inventory

Eggs broken under FSIS inspection (million cases)

 FEBRUARY 2023, 6.05 JANUARY 2023 6.28

Cumulative eggs broken under FSIS inspection 2022 (million cases) 79.3 JAN. to DEC.

Cumulative 2022: number of cases produced (million) 257.3 JAN. to DEC.

Cumulative 2022: proportion of total eggs broken 30.8% (28.9% 2021)

Cumulative 2023: number of cases produced (million) 41.1 JAN. – FEB.

Cumulative 2023: proportion of total eggs broken 30.0%

EXPORTS FEBRUARY 2023: (Expressed as shell-equivalent cases of 360 eggs).

*Representing 1.1 percent of National production in February 2023.

COMMENTARY ON MARCH 2023 COSTS AND STATISTICS

COST AND REVENUE DATA FOR MARCH 2023

The USDA reports data for five regions, respectively comprising the Northeast, South East (Mid-Atlantic), South Central, Midwest, and Northwest (NW and California combined in some tables).

From March 2019 onward some state data was withheld to maintain confidentiality where a company predominates in a specific state or region. From March 2021 California costs were inexplicably excluded, representing an unjustified concealment of data. The three Pacific Coast states could be combined to maintain confidentiality while providing representative U.S. data. Costs include fixed components (interest, depreciation and overhead) and variable components (feed, pullet depreciation, labor) recalculated in February 2023 by EIC based on surveys

• The USDA ex farm benchmark blended egg price in March 2023 was 28.0 percent higher or 59.9 cents per dozen from February 2023 to 273.7 cents per dozen. This contributed to a positive margin of 182.2 cents per dozen based on ‘nest-run’ eggs (ungraded as delivered from the laying house) in March 2023, compared to a positive margin of 119.4 cents per dozen in February 2023. The March 2023 USDA benchmark price of 273.7 cents per dozen should be compared to 104.0 cents per dozen for the corresponding month in 2021 and 158.5 cents per dozen in March 2022. The relatively high values during the second through fourth quarters of 2022 compared to corresponding periods for the two previous years were due to depletion of hens following the emergence of HPAI coupled with a rise in demand following relaxation of COVID restrictions.

• During March 2023, the feed component of production cost averaged 50.9 cents per dozen, down 4.9 percent or 2.6 cents per dozen from February 2023. During 2022 average feed cost was 50.1 cents per dozen compared to 42.5 cents per dozen in 2021 and 31.7 cents per dozen in 2020.

• Combining data from the USDA and the EIC, producers recorded a positive margin of 182.2 cents per dozen at farm-level for generic-egg flocks during March 2023. This compares with a positive margin of 119.4 cents per dozen in February 2023. During 2022 cumulative algebraic margin attained 1,887 cents per dozen. For 2021 the cumulative average algebraic margin was 91.0 cents per dozen; for 2020, 16.0 cents; for 2019, -2.8 cents and for 2018, 35.3 cents per dozen, against USDA benchmark ‘nest run’ values.

• The simple average price of feed in March 2023 over 5-regions was $315.44 per ton, lower by $15.83 per ton or 4.8 percent compared to February 2023.

Southwest data is no longer disclosed to avoid compromising a company that predominates in Texas. The highest cost among five regions was the Northwest at $360.63 per ton, down 4.7 percent from February 2023. This may be compared to the lowest-cost region, the Midwest at $293.05 per ton, down 4.8 from the previous month. The average cost for feed includes ingredients plus milling and delivery at a nominal $10 per ton.

• The benchmark price of corn was $252.46 per ton in March 2023, down $11.53 per ton or 4.4 percent from the average February 2023 price, taking into account the difference in basis paid by producers. The differential in corn price between the Midwest and the Northwest in March 2023 was $71.51 per ton. A 5.4 percent decrease of $35.10 per ton in the price of soybean meal to $504.10 per ton in March 2023 contributed to a lower cost of feed. During March 2023 there was a differential of $67.58 per ton in feed price between the Midwest and the Northwest compared to a difference of $71.04 per ton in February 2023 corresponding to 12.5 cents per dozen. The industry has experienced sharp increases in the cost of phosphate additives, fat and vitamins since March 2022.

• Feed price will continue to be a major factor driving production cost and hence margin. WASDE #635 (retrievable under the STATISTICS Tab) released on April 11^th confirmed the volumes of the 2022 corn and soybean harvests, ingredient use, exports and ending stocks for the two major feed ingredients. Unknown factors influencing feed cost during the second quarter of 2023 will include the consequences of the invasion of Ukraine with inevitable disruption in production and shipping from the region. This influence coupled with the projected high harvests in Argentina and Brazil, impacted by drought, will determine prevailing prices in international trade. The availability and hence prices of ingredients will also be influenced by weather conditions following the transition from a La Nina, predicted to wane in the second quarter of 2023, to an El Nino phenomenon; export volume from the U.S. and especially to China; diversion of corn to ethanol and soy oil to biodiesel; the remaining economic and logistic effects of COVID restrictions and inflation. There is obviously lower demand for ethanol with production projected by the U.S. Energy Information Administration at 970,000 barrels per day with one-million barrels per day during the first quarter of 2023. Substantial exports of soybeans to China, during market year 2022/2023 increased domestic price and hence cost of egg production. Each $10 per ton difference in feed cost represents approximately 1.70 cents per dozen. A change of $1 per ton (2.8 cents per bushel) in the price of corn is reflected in a 0.11 cent per dozen change in production cost. A $10 per ton change in the price of soybean meal affects production cost by 0.35 cent per dozen.

• The EIC calculated the 5-Region adjusted total nest-run production cost in March to be 91.5 cents per dozen, 2.9 cents per dozen or 3.1 percent higher than in February 2023. Production costs during March 2023 ranged from 87.5 cents per dozen in the Midwest up to 99.7 cents per dozen in the Northwest, higher than the Midwest region by 12.2 cents per dozen. During 2022 the average monthly cost of production was 81.0 cents per dozen.

Deletion of California data is considered a substantial deficiency of the EIC Report.

• Retail egg prices as determined by the Department of Commerce in February 2023 averaged 421.1 cents per dozen, down 61.2 cents per dozen, higher than in January 2023. During February 2021 and 2022 retail prices were respectively 159.7 and 200.5 cents per dozen. Through 2017 and 2021 average retail prices did not decline in proportion to ex-farm prices, allowing higher margins at retail, thereby depressing demand. Retailers have recently demonstrated some restraint in pricing possibly due to competition from deep discounters and club stores, despite sustained demand.

PRODUCTION DATA FOR MARCH 2023

• According to USDA, the estimated average complement of U.S. hens in flocks over 30,000 during February 2023 amounted to 293.9 million, reflecting a net increase in flock size by 2.7 million hens during the month. Routine depletion and also depopulation due to HPAI during 2022 was offset by pullet replacements and retained flocks. The average total U.S. flock including hens in molt on all farms counted by the USDA amounted to 310.9 million in February 2023. The average end-of-year flock sizes over the past seven years respectively were, 2014, (311 million); 2015, (291 million post-HPAI losses); 2016, (319 million); 2017, (329.6 million); 2018, (341.6 million); 2019, (341.6 million) and 2020, (325.5 million). The December 1^st 2023 flock was projected to be 332.5 in April 2023 applying the EIC model. Flock size was depressed by depopulation due to HPAI amounting to 44 million hens through mid-December 2022. With replacements, molting and delayed depopulation it is estimated that the national flock comprises 20 million fewer hens each week than before the advent of HPAI. In the absence of a vaccine only effective biosecurity will protect flocks going forward.

• Pullet chick hatch attained 26.0 million in February 2023, up 3.8 million from January 2023. It is anticipated that seasonal prices will be considerably higher than in preceding years into 2023, resulting in demand for chicks for expansion in addition to necessary replacement of depleted pullets and hens. It is understood that production of additional pullet chicks is unlikely given forward planning by breeder-hatcheries and full utilization of facilities.

• The total in-molt and post-molt population of hens in the 5-Regions monitored by the USDA attained 12.9 percent of the national flock in March 2023, compared to 12.5 percent in February 2023. Annual averages for molt and post-molt combined were 14.4 percent in 2021, 13.5 percent for 2020, 15.2 percent for 2019 and 17.4 percent for 2018. The historical high value of 23.8 percent in 2016 was due to the loss of hens during the 2015 HPAI epornitic. This situation may be revisited in 2023.

• During the first quarter of 2023 the average monthly transfer of pullets to laying houses was 23.5 million to be followed by 20.8 million in the second quarter.

• The projected hatchery supply flock (parent generation) peaked during 2022 at 3.1 million hens in June. The previous high parent-flock of 3.1 million hens in production was in June 2015, coinciding with the end of the HPAI epornitic. Parent hens then declined to a low of 2.5 million during the fourth quarter of 2016. Parent flocks attained a monthly average of 2.9 million during the third quarter and 2.8 million for the fourth quarter of 2022. During 2023 the flock size for parent hens will average 2.61 million and 2.53 million for the first and second quarters respectively. The size of the parent flock is unlikely to be revised based on pullet chick orders influenced by the demand to replace depopulated hens and in response to higher producer margins.

• Average hen-week production of 80.7 percent in March 2023 compared to a revised value of 80.8 percent in February 2023 reflects a similar proportion of older hens in the national flock with many first-cycle hens and early second-cycle hens in production. Average rate of lay in 2021 was 82.0 percent, with 80.9 percent in 2020 and compared to 79.2 percent during 2019. 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 the weighted flock age increases or conversely will rise due to early depletion thereby increasing the proportion of young hens in their first cycle.

• The March 24^th 2023 USDA Poultry Slaughter Report documented 2.7 million light spent-hens processed under FSIS inspection during February 2023, 1.1 percent less than during the previous month of January 2023 and 13.2 percent more than in February 2022. These differences are inconsequential in comparison to the depletion of 14 million hens per month with the bulk either rendered or consigned to landfills. Provided housing space is available, prevailing high prices will result in retention of hens with fewer routine or previously scheduled flock depletions.

EXPORT DATA FOR FEBRUARY 2023.

• Monthly export data can be accessed in the relevant report retrievable in this edition and thereafter in April under the STATISTICS Tab.

• According to USDA-FAS data, 154,000 cases of shell eggs were exported in February 2023, representing 0.8 percent of total production. There was an 11.6 percent decrease over the small base in January 2023. Exports were sustained by demand from Canada, Central America and some Caribbean nations.

• Exports of egg products in February 2023 attained 159,000 case-equivalents down 2.0 percent from the previous month, representing 0.8 percent of U.S. output.

• Collectively, exports of shell eggs and products in February 2023 comprised the output from approximately 4.4 million hens in production during the month, attaining 313,000 case-equivalents, down 3.4 percent from January 2022 but only 52.5 percent of combined exports during the pre-HPAI first quarter of 2022 averaging 596,300 case equivalents per month.

• Maintaining export volume is attributed to cooperation between the AEB and USAPEEC, in existing, new and potential 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 February 2023 corresponded to 1.1 percent of a nominal national flock of approximately 310 million producing hens, (before HPAI depletions) 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 specific state or country.