OVERVIEW

The July 11th 2019 USDA WASDE projections for the 2019 corn and soybean harvests are based on historical yield and harvest data. The corn acreage to be harvested was determined from planting completed at 83.6 million acres (81.8 million in 2018) and is up 1.4 percent from the June WASDE. In 2019 soybeans will be harvested from 79.3 million acres (88.3 million acres in 2018) with the reduction due to uncertainty over the export market.

The USDA projected corn yield to attain 166.0 bushels per acre, (178.9 bushels in 2018) and unchanged from the June WASDE despite late planting and delayed development. Soybean yield was projected at 48.5 bushels per acre (52.1 bushels in 2018), 5 percent lower than in the June WASDE projection. These values presume suitable growing conditions, the time of sowing and standard rates of germination.

The July USDA projection of ending stock for corn was increased by 20.0 percent percent from the June WASDE to 2,010 million bushels. Ending stock for soybeans will be 23.9 percent lower at 795 million bushels. Ending stocks for both corn and soybeans have influenced recent CME price quotations. It is emphasized that projections are based on the presumption of at least a partial settlement of the trade dispute with China followed by restoration of exports to that Nation, a prospect that appears in question given lower demand from China and the failure to commit to purchases following the June meeting between President Trump and Premier Xi at the G-20 Meeting in Osaka.

 

Review of June 2019 Production Costs and Statistics.

June 2019 USDA ex-farm nest-run benchmark price was up 66.7 percent from May 2019 to 38.5 cents per dozen but still below the cost of production. Low price is consistent with seasonal purchase trends and oversupply.

• June 2019 USDA average nest-run production cost was 6.0 percent higher than May 2019 at 63.2 cents per dozen.

• June 2019 USDA benchmark nest-run loss decreased from May 2019 to 24.7 cents per dozen.

• June national flock ( over 30,000 hens/farm) was down 5.7 million or 1.7 percent to 319.0 million.

INTRODUCTION.

Summary tables for the latest USDA June 2019 prices and flock statistics made available by the EIC on July 11th 2019 are arranged, summarized, tabulated and reviewed in comparison with values from the previous June 12th 2019 posting reflecting May 2019 cost and production data.

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing the first five months of 2019 with the corresponding period in 2018:-

U.S. SHELL EGG AND EGG PRODUCT EXPORTS DURING

JANUARY-MAY 2019 COMPARED WITH 2018

Source USDA-FAS/USAPEEC

SHELL EGGS

Shell egg exports from the U.S. during the first five months of 2019 increased by 14.3 percent in volume but declined 25.5 percent in total value compared to Jan.-May 2018. Unit value was lower by 34.7 percent or 44 cents per dozen for the five-month comparison between 2018 and 2019. The top two importing nations represented 74.8 percent of volume and 70.2 percent of total value.

Hong Kong was the leading importer of shell eggs in Jan.-May 2019, with 19.7 million dozen representing 37.5 percent of volume and 40.2 percent of the total value of U.S. shipments of shell eggs with an average unit value of $0.83 cents per dozen.

Canada was the 2nd-ranked importer during Jan.-May 2019 with 19.6 million dozen representing 37.3 percent of volume and 30.0 percent of total value at $13.1 million with a unit value of $0.67 per dozen. Shell eggs shipped to Canada represent the difference between domestic demand and production, limited by their national controlled marketing system

Mexico was a distant third in rank during Jan.-May 2019 with 12.0 percent of volume and 10.8 percent of total value, with a unit value of $0.83 per dozen.

The Caribbean Region represented 5.9 percent of export volume for the first five months of 2019. This region was down 18.4 percent in volume and 51.7 percent in total value compared with 2018. The unit value of shell eggs exports to the Caribbean averaged $1.39 per dozen for Jan.-May 2019 ($1.93 over entire 2018) which appears inordinately high compared with the average export realization, warranting validation of USDA data or an investigation of the price discrepancy. It is possible that a proportion of shell eggs enumerated may have been fertile hatching eggs.

The Middle East Region imported 2.1 million dozen during the first five months of 2019 valued at $2.0 million with a unit price of $0.95 per dozen. Volume and value were respectively lower by 32.3 percent and 33.3 percent compared with the corresponding period in 2018. Israel emerged as an importer at the end of 2018 attributed to depletion of domestic flocks due to SE.

EGG PRODUCTS

The total volume of exported egg products during Jan.-May 2019 decreased by 16.2 percent and total value was lower by 28.4 percent compared to the same period in 2018. Unit value decreased by 14.7 percent to $3,121 per ton from $3,660 obtained during Jan.-May 2018. This decline reflected the relationship between World supply and demand.

During Jan.-May 2019, 1st-ranked Japan represented 27.3 percent of the total U.S. export volume with 3,362 m. tons, a decrease of 36.0 percent compared with the first five months of 2018.

Mexico was the second ranked importer during Jan.-May 2019 receiving 2,522 metric tons comprising 20.5 percent of volume and 15.9 percent of value exported with a unit price of $2,419 per metric ton

Canada represented the 3rd rank among importers purchasing 2,370 m. tons representing 19.3 percent of volume and 13.0 percent of value ($5.0 million) exported with a unit price of $2,109 per m. ton. During the five-month period in 2019 Canada increased volume by 20.9 percent and value by 8.7 percent compared to the corresponding period in 2018.

During the first five months of 2019, 4th-ranked E.U-28 imported 432 m. tons of egg products, representing 3.5 percent of volume and 7.5 percent of value shipped during Jan.-May 2019

COMMENTS

Successful conclusion of NAFTA negotiations led to the trilateral USMCA, announced on September 30th 2018 but will have to be ratified by the legislatures of Canada and the U.S. Exports of shell eggs and egg products to our neighbors were valued at $74.7 million for 2017 and $89.7 million for 2018 and $28.8 million over the first five months of 2019.

Prospects for long-term exports of shell eggs will be limited by the willingness of importers to accept the World Organization for Animal Health (OIE) principle of regionalization in the event of exotic Newcastle disease or isolation of H5 or H7 avian influenza, irrespective of pathogenicity. Most importing nations, with the noted exception of China, are now applying regionalization and permitting imports on a county or state-exclusion basis following H5 or H7 AI infection.

The fourteen-month ongoing series of incident cases of END in approximately 480 backyard flocks, predominantly fighting cocks has apparently ended. Extension of the infection to four commercial farms in Southern California in late 2018 did not impact exports since importers are complying with the OIE principle of regionalization.

Generally pasteurized egg products should not be subject to any embargo imposed following reports of AI or Newcastle disease.

The USDA Economic Research Service issued an updated forecast of egg production on June 17th, following the previous May16 th report. The volume of eggs produced and per capita consumption in 2019 were increased by 2.9 and 2.6 percent respectively compared to revised 2018 data. Consistent with this disparity, the benchmark New York price was reduced by 37.0 percent in unit value. Production data reflecting 2016 and 2017 should be compared to 2015, impacted by the Spring outbreak of HPAI in the upper-Midwest. The price elasticity of eggs is denoted by the disparity in the decline in the New York price benchmark relative to forecast volume of production. The latest data is reflected in the table below:-

Source: Livestock, Dairy and Poultry Outlook -June 17th 2019

*Impacted by Spring 2015 HPAI outbreaks. Consumption in 2014, 267 eggs per capita

Subscribers to EGG-NEWS are referred to the postings depicting weekly prices, volumes and trends and the monthly review of prices and related industry statistics.

Review of May 2019 Production Costs and Statistics.

May 2019 USDA Ex-Farm Benchmark Price Down 41.8 Percent from April 2019 to 23.1 cents per dozen Consistent with Seasonal Purchase Trends and Oversupply.

• May 2019 USDA Average Nest-run Production Cost 0.2 Percent Higher than April 2019 at 59.57 cents per dozen.

• May 2019 USDA Benchmark Nest-run Loss Increased from April 2019 to 36.5 cents per dozen.

• May National Flock ( over 30,000 hens/farm) Down 0.4 million or 0.2 percent to 324.7 million.

INTRODUCTION.

Summary tables for the latest USDA May 2019 prices and flock statistics made available by the EIC on June 12th 2019 are arranged, summarized, tabulated and reviewed in comparison with values from the previous May 12th 2019 posting reflecting April 2019 cost and production data.

OVERVIEW

The June 11th 2019 USDA WASDE projections for the 2019 corn and soybean harvests are based on historical yield and harvest data. The corn acreage to be harvested was determined from planting completed and stated intentions at 82.4 million acres (81.8 million in 2018) and down 3.5 percent from the May WASDE. In 2019 soybeans will be harvested from 87.8 million acres (88.3 million acres in 2018). There was apparently no material change due to recent Midwest flooding or the forecast for wet conditions from snowmelt delaying planting.

The USDA projected corn yield to attain 166.0 bushels per acre, (178.9 bushels in 2018) and down 5.7 percent from the May WASDE. Soybean yield was projected at 49.5 bushels per acre (52.1 bushels in 2018). These values presume suitable planting and growing conditions, time of sowing and standard rates of germination.

The May USDA projection of ending stock for corn was reduced by 32.6 percent from the May WASDE to 1,675 million bushels. Ending stock for soybeans will be 8.5 percent higher at 970 million bushels. Ending stocks for both corn and soybeans have influenced recent CME price quotations. It is emphasized that projections are based on the presumption of at least a partial settlement of the trade dispute with China followed by restoration of exports to that Nation, a prospect that appears in question given lower demand from China and the latest round of tariffs imposed by both nations.

USDA-FAS data collated by USAPEEC, reflecting export volume and values for shell eggs and egg products are shown in the table below comparing the first four months of 2019 with the corresponding period in 2018:-

U.S. SHELL EGG AND EGG PRODUCT EXPORTS DURING

JANUARY-APRIL 2019 COMPARED WITH 2018

Source USDA-FAS/USAPEEC

SHELL EGGS

Shell egg exports from the U.S. during the first four months of 2019 increased by 8.7 percent in volume but declined 28.9 percent in total value compared to Jan.-April 2018. Unit value was lower by 34.3 percent or 46 cents per dozen for the four-month comparison between 2018 and 2019. The top two importing nations represented 77.5 percent of volume and 72.1 percent of total value.

Canada was the leading importer during Jan.-April 2019 with 18.9 million dozen representing 39.4 percent of volume and 33.7 percent of total value at $11.5 million with a unit value of $0.72 per dozen. Shell eggs shipped to Canada represent the difference between domestic demand and production, limited by their national controlled marketing system

Hong Kong was the 2nd ranked importer of shell eggs in Jan.-April 2019, with 14.2 million dozen representing 36.7 percent of volume and 38.4 percent of the total value of U.S. shipments of shell eggs with an average unit value of $0.92 cents per dozen.

Mexico was a distant third in rank during Jan.-April 2019 with 7.8 percent of volume and 7.3 percent of total value, with a unit value of $0.83 per dozen.

The Caribbean Region represented 6.7 percent of export volume for the first four months of 2019. This region was down 23.5 percent in volume and 56.6 percent in total value compared with 2018. The unit value of shell eggs exports to the Caribbean averaged $1.38 per dozen for Jan.-April 2019 ($1.93 over entire 2018) which appears inordinately high compared with the average export realization, warranting validation of USDA data or an investigation of the price discrepancy.

The Middle East Region imported 1.8 million dozen during the first four months of 2019 valued at $1.7 million with a unit price of $0.94 per dozen. Volume and value were respectively lower by 37.9 percent and 37.0 percent compared with the corresponding period in 2018. Israel emerged as an importer at the end of 2018 attributed to depletion of domestic flocks due to SE.

EGG PRODUCTS

The total volume of exported egg products during Jan.-April 2019 decreased by 21.0 percent and total value was lower by 33.0 percent compared to the same period in 2018. Unit value decreased by 15.1 percent to $3,114 per ton from $3,670 obtained during Jan.-April 2018. This decline reflected the relationship between World supply and demand.

During Jan.-April 2019, 1st-ranked Japan represented 25.8 percent of the total U.S. export volume with 2,474 m. tons, a decrease of 42.1 percent compared with the first four months of 2018.

Mexico was the second ranked importer during Jan.-April 2019 receiving 2,158 metric tons comprising 22.5 percent of volume and 17.4 percent of value exported with a unit price of $2,410 per metric ton

Canada was displaced to the 3rd rank among importers purchasing 1,897 m. tons representing 19.8 percent of volume and 13.0 percent of value ($3.9 million) exported with a unit price of $2,056 per m. ton. During the four-month period in 2019 Canada increased volume by 24.7 percent and value by 18.2 percent compared to the corresponding period in 2018.

During the first four months of 2019, 4th-ranked E.U-28 imported 332 m. tons of egg products, representing 3.4 percent of volume and 8.6 percent of value shipped during Jan.-April 2019

COMMENTS

Successful conclusion of NAFTA negotiations led to the trilateral USMCA, announced on September 30th 2018 will be ratified by the legislatures of all three signatories. Exports of shell eggs and egg products to our neighbors were valued at $74.7 million for 2017 and $89.7 million for 2018 and $23.1 million over the first four months of 2019.

Prospects for long-term exports of shell eggs will be limited by the willingness of importers to accept the World Organization for Animal Health (OIE) principle of regionalization in the event of exotic Newcastle disease or isolation of H5 or H7 avian influenza, irrespective of pathogenicity. Most importing nations, with the noted exception of China, are now applying regionalization and permitting imports on a county or state-exclusion basis following H5 or H7 AI infection.

The fourteen-month ongoing series of incident cases of END in approximately 450 backyard flocks, predominantly fighting cocks. Extension of the infection to four commercial farms in Southern California should not impact exports since importers are complying with the OIE principle of regionalization.

Generally pasteurized egg products should not be subject to any embargo imposed following reports of AI or Newcastle disease.

Based on the importance of expanding cage-free production, the USDA-AMS issues a monthly report on volumes and prices for the information of Industry stakeholders. There is some doubt as to the accuracy of the individual monthly flock numbers especially with reports that show a significant increase in the cage-free flock for a specific month. It is questioned is whether it would not be more desirable to post accurate quarterly data in place of unconvincing sequential monthly figures.

EGG-NEWS summarizes and comments on data and trends in the monthly USDA Cage-Free Report, supplementing the information posted weekly in the EGG-NEWS Egg Weekly Price and Inventory Report.

The USDA Cage Free Report for the month of May 2019 released on June 3 rd 2019 documented a 0.6 percent increase of 0.1 million in flock size for hens hens producing under the Certified Organic seal. The National cage-free flock increased by 0.2 million or 0.4 percent as compared to the value for April. The respective numbers of hens in organic and cage-free flocks should reflect the realities of supply and demand in the market over successive quarters. Average flock production was retained from April at 75.5 percent for both categories of non-caged hens (accepting USDA data).

Kindly refer to weekly USDA wholesale and retail prices posted in the EGG-NEWS Egg Price and Inventory Report E-mailed each Friday. The previous Monthly Cage-Free Report is available under the STATISTICS Tab.