Roller coaster ride predicted for egg prices
March egg industry data identifies recent trends and anticipates changes in production and profit.
The March update of egg industry statistics, including USDA Economic Research Service values assembled by Don Bell of the University of California, Riverside, represents a comprehensive collection of data providing a perspective of the recent history and trends in production and profit.
The key values include:
- Eggs in incubators (35.2 million) during February 2009 represented a 1% decline over the corresponding month in 2008 and a 4% decline over January 2009.
- The hatchery supply flock has remained fairly constant, ranging from 2.6 to 2.7 million hens during the past six months.
- As of Feb. 1 there were 283.5 million hens in lay at an average of 74.9% hen/month production.
- The national flock is forecast to decline to a low of 281.2 million in August 2009 but will show a seasonal rise to 285.0 million in December.
- During February 2009, 25% of the flock had completed a molt.
At the beginning of 2009, the national flock was located in the following states in the proportions as indicated: Iowa (19%); Ohio (10%); Indiana (8%); Pennsylvania (8%); California (7%); Texas (5%).
During January 2009, 5.422 million cases were broken, representing 29.9% of production compared to a monthly average of 5.689 million cases during 2008 (31.9% of production).
Exports, consumption down
Exports of shell eggs during 2008 amounted to 1,918 thousand cases or 0.9% of production, down 26% from the record achieved in 2007. Significant markets were Canada (43%) and Hong Kong-PRC (30%) denoting a reliance on these two destinations. Exports of egg products in 2008 were equivalent to 3,108 thousand cases or 1.5% of production. Japan (32%); Germany and Canada (10% each) and Mexico (8%) were the major importers.
Domestic U.S. consumption in 2009 will attain 245.3 per capita, compared to 248.3 and 250.1 eggs in 2008 and 2007 respectively.
Feed is 60% of costs
Average production costs for the first two months of 2009 amounted to 58.7 cents/dozen. The principal components of cost derived from USDA data were:
- feed (60%);
- pullet depreciation (14%); and
- other fixed and variable costs (26%).
Given a two-month average egg price for nest-run of 76.8 cents/dozen, producers generated a contribution margin of 18.1 cents/dozen into their plants. It is noted that the average USDA mid-month egg price declined by 29% from a January value of 89.6 cents/dozen to 63.9 cents/dozen in February 2009. This lowered monthly contribution from 58 cents/hen in January to 8.8 cents/hen in February. The average egg price for 2008 as reported by USDA was 93.4 cents/dozen ranging from a high of 130 cents/dozen in March to a low of 66.8 cents/dozen in July.
Variable prices throughout 2009
Urner-Barry, Mid-West, Large grade prices are forecast to decline from a projected price of 111.1 cents/dozen in March to a seasonal low of 88.8 cents/dozen in May. Over the summer months, prices are expected to rise 95 to 97 cents/dozen but complete the year at 116.4 cents/dozen through November and December.