Post-Easter dip levels out eggs prices

Maro Ibarburu, the recently appointed program manager for the Egg Industry Center located at Iowa State University, has released the April-May Statistical Report.

The following is a summarization of the data given in the report:

• The U.S. estimated cost of production for May 2010 was 56.6 cents ex farm, unchanged from the previous month. The five-month average production cost for 2010 approached 58 cents per dozen, virtually unchanged from the 58.9 cents per dozen recorded during the first five months of 2009.
• The May ex farm egg price estimated by the USDA-NASS was 44.1 cents per dozen, compared to 59.9 cents per dozen for April and a five-month average of 75.6 cents per dozen for 2010 to date. The egg price for May 2010 was 0.1 cent per dozen less than the comparable month in 2009.
• The margin represented by “income minus cost” for May dipped below breakeven at -12.5 cents per dozen. For the first five months of 2010 the average margin was 17.9 cents per dozen. The May margin was 15.5 cents per dozen below April 2010 but was 7.6 cents per dozen higher than the seasonal post-Easter dip in May 2009.
• In evaluating the low margin for May it was noted that feed cost was 33.6 cents per dozen, pullet depreciation at 8.3 cents per dozen with other fixed and variable costs of 14.7 cents per dozen, applying standard cost factors used by the EIC. These values remained virtually unchanged through the first five months of 2010. Contribution per hen, based on May figures turned negative at -23.6 cents which followed the 6.2 cent value in April and 92.9 cents recorded in March. The cumulative five-month hen contribution now stands at 167.0 cents.
• The Urner Barry simple average price for six U.S. regions, assuming 80% large eggs, was 45.7 cents per dozen for May compared to 56.9 cents per dozen in April. The five-month simple average UB price was 74.3 cents per dozen.
• In reviewing retail prices for table eggs, the Bureau of Labor Statistics and the Department of Commerce estimated an April average of 177.9 cents per dozen, 2.4% lower than the March 2009 value of 182.2 cents per dozen.
• The large to medium white egg price spread over six regions was 10.8 cents in May compared to 9.2 cents in April with an average of 17.6 cents per dozen for the first five months of 2010. Regional spreads ranged from 9.3 cents per dozen in the Northeast to 13.1 cents per dozen in the South Central region.
• During May 2010, layer feed averaged $193.0 per ton, which is slightly lower than the five month average of $196 per ton based on six regions. During May the price range among regions was $181.4 per ton in the Midwest rising to $220.0 per ton in California.
• The May 2010 differential in feed price contributed to a spread of 7.9 cents per dozen in production cost, incorporating a standard value of 14.7 cents per dozen for labor, interest and miscellaneous inputs. The Midwest produced for 53.9 cents per dozen compared to the California production cost of 61.8 cents per dozen, amounting to a difference of 7.9 cents per dozen. The simple average of the six U.S regions in April was 58.7 cents per dozen.
• For the first four months of 2010, commercial-layer eggs in incubators and straight run hatch have shown an increase over corresponding months in 2009. As of April 1, egg-type pullet hatch increased by 11.0% over April 2009 to 23.75 million.
• Pullets to be housed in future months based on the five months-previous hatch and incorporating a 5% mortality factor, projects a range of increases in placements from 15.75 million pullets in April to 21.44 million pullets in September 2010. This value is approximately 4.9 million pullets greater than the monthly average of the years 2005 through 2009 at 16.5 million.
• For April 2010, the USDA-NASS estimated the national flock at 281.1 million hens, which is 1.4 million more than in March 2010 but 1.8 million less than in April 2009. Applying the University of California model based on USDA-NASS data for chickens and eggs it is estimated that the September 2010 flock will attain 218.7 million hens aged less than 72 weeks. This is based on the assumption of 9% mortality from 20 through 72 weeks of age. As at the end of April 2010, 24.8% of the national flock was over 72 weeks of age. With the exception of March 2010, which was an aberration, the seasonal pattern of a decline in molted flocks from January through April appears to be holding. In 2008, 32.9% of the national flock was over 72 weeks of age.
• Six regions reported a simple average of 24.4% molted hens in May 2010 reflecting all states surveyed by the USDA-NASS. Within the U.S. the actual proportion of molted hens varies widely, from 9.2% in the Northeast to 36.8% in the Northwest. The five-month average of 23.3% molted hens is a reflection of production costs, revenue for eggs and realization value for spent hens.
• The most recent estimate of the national table-egg flock for June is 279.2 million hens. This number is expected to increase steadily through 282.8 million in September to 291.8 million in December. Given current projections of prices which are functions of supply and demand, flock sizes could be trimmed by depletion or increased by retention or molting subject to available capacity including re-caging. Prolonged depression in price beyond current estimates will inevitably result in a decrease in hen numbers as flocks are depleted at a rate faster than projected.
• The EIC projects an Urner-Barry Midwest large price of 90.6 cents/dozen in June with triple digits in November and December attaining 120 cents per dozen. The post-January drop will occur in 2011 with April forecast at 94.7 cents per dozen.
• The top six states representing 158.66 million hens represent 56.8% of the total national flock. In descending order these states are Iowa (19.2%), Ohio (9.7%), Indiana (8.2%), Pennsylvania (8.0%), California (6.9%), and Texas (4.8%). States reporting to the USDA-NASS represent 98.6% of all hens producing table eggs.
• Rate of lay for the first four months of 2010 attained 76.1%. This is higher than 2009 during which an average of 75.2% was recorded. The positive difference of 0.9% in production rate relates to a daily volume approaching 7,000 cases.
• During April 2010, 5.73 million cases of eggs were broken under federal inspection, which is approximately 4.2% more than the previous month but 3.7% less than April 2009. For the first four months of 2010, egg breaking was up by 1.3% over the corresponding period in 2009. For the year to date, 30.1% of the 71.42 million cases produced have been broken compared to 30.8% for the entire year of 2009. It is noted that the proportion of eggs broken has steadily declined from the 2005 high of 35.1% to a projected value of 30% for 2010.
• Egg consumption in 2010 is projected to be 246.1 per capita, almost 1.8% lower than the 247.9 eggs per capita recorded in 2009. Over the past seven years the highest per capita consumption was recorded in 2006 at 257.8 eggs.
• According to the USDA Foreign Agricultural Service 426,000 cases of shell eggs were exported during the first three months of 2010 with Hong Kong (37%), Canada (24%) and China (8%) representing the most significant importers. Export of shell eggs for the first three months of 2010 represented 0.80% of U.S. production.
• Exports of egg products and shell equivalents represented 1,097,000 cases for the first three months of 2010, representing an average of 2.06% of U.S. production.
• Combining shell eggs and egg products total exports during the first quarter of 2010 represented the equivalent of 1.53 million cases or 2.9% of U.S. production.