The estimated average cost for feeding layers in the U.S. as calculated by the Egg Industry Center reached $14.92 per hundred pounds for the month of May. This is the highest monthly average feed cost since calculations began in January of 2000. The May 2011 average feed cost was 52.1% higher than it was in May of last year.
At the same time that estimated total cost of production was up $0.196 cents per dozen eggs from last May, the egg price was only up $0.181 cents per dozen eggs. The Egg Industry Center estimates the industry average loss per dozen eggs in May was just over 17 cents.
Corn crop estimates released by the USDA in early June brought more bad news for corn buyers with the expected harvest being reduced by 2.3%. On this news, July 2011 corn futures reached a three-year high, with prices approaching $8.00 per bushel on the Chicago Board of Trade.
Dangerous time to play chicken
These are dangerous times for all involved in animal agriculture. Long-time broiler integrator Allen’s Family Foods recently filed for bankruptcy protection and has announced that it will cease operation in July.
Egg producers must take a serious look at what market price they will need to receive for eggs to cover the cost of $8.00 per bushel corn in their rations. With this information in hand, egg producers must determine how long they can hold out before egg prices can reasonably be expected to rise to a level that will cover these higher feed costs.
It would be sheer folly for anyone in animal agriculture to assume that prices for meat and eggs will rise to cover record high costs of production without cutbacks first being made in supply. The next few months will give producers the opportunity to engage in a very dangerous game of chicken.