Egg Industry - August 2008

l Major increase in hen numbers anticipated by December l _U.S. _PRODUCER _EGG _PRICE _AVERAGE_(all _table _egg _grades)280.1 million at the beginning of June to 291.1 million by December. The projection is based on hatch data, mortality ^140%pattern, USDA slaughter data and estimates based on 5-year 120% ^{130 103.8}trends. ^{120 122}Bell projects a moderate rise in Urner Barry Midwest ^100%Large prices from $1.27 per dozen in June to $1.52 for No- ^92.7_80%88.4 U.S. MONTHLY PROFITS 60% ^69.865.0 ^40%
55.056.1 55.8 ^62.3^20%45.0 ^0%Jan Feb Mar Apr May Jun Avg Prepared by Don Bell 35.0 _35.925.0 19. 9 ₁₅_.019. 5 ⁵^.0U.S. COST OF PRODUCTION ₀2.0 Jan Feb Mar Apr May Jun Avg Prepared by Don Bell ^75.0

Cents/dozen
Cents/dozen Cents/dozen

70.0 70.0 65.0 _64.165.2 _63.8_60.063.2 60.4

55.0

50.0

45.0

^40.0Jan Feb Mar Apr May Jun Prepared by Don Bell

Egg prices declined 33 percent from $1.24 per dozen for the
first quarter to 88.6 cents per dozen in the second quarter.
Maintaining a profitable national hen flock is currently the great-
est challenge to the egg industry.

vember and December, followed by a rapid decline from $1.08 in January 2009 to $1.01 in April and a drop to 93 cents by May. Production cost could exceed 75 cents per dozen by January 2009. Some relief may occur in the unlikely event of a reduction in the rate of diversion of corn to ethanol and providing the recent floods do not reduce USDA predictions of yield and total harvest.

Contrast with broiler industry

The broiler industry should maintain prices due to a rational program of reducing output. Two large integrators announced that they have deferred construction of new com-plexes or other expansion and virtually all companies have announced reductions in output with concurrent shifting of their product mix to heavier birds. Restraint in expansion is possible with an oligopolistic industry segment such as broilers in which the top five producers represent 60 percent of production.

Production cost could exceed 75 cents per dozen by January.

Greatest challenge for egg industry

Maintaining a profitable national hen flock is currently the greatest challenge to the egg industry. Fluctuation in profitability due to cycles of over-supply will inhibit long-term investment. Consolidation and acquisition is inevitable if the industry does not react to the prospect of over-supplying a market dominated by price sensitive consumers. EI

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