Market Update
April 2016
Overview
Cage-free continues to be a key topic in the egg industry. Over the past 30 days, twenty-six companies have committed to
sourcing 100% cage-free egg supply. Exports continue to decline, while increased imports and the re-population of domestic
farms have provided a surplus of supply in the marketplace. We expect the egg market to remain volatile until later in the year.
Grain Market
Urner Barry 30 Day Change
6.00
5.00
Bkr-L
4.00
Liq WE Low
3.00
Liq White Lo
2.00
Liq Yolk Lo
Dried Whole Egg
1.00
Dried Yolk
Supply and Demand
Breaking egg numbers are below what they were in 2015. According
to the USDA’s Chicken and Eggs report, egg production in Iowa
during January 2016 was 73.7 million dozen, which is 38% below
what they were in 2015. Total U.S. egg production is only down 5%
to 679.3 million dozen. Iowa egg production in February was down
27% from the same time last year. Nationally, egg production was
13% higher than it was in 2015. In January 2016, Iowa accounted
for 11% of the total U.S. egg production, compared to 17% in
January 2015.10
4/14/2016
4/13/2016
4/12/2016
4/9/2016
4/11/2016
4/8/2016
4/10/2016
4/7/2016
4/6/2016
4/5/2016
4/4/2016
4/3/2016
4/2/2016
4/1/2016
3/31/2016
3/30/2016
3/29/2016
3/28/2016
3/27/2016
3/26/2016
3/25/2016
3/24/2016
3/23/2016
3/22/2016
3/21/2016
3/20/2016
3/19/2016
3/18/2016
3/17/2016
Dried Whites
3/16/2016
0.00
3/15/2016
The U.S. dollar is nearing the low end of last year’s trading range,
influencing traders to invest money into commodities. Spec funds
are buying back short positions. Soybean carryout is questionable
for next year lending due to higher markets. The corn market is
following as not to lose too many acres. The dryness in Brazil and
the wetness in Argentina are adding premiums to corn and soybean
prices. Questions remain on the possibility of crop stress in the U.S.
due to the effects from El Nino and La Nina.
Egg Supply & Demand as of 3/25/16
DEMAND
SUPPLY
WHOLE
ALBUMIN
LIQUID EGG
YOLK
WHOLE
ALBUMIN
YOLK
FROZEN EGG
US Dept. of Agricultre
WHOLE
ALBUMIN
YOLK
DRIED EGG
Past 30 Days Cage-Free Commitments
Exports and Imports
Retail
Total egg exports for January and February 2016 resulted in 26.42
Foodservice
million dozen, a decrease of 51.7% compared to 2015. In February,
Ingredient
exports of table eggs dropped by 37.4% to 9.51 million dozen
while value dropped 39.9%. The decrease in table eggs is mostly
attributed to the decrease in exports to Mexico. February exports to
Mexico dropped by 99.5% compared to February 2015.4 Mexico
only recently lifted the import ban from last year’s avian influenza outbreaks. The ban prevented import of shell eggs and egg
products from the following states: Washington, Oregon, California, Minnesota, Iowa, Arkansas, Missouri, South Dakota, Kansas,
Montana, Wisconsin, North Dakota, Nebraska, Indiana, and Idaho.6 Exports to Hong Kong also decreased by 21.2%. Exports to
Jamaica increased drastically; 1.3 million dozen eggs were shipped to Jamaica, compared to zero in 2015. Canada, Hong Kong,
Jamaica, Trinidad and Tobago, and Guyana accounted for 85% of table egg volume exports in January and February.4
Export value in February for egg products dropped by 57.9% compared to 2015. Value to Japan dropped by 31.2% and sales to
Mexico only resulted in $0.3 million. Mexico, Japan, the European Union, Canada, and Australia were the top five countries that
egg products were exported to during the first two months of the year. These five regions accounted for nearly 85% of the export
value. Japan was the top export region of egg products, contributing 51% of the value during this time period.4
Over the past thirty days, 936,000 shell eggs were imported for breaking stock. The top three source countries were Spain,
Portugal, and Italy.
Rembrandt Foods®
www.rembrandtfoods.com
The Cage-Free Push
There have been twenty-six companies over the past thirty days that have
committed to sourcing a 100% cage-free egg supply. Nearly 80% of the
companies that have made public announcements so far will transition to
cage-free eggs by 2025.
The most influential announcement over the past month has come from
Walmart. They have committed to transitioning to a 100% cage-free egg
supply by 2025. Estimates show that Walmart sources approximately 625
million dozen eggs every year. Walmart’s spokesman, Kevin Gardner, stated,
“We expect that as cage-eggs shift from a specialty product to the industry
standard over the next decade; that change will be reflected for our customers
in pricing.”9 Currently, consumers are paying nearly double for cage-free eggs
at a grocery store over conventional eggs. 3
Prior to Walmart’s announcement, Chad Gregory, president of the United
Egg Producers, estimated that collectively, the commitments amount to 138
million layers, or approximately 48% of the total U.S. flock. According to
Egg-Cite, the U.S. egg producers will be required to install new housing for
approximately 270 million layers over the next ten to twelve years, if the entire
market transitions to cage-free. They assume that it costs an average capital
cost of $40 to house a hen over the next ten years, the egg industry will need
to spend $10.8 billion to re-house existing caged birds.11 We estimate that
the entire U.S. flock will be 360 million layers by 2025.
The Humane Society of the United States believes that the recent amount
of cage-free commitments could position the U.S. to leapfrog over Europe in
terms of cage-free flock size. According to Nielsen, about 14% of egg sales
are either cage-free or free-range, compared to 47% in the U.K.3
Organic Egg Production
The USDA is proposing a new standard for organic egg production. The
proposal would require that farmers provide each hen with at least 2 square
feet of outdoor space. Under the new proposition, outdoor space is defined
as an area with at least half of the space being composed of soil; the
other half cannot have solid walls or a solid roof. If passed, the USDA will
require current organic farmers to transition over a five year period. The new
requirements would increase current organic egg production costs by 3.6%.
According to the USDA, there were approximately 166 million dozen organic
eggs produced in 2014.5
Market Trends
Technomic reported 54% of consumers enjoy
eating breakfast items outside of regular
morning hours. This is up 6% from 2013. NRA
research found that 72% of adults would like a
breakfast menu option throughout the day. Over
a third of consumers who eat breakfast foods
during lunch eat the meal outside of the home.1
45% of millennials would eat at a restaurant
they don’t normally visit if there were breakfast
items offered beyond typical breakfast hours.1
Breakfast or brunch is now offered at 46% of
all casual restaurants, an increase of 17% over
the past four years.1
On breakfast menus, hot sandwich offerings
grew 9% between 2011 and 2015.1
Mexican themed dishes, which generally
contain eggs, are the fastest growing breakfast
option at FSRs. This trend has grown 23%
since 2013.1
According to the NRA’s “What’s Hot” survey,
vegetables will be a top menu trend throughout
the year. Eggs are a perfect complement for
veggies on a menu. The fastest growing toppings
on breakfast sandwiches at LSRs are spinach
and mushrooms.1 Combining whole cooked
eggs with carotenoid-rich foods is an effective
way to increase carotenoid absorption.2
Consumers are demanding more natural, clean
label products. 93% of consumers prefer to
see recognizable ingredients on products they
purchase. 61% of consumers believe that
a product labeled “all natural” is a healthier
product. Eggs are a perfect ingredient for
allowing a clean labeled finished product.8
Rembrandt’s Recommendation
Although market pricing has dropped over the past thirty days, the market could flip quickly. Market buying has many uncertainties
to it with substantial risks. We urge customers that are buying according to market based pricing to talk with your sales
representative regarding grain based pricing. Grain based pricing is modest at the moment, and we encourage our customers to
book as far into the future as possible for all of your egg product needs. Shell customers should expect the Urner Barry market
to bottom out and begin to rise again as production begins to level out with market demand.
Consumers continue to show that they want breakfast outside of the traditional breakfast hours. This is the perfect time to add
an all-day egg dish to your menu. Consider spicing up your offerings by adding a Mexican flavored egg dish or a super-power
packed omelet stuffed with super foods like spinach, avocado, and salmon.
The content in this market update is meant for marketing and informational purposes only, and is not intended as, nor should be regarded as, advice. The information presented in this
article is obtained and compiled from sources Rembrandt Foods® believes to be reliable. We do not claim responsibility for the accuracy, validity, timeliness, or completeness of the
content or data provided. The content of this article is current as of the date of this update and is subject to change without notice.
1. Breakfast Beat, 32. (2016, March 22). 2. Eun Kim, J. (2015). Effects of egg consumption on carotenoid absorption from co-consumed, raw vegetables. The American Journal of Clinical Nutrition. Retrieved from http://ajcn.nutrition.org/content/
early/2015/05/27/ajcn.115.111062.abstract 3.Cage-Free Eggs May Be Golden Goose for Retail Profits. (n.d.). Retrieved April 11, 2016, from http://www.bloomberg.com/news/articles/2016-03-25/cage-free-eggs-may-be-golden-goose-for-retail-profits 4.
Moore, T. (2016). January-February exports remain below ‘15, but begin showing signs of trending upward. Monday Line, 1-3. 5. U.S. aims to toughen rules on organic egg production. (n.d.). Retrieved April 11, 2016, from http://www.agweek.com/news/
nation-and-world/4004996-us-aims-toughen-rules-organic-egg-production 6. Moore, T. (2016). U.S.-meixco wrap up AI mission, but bans remain in force, for now. Monday Line. 7. Moore, T. (2016). China’s move to end corn stockpiles causes concern in
global market. Monday Line. 8. 000 - Egg Science & Tech Videos Intro (video27) - Shelly. (n.d.). Retrieved April 11, 2016, from http://www.aeb.org/food-manufacturers/eggs-product-overview/98-cwhite-papers/467-athe-egg-and-clean-labeling
9. Malcolm, H. (2016). Walmart’s cage-free egg vow could cut prices, aid hens. Retrieved April 11, 2016, from http://www.usatoday.com/story/money/2016/04/06/cage-free-eggs-expected-to-get-cheaper/82702828/ 10. Egg prices continue to fall from
record highsFood Business News. (n.d.). Retrieved April 11, 2016, from http://www.foodbusinessnews.net/Opinion/Ron Sterk/Egg prices continue to fall from record highs.aspx 11. Collective Impact of “Cage Free” Announcements. (2016, April 8).
Retrieved from http://egg-cite.com/
Rembrandt Foods®
www.rembrandtfoods.com