Land O’ Lakes reports flat layer egg profits, improvement in feed

Land O' Lakes Inc. reported flat profits in its layer egg business when compared to a year ago, but its feed business performed well during the first quarter of 2013.
"Our Feed business, operated through Purina Animal Nutrition LLC, showed improved operating profit in 2013 as well," said Chris Policinski, Land O'Lakes president and CEO. "Our Layers egg business was challenged by high feed costs and low commodity egg prices, generating results similar to the prior year," he added.
Land O'Lakes announced first-quarter financial results on May 8, reporting quarterly net sales of $4.2 billion and net earnings of $72 million. Sales were up 8 percent from the same period last year. Company officials described the first quarter performance as "solid and in line with expectations" noting that gross profit for the first quarter increased by 6 percent versus the prior year, while net earnings were down 16 percent due mainly to higher spending on advertising and promotion of new products across the businesses.
"Land O'Lakes has begun 2013 with solid sales growth and strong operating performance in our business units," Policinski said. "Our Crop Inputs business, which is operated under Winfield Solutions LLC, had a record year in 2012 and continued to deliver strong earnings in the first quarter of 2013, slightly below prior year because of weather-related timing of spring planting," he added.
Land O'Lakes retail dairy business had an impressive first quarter, primarily due to strong earnings in its flagship branded butter products. Innovative offerings continued to be added to Dairy Foods such as the new Saute Express Saute Starter. New acquisitions in Dairy Foods, such as the Kozy Shack line of premium refrigerated desserts, have also begun to produce significant earnings. Total Dairy Foods gross profit increased by 56 percent versus the prior year, which was offset by higher spending on advertising and promotion.
"After reporting record sales and earnings in 2012, Land O'Lakes is building momentum to achieve even stronger earnings performance and accelerated growth," Policinski said. "In 2013 we have increased spending on advertising and promotion of new products which will generate ongoing benefits. Agribusiness and food production are among the greatest growth industries of our era and we are well-positioned to capture this opportunity with strong brands, leading market positions and innovative growth strategies," he added.
Long-term debt was essentially unchanged at the end of the quarter, at $1.1 billion.  Short-term debt levels were seasonally higher at March 30, at approximately $705 million, up from $170 million as of December 31, 2012.  The increase was due to seasonal working capital requirements.

US table egg layer flock continues to increase

The average number of table egg layers on hand grew significantly over the course of 2012, according to the U.S. Department of Agriculture’s Chicken and Eggs 2012 Summary, released on February 27.
The average number of table egg layers on hand in November 2012 was up 2.5 percent from November of 2011. The year-on-year spread grew from January, when there was only a 0.5 percent spread. The 2012 annual average production per layer on hand was estimated at 274 eggs, up 1 percent from the 271-egg average reported in 2011.
The broiler breeder layer inventory was lower each month of 2012 than in the corresponding month in 2011. The spread between the monthly average broiler breeder inventory in 2012 and the average in the corresponding month in 2011 has tightened throughout 2012. In January 2012, there were 8.6 percent fewer broiler breeders than in January 2011, but there were only 1.5 percent fewer broiler breeders in November 2012 than in November 2011. The boiler breeder inventory did not decline between October and November of 2012, breaking a string of five consecutive months with a decline.

US table egg production up in October

The U.S. table egg laying flock in October was estimated at 288 million hens, 2.2 percent above 2011 numbers, according to the U.S. Department of Agriculture's latest report.
The number of hens in the table egg flock on a year-over-year basis was higher throughout the first 10 months of 2012. With higher hen numbers, the number of table eggs produced has increased. In October, table egg production was 574 million dozen, an increase of 2.2 percent from 2011, said the USDA. Table egg production on a year-over-year basis has been higher in every month so far in 2012.
Overall table egg production in the first 10 months of 2012 was 5.5 billion dozen, an increase of 1.3 percent from the same period in 2011. The table egg flock and table egg production are expected to be at higher levels than in 2011 through the remainder of 2012. At the beginning of November, the number of birds in the table egg flock was 291 million, up 2.5 percent from 2011 numbers, and table egg production is expected to total 1.72 billion dozen in the fourth quarter of 2012, up 2 percent from 2011.

U.S. egg prices
Even with larger table egg production, wholesale prices for eggs have continued to be strong, according to the USDA. The fourth-quarter 2012 wholesale price for one dozen Grade A eggs in the New York market is expected to average $1.30 to $1.33, roughly the same as in 2011. At the beginning of December, wholesale prices for Grade A large eggs in the New York market were approximately $1.38 per dozen.

Hatching egg production
Hatching egg production was lower than 2011 numbers throughout the first 10 months of 2012, according to the USDA report.

With lower broiler production, the decline in hatching egg production has largely been due to significantly lower production of meat-type hatching eggs in every month compared with 2011. Over the first 10 months of 2012, production of meat-type hatching eggs was 4 percent lower than in 2011, while the production of egg-type hatching eggs was 1 percent higher. Decreased production of meat-type eggs is expected to continue into the first half of 2013 until broiler integrators begin to expand production.
For more information and statistics on U.S. egg production, see www.wattagnet.com/marketdata.html.

US table eggs up, hatching eggs down in August

In August, U.S. table egg production was 563 million dozen, 1.7 percent higher than in 2011, according to the U.S. Department of Agriculture's latest report.
The gain was due to increases in both the size of the table egg flock and the number of eggs produced per laying hen. In August, the number of hens in the table egg laying flock was 282 million, up 1 percent from 2011 numbers. During the first 8 months of 2012, table egg production totaled 4.4 billion dozen, an increase of 1.1 percent over that in the same period in 2011.
Table egg production increased throughout the first 8 months of 2012, a trend that is expected to continue through the remainder of the third quarter and into the fourth quarter and has led to an increase of 45 million dozen in the production forecast for 2012. With relatively high prices expected into the first half of 2013, the decline in production is likely to be more moderate; thus, expected shell egg production for 2013 has increased by 100 million dozen, according to the USDA. This brings the 2013 total to 6.6 billion dozen, 1.1 percent lower than the forecast total in 2012.
Over the first eight months of 2012, the number of hatching eggs produced totaled 694 million dozen, down 3.8 percent from the same period in 2011. The decline in hatching egg production has been concentrated in lower numbers of broiler-type eggs produced. Production of broiler-type hatching eggs is expected to fall through the rest of third-quarter 2012 but increase slightly in the fourth quarter.
In September, wholesale prices for a dozen large eggs in the New York market averaged $1.35, up 16 percent from the price in 2011. In early October, weekly prices declined somewhat to approximately $1.17 per dozen. Prices in the fourth quarter of 2012 are expected to strengthen seasonally and average $1.32–$1.38 per dozen.
For more information on U.S. eggs, see www.wattagnet.com/marketdata.html. 

US egg production up slightly in August

U.S. egg production totaled 7.8 billion during August, up 1 percent from 2011 numbers, according to the U.S. Department of Agriculture's latest report.
Production included 6.76 billion table eggs, and 1.04 billion hatching eggs, of which 971 million were broiler-type and 69 million were egg-type. The total number of layers during August averaged 335 million, up slightly from 2011. August egg production per 100 layers was 2,324 eggs, up 1 percent from August 2011. All layers in the U.S. on September 1 totaled 336 million, up slightly from 2011, according to the USDA. The 336 million layers consisted of 284 million layers producing table or market type eggs, 49.8 million layers producing broiler-type hatching eggs and 2.84 million layers producing egg-type hatching eggs.
Egg-type chicks hatched during August totaled 41.4 million, down slightly from August 2011. Eggs in incubators totaled 36.8 million on September 1, down 6 percent from 2011 numbers. Domestic placements of egg-type pullet chicks for future hatchery supply flocks by leading breeders totaled 234,000, down 26 percent from August 2011.
Broiler-type chicks hatched in August totaled 758 million, also down slightly from August 2011. Eggs in incubators totaled 596 million on September 1, down 1 percent from 2011 numbers, according to the USDA. Leading breeders placed 7.05 million broiler-type pullet chicks for future domestic hatchery supply flocks during August 2012, down 3 percent from August 2011.

US table egg flock up in July

In July, the number of birds in the U.S. table egg flock was 281.1 million, up just under 1 percent from 2011 numbers, according to the latest U.S. Department of Agriculture report.
The table egg flock has been larger year-over-year throughout 2012. With the increase in the table egg flock, table egg production has increased. Over the first seven months of 2012, table egg production has totaled 3.9 billion dozen, 1.1 percent higher than in 2011. Table egg production is expected to continue to be higher in the third quarter of 2012 but to fall in the fourth quarter, and production is also expected to be lower in 2013. The decrease, like that for broilers and turkeys, is expected to stem from a contraction in production arising from higher feed costs.
The hatching flock for meat-type birds (broiler-breeder flock) was reported at 51.1 million in July, down 6 percent from 2011, according to the USDA. The number of meat-type hens in the broiler-hatchery flock has been significantly lower on a year-over-year basis since mid-2011. The lower number of hens reflects the decreases in broiler chick demand as broiler integrators cut back expansion plans due to high grain prices and relatively weak domestic demand.
In July and August 2012, the weekly wholesale price for eggs in the New York market had a short-lived but sharp spike in prices. Prices at the beginning of July averaged around $1.05 per dozen and then rose to almost $1.60 per dozen, before falling back to around $1.16 per dozen by the beginning of September. Since the beginning of September, prices have begun to recover, said the USDA.
With this run-up in egg prices, the third-quarter 2012 average for New York egg prices is now expected to be $1.26–$1.29 per dozen, up almost $0.12 from the third quarter of 2011. Prices in the fourth quarter of 2012 are forecast at $1.32–$1.38 per dozen. This strengthening in prices in the fourth quarter is expected to come from a slow growth in production in the face of the normal increase in seasonal demand.
For more information and statistics on U.S. poultry and eggs, see www.wattagnet.com/marketdata.html. 

US table egg production to drop slightly in 2013

U.S. table egg production is expected to total 6.6 billion dozen in 2013, down fractionally from 2012 numbers, according to the U.S. Department of Agriculture's latest report.
While 2013 is expected to have higher prices for many meat products and improving general economic conditions, egg producers are expected to face lower prices for the remainder of 2012. While the rate of lay is expected to very gradually increase, the decrease in production is expected to come from a cut in the size of the laying flock.
Hatching egg production is expected to total almost 1.1 billion dozen in 2013, a marginal increase after a decline in 2011 and 2012, according to the report. The expansion in hatching egg production is based on the forecast for higher broiler production starting at the end of 2012 and carrying through 2013.
U.S. egg production totaled 1.91 billion dozen in the first quarter of 2012, up slightly (1 percent) from the same time in 2011. The increase was due to greater production of table eggs at 1.65 billion dozen, up 1.7 percent from 2011 numbers. Production of hatching eggs totaled 258 million dozen, down 3 percent as the production of broiler-type eggs continue down significantly from 2011.
The average number of birds in the table egg flock during the first quarter of 2012 was slightly higher (up 0.7 percent) than in 2011 at 285 million birds. Table egg production for the rest of 2012 is expected to continue to be slightly higher than in 2011 during the second and third quarters and about even with 2011 numbers in the fourth quarter. Production of hatching eggs is expected to have the opposite pattern, with lower production through the first three quarters of 2012 and higher production in the fourth quarter as broiler processors react to the incentives of a generally better economy, higher prices and slightly lower grain prices.
For more information and statistics on poultry, see www.wattagnet.com/marketdata.html.  

US table egg production estimated up for 2012

The number of hens in the U.S. table egg flock was reported at 285 million in February, 1 percent higher than in February 2011, according to the latest U.S. Department of Agriculture report.
With this increase in hens and the additional day due to Leap Year, table egg production rose to 521 million dozen in February, an increase of 3.8 percent from 2011 numbers. Table egg production is expected to continue higher through March and is forecast at 1.65 billion dozen for the first quarter, a 0.7 percent increase from 2011. Table egg production in 2012 is expected to be slightly higher than in 2011 through the first three quarters but then to be slightly lower in the fourth quarter. The forecast total for 2012, at 6.62 billion dozen, is 0.4 percent higher than in 2011.
Hatching egg production is also forecast lower (1.05 billion dozen), down 1.8 percent from 2011 numbers. In February, the number of hens in the broiler hatching flock totaled 50.6 million, down 8.1 percent from February 2011. On a year-over-year basis, the number of hens in the broiler hatching flock has been lower for the last 13 consecutive months. However, even with the large decline in the number of hens, the number of broiler-type eggs produced in February was down only 1 percent from 2011. This is partially due to the extra day in February 2012 (Leap Year). However, another source of the increase was that the number of eggs produced per 100 hens in the broiler hatching flock was 15 percent higher than in 2011.
In February, egg and egg product exports totaled 19.8 million dozen, down 9 percent from the same time in 2011. Almost all the decrease can be attributed to a very sharp decline in egg shipments to Korea. Shipments to Korea were especially strong in 2011 as pork supplies were lower due to disease problems. In February exports to Korea were down 3.9 million dozen from 2011 numbers, a decline of 92 percent. The lower shipments to Korea were almost totally due to falling exports of eggs products. The declines in egg product exports to Korea more than offset larger exports to Canada, Japan, Hong Kong and Mexico. These countries are normally the top four markets for U.S. egg exports.
For more egg information and statistics, see www.wattagnet.com/marketdata.html.  

US to produce 6.6 billion dozen table eggs in 2012

U.S. table egg production is expected to increase slightly (0.5 percent) in 2012, reaching 6.64 billion dozen, up from 6.61 billion dozen in 2011, according to the U.S. Department of Agriculture. Production increases are expected to occur in all four quarters, but most of the total increase is expected in the first half of 2012. The production growth is expected to come from small increases in the number of hens in the table egg flock, with relatively little change in the rate of eggs produced per bird. The number of birds in the table egg flock was down in four of the last six months of 2011, but the flock is expected to average above year-earlier levels through the first several months of 2012 as strong prices encourage production, according to the USDA's report. Higher egg production is also expected to be supported by higher prices for most livestock and poultry products. Hatching egg production for 2012 is forecast at 1.04 billion dozen, down 1.7 percent from 2011. The decline in production of hatching eggs reflects the expected decline in broiler production. The reduction in production is expected to mirror changes in broiler output, with production down on a year-over-year basis in the first three quarters and increasing in the fourth quarter of 2012. For more information and egg statistics, visit www.wattagnet.com/marketdata.html.  

Kenya traders look to Uganda for affordable eggs

Kenya traders have turned to Uganda poultry farmers for affordable eggs in the wake of rising poultry feed and production costs, according to reports.
Traders are finding it cheaper to cross the border into Uganda and purchase eggs there for consumption or resale in Kenya. According to farmers, the cost of chicken feed is lower in Uganda due to ingredients like omena and maize being more plentiful. “Remains from maize and cassavas are easily available due to high production of the two crops compared to Kenya," said John Mugisha, an egg trader in Uganda. "This is used to feed chicks. This means one can make feed at the farm level and does not necessarily need to go for the processed product.”
Mugisha said the government has also subsidized the cost of poultry drugs and vaccines to encourage more small-scale farmers to engage in poultry production.

US table egg production up slightly in October

The U.S. table-egg-laying flock in October was estimated at 282 million hens, 0.9% above 2010 numbers, according to the U.S. Department of Agriculture. Changes in the table egg flock numbers on a year-over-year basis have generally been lower in 2011. The flock size was higher in only three of the first 10 months, although table egg production has been higher throughout 2011. The table egg flock is expected to remain higher than 2010 through the remainder of 2011, but only slightly. At the beginning of November the estimate of the number of birds in the table egg flock was down, but the decrease was less than 1%. With expected higher feed prices and continuing economic uncertainties, egg producers are not expected to have much of an incentive to expand production in 2012, according to the USDA. Even with table egg production higher throughout the first 10 months of 2011, total production has been 5.5 billion dozen, only marginally higher (0.8%) than the same period in 2010. In October, production was 562 million dozen, an increase of 1.9% from 2010 numbers. Fourth-quarter 2011 table egg production is estimated at 1.69 billion dozen, or about 1.1% higher than 2010. Hatching egg production has been lower than 2010 through the first 10 months of 2011. Over the first half of 2011, hatching egg production was down by relatively small amounts per month, but since July the declines have been much sharper, averaging around 3% per month. Although there have been some declines in the number of egg-type eggs produced, the majority of the decline has come from a lower number of broiler-type eggs. The decrease in the production of broiler-type eggs is expected to continue through the first half of 2012 or until broiler integrators begin to expand production.

US egg production, exports up in September

U.S. table egg production in the third quarter of 2011 was just over 1.65 billion dozen, up slightly from 2010 numbers, according to the U.S. Department of Agriculture.
On a year-over-year basis, table egg production has now risen in the last 11 consecutive quarters. With the number of table egg layers in production increasing from August, table egg production is expected to continue above 2010 in fourth-quarter 2011. However, overall table egg production in 2012 is expected to be only about even, as weaker egg prices, high grain costs and a slowly growing economy dampen expansion, according to the USDA.
Hatching egg production in the third quarter of 2011 was 264 million dozen, down 7 million dozen from 2010, a decrease of 2.6%. Hatching egg production is expected to be sharply lower in fourth-quarter 2011 as broiler producers cut back on production. The decrease in third-quarter 2011 was chiefly due to a lower number of meat-type hens as the demand for broiler chicks declined. Hatching egg production is expected to level off in the latter part of 2012 as broiler production starts to gradually expand.
Although egg prices have been relatively volatile in 2011, egg and egg product exports have remained strong to a number of countries, according to USDA numbers. In September, total egg exports were the equivalent of 26.1 million dozen eggs, 9% higher than 2010. In September, exports of shell eggs fell slightly, but those declines were more than offset by strong increases in exports of egg products. The increase in exports is related to strong demand in a number of Asian countries and the weakness of the dollar against a number of other currencies.
Total egg exports in third-quarter 2011 totaled 70.6 million dozen on a shell egg equivalent basis, up 5% from the same period in 2010. With year-to-date exports down to Canada and a number of EU countries, the increases have come from higher shipments to Mexico and a number of Asian countries, particularly Japan and Hong Kong.

Tajikistan to export 2 million eggs to Iran

Tajikistan will export 1 to 2 million eggs to Iran to help the country deal with a poultry crisis, according to Sijouddin Isroilov, Tajikistan’s deputy minister of agriculture.
Iran’s poultry population has been decimated by disease and is in need of poultry products, said Isroilov, and the large egg export will not hurt Tajikistan’s domestic market. “Poultry farms in [Tajikistan's] Sughd province have coped with providing the population of the region with the eggs and now intend to sell their product in other regions, including Dushanbe,” he said. Prices for eggs in Iran are also more than double the price in Dushanbe, said the minister.

Hillandale’s Iowa facility to resume shipping eggs

The Food and Drug Administration informed Hillandale Farms that the Hampton, Iowa, facility could resume shipping table eggs from specific houses based on corrective action and negative environmental assays. Based on positive assays from four houses, egg pool testing will continue before a decision is made concerning the marketability of product from these flocks. Two houses are undergoing decontamination following depletion. In a letter dated October 15, the FDA commented that corrective action to remedy “objectionable conditions noted during the August inspection have been resolved.”
In a separate letter to Mr. Jack Austin DeCoster, the FDA noted that the biosecurity problems and deviations from acceptable standards, as documented during previous inspections, have not been rectified and the company was warned to “take prompt and aggressive action to eliminate salmonella contamination and defects in biosecurity.”
The FDA warned that failure to take prompt action would result in regulatory penalties including seizure of product and injunctions. The warning letter cited deviations from regulations concerning safety of shell eggs with specific reference to rodent control and biosecurity. The recipient of the FDA letter was advised to respond indicating “prompt and aggressive action” to the district director.

July table egg exports down 7.5% in volume

Table egg exports in July 2010 amounted to 5.855 million dozen valued at $4.329 million, representing an average revenue of 72 cents per dozen. The 7.5% decline in volume was due to a decrease in shipments to Canada and Mexico.
Compensatory increases were achieved from exports to the UAE, South Korea and the Caribbean. For the first seven months of 2010, 37.413 million dozens were exported at an average revenue of 81 cents per dozen. Hong Kong, Canada, UAE, Bahamas and Israel represented the top five importers.
During July, 2,714 tons of processed products were exported, with an aggregate value of $8.924 million or $3,288/ton. The volume was reduced by 20% compared to the corresponding period in 2009, mainly due to lower volume of shipments to Canada. Year to date export of egg products attained 21,789 tons valued at $68.121 million, or $3,127/ton.
Total volume of eggs exported in-shell and as shell equivalent liquid amounted to 3% of U.S. production, or 115,707 million dozen over the first seven months of 2010, according to data assembled by USDA-FAS and processed by Dr. Renan Zhuang of the USA Poultry and Egg Export Council.

Mexico considers import ban on US eggs, poultry meat

Senator Fernando Castro of the Industrial Revolutionary Party representing the state of Baja California has proposed that U.S. table eggs be banned from importation into Mexico, ostensibly as a result of the Wright County Eggs recall.
However, table eggs are not currently imported on any scale into Mexico from the U.S. Notwithstanding this reality, events such as those which have unfolded in Iowa in recent weeks have sullied the reputation of intensive livestock production. The recall has even stimulated opposition to importation of U.S. poultry into the Russian Federation.
Although there is no direct connection between table egg production and broiler meat, intensified surveillance on U.S. exports will be implemented. Given the zero tolerance for salmonella imposed by Russia, it is likely that the Wright County episode will have untoward effects on U.S. shipments of poultry meat.

Table eggs subject to certification

Effective April 1, 2009 exports of U.S. table eggs must be certified by the Animal and Plant Health Inspection Service (APHIS) as originating from layer flocks that originated from breeder flocks that participate in the National Poultry Improvement Plan.
The Agricultural Marketing Service (AMS) of USDA, which certifies table eggs for export, announced the certification last week in a memorandum to regional directors, staff and graders, according to the USA Poultry & Egg Export Council. USAPEEC reported that under the new requirements, export loads of table eggs of Grade B or better, or washed, nest-run table eggs for breaking must have APHIS certification in the form of Form VS 9-3, as well as a certificate of compliance issued by the company.
The requirement essentially expands certification that is currently in place for exports of baby chicks and hatching eggs to include table eggs, said USAPEEC. It will enable APHIS to make the same disease-free statements for table eggs that it makes for live birds and for hatching eggs, providing an additional level of traceability and assurance to foreign buyer.