Shell Egg and Egg Product Market Review

Rick Brown Randy Pesciotta Brian Moscogiuri

@UBEGG

• 2014 Shell Egg & Egg Product Review

• Year-to-Date 2015 Review

• Domestic Per Capita Consumption

• Exports & Strength of the Dollar

• EU Egg Products Market Review

• Impact of California Proposition 2

• Cage-Free vs. Enriched Colony

• Develop Cage-Free Quote

• Price Discovery Survey

275

280

285

290

295

300

305

310

315

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Mill

ion

s o

f La

yers

US Table Egg Type Layer Numbers & 2015 Projections Source: USDA / Projections by Egg Industry Center

2015 Actual

2014

5-Yr-Avg

275

280

285

290

295

300

305

310

315

320

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Mill

ion

s o

f La

yers

US Table Egg Type Layer Numbers & 2015 Projections Source: USDA / Projections by Egg Industry Center

2015 Projected

2015 Actual

2014

5-Yr-Avg

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

1.4

1.5

1.6

230

240

250

260

270

280

290

300

310

$/d

zn.

Mill

ion

s o

f La

yers

Average Egg/Type Layers Theoretical 3 Mil Hen Increase Average MW UB Large

70

71

72

73

74

75

76

77

78

US Table Eggs per 100 Layers Source Data: USDA

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

$/d

zn. 2014

2013

5-Yr-Avg

Post-Holiday Molt/Slaughter

+ Weather

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

$/d

zn. 2014

2013

5-Yr-Avg

CN and MX Exports

Post-Holiday Molt/Slaughter

+ Weather

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

$/d

zn. 2014

2013

5-Yr-Avg

Record Easter Rally to $1.80

+27.6% CN and MX

Exports

Post-Holiday Molt/Slaughter

+ Weather

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

$/d

zn. 2014

2013

5-Yr-Avg

Post-Holiday Correction

-29.4%

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

$/d

zn. 2014

2013

5-Yr-Avg

200 Load Export to MX Announced

Post-Holiday Correction

-29.4%

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

$/d

zn. 2014

2013

5-Yr-Avg

Prices Temper Domestic Demand

200 Load Export to MX Announced

Post-Holiday Correction

-29.4%

1.00

1.10

1.20

1.30

1.40

1.50

1.60

$/d

zn.

2014

2013

5-Yr-Avg

Exports Continue

1.00

1.10

1.20

1.30

1.40

1.50

1.60

$/d

zn.

2014

2013

5-Yr-Avg

Follows Seasonal

Trends

Exports Continue

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

2.00

2.10

2.20

2.30

2.40

$/d

zn.

2014

2013

5-Yr-Avg

Market Stability +

Exports to CN

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

2.00

2.10

2.20

2.30

2.40

$/d

zn.

2014

2013

5-Yr-Avg

Thanksgiving + Consistent

Export

Market Stability +

Exports to CN

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

2.00

2.10

2.20

2.30

2.40

$/d

zn.

2014

2013

5-Yr-Avg

Record Exports Mainly to CN

Thanksgiving + Consistent

Export

Market Stability +

Exports to CN

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

$/d

zn. 2015

2014

2013

5-Yr-Avg

Post-Holiday Bottom at 2014

Low

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

$/d

zn. 2015

2014

2013

5-Yr-Avg

Winter Weather Flock Rotation

California

Post-Holiday Bottom at 2014

Low

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70

1.80

1.90

$/d

zn. 2015

2014

2013

5-Yr-Avg

Record Easter Levels

Post-Holiday Bottom at 2015

Low

Winter Weather Flock Rotation

California

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

50,000,000 Ja

n-1

0

Mar

-10

May

-10

Jul-

10

Sep

-10

No

v-1

0

Jan

-11

Mar

-11

May

-11

Jul-

11

Sep

-11

No

v-1

1

Jan

-12

Mar

-12

May

-12

Jul-

12

Sep

-12

No

v-1

2

Jan

-13

Mar

-13

May

-13

Jul-

13

Sep

-13

No

v-1

3

Jan

-14

Mar

-14

May

-14

Jul-

14

Sep

-14

No

v-1

4

Jan

-15

Do

zen

s

USDA Monthly Egg Exports Including Products

USDA Monthly Egg Exports Including Products

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

35,000,000

40,000,000

45,000,000

50,000,000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Do

zen

s

2015 2014 (340.8 Million) 2013 (324.9 Million) 5-Yr-Avg (272.8 Million)

2014 : 4,370 Loads

2015 : 320 Loads

2014 : 3,040 Loads

2015 : 870 Loads

More Than 7,000 Loads Moved Into MX and CN During 2014

5 Year Average

Fairly Balanced

Canada 26%

Mexico 20%

Japan 14%

EU(5) 10%

Hong Kong 16%

Other 14%

5 Year Average 2013

Fairly Balanced AI in Mexico

Canada 26%

Mexico 20%

Japan 14%

EU(5) 10%

Hong Kong 16%

Other 14%

Canada 20%

Mexico 28%

Japan 13%

EU(5) 4%

Hong Kong 16%

Other 19%

5 Year Average 2013 2014

Fairly Balanced AI in Mexico Records To CN

Canada 26%

Mexico 20%

Japan 14%

EU(5) 10%

Hong Kong 16%

Other 14%

Canada 20%

Mexico 28%

Japan 13%

EU(5) 4%

Hong Kong 16%

Other 19%

Canada 32%

Mexico 23%

Japan 7%

EU(5) 4%

Hong Kong 15%

Other 19%

5 Year Average 2013 2014

Fairly Balanced AI in Mexico Records To CN Easter Prep

Canada 26%

Mexico 20%

Japan 14%

EU(5) 10%

Hong Kong 16%

Other 14%

Canada 20%

Mexico 28%

Japan 13%

EU(5) 4%

Hong Kong 16%

Other 19%

Canada 32%

Mexico 23%

Japan 7%

EU(5) 4%

Hong Kong 15%

Other 19%

Canada 15%

Mexico 41%

Japan 11%

EU(5) 4%

Hong Kong 13%

Other 16%

15.6 Million Layers Were Needed to Service Exports in 2014

5% of Total Layers

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00

Jan

-10

Mar

-10

May

-10

Jul-

10

Sep

-10

No

v-1

0

Jan

-11

Mar

-11

May

-11

Jul-

11

Sep

-11

No

v-1

1

Jan

-12

Mar

-12

May

-12

Jul-

12

Sep

-12

No

v-1

2

Jan

-13

Mar

-13

May

-13

Jul-

13

Sep

-13

No

v-1

3

Jan

-14

Mar

-14

May

-14

Jul-

14

Sep

-14

No

v-1

4

Jan

-15

Mar

-15

Foreign Exchange Rates, European Union, Euro

94 EU Cents

68 EU Cents

Using $1 a Dozen, US

10

11

12

13

14

15

16

Jan

-10

Mar

-10

May

-10

Jul-

10

Sep

-10

No

v-1

0

Jan

-11

Mar

-11

May

-11

Jul-

11

Sep

-11

No

v-1

1

Jan

-12

Mar

-12

May

-12

Jul-

12

Sep

-12

No

v-1

2

Jan

-13

Mar

-13

May

-13

Jul-

13

Sep

-13

No

v-1

3

Jan

-14

Mar

-14

May

-14

Jul-

14

Sep

-14

No

v-1

4

Jan

-15

Mar

-15

Foreign Exchange Rates, Mexico, Peso

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

Jan

-10

Mar

-10

May

-10

Jul-

10

Sep

-10

No

v-1

0

Jan

-11

Mar

-11

May

-11

Jul-

11

Sep

-11

No

v-1

1

Jan

-12

Mar

-12

May

-12

Jul-

12

Sep

-12

No

v-1

2

Jan

-13

Mar

-13

May

-13

Jul-

13

Sep

-13

No

v-1

3

Jan

-14

Mar

-14

May

-14

Jul-

14

Sep

-14

No

v-1

4

Jan

-15

Mar

-15

Foreign Exchange Rates, Canada, Dollar

70

80

90

100

110

120

130

Jan

-10

Mar

-10

May

-10

Jul-

10

Sep

-10

No

v-1

0

Jan

-11

Mar

-11

May

-11

Jul-

11

Sep

-11

No

v-1

1

Jan

-12

Mar

-12

May

-12

Jul-

12

Sep

-12

No

v-1

2

Jan

-13

Mar

-13

May

-13

Jul-

13

Sep

-13

No

v-1

3

Jan

-14

Mar

-14

May

-14

Jul-

14

Sep

-14

No

v-1

4

Jan

-15

Mar

-15

Foreign Exchange Rates, Japan, Yen

7.72

7.73

7.74

7.75

7.76

7.77

7.78

7.79

7.80

7.81

Jan

-10

Mar

-10

May

-10

Jul-

10

Sep

-10

No

v-1

0

Jan

-11

Mar

-11

May

-11

Jul-

11

Sep

-11

No

v-1

1

Jan

-12

Mar

-12

May

-12

Jul-

12

Sep

-12

No

v-1

2

Jan

-13

Mar

-13

May

-13

Jul-

13

Sep

-13

No

v-1

3

Jan

-14

Mar

-14

May

-14

Jul-

14

Sep

-14

No

v-1

4

Jan

-15

Mar

-15

Foreign Exchange Rates, Hong Kong, Dollar

Dollar Strength Could Temper Recent Export Trends

45,000,000

50,000,000

55,000,000

60,000,000

65,000,000

70,000,000

75,000,000

80,000,000

Source: USDA

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

Breaking Stock Whole Yolk Whites

$/l

bs.

2011

2012

2013

0.00

0.20

0.40

0.60

0.80

1.00

1.20

Breaking Stock Whole Yolk Whites

$/l

bs.

2011

2012

2013

2014

-0.1

-0.05

0

0.05

0.1

0.15

0.2

0.25

0.3

0.35

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

$/l

bs.

Comparison of Whites and Yolk to Whole Egg Prices

5 yr avg

2015

2014

0

0.2

0.4

0.6

0.8

1

1.2

Breaking Stock Whole Yolk Whites

$/l

bs.

2011

2012

2013

2014

2015 YTD

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

Whole Yolk Whites

$/l

bs.

2011

2012

2013

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

Whole Yolk Whites

$/l

bs.

2011

2012

2013

2014

December Dried Egg Inventory Source Data : USDA

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000 Ja

n-0

5

May

-05

Sep

-05

Jan

-06

May

-06

Sep

-06

Jan

-07

May

-07

Sep

-07

Jan

-08

May

-08

Sep

-08

Jan

-09

May

-09

Sep

-09

Jan

-10

May

-10

Sep

-10

Jan

-11

May

-11

Sep

-11

Jan

-12

May

-12

Sep

-12

Jan

-13

May

-13

Sep

-13

Jan

-14

May

-14

Sep

-14

Jan

-15

Po

un

ds

in T

ho

usa

nd

s

March 2008

Whole 20%

Whites 49%

Yolk 23%

Blends 8%

March Ending Dried Egg Inventory Source Data : USDA

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

Whole Yolk Whites

$/l

bs.

2011

2012

2013

2014

2015 YTD

2.00

2.50

3.00

3.50

4.00

4.50

5.00

Jan

-10

Mar

-10

May

-10

Jul-

10

Sep

-10

No

v-1

0

Jan

-11

Mar

-11

May

-11

Jul-

11

Sep

-11

No

v-1

1

Jan

-12

Mar

-12

May

-12

Jul-

12

Sep

-12

No

v-1

2

Jan

-13

Mar

-13

May

-13

Jul-

13

Sep

-13

No

v-1

3

Jan

-14

Mar

-14

May

-14

Jul-

14

Sep

-14

No

v-1

4

Jan

-15

Mar

-15

$/l

bs.

Dried Whole Egg

US

EU

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

Jan

-10

Mar

-10

May

-10

Jul-

10

Sep

-10

No

v-1

0

Jan

-11

Mar

-11

May

-11

Jul-

11

Sep

-11

No

v-1

1

Jan

-12

Mar

-12

May

-12

Jul-

12

Sep

-12

No

v-1

2

Jan

-13

Mar

-13

May

-13

Jul-

13

Sep

-13

No

v-1

3

Jan

-14

Mar

-14

May

-14

Jul-

14

Sep

-14

No

v-1

4

Jan

-15

Mar

-15

$/l

bs.

Egg Whites

US

EU

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

Jan

-10

Mar

-10

May

-10

Jul-

10

Sep

-10

No

v-1

0

Jan

-11

Mar

-11

May

-11

Jul-

11

Sep

-11

No

v-1

1

Jan

-12

Mar

-12

May

-12

Jul-

12

Sep

-12

No

v-1

2

Jan

-13

Mar

-13

May

-13

Jul-

13

Sep

-13

No

v-1

3

Jan

-14

Mar

-14

May

-14

Jul-

14

Sep

-14

No

v-1

4

Jan

-15

Mar

-15

$/l

bs.

Dried Yolk

US

EU

EU Cage Ban

US Egg White Highs

US Exports to EU Appear to be Declining EU Becoming More Competitive Globally

• Eggs are Healthy-er Again • Diet Trends • Moving Out of Breakfast • Clean Labels • Competing Proteins

1.5

1.7

1.9

2.1

2.3

2.5

2.7 UB Beef Index

0.6

0.7

0.8

0.9

1

1.1

1.2

1.3

1.4 UB Pork Cutout

0.6

0.7

0.8

0.9 UB Chicken Index

3

3.5

4

4.5

5

5.5 UB Salmon Index

$/lbs.

Foodservice Business Could Help Fill Gaps if Exports Slow

1.00

1.50

2.00

2.50

3.00

3.50

4.00

$/d

zn. 2013

2014

2015

0.00

0.25

0.50

0.75

1.00

1.25

1.50

1.75

2.00

2.25

$/d

zn.

CA vs. MW Large Spread

10,000

12,000

14,000

16,000

18,000

20,000

22,000

Laye

rs in

Th

ou

san

ds

Layers In California Source: USDA Chickens and Eggs

Evolution of Production

OVER 70 CONFIRMED CASES

SINCE JANUARY 1, 2015

HIGH PATH AI

Commercial Turkey Commercial Chicken Other

Commercial Turkey Commercial Chicken Other

For More Information on Any of the Topics Covered in Today’s Presentation or to

Discuss the Markets:

Please Call 732-240-5330 or E-mail:

Rick Brown – rickbrown@urnerbarry.com

Randy Pesciotta – randyp@urnerbarry.com

Brian Moscogiuri – brianm@urnerbarry.com