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LIVESTOCK AND POULTRY
World Markets and Trade
March 1998
Eggs and Egg Products
Global production and consumption of eggs and egg products continue their steady trend upward in 1998, protected from economic turmoil by the ability to serve as a low-priced protein source. The United States will maintain its position as the largest exporter. Strong competition in world market, however, stems from China which accounts for nearly half of global production.
Egg consumption in selected countries is set to continue its steady 4 percent upward trend into 1998 and beyond. Strong demand in China for eggs as a low-priced protein alternative is driving this trend, with China accounting for a resounding 50 percent of global consumption.
Egg exports by selected countries have trended upward since the 1990's. In 1998, total shipments are forecast up 6 percent, supported by gains by the world's major suppliers--the United States and China. Their highly perishable nature results in eggs remaining a thinly traded commodity, with exports, forecast at 7.3 billion pieces, accounting for less than 1-percent of production by selected countries. This is despite a growing trend of stronger demand for egg products.
China Dominates the Global Egg Outlook
Despite an oversupply situation in China that prompted a steady decline in egg prices throughout the country in 1997, output is expected to increase 7 percent in 1998 to 360 billion pieces. Low grain prices and declining inventories as eggs move into international markets, particularly Hong Kong, may spark a recovery for egg producers with higher prices and better returns expected by late 1998.
Egg consumption in China, as a result of market reforms, growing incomes, and government support, witnessed a resounding 11-percent annual growth since the mid-1980's. Part of the expansion in production has been supported by the inclusion of the egg sector in the Vegetable Basket program, a program that ensures support to provide steady supplies for urban residents.
Japan and Hong Kong Major Markets
Asian dominates the world egg markets, with Japan and Hong Kong accounting for nearly half of imports by selected countries. Additional demand stems from markets in the Middle East and Africa.
Increasing production in China over the past few years and competitive prices supported by geographical proximity have resulted in a strong egg export surge from China across the border into Hong Kong. At one time, the United States was the largest supplier of eggs to Hong Kong; however, China's market share has steadily increased from 22 percent in 1995 to 44 percent in 1997. One reason for China's gain, in addition to prices that average around $4/box (360 eggs) cheaper than U.S. product, is that Chinese eggs, in terms of quality and packaging, have improved tremendously. Producers in China are using U.S. breeds and in some instances, white eggs are of such good quality and packaging that many traders find it difficult to tell whether they are U.S. or Chinese eggs.
In Japan, increased use of domestic eggs for processing in 1997 was the result of reduced household use of table eggs. Consequently, processed egg imports which constitute nearly all of egg imports, were down 6 percent in 1997. Demand for U.S. egg imports was hampered by both constrained domestic intake in Japan as well as the appreciation of the U.S. dollar against the yen. Egg imports from the United States were down 16 percent in 1997, supplying only one-third of Japanese import demand. Much of the remainder was supplied by the EU, presumably the Netherlands.
Declines are particularly significant in powdered yolk, powdered whole egg and frozen liquid albumen products estimated down 12, 11, and 44 percent respectively. As Japan's egg output increases again in 1998 to 43 billion pieces, imports are expected to continue their steady decline for the fourth year in a row.
U.S. Bears the Brunt of the Declines in Asia
The United States continues to supply nearly 40 percent of import requirements by selected countries. In 1997, however, the nearly 35 percent jump in Chinese exports, nearly all of which moved into Hong Kong, slowed the pace of U.S. shipments, dropping U.S. exports 11 percent to 2.7 billion pieces. In 1998, U.S. exports are expected to recover slightly to 2.8 billion pieces. This is despite a slow down in demand from both the U.S. major markets--Japan and Canada that account for nearly half of the total value of U.S. egg and product exports.
Canada provided some support to the U.S. industry in 1997 as periodic shortages from Canadian shell egg suppliers prompted an almost 50 percent increase in shipments north across the border. The tariff-rate quota for shell eggs and products for Canada is based on 3 percent of the previous year's production, or 7.1 million dozen in 1997. Issuances of supplementary import permits in 1997 boosted total shell egg imports from the United States to nearly 13.7 million dozen. Only 26 percent of the value of U.S. egg and product exports to Canada consists of processed product.
EU Exports Move Downward
European Union egg production is increasingly being routed to other member states as declining WTO-allowed export subsidies constrain competitiveness in global egg markets. Total E.U. egg exports to third countries have dropped 50 percent from 1994, from 3.2 billion pieces to a subdued 1.6 billion in 1998. The Netherlands dominates the export market, despite that four other member countries--France, Germany, Italy and the U.K--surpass the Dutch in egg output.
As authorized restitution commitment levels move progressively downward, 115,200 tons in 1998, the European market has become the primary outlet for Dutch egg exports. Due to relatively high prices, Dutch competitiveness in markets in the Far and Middle East continues to be weak. This is evidenced by a 65 percent drop in table egg exports to Hong Kong since 1996. Third country exports are basically limited to spot sales in countries where there is a short term shortage, such as in the Czech Republic, Bulgaria, Russia, and the Ukraine.
The Dutch also supply the Middle East market where the United Arab Emirates is by far the largest egg market. However, EU restitution levels that have dropped from 20 ecu/kg in 1994 to 12 ecu/kg in February 1998 have limited EU competitiveness in egg markets, including the Middle East. At the present time, India and Thailand are now major egg suppliers to this region. Contacts report that Indian suppliers have significantly improved the quality and packaging of their egg exports while Thai eggs are penetrating the market as they become cheaper due to the fall in the Thai currency.
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