Egg shelves in Recent York on Jan. 21, 2023 with a note apologizing to customers for the worth increase.
Fatih Aktas/Anadolu Agency via Getty Images
Wholesale egg prices have cratered in recent weeks from record highs, meaning consumers may soon see relief on the food market.
However the dynamics of egg pricing from the wholesale to retail market, along with other aspects, implies that’s not a sure thing within the short term.
Prices fell to $2.61 per dozen eggs on Monday — a 52% decrease from the height of around $5.43 on Dec. 19 and a 47% decrease from the start of 2023, based on Urner Barry, a market research firm that makes a speciality of the wholesale food industry. Its Midwest Large White Egg price benchmark is a widely cited barometer within the egg industry.
“Prices have collapsed,” said Angel Rubio, senior analyst at Urner Barry. “That is a giant, big adjustment downward.”
Historic bird flu outbreak led to soaring egg prices
In a 12 months characterised by historically high inflation, egg prices were a standout in 2022, rising faster than just about all other consumer items.
Average retail prices increased nearly 60% in 2022, based on the patron price index.
In December, a dozen large Grade A eggs cost consumers $4.25 on average, greater than double the $1.79 a 12 months earlier, based on monthly Bureau of Labor Statistics data.
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The deadliest outbreak of bird flu in history hit the U.S. in 2022, killing hundreds of thousands of birds and significantly disrupting egg supply, based on food economists.
The disease, which is contagious and lethal, affects many forms of birds, including egg-laying hens. Cases typically fade by summer, but that did not occur in 2022; latest outbreaks coincided with peak demand across the winter holiday season.
“Highly pathogenic avian influenza” ultimately killed about 58 million birds across 47 states, based on the Centers for Disease Control and Prevention. The prior record was set in 2015, when 50.5 million birds died.
Typically, when a case of bird flu is detected, farmers must cull their flocks as a precaution to contain spread of the disease, economists said. It might take months for that farm to start out producing and selling eggs again. Meanwhile, buyers must find latest suppliers in order that they can stock shelves — a dynamic that played out nationwide and raised prices.
One group, Farm Motion, asked the Federal Trade Commission to analyze the chance that a “collusive scheme” amongst egg suppliers, moderately than the bird flu, is what has kept prices elevated, a contention that is basically downplayed by food economists.
Farmers get a reprieve and consumers show ‘resistance’
Julian Stratenschulte/picture alliance via Getty Images
There have not been any latest bird-flu outbreaks amongst industrial table-egg laying birds since Dec. 20, based on the U.S. Department of Agriculture.
A protracted period without setbacks in egg production has given suppliers a reprieve and the market time to get better, said Brian Moscogiuri, global trade strategist at Eggs Unlimited, one among the most important egg suppliers within the U.S.
Consumer demand also typically wanes in January and February, further alleviating price pressures, Moscogiuri said.
The USDA recently cited consumer “resistance to record high prices in grocery outlets across the country” as one more reason for the declining and below-average egg demand.
“Wholesale prices have been declining steadily from their late 2022 highs which has helped support retailer efforts to bring pricing all the way down to a more consumer-acceptable level,” the USDA said Feb. 3.
Weekly retail egg data from the USDA is spotty, and it’s difficult to see how cratering wholesale prices could also be translating within the retail market.
On average, it takes about 4 weeks for retail prices to reflect wholesale price trends, Rubio said. Meaning consumers may begin to see some relief in February, he said.
Retail prices are inclined to be less volatile than those on the wholesale level. For each 10% decrease or increase in wholesale egg price, consumers can expect retail prices to shift about 2%, on average, Rubio said.
Nonetheless, egg demand also generally increases within the weeks preceding Easter, which this 12 months falls on April 9 — making it hard to find out how prices will respond, Rubio said.
There are other aspects that will keep retail egg prices elevated for longer, nonetheless.
Supermarket chains and other egg retailers don’t all peg their shelf prices to movements in wholesale prices, economists said. They might buy eggs from suppliers based on different formulas; some are a minimum of partially tied to the worth of corn and soybeans, for instance, that are a giant cost in raising and feeding chickens, Moscogiuri said.
While prices for those commodities are down from highs following Russia’s invasion of Ukraine in early 2022, they continue to be historically elevated.
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Some supermarkets could have tried keeping egg prices down in order to not dissuade consumers from buying — and should now attempt to recoup a few of their losses before lowering retail prices, Moscogiuri said.
“It’s sort of as much as the retailer as to how quickly they need to pass prices along,” he said.
While bird flu hasn’t affected industrial egg-laying flocks since December, there have been confirmed cases amongst other forms of birds — meaning it’s still “a serious risk heading into the spring migration,” Moscogiuri said. The primary case amongst egg layers last 12 months was detected Feb. 22.
