High US egg prices and the risks of raising chickens at home.
For months and months, the price of eggs in the United States skyrocketed. Now its price is falling.
As of last week, large Midwestern eggs, the benchmark for eggs sold in the shell in the United States, cost only $0.94 per dozen in the wholesale market, according to Urner Barry, an agency independent of price reports. That’s a sharp decline from the $5.46 per box just six months ago. (Prices at retail are well above $1 per box, though they are coming down.)
Why did the prices of eggs fall? This is due to the reversal of supply and demand trends, which causes prices to skyrocket for the first time.
Last year, the deadly bird flu wiped out large numbers of hens, reducing the supply of eggs. On top of that, farmers also had to contend with increased fodder and fuel prices.
The disruptions gave producers like Cal-Maine Foods (CALM) cover to raise prices and reap huge profits, which is America’s largest egg distributor.
But now the egg supply is back on track: Although the industry braces for more cases of bird flu this year, the deadly virus appears to be under control. Meanwhile, demand has not picked up.
According to Karen Rispoli, senior egg market analyst at Urner Barry, the decline in wholesale prices began in late March. He said prices hit a yearly low in early May and have remained stable since then.
“While the 2022 egg market was dominated by bird flu, this year’s market is dominated by its absence,” Rispoli told CNN.
As of early December, there were about 308 million chickens for consumption, up from about 328 million in December 2021, according to the US Department of Agriculture (USDA). But that number has been rising ever since: In April 2023, there were 314 million chickens, according to the USDA.
What do eggs have to do with the economy?
While the supply of eggs has increased due to the improvement in the bird flu situation, consumer demand is also declining.
One reason: Buyers responded to higher egg prices by buying less. When egg prices were skyrocketing, “everybody and their brother had a story about egg prices,” said Amy Smith, vice president of the consulting firm Advanced Economic Solutions.
The eggs became “a symbol of what was happening with inflation,” Smith said.
U.S. retail unit sales of eggs are expected to decline 4% in the four weeks ending April 22, 2023, compared with the same period a year earlier, according to the NIQ, which tracks retail sales. (Still, egg sales have been flat across the board: NIQ data shows that unit sales were essentially flat in the year to April, despite rising prices.)
Experts say that apart from headlines, buyer demand for eggs typically drops in late spring.
“It’s that time of year when demand cools off a little bit,” said Brian Earnest, chief economist for animal proteins at CoBank.
Egg demand typically rises during the winter holidays, when people prepare and eat breakfast at home, and while it declines in the first quarter, it generally remains relatively strong. Not so this year.
“Buyers are budget-conscious at that point,” after the holidays, he said. “Generally, they’re probably putting more eggs in their basket than usual. But if you have a high price environment, they’re more Not shopping.”
The demand for eggs may not pick up again for a few months. After Easter and Mother’s Day, demand typically slows until the back-to-school season.
“Wholesale prices are determined entirely by market forces; They are not determined by egg producers,” said Emily Metz, president and CEO of the American Egg Board, a farmer-funded group dedicated to increasing demand for eggs in the United States.
Will egg prices drop in supermarkets?
Wholesale prices are falling, but that doesn’t mean consumers will get a good deal. Retail egg prices are falling at a more moderate pace.
From March to April, egg prices adjusted for seasonal changes declined 1.5%, according to the most recent data from the Bureau of Labor Statistics. (On an annual basis, prices remain high: In the one-year period through April, egg prices were 21.4% higher.)
Wholesale prices are more volatile than retail prices. This is because supermarkets and grocery stores set retail prices for eggs and don’t want customers to be scared off by wild variations. Therefore, prices in the grocery store do not immediately follow wholesale trends.
“Just because wholesale prices are going down, doesn’t mean retailers will drop their prices,” Earnest said. “So the consumer is still subject to a higher price. And it will take a while to take off.”
Smith of Advanced Economic Solutions expects grocery prices to “bring down.”
Retailers, he said, can hold their breath for another round of egg disruption.
“Before they completely discount anything,” he said, “they’re going to make sure that nothing disrupts the market in any way.”
