Wholesale egg prices have ‘collapsed’ from record highs in December

Wholesale egg prices have cratered in latest weeks from record highs, that means customers might quickly see aid on the grocery retailer.

However the dynamics of egg pricing from the wholesale to retail market, in addition to different components, implies that’s not a positive factor in the brief time period.

Prices fell to $2.61 per dozen eggs on Monday — a 52% lower from the height of round $5.43 on Dec. 19 and a 47% lower from the start of 2023, in keeping with Urner Barry, a market analysis agency that specializes in the wholesale meals trade. Its Midwest Giant White Egg value benchmark is a broadly cited barometer in the egg trade.

“Prices have collapsed,” mentioned Angel Rubio, senior analyst at Urner Barry. “That’s a big, big adjustment downward.”

Historic chicken flu outbreak led to hovering egg prices

In a yr characterised by traditionally excessive inflation, egg prices have been a standout in 2022, rising faster than almost all other consumer items.

Average retail prices increased nearly 60% in 2022, according to the consumer price index.

In December, a dozen large Grade A eggs cost consumers $4.25 on average, more than double the $1.79 a year earlier, according to monthly Bureau of Labor Statistics data.

The deadliest outbreak of chicken flu in historical past hit the U.S. in 2022, killing hundreds of thousands of birds and considerably disrupting egg provide, in keeping with meals economists.

The illness, which is contagious and deadly, impacts many varieties of birds, together with egg-laying hens. Instances sometimes fade by summer time, however that did not occur in 2022; new outbreaks coincided with peak demand across the winter vacation season.

“Highly pathogenic avian influenza” in the end killed about 58 million birds throughout 47 states, according to the Facilities for Illness Management and Prevention. The prior record was set in 2015, when 50.5 million birds died. 

Usually, when a case of chicken flu is detected, farmers should cull their flocks as a precaution to include unfold of the illness, economists mentioned. It might probably take months for that farm to start out producing and promoting eggs once more. In the meantime, consumers should discover new suppliers to allow them to inventory cabinets — a dynamic that performed out nationwide and raised prices.

One group, Farm Motion, requested the Federal Commerce Fee to research the likelihood {that a} “collusive scheme” amongst egg suppliers, relatively than the chicken flu, is what has stored prices elevated, a competition that’s largely downplayed by meals economists.

Farmers get a reprieve and customers present ‘resistance’

There have not been any new bird-flu outbreaks amongst business table-egg laying birds since Dec. 20, according to the U.S. Division of Agriculture.

A chronic interval with out setbacks in egg manufacturing has given suppliers a reprieve and the market time to get better, mentioned Brian Moscogiuri, world commerce strategist at Eggs Limitless, one of many largest egg suppliers in the U.S.

Client demand additionally sometimes wanes in January and February, additional assuaging value pressures, Moscogiuri mentioned.

The USDA just lately cited shopper “resistance to record high prices in grocery outlets across the country” as another excuse 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 down to a more consumer-acceptable level,” the USDA said Feb. 3.

Weekly retail egg information from the USDA is spotty, and it is tough to see how cratering wholesale prices could also be translating in the retail market.

On common, it takes about 4 weeks for retail prices to mirror wholesale value developments, Rubio mentioned. Which means customers might begin to see some aid in February, he mentioned.

Retail prices are typically much less unstable than these on the wholesale stage. For each 10% lower or enhance in wholesale egg value, customers can count on retail prices to shift about 2%, on common, Rubio mentioned.

Nonetheless, egg demand additionally typically will increase in the weeks previous Easter, which this yr falls on April 9 — making it exhausting to find out how prices will reply, Rubio mentioned.

There are different components which will maintain retail egg prices elevated for longer, nonetheless.

Grocery store chains and different egg retailers do not all peg their shelf prices to actions in wholesale prices, economists mentioned. They might purchase eggs from suppliers in keeping with completely different formulation; some are a minimum of partially tied to the worth of corn and soybeans, for instance, that are a giant value in elevating and feeding chickens, Moscogiuri mentioned.

Whereas prices for these commodities are down from highs following Russia’s invasion of Ukraine in early 2022, they continue to be traditionally elevated.    

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Some supermarkets might have tried retaining egg prices down in order to not dissuade customers from shopping for — and will now attempt to recoup a few of their losses earlier than reducing retail prices, Moscogiuri mentioned.

“It’s kind of up to the retailer as to how quickly they want to pass prices along,” he mentioned.

Whereas chicken flu hasn’t affected business egg-laying flocks since December, there have been confirmed circumstances amongst different varieties of birds — that means it is nonetheless “a major risk heading into the spring migration,” Moscogiuri mentioned. The primary case amongst egg layers final yr was detected Feb. 22.

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