Wholesale egg prices ‘collapsed’ after hitting record highs in December
Egg racks in New York on January 21, 2023 with a note apologizing to customers for the price hike.
Fatih Aktas/Anadolu Agency via Getty Images
Wholesale egg prices have fallen in recent weeks from record lows, meaning consumers may soon see relief at the grocery store.
But the price dynamics of eggs from the wholesale market to the retail market, in addition to other factors, mean that this is not a sure thing in the short term.
Prices fell to $2.61 per dozen eggs on Monday – a 52% drop from a peak of around $5.43 on Dec. 19 and a 47% drop since the start of 2023, according to Urner Barry , a market research company specializing in the wholesale food industry. . Its benchmark price Midwest Large White Egg is a widely quoted barometer in the egg industry.
“Prices have collapsed,” said Angel Rubio, principal analyst at Urner Barry. “It’s a big, big downward adjustment.”
A historic outbreak of bird flu has led to a spike in egg prices
In a year characterized by historically high inflation, egg prices stood out in 2022, rising faster than almost any other consumer good.
Average retail prices are up 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 data from the Bureau of Labor Statistics.
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The United States suffered its deadliest bird flu outbreak in history in 2022, killing millions of birds and dramatically disrupting egg supplies, according to food economists.
The disease, contagious and deadly, affects many types of birds, including laying hens. Cases usually clear up in the summer, but that didn’t happen in 2022; new outbreaks coincided with a peak in demand around the winter holiday season.
One group, Farm Action, has asked the Federal Trade Commission to investigate a possible “collusive scheme” among egg suppliers to keep prices high, though food economists have largely downplayed the possibility.
The “highly pathogenic bird flu” eventually killed an estimated 58 million birds in 47 states, according to the Centers for Disease Control and Prevention. The previous 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 precautionary measure to contain the spread of the disease, economists have said. It may take months for that farm to start producing and selling eggs again. Meanwhile, buyers have to find new suppliers so they can stock the shelves – a dynamic that has played out nationwide and has driven prices up.
Farmers get a reprieve and consumers show ‘resistance’
Julian Stratenschulte/photo alliance via Getty Images
However, there have been no new outbreaks of avian flu in laying commercial table birds since Dec. 20, according to the U.S. Department of Agriculture.
A prolonged period of no setbacks in egg production has given suppliers reprieve and time in the market to recover, said Brian Moscogiuri, global business strategist at Eggs Unlimited, one of the largest egg suppliers in the States. -United.
Consumer demand also typically declines in January and February, further easing price pressures, Moscogiuri said.
The USDA recently cited “consumer resistance to record high prices at grocery stores across the country” as another reason for declining and below-average demand for eggs.
“Wholesale prices have declined steadily since their late 2022 highs, which has helped support retailers’ efforts to bring prices back to a more acceptable level for consumers,” the USDA said Feb. 3.
USDA’s weekly retail egg data is patchy and it’s hard to see how the drop in wholesale prices may translate to the retail market.
On average, it takes about four weeks for retail prices to reflect wholesale price trends, Rubio said. That means consumers could start feeling some relief in February, he said.
Retail prices tend to be less volatile than wholesale prices. For every 10% drop or increase in the wholesale price of eggs, consumers can expect retail prices to change by about 2% on average, Rubio said.
However, demand for eggs also typically increases in the weeks leading up to Easter, which falls on April 9 this year, making it difficult to determine how prices will react, Rubio said.
However, other factors may keep retail egg prices high for longer.
Supermarket chains and other egg retailers do not all set their shelf prices to movements in wholesale prices, economists have said. They can buy eggs from suppliers according to different formulas; some are at least partially tied to the price of corn and soybeans, for example, which are a significant cost to raising and feeding chickens, Moscogiuri said.
Although the prices of these commodities are down from the highs reached after Russia invaded Ukraine in early 2022, they remain historically high.
Some supermarkets may have tried to keep egg prices low so as not to deter consumers from shopping – and may now be trying to recoup some of their losses before lowering retail prices, Moscogiuri said.
“It’s kind of up to the retailer how quickly they want to pass on prices,” he said.
Although bird flu hasn’t impacted commercial egg-laying flocks since December, there have been confirmed cases among other types of birds, meaning it’s still “a major risk before the spring migration,” Moscogiuri said. The first case among layers last year was detected on February 22.