For months and months, the worth of eggs was hovering. Now, they’re going splat.
As of final week, Midwest giant eggs — the benchmark for eggs bought of their shells — price simply $0.94 per dozen within the wholesale market, in line with Urner Barry, an impartial worth reporting company. That’s a pointy fall from $5.46 per carton simply six months in the past. (In retail, costs are properly above $1 per carton, although they too have been declining.)
Why the decline? It’s due to a reversal of supply-demand traits that triggered costs to spike within the first place.
Final yr, lethal avian flu worn out a major variety of egg-laying hens, lowering egg provides. On prime of that, farmers needed to take care of inflated feed and gas prices.
The disruptions gave producers like Cal-Maine Meals
(CALM), the most important US egg distributor, cowl to hike costs manner up and rake in big earnings.
However now provide is again on monitor: Although the trade braced for extra instances of chook flu this yr, the lethal virus appears to be below management. In the meantime, demand hasn’t stored tempo.
The wholesale worth drop started in late March, in line with Karyn Rispoli, senior egg market analyst at Urner Barry. Costs hit annual lows in early Could and have stayed about regular since then, she stated.
“Whereas the egg market in 2022 was dominated by the chook flu, the market this yr has been dominated by its absence,” Rispoli informed CNN.
As of early December, there have been about 308 million hens laying eggs for consumption, down from roughly 328 million in December 2021, in line with the US Division of Agriculture. However the quantity has been rising since then: As of April, there have been 314 million layer hens, in line with the USDA.
Whereas improved avian flu scenario has elevated egg provide, the patron demand can also be slipping.
One cause: Buyers responded to excessive egg costs by shopping for much less. When costs had been taking pictures up, “all people and their brother had a narrative about what egg costs had been doing,” stated Amy Smith, vp at Superior Financial Options, a consulting agency.
Eggs turned “the poster little one for what was happening with inflation,” Smith added.
Within the 4 weeks ending on April 22, unit gross sales of eggs in US retail dropped 4% in comparison with the identical interval the yr earlier than, in line with NIQ, which tracks retail gross sales. (Nonetheless, egg gross sales have remained secure general: NIQ information exhibits unit gross sales stayed primarily flat within the yr via April, regardless of rising costs.)
Headlines apart, consumers’ demand for eggs sometimes drops in late spring, specialists say.
“That is the time of yr the place demand cools off just a little bit,” stated Brian Earnest, lead economist for animal protein in CoBank.
Demand for eggs sometimes rises across the winter holidays — when individuals bake and eat breakfast at house — and although it slows within the first quarter, it often stays comparatively sturdy. Not so this yr.
“Buyers are price range acutely aware at the moment,” after the vacations, he stated, “so sometimes, they’re in all probability placing extra eggs of their basket than they usually do. However if you happen to’ve acquired a excessive worth atmosphere, they’re not over-buying.”
Egg demand isn’t more likely to choose up once more for a number of months. After Easter and Mom’s Day, demand sometimes takes a dip till the back-to-school season.
“Wholesale costs are solely pushed by market forces; they’re not set by egg farmers,” stated Emily Metz, president and CEO of the American Egg Board, a farmer-funded group that’s devoted to growing US demand for eggs.
Wholesale costs are taking a dive, however that doesn’t imply shoppers will get fairly as a lot of a deal. Retail egg costs have been declining at a extra reasonable clip.
From March to April, egg costs fell 1.5% adjusted for seasonal swings, in line with current information from the Bureau of Labor Statistics. (On an annual foundation, costs are nonetheless excessive: Within the yr via April, egg costs had been 21.4% greater.)
Wholesale costs are sometimes extra risky than retail costs. That’s as a result of supermarkets and grocery shops set retail egg costs, and so they don’t need prospects to be scared away by wild swings. So costs within the grocery retailer don’t instantly observe wholesale traits.
“Simply because wholesale costs go decrease, it doesn’t essentially imply retailers will decrease their costs,” stated Earnest. “So the patron remains to be topic to a better worth level. And it’ll take some time for that to get shaken out.”
Smith, of Superior Financial Options, expects grocery costs to “trickle downward.”
Retailers, she famous, could also be holding their breath for an additional spherical of egg disruptions.
“Earlier than they fully deep low cost one thing,” she stated, “they’re going to guarantee that nothing’s going to upset the market in any manner.”