Egg prices are plummeting. This is why:
For months and months, the price of eggs had been skyrocketing. They’re now going splat.
According to Urner Barry, an independent price reporting firm, Midwest big eggs — the benchmark for eggs sold in their shells — cost $0.94 per dozen in the wholesale market as of last week. This is a significant decrease from $5.46 per carton just six months ago. (Retail prices are significantly higher than $1 per carton, though they, too, have been decreasing.)
What is causing the decline? Prices skyrocketed in the first place due to a reversal of supply-demand trends.
Last year, avian flu killed a large number of egg-laying chickens, limiting egg supplies. Farmers also have to deal with rising feed and fuel prices.
Cal-Maine Foods (CALM), the largest egg producer in the United States, reported a profit increase of almost 700% in the quarter ended February 25 due to rising egg prices. Some US politicians, including Senator Elizabeth Warren, have sought for additional information on why prices have risen so dramatically, raising worries about price gouging.
Although the industry was expecting more cases of bird flu this year, the deadly virus appears to be under control. Meanwhile, demand has lagged.
According to Karyn Rispoli, senior egg market analyst at Urner Barry, the wholesale price decline began in late March. Prices fell to an all-time low in early May and have remained rather stable since then, according to her.
This year, egg prices have been falling.
This year, egg prices have been falling.
Photographer: Justin Sullivan/Getty Images
“While the egg market in 2022 was dominated by bird flu, the market this year has been dominated by its absence,” Rispoli said CNN.
According to the US Department of Agriculture, there were roughly 308 million hens providing eggs for human consumption as of early December, down from approximately 328 million in December 2021. However, the figure has risen since then: According to the USDA, there were 314 million layer hens in April.
Eggs? In this economic climate?
While the avian flu situation has improved, egg supply has grown, but consumer demand has decreased.
One factor is that shoppers responded to rising egg prices by purchasing fewer eggs. “Everybody and their brother had a story about what egg prices were doing,” Amy Smith, vice president at Advanced Economic Solutions, a consultancy firm, said when prices were skyrocketing.
“The poster child for what was going on with inflation,” Smith added.
According to NIQ, which measures retail sales, unit sales of eggs in the United States declined 4% in the four weeks ending April 22 compared to the same period the previous year. (However, overall egg sales have remained stable: NIQ data show that unit sales remained practically steady in the year through April, despite rising prices.)
Aside from the headlines, experts note that the demand for eggs normally decreases in late spring.
“This is the time of year when demand slows a little bit,” said Brian Earnest, CoBank’s head economist for animal protein.
Demand for eggs often increases during the winter holidays, when people bake and enjoy breakfast at home, and while it slows in the first quarter, it usually remains pretty high. This year is different.
“Shoppers are budget conscious at that time,” he says, “so they’re probably putting more eggs in their basket than they normally do.” However, in a high-priced environment, they are not over-buying.”
Demand for eggs is unlikely to increase for several months. After Easter and Mother’s Day, demand normally drops until the start of the school year.
“Wholesale prices are entirely driven by market forces; they’re not set by egg farmers,” said Emily Metz, president and CEO of the American Egg Board, a farmer-funded organization aimed to promoting egg demand in the United States.
Will egg costs in the grocery store fall?
Wholesale prices are falling, but that doesn’t imply consumers will receive a better deal. Retail egg prices have been falling at a slower rate.
In a year, egg costs increased by 60%. Look at how some people are attempting to save money.
02:49 CNN is the source.
According to current Bureau of Labor Statistics statistics, egg prices declined 1.5% from March to April after accounting for seasonal fluctuations. (Prices are still expensive on a yearly basis: Egg prices were 21.4% higher in the year to April.)
In general, wholesale prices are more variable than retail pricing. This is due to the fact that supermarkets and grocery stores set retail egg pricing, and they do not want customers to be scared away by huge swings. As a result, grocery store prices do not always correspond to wholesale trends.
“Just because wholesale prices fall doesn’t mean retailers will follow suit,” Earnest explained. “As a result, the consumer remains subject to a higher price point.” And that will take some time to shake out.”
Smith of Advanced Economic Solutions anticipates that grocery prices will “trickle downward.”
Retailers, she speculated, may be waiting for another wave of egg interruptions.
“Before they completely deep discount something,” she explained, “they’ll make sure that nothing upsets the market in any way.”