Wholesale egg costs have “slumped” from file highs in December.
Egg shelves 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 from record highs in recent weeks, meaning consumers will soon see relief at the grocery store.
But the dynamics of egg prices from wholesale to retail, among other factors, means this is not a sure thing in the short term.
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Prices fell to $2.61 a dozen eggs on Monday — a 52% drop from a peak of around $5.43 on Dec. 19 and a 47% drop since early 2023, according to Urner Barry, a market research firm that specializes in the food wholesale industry. The Midwest Large White Egg Price Benchmark is a much-cited barometer in the egg industry.
“Prices have collapsed,” said Angel Rubio, senior analyst at Urner Barry. “That’s a big, big adjustment down.”
The historic outbreak of bird flu led to rising egg prices
In a year marked by historically high inflation, egg prices stood out in 2022, rising faster than almost all other consumer goods.
According to the consumer price index, average retail prices increased by almost 60% in 2022.
In December, a dozen large Grade A eggs cost consumers an average of $4.25, more than double the $1.79 a year ago, according to monthly data from the Bureau of Labor Statistics.
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The deadliest outbreak of bird flu in history hit the US in 2022, killing millions of birds and severely disrupting egg supplies, according to food economists.
The contagious and deadly disease affects many species of birds, including laying hens. Falls usually fade by summer, but that didn’t happen in 2022; New outbreaks coincided with peak demand around the winter holiday season.
According to the Centers for Disease Control and Prevention, “highly pathogenic bird flu” ultimately killed about 58 million birds in 47 states. The previous record was set in 2015 when 50.5 million birds died.
When a case of bird flu is detected, farmers are usually required to kill their flocks as a precaution to curb the spread of the disease, economists said. It may be months before this farm starts producing and selling eggs again. Meanwhile, buyers must find new suppliers so they can replenish shelves — a dynamic that played out across the country and pushed up prices.
One group, Farm Action, has called on the Federal Trade Commission to investigate the possibility that a “collusion scheme” between egg suppliers, rather than bird flu, has been keeping prices high, a claim largely downplayed by food economists.
Farmers given a grace period and consumers show ‘resistance’
Julian Stratenschulte/Picture Alliance via Getty Images
According to the US Department of Agriculture, there have been no new outbreaks of avian influenza among commercial egg-laying birds since December 20.
An extended period of no setbacks in egg production has given suppliers some breathing space and given the market time to recover, said Brian Moscogiuri, global trade strategist at Eggs Unlimited, one of the largest egg suppliers in the US
Consumer demand also typically slacks in January and February, further relieving price pressures, Moscogiuri said.
The USDA recently cited “consumer resistance to record-breaking grocery store prices across the country” as another reason for the declining and subpar demand for eggs.
“Wholesale prices have been steadily declining since their peaks in late 2022, which has helped support retailers’ efforts to bring prices down to levels more acceptable to consumers,” the USDA said on Feb. 3.
The USDA’s weekly retail egg data is patchy, and it’s hard to see how the crashing wholesale prices are affecting the retail market.
On average, it takes about four weeks for retail prices to reflect trends in wholesale prices, Rubio said. That means consumers could see some relief in February, he said.
Retail prices tend to be less volatile than those at the wholesale level. For every 10% fall or rise in the wholesale price of eggs, consumers can expect retail prices to move about 2% on average, Rubio said.
However, demand for eggs also generally 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, there are other factors that could keep retail egg prices high for longer.
Supermarket chains and other egg retailers are not all linking their shelf prices to movements in wholesale prices, economists said. You can buy eggs of different recipes from suppliers; For example, some are tied, at least in part, to the price of corn and soybeans, which are high costs in raising and feeding chickens, Moscogiuri said.
While prices for these commodities have fallen from their highs in the wake of the Russian invasion of Ukraine in early 2022, they remain historically high.
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Some supermarkets may have been trying to keep egg prices low to avoid discouraging consumers from buying – and may now try to recoup some of their losses before slashing retail prices, Moscogiuri said.
“It’s kind of up to the retailer how quickly they want to pass prices along,” he said.
While avian flu hasn’t affected commercial egg-laying flocks since December, there have been confirmed cases in other bird species – meaning it’s still “a major risk for spring migration,” Moscogiuri said. The first case among egg layers last year was detected on February 22.