Eggflation: The Impact of Bird Flu on Egg Prices

Egg prices are once again on the rise, thanks to a recent outbreak of bird flu. According to the latest consumer price index report, the index tracking egg prices experienced an 8.9% surge in December compared to the previous month. This increase far exceeds the overall CPI’s headline growth of 0.3%, following a rise of 2.2% in November and 0.1% in October.

While seasonal factors play a role in the December surge, such as increased egg consumption during the holidays for eggnog and baking, this year faced an additional challenge. The resurgence of avian flu, which had already devastated millions of egg-laying chickens in 2022, pushed egg prices to record highs at the beginning of 2023. Data from the St. Louis Federal Reserve Bank indicated that the average cost of a dozen eggs last January was around $4.82.

Throughout most of 2023, the outbreak subsided, leading to improved egg supply nationwide and subsequent price reductions. By August, prices had reached their lowest point since March 2022, at just $2.04 for a dozen eggs. Furthermore, the current December prices are still approximately 24% lower than they were a year ago.

Unfortunately, the progress made in stabilizing prices was hindered by the emergence of a new strain of influenza last fall. As a result, the industry had no choice but to euthanize 11.5 million birds in December, a drastic increase from the 1.4 million in October, as reported by the U.S. Department of Agriculture.

Cal-Maine, a major egg producer, revealed that it had to cull 1.6% of its total flock, amounting to 684,000 laying hens, after a facility in Kansas tested positive for the flu.

The impact of these cullings can be seen in the national egg supply. The U.S. Department of Agriculture noted a 2% decline in the national inventory of shell eggs in stock during the last week of December, which continued into the first week of January. Additionally, the volume of eggs processed experienced a drop of 12% in the first week of January.

Despite efforts to combat bird flu and stabilize egg prices, this recent outbreak has once again disrupted the egg market, making it difficult to predict when prices may normalize. Consumers should brace themselves for higher egg prices in the foreseeable future.

The Potential Impact of Bird Flu on Egg Prices

By Sabrina Escobar

Should the number of affected hen flocks be as much as they were in 2022, consumers might see significant changes in egg prices given that supply will dwindle, according to Caitlinn Hubbell, market research analyst at Purdue University’s Center for Food Demand Analysis & Sustainability. Encouragingly, early signs suggest it’s unlikely, especially because the number of egg-laying hens is higher now than it was a year ago.

A Potential Relief for Consumers

“Assuming the demand for eggs remains consistent with demand in the previous years, the impact on prices may not be as severe given the greater supply,” Hubbell stated. However, she emphasized that this will depend on the severity of the current outbreak.

Uncertainty Looms

It’s too early to tell whether the current strain will lead to an outbreak as severe as the one last year, and if prices will also jump accordingly, Hubbell added. However, there are indications that the pace of infections is slowing compared with December. In the first few days of January, approximately 1.7 million birds have been killed, while around 4.3 million were euthanized in the same period last month.

A Strategy for the Future

Cal-Maine, one of the major egg producers in the industry, remains cautiously optimistic. “Over time more and more birds will become exposed to it,” said Sherman Miller, Cal-Maine’s CEO. “And that virus shedding load should decrease. And we’re already seeing that the numbers coming out of the Wildlife Services are finding one out of 100 birds positive this year where that was 10 out of 100 last year.”

A Financial Upside

Although bird flu poses a risk to Cal-Maine and other egg producers, it can also bring unexpected financial benefits. In fiscal 2023, Cal-Maine reported $3.1 billion in net sales, up from $1.8 billion in 2022. This growth can be attributed to higher selling prices and strong volumes, as mentioned in the company’s annual letter to shareholders in August.

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