Why egg prices are still going up

New York
CNN Business
 — 

Several grocery items have gotten more expensive this year. But nothing comes close to the rise in egg prices.

In the year through November, not adjusted for seasonal swings, egg prices jumped 49%, according to data from the Bureau of Labor Statistics.

Since early this year, a deadly avian flu has been reducing poultry flocks — specifically turkeys and egg-laying hens. That’s one reason for the unrelenting increase in prices. But the situation has been exacerbated by elevated feed and energy costs for producers, in addition to high demand in the supermarket.

Experts think that the peak has passed, but until these conditions improve, expect to pay more for eggs in the grocery store.

Avian flu has been a problem in the US for several months now, but in recent weeks wholesale prices have been hitting records.

As of last week, “prices have been escalating for nine consecutive weeks… setting new record highs on a daily basis since the week of Thanksgiving,” said Karyn Rispoli, editor of the Egg Price Current for Urner Barry, which offers food market data.

On Friday, Midwest large eggs, the benchmark for eggs sold in their shells, hit $5.46 per dozen, Rispoli said, citing Urner Barry’s data. This time last year, Urner Berry’s data shows, that price was around $1.70.

One reason for the increase? Not enough supply.

“There’s simply not been enough production to support the incredibly strong retail demand we’ve seen this year,” Rispoli said. Supply has been constrained by the deadly bird flu.

The current outbreak of Highly-Pathogenic Avian Influenza started in the US around February, and has persisted throughout the year. The last major bird flu outbreak in the United States was in 2015. But that one was contained by June of that year, noted Brian Earnest, lead economist for animal protein in CoBank.

“This year, we’ve continued to see flock depopulations throughout the entire year, and there’s an expectation that we’ll continue to see it into 2023,” he said, noting that he expects “we’re going to see a tight supply situation and elevated pricing environment moving forward.”

About 60 million birds are gone because of the disease so far, according to the USDA. Of those, about 43 million are egg-laying hens, according to USDA data provided by the American Egg Board, a farmer-funded group which markets eggs.

Still, farmers have been able to moderate the losses. “Our producers learned a lot of hard lessons from 2015,” said Emily Metz, CEO of the American Egg Board. Some farmers have been able to repopulate their flocks, decreasing the net impact on flock sizes and egg supplies. As of early December, there were about 308 million hens laying eggs for consumption, down from about 328 million in December 2021, according to the USDA.

The supply squeeze isn’t the only thing contributing to higher egg prices, said Metz. Higher fuel, feed and other producer cost are also driving up wholesale prices, she said. And then there’s that high demand for eggs, which spikes this time of year.

People buy more eggs around the holidays, when they’re baking and cooking more, and eating breakfast at home more often.

Wholesale prices tend to go up in the winter because of those habits, noted Earnest. That has “brought about a very strong market condition.”

Year-round demand for eggs has also also been strong.

Even while prices have soared, sales of eggs have only ticked down about 2% by unit in retail in the year through December 4th, according to data from IRI, a market research firm.

Shoppers have been accepting high prices at the grocery store as they pull back on restaurant visits. And even though eggs have gotten more expensive, they still cost less than other proteins.

As that peak holiday demand passes, wholesale prices are expected to fall.

“Based on current trade values and market conditions, it appears that the market may have finally reached its peak,” said Rispoli. Friday’s wholesale prices were the same as Thursday’s, the first time pricing held steady since October, she said.

“Several suppliers have reported to us… that they are seeing their orders slow,” in the week leading up to Christmas, she added. By then, “most grocers have pulled in whatever inventory they’ll need for the holidays.”

It might take another three to six months for prices to moderate in retail, said KK Davey, president of thought leadership at IRI and NPD, and even longer for prices to come down to what they were last year.

“It may take some more time,” he said.