KANSAS CITY, MO. — Egg producers and processors have been on a coronavirus (COVID-19) “rollercoaster” over the past few weeks, mostly driven by erratic consumer buying patterns at the grocery level. Prices for eggs soared to record highs a few weeks ago, while prices for some egg products have since fallen to record lows.
In early March, demand for retail eggs and processed egg products going to grocers or food manufacturers selling to grocery stores surged as consumers stocked up for what was expected to be a two- to four-week “shelter-at-home” period. Coolers were void of egg cartons, as were store shelves of flour, sugar, pasta and other staples, along with hand sanitizers and toilet paper. Industry sources noted that demand for products aimed for grocery stores surged as much as 200%.
The average wholesale price of Grade A large eggs as reported by the US Department of Agriculture (USDA) peaked at $2.91½ to $3.06½ per dozen during the week ended April 3, up nearly 3.5 times from a month earlier and even above the prior record high of $2.67 to $2.85½ per dozen set in August 2015 at the height of the avian influenza event that took a devastating toll on US laying flocks.
But in the two weeks following April 3, Grade A large egg prices dropped about 30%, averaging $2.09½ to $2.24½ a dozen the week ended April 17. Prices continued to fall almost daily last week.
“Shell egg prices tripled from $1.03 to $3.09 per dozen,” said Brian Moscoguiri, director of US and EU egg and egg product markets at Urner Barry, the Toms River, NJ-based poultry, seafood and meat price reporting and news service. “Now they are below $1.20 a dozen for Midwest large eggs.”
Retail egg sales remained good last week, according to trade sources and the USDA, but supplies no longer were an issue and in fact surpassed demand, both at retail and at the processor level.
Retail egg prices increased, retailers allocated the number of eggs consumers could buy and consumer interest has slowed, Moscoguiri said.
Anecdotally, egg prices at some Midwest grocery stores soared to more than $3 per dozen in early April, and store shelves frequently were bare. Last week, prices were closer to $1.50 per dozen, with many stores restricting purchases to a limit of two cartons. Shelves tended to be stocked — even well stocked — of most things (including toilet paper) except for hand sanitizers. And that was with an extension of shelter-at-home directives through early to mid-May in many areas.
Breaking egg prices somewhat followed retail egg values as supplies of gradable breaking stock initially were rerouted to retail, tightening supplies available to breakers. But as supplies increased, the buying also slowed a bit and grocery shelves remained stocked. Excess retail eggs then were shifted back to breakers, creating an oversupply of eggs offered to breakers and processors.
Nest run (breaking stock) egg prices reported by the USDA nearly tripled from early February to late March, peaking at 67 cents per dozen the week ended March 27, which was far below record levels. Breaking stock prices didn’t keep pace with graded eggs because no breaking stock was available for a time, one source said. As supplies increased, nest run prices subsequently plunged 70% in the three weeks ended April 17, to around 20 cents a dozen, far below breakeven prices.
For egg products, the rollercoaster ride was mixed, with liquid and frozen whole egg the most affected and dry products the least affected so far. Egg processors had the added pressure of losing a significant portion, if not all in some cases, of their sales to foodservice.
“Foodservice all but stopped,” Moscoguiri said, noting that about 20% of eggs produced are utilized by foodservice.
Liquid and frozen whole egg both fell 9¢ a lb in the week ended April 17, with liquid down more than 75% since March 20 at a record low. Last week liquid whole egg prices reported by Urner Barry had fallen to a new record low of 8¢ to 10¢ a lb.
Liquid and frozen yolk and white each were down 2 cents a lb for the week ended April 17, with white down 15% to 20% and yolk down only about 5% from recent highs. But those prices could begin to decline more sharply as processors look to take advantage of the margin between whole egg and separated (yolk and white) products, Moscoguiri said.
Dried egg prices had mostly missed out on the volatility, avoiding the large upswing in prices and the quick downturn, until now. Dried whole eggs were about 20 cents to 30 cents a lb lower for the week as of April 21, Moscoguiri said. Markets saturated with liquid egg, and processors were turning to drying.
“Business is not good for our industry,” a Midwest egg processor said. “No matter where you are in the chain, everything is turning into losses. People are desperate.”
The actual supply of eggs never was an issue. The shortage at retail resulted from a sudden surge in buying and deliveries needed a couple of weeks to catch up. Most sources maintain there was an oversupply of eggs prior to the pandemic. That oversupply was briefly relieved by near panic buying at retail in the early stages of sheltering at home. The oversupply mostly was the result of a buildup in cage-free laying flocks without an offsetting depopulating of conventional laying flocks. But that finally has begun to change, with producers reducing the number of layers by about 10 million during the first quarter.
“The market forced them to adjust,” Moscoguiri said. “And it will force them to make future corrections.”
The Midwest egg processor agreed, saying, “There are definite flock reductions happening.”
The low prices for eggs and products have created buying opportunities.
“There is a tremendous opportunity to purchase eggs to help alleviate the surplus and take advantage of low prices if you can produce for retail,” Moscoguiri said. “It’s a great buying opportunity, but extreme markets tend not to last too long.”
Moscoguiri said there were signs that prices were nearing a bottom. At the same time, he said buyers most likely can’t lock in current low prices as sellers can’t afford to commit to those levels for a long period of time.