Why egg prices are rising - but chicken prices are falling: It's an 'act of God' event, says a business strategist

Why egg prices are rising – but chicken prices are falling: It’s an ‘act of God’ event, says a business strategist

A shopper checks a box of eggs at a grocery store in San Francisco on May 2, 2022.

David Paul Morris | Bloomberg | Getty Images

Which (price change) came first, the chicken or the egg?

Grocery prices are rising at their fastest rate in decades, and neither are eggs. Yet chicken prices fell in October.

It may seem counterintuitive that egg and chicken prices have moved in opposite directions.

The momentum is mainly due to a severe outbreak of bird flu in the United States – which killed many laying hens but left chickens reared for meat production largely unscathed, economists say.

“A lot of things have been up since 2020,” said Bill Lapp, president of Advanced Economic Solutions, a food economics consulting firm. “But the recent spike is extraordinary in the shell egg and egg product markets.”

An “unprecedented” egg supply disruption

Soaring egg prices are mainly the result of one of the worst outbreaks of bird flu in the United States

About 50.3 million birds have been affected by the virus since early February, according to recent data from the Centers for Disease Control and Prevention. These numbers also include birds such as turkeys and ducks.

Bird flu is relatively rare in the United States. The last episode dates back to 2015, when a record 50.5 million birds were affected, the CDC said. The flu hadn’t appeared for at least a decade or two before that, Lapp said.

Here’s why it matters: Bird flu, which is usually transmitted by wild birds like ducks and geese, is “highly contagious,” the New Jersey Department of Agriculture warned last month. It’s also extremely deadly; it kills 90% to 100% of chickens, often within 48 hours, according to the CDC.

Luke Sharrett/Bloomberg via Getty Images

Farmers generally have to kill their remaining birds — not by choice but because of federal rules meant to prevent the spread, said Brian Moscogiuri, global business strategist at Eggs Unlimited, an egg supplier based in Irvine, Calif.

As a result, about 37 million laying hens — “layers,” for industry short — have died since the start of 2022, Moscogiuri said. They make up about 10% of US production, he said.

The quantity of eggs cratered at the same rate. About 8.8 million eggs were produced in September, compared to about 9.7 million in December 2021, according to the most recent data from the United States Department of Agriculture.

“It’s a disruption of supply, ‘act of God’ type stuff,” said Moscogiuri, who called the situation “unprecedented.”

“It’s a bit of a coincidence that inflation continues [more broadly] during the same period,” he added.

Inflation and holiday receipts drive demand for eggs

Bird flu usually arrives during spring migration and clears up in summer, experts said. But this year was different; the virus reappeared in September.

In October, the Department of Agriculture revised down its table egg production forecast for 2023 and the rest of 2022 following “September detections” of bird flu.

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This bird flu outbreak – and the resulting death toll for laying hens – is heading headlong into the peak demand season, when consumers use more eggs for holiday cooking, experts said. .

Consumer demand for eggs has also been boosted by a pivot away from some more expensive proteins amid broader food inflation, the Department of Agriculture suggested in an October outlook report. .

High egg prices “could last into the first quarter of 2023,” Lapp said.

“Broilers” are less affected by the flu than “layers”

Meanwhile, chicken prices retreated in October, falling 1.3% in the month.

The wholesale price of chicken breast has fallen below $1.20 a pound, a third of its peak of around $3.60 over the summer, for example, Lapp said.

Chickens raised for meat consumption – known as ‘broilers’ – are not affected by bird flu to the same extent as ‘laying hens’.

“They’re two totally different styles of production, two totally different breeds of birds,” Moscogiuri said.

The life cycle of a broiler is much shorter – 5.5 to 9 weeks from hatch to slaughter, according to Vencomatic Group, a poultry consultancy.

Herd of broiler chickens inside a chicken coop.

Edwin Remsberg | The image bank | Getty Images

However, a laying hen’s life cycle can be up to 100 weeks, Moscogiuri said. According to the Department of Agriculture, it can take about five to six months for laying hens to reach full productivity.

The latter are therefore more susceptible to bird flu since farmers have to keep them alive longer, according to experts.

The quantity of broiler chickens is also on the rise, helping to lower chicken prices at the grocery store.

For example, around 865 million broiler chicks hatched in August – 2.9% more than in August 2021 and a monthly record, which was previously set in March 2020, the agriculture ministry said.

Broiler “placements” have also increased in recent weeks, hitting a record 194.2 million chicks in the week ended September 17, according to the department. The agency raised the production forecast for 2023 on this “optimistic” hatch and placement data.

Despite the recent drop, chicken prices are still up 14.5% from October 2021, according to the CPI. Higher prices for staples such as corn and soybeans — the main ingredients in chicken feed — likely contributed to chicken inflation, as well as eggs. Higher energy prices also contribute to the high costs of food distribution, for example.

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