How does a -3% decline in table-egg production translate into December’s 2x+ egg price increase? That’s a good question for someone…
Was it the bird flu?
Despite sizeable HPAI (bird flu) culling losses during 2022 (which was notably less than the 50.5MM culling in 2015), the USDA’s table-egg production forecast for 2022 is just down -3% y/y. Notably, the 12/1 table-egg layer flock was estimated at 308.3MM, only 0.8MM lower than the 11/1 estimate despite the 2.72MM HPAI culling during November (indicative that producers are working hard to rebuild their egg-laying flocks).
With just a -3% decline in table-egg production, it is shocking that December wholesale egg prices (large, grade A, New York) were the highest ever recorded, averaging $5.03 per dozen up 2x+ y/y (declining to $4.12 as of 1/11/23). This dynamic is attributed to the fact that eggs are a staple product with few substitutes that also enjoy strong demand as a low-cost protein substitute. Per capita, egg consumption during 2022 is forecast at 277.5 eggs per person, down 3 eggs y/y. We would suggest that the country could use a better supply chain for eggs!
As producers further rebuild their egg-laying flock capacity, quarterly wholesale egg price forecasts for 2023 are as follows: 1Q23 to $2.85; 2Q23 to $1.95; 3Q23 to $1.65; and 4Q23 to $1.75. This translates into a -30% y/y decline in the 2023 average forecast price to $2.05 per dozen.