Egg Prices Are Rising Again. Here’s Why.

Part of the surge in December can be chalked up to seasonal factors: Consumers use more eggs during the holiday as they fill up on eggnog and bake more sugar cookies than usual.

This year, however, the holidays collided with a resurgence of the avian flu that decimated millions of egg-laying chickens in 2022, pushing egg prices to record highs at the start of 2023. Last January, the average cost for a dozen ranged around $4.82, according to data from the St. Louis Federal Reserve Bank.

The outbreak ebbed throughout most of 2023, which helped improve egg supply nationwide and lower prices. In August, prices reached $2.04 for a dozen eggs—the lowest point since March 2022. And indeed, December’s prices are still roughly 24% lower than they were a year ago.

But a new strain of influenza, which started spreading last fall, curbed some of the progress made in reining in prices. In December, the industry had to euthanize 11.5 million birds, up from about 1.4 million in October, according to the latest data from the U.S. Department of Agriculture.

Egg producer
Cal-Maine
said that month it had to kill 684,000 laying hens, or 1.6% of its total flock, after one of its facilities in Kansas tested positive for the flu.

That has affected the national egg supply. In the last week of December, the national inventory of shell eggs in stock declined 2%, and it did so again in the first week of January, according to the USDA. The volume of eggs processed also fell in the first week of January, the USDA said, with production of whole eggs down 12%.

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, said Caitlinn Hubbell, market research analyst at Purdue University’s Center for Food Demand Analysis & Sustainability, in emailed comments to Barron’s. 

Encouragingly, early signs suggest it’s unlikely, especially because the number of egg-laying hens is higher now than it was a year ago, she wrote.

“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 wrote. “This is, of course, dependent on the severity of the outbreak we are currently seeing.”

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. But already, the pace of infections seems to be slowing compared with December. About 1.7 million birds have been killed in the first few days of January, while roughly 4.3 million were euthanized in that same period last month.

That’s certainly what Cal-Maine is betting on.

“Over time more and more birds will become exposed to it,” said Sherman Miller, Cal-Maine’s CEO, at an investor conference in November. “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.”

Although, while the bird flu is certainly poses a risk to egg producers such as Cal-Maine, it can also bring an unexpected financial upside. In fiscal 2023, Cal-Maine reported $3.1 billion in net sales, up from $1.8 billion in 2022—largely driven by higher selling prices and strong volumes, the company said in its annual letter to shareholders in August.

Still, it’s also too soon to shake off the concerns entirely, other experts say. Kevin Bergquist, agri-food institute sector manager at
Wells Fargo,
notes that the current outbreak is expanding at a similar pace to the last major outbreak, and is also more widespread across different regions in the U.S., which is “a greater concern.”

He predicts that while wholesale egg prices won’t skyrocket like they did in late 2022, they could rise as the country approaches the Easter season, especially if infections continue at the current rate.

“The [bird flu] wild card is still very much in play,” he wrote in emailed comments to Barron’s.

Write to Sabrina Escobar at [email protected]