The price of eggs plummets in the United States, why?

() — For months and months, the price of eggs skyrocketed in the United States. Now, its price is falling.

As of last week, large Midwestern eggs, the benchmark for eggs sold in the shell in the United States, cost just $0.94 a dozen on the wholesale market, according to Urner Barry, an agency independent of price reports. That’s a steep drop off US$ 5.46 per box that cost just six months. (At retail, prices are well above $1 a box, though they have been declining as well.)

Why did the price of eggs fall? It is due to a reversal of supply and demand trends that caused prices to skyrocket in the first place.

Last year, the deadly bird flu wiped out significant numbers of laying hens, reducing the supply of eggs. On top of that, farmers had to deal with inflated feed and fuel costs.

The disruptions gave producers like Cal-Maine Foods (CALM), the largest US egg distributor, cover to raise prices and make huge profits.

But now the egg supply is back on track: Although the industry has braced for more cases of bird flu this year, the deadly virus appears to be under control. Meanwhile, demand has not kept pace.

The wholesale price decline began in late March, according to Karyn Rispoli, senior egg market analyst at Urner Barry. Prices hit yearly lows in early May and have held steady ever since, she said.

“While the 2022 egg market was dominated by bird flu, this year’s market has been dominated by its absence,” Rispoli told .

As of early December, there were about 308 million laying hens for consumption, up from about 328 million in December 2021, according to the US Department of Agriculture (USDA). But the number has been growing ever since: In April 2023, there were 314 million laying hens, according to the USDA.

What do eggs have to do with the economy?

While the improved bird flu situation has increased the supply of eggs, consumer demand is also declining.

One reason: Buyers responded to higher egg prices by buying less. When egg prices skyrocketed, “everyone and their brother had a story about how high egg prices were,” said Amy Smith, vice president of Advanced Economic Solutions, a consulting firm.

The eggs became “the symbol of what was happening with inflation,” Smith added.

In the four weeks ending April 22, 2023, US retail unit sales of eggs fell 4% compared with the same period a year earlier, according to NIQ, which conducts a retail sales tracking. (Still, egg sales have been flat across the board: NIQ data shows unit sales were essentially flat in the year to April, despite rising prices.)

But aside from headlines, buyer demand for eggs generally falls in late spring, experts say.

“This is the time of year that demand cools off a bit,” said Brian Earnest, lead economist for Animal Protein at CoBank.

Demand for eggs typically increases during the winter holidays, when people bake and eat breakfast at home, and while it declines in the first quarter, it generally remains relatively strong. Not so this year.

“Buyers are budget conscious at that point,” after the holidays, he said, “generally, they’re probably putting more eggs in their basket than normal. But if you have a high price environment, they’re not overbuying.”

Demand for eggs may not pick up again for a few months. After Easter and Mother’s Day, the demand usually slows down until the back-to-school season.

“Wholesale prices are totally determined by market forces; they are not set by egg producers,” said Emily Metz, president and CEO of the American Egg Board, a farmer-funded group dedicated to increasing demand for eggs in the United States.

Will the prices of eggs in the supermarket go down?

Wholesale prices are falling, but that doesn’t mean consumers will get as good a deal. Egg retail prices have been falling at a more moderate pace.

From March to April, egg prices fell 1.5% adjusted for seasonal changes, according to recent data from the Bureau of Labor Statistics. (On an annual basis, prices are still high: in the one-year period through April, egg prices were 21.4% higher.)

Wholesale prices tend to be more volatile than retail prices. This is because supermarkets and grocery stores set the retail prices for eggs and don’t want customers to be spooked by wild changes. Therefore, prices in the grocery store do not immediately follow wholesale trends.

“Just because wholesale prices go down, it doesn’t necessarily mean that retailers will drop their prices,” Earnest said. “So the consumer is still subject to a higher price. And it will take a while for that to be removed.”

Smith of Advanced Economic Solutions expects grocery prices to “come down.”

Retailers, he noted, may be holding their breath for another round of egg disruptions.

“Before they discount something completely,” he said, “they’re going to make sure that nothing disrupts the market in any way.”