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Prospects for Egg Prices in 2018

01/03/2018

Despite optimistic projections made by the Egg Industry Center of Iowa State University, the wholesale price of eggs in 2018 will be determined by the balance between supply and demand. There is no evidence that per capita consumption will increase materially during the first quarter of 2018. USDA projections note an increase of less than one egg per capita between Q1 of 2017 and Q2 of 2018. At the end of December, U.S. total flock attained 327 million hens with 317 million actually in production in commercial flocks above 30,000 hens. During the last week of December 2017 the stock level of generic eggs increased by 7.9 percent over the previous week to 1,653,800 cases of which 80.8 percent were shell eggs.

Prospects for exports do not appear as optimistic as expressed in recent press releases. The fipronil crisis in the E.U. has largely passed as the affected flocks have been cycled out of production and replaced by non-contaminated hens. Korea has largely restocked flocks depleted by the 2016 outbreak of highly pathogenic avian influenza. In any event, U.S. exporters of shell eggs are non-competitive on the basis of price and shell color compared to product shipped to Korea from Spain, Turkey, the Ukraine and Asian nations.

To state ingenuously that during the first quarter of 2018, egg prices will be 35 percent above the corresponding period in 2017 is not a material advance for the egg industry. The comparison is against unprecedented low prices, considerably below production cost. U.S. producers experienced negative margins for the first nine months of 2017 based principally on the disparity between production and demand.

(SMS 024-18 January 3rd 2018)