Glut in U.S. egg supply brings lower prices, revenue losses for producers

EVANSVILLE, Ind., Oct. 3 (UPI) -- Egg prices fell across the United States this year as the national egg supply spiked and demand waned.

But what was good news for consumers was detrimental to producers.

"The egg price is very low right now," said Maro Ibarburu, an associate science-business analyst at the Egg Industry Center, which serves the U.S. egg industry from Iowa State University. "It doesn't even cover the cost of production."

The average retail price for a dozen "regular" eggs in the United States was $1.12 at the start of October, which was a jump from under 90 cents earlier in the summer, according to the U.S. Department of Agriculture. In 2018, the average price was $1.25.

The price drop to wholesalers is even more stark. The average wholesale price for a dozen large eggs as of Oct. 3 was roughly 40 cents -- less than half of last year's average price of 89 cents.

The price dipped below the cost of production around April, Ibarburu said.

Producers saw an immediate effect. Cal-Maine Foods Inc., the nation's leading egg supplier, reported a net loss of $45.8 million in the first quarter of fiscal 2020, which for that company is June through August.

"Our financial and operating results for the first quarter reflect the very challenging market conditions that prevailed throughout the summer," Dolph Baker, Cal-Maine Foods chairman and CEO, said in a statement to investors. "The extreme drop in market prices adversely affected our results."

The price drop came as supply ballooned, Baker said.

Egg prices were high in 2018, and the industry responded by increasing production. The number of egg-laying hens rose by 800,000 animals between September 2018 and September 2019, according to the USDA.

"The significant drop in market prices reflects the oversupply of eggs that began to affect the market starting in early calendar 2018," Baker said.

During roughly the same period, America's various trade disputes with China, Mexico, Canada and other nations meant that the United States was exporting fewer eggs, Ibarburu said.

Though the United States is not a major exporter of eggs -- it exports between 3 and 5 percent of its eggs -- the trade disruption added to the existing oversupply.

"It's a very small percentage, but it's very important so you don't build up inventory when the supply increases," Ibarburu said.

While the price for normal eggs has plummeted, the price for "specialty" eggs remains relatively stable.

Specialty eggs are any type of eggs that are not the usual white eggs laid by caged hens. They include pasture-raised, cage-free, vegetarian-fed, organic or eggs with a higher nutritional value.

"We have a pretty niche market," said Mike Badger, the executive director of the American Pastured Poultry Producers Association. "There's a rising consumer demand for pasture raised eggs, and, in general, food that is produced with more welfare in mind."

The large egg producers are recognizing this trend. Cal-Maine Foods plans to invest more in its specialty eggs, in the coming year.

"For the first quarter ... specialty egg revenue was 44.9 percent of total shell egg revenue, compared with 34.2 percent for the first quarter of fiscal 2019, reflecting less volatility in the average selling price of specialty eggs," Baker said.

"Our specialty egg business will continue to be a primary focus of our growth strategy in fiscal 2020."