After A 38% Jump In July, Egg Prices Should ‘Fall Down’

As consumers continue to face increasing prices at the grocery store, egg prices jumped by a significant 38% year-over-year in the month of July.

Despite the fact that it does not appear that expenses will change in the near future, an executive from an egg manufacturer claims that this is not the case.

According to Vital Farms (VITL) CEO Russell Diez-Canseco, who spoke with Yahoo Finance, “a lot of the big changes you’re seeing at the shelf today are driven by both a shortage of eggs due to the avian influenza outbreak earlier this year and the inflation we’ve seen in commodity costs, including corn, soybeans, and diesel fuel.” “A lot of the big changes you’re seeing at the shelf today are driven by both a shortage of eggs due to the avian influenza outbreak earlier

In spite of this, “the predictions on those things are starting to come down, and I would absolutely assume you’d see commodity egg prices fall down as a result of it as well,” he said.

According to Yahoo Finance, Steve Reed, an economist at the United States Bureau of Labor Statistics (BLS), stated that the increase in egg prices, despite appearing to be unreasonably high for consumers to bear, is still within historical norms “eggs are part of a category that “has always been a volatile index, even before the pandemic,” so this finding is “not unusual.”

“In comparison to most brands, Vital Farms’ organic and ethically produced eggs are sold at a premium price, and the company just recently increased those prices for the first time in the past five years. However, as a result of inflation, “there has been a price compression,” according to Diez-Canseco. This means that the prices of the cheapest eggs are now priced a lot closer to the prices of our eggs.

Nevertheless, the CEO pointed out that the company “hasn’t seen that much connection between a consumer who is shopping for the absolute cheapest eggs and the consumer who is buying our [items].”

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He added: “What we are witnessing, though, is that sales of the least expensive eggs are skyrocketing. This is partly due to inflation, and partly because people are shifting down to less expensive products. You are also observing enormous increase at the high end, which is the market segment in which we operate.”

The CEO went on to say that “the brands and price points in the center are where we’re starting to see some vulnerability,” and that this is because the fundamental trend of economic bifurcation is accelerating in the current environment.
Diez-Canseco emphasized once more that the “resilient” supply chain that the company maintains has been an essential component of the company’s success as it works to protect its business from a variety of external issues such as inflation.

“We will only purchase eggs from farms that we have an established working relationship with. These purchases are subject to the terms of a contract, and we determine the prices in advance “He described it and went on to say that because of this method, the brand is able to avoid experiencing any short-term price shocks that are caused by supply shortages.

He went on to say that one other advantage resides in the fact that Vital Farm has partnered with over 300 different small family farms, which provides the company with an additional layer of defense against unforeseen events such as the emergence of avian influenza.

Overweight status was recently bestowed upon Vital Farms by Morgan Stanley. The large bank cited the company’s strong position in the higher growth speciality egg market, pointing to several tailwinds such as altering consumer preferences and greater retail and state pledges to cage-free egg farming as reasons for the optimism.

The share price has decreased by around 22% so far this year, but it has increased by 57% over the past month.

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