Chicken Prices Are Down While Egg Prices Are Rising

Eggs are the one food item where costs are rising at the quickest rate in decades. But in October, chicken prices decreased. The opposite price movements for chicken and eggs may appear contradictory. According to economists, the U.S. is currently experiencing a major bird flu outbreak that has killed many egg-laying hens but mainly spared chicks kept for meat production.

According to Bill Lapp, head of Advanced Economic Solutions, a company that specializes in food economics, “a lot of things are up since 2020.” However, the recent increase in both the shell egg and egg product sectors is astonishing.
According to the consumer price index released Thursday by the U.S. Bureau of Labor Statistics, egg prices increased by 10% in October, the biggest monthly increase of any supermarket item.

In contrast, the No. 2 category, “meal at employee sites and schools,” saw a monthly price increase of 3.8%. That represents less than half the rise in eggs. According to federal data, consumers paid an average of $3.42 for a dozen Grade A, big eggs in October, up from $1.82 a year earlier. Since October 2021, only margarine inflation (47%) has outpaced the whole egg category (43%) in terms of inflation. One of the worst bird flu outbreaks in U.S. history is mostly to blame for rising egg prices. Since early February, the virus has affected about 50.3 million birds, according to recent information from the Centers for Disease Control and Prevention. These statistics also include birds like ducks and turkeys.

The U.S. experiences very few cases of bird flu. The CDC reported that the most recent outbreak occurred in 2015 and affected a record 50.5 million birds. Prior to that, the flu hadn’t broken out in at least a decade or two, according to Lapp. Here’s why it’s important: The New Jersey Department of Agriculture issued a warning last month that avian flu is “extremely contagious” and is typically carried by wild birds like ducks and geese. According to the CDC, it is also exceedingly deadly, killing 90% to 100% of hens, frequently within 48 hours. According to Brian Moscogiuri, a global trade strategist with Irvine, California-based Eggs Unlimited, farmers typically have little choice but to kill their surviving chickens because of government regulations designed to stop the spread of the disease.

According to Moscogiuri, this has caused around 37 million egg-laying chickens, or “layers,” to pass away since the year 2022. According to him, they make up around 10% of American output. The number of eggs has similarly decreased. According to the latest recent data from the U.S. Department of Agriculture, approximately 8.8 million eggs were produced in September, down from approximately 9.7 million in December 2021. Moscogiuri described the incident as “unusual” and added that it was a “act of God” that caused the supply to be disrupted.

The fact that inflation is occurring [more generally] at the same time is kind of coincidental, he continued. According to specialists, bird flu normally appears during the spring migration and vanishes by the summer. This year, though, was unique since the virus returned in September.Following “September detections” of avian flu, the Agriculture Department lowered its output prediction for table eggs downward for 2023 and the remaining portion of 2022 in October.
The resurgence of the avian flu and the attendant death toll for egg-laying hens coincides with the peak demand period, when people use more eggs for Christmas baking, according to experts.

According to the Agriculture Department’s October outlook report, a shift away from some more expensive proteins amid general food inflation has helped consumer demand for eggs. According to Lapp, high egg prices “may endure through the first quarter of 2023.” In contrast, the price of chicken declined in October, dropping 1.3% in that month. According to Lapp, the wholesale price of chicken breast has dropped to below $1.20 per pound, which is a third of its peak price of roughly $3.60 over the summer.

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The avian flu doesn’t have the same impact on “broilers” (chickens reared for meat consumption) as it does on “layers.” Two completely separate bird breeds and two wholly different manufacturing methods, according to Moscogiuri. A broiler’s life cycle is substantially shorter, lasting between 5.5 and 9 weeks from hatch to slaughter, according to the poultry consultancy company Vencomatic Group. However, according to Moscogiuri, an egg-laying hen’s life cycle might last up to 100 weeks. According to the Agriculture Department, reaching peak productivity for layers can take anywhere between five and six months.

Therefore, because farmers must maintain them alive for a longer period of time, the latter are more vulnerable to bird flu, according to specialists. Additionally, there are more broilers being produced, which lowers the cost of chicken at the grocery store. For instance, the Agriculture Department said that 865 million broiler chicks hatched in August, a monthly record that was previously achieved in March 2020 and 2.9% higher than August 2021.

The government reports that broiler “placements” have increased recently and reached a record 194.2 million chicks in the week ended September 17. Based on such “optimistic” hatch and placement statistics, the government increased its production projections for 2023. Despite a recent decline, the CPI shows that chicken prices are still up 14.5% from October 2021. Inflation in the price of chicken and eggs has most likely been caused by rising prices for basic commodities like corn and soybeans, which are the main components of chicken feed. Increased expenses for distribution of food, for instance, are a result of higher energy prices.