- Egg prices have plunged to their lowest in a decade as poultry farms have recovered from last year's bird flu outbreak, which wiped out 48 million birds across the U.S.
- While production has rebounded, demand has not. When egg supplies dwindled and prices skyrocketed last summer, manufacturers and consumers found ways to use egg replacements, extenders, and other strategies to reduce their need for eggs.
- There is also a decline in export demand, as several countries slowed or stopped importing eggs from the U.S. during the outbreak, including China.
Much lower egg prices should renew profitability in industries that commonly use eggs as ingredients, particularly the baking industry and its use of liquid, or breaker, eggs.
In addition to bringing costs down, the return of the egg supply, which the industry confirmed in January would occur by midyear, means manufacturers can also resume normal production routines. This will help resolve sales issues they may have faced last year when limited egg supplies reduced output.
However, several companies, such as General Mills, worked through last year's egg shortage and record-high prices by using powdered egg replacements, such as the plant-based substitute Hampton Creek produces. Manufacturers that switched to egg substitutes may not readily switch back to conventional eggs, even with their prices falling to current levels, if the egg substitutes are acceptable to consumers, priced right, and see less volatility in the market long term.
That's bad news for the egg industry, especially with the USDA predicting earlier this year that 2016 egg exports would be the lowest since 2012 after the number of shipments fell 34% in the first quarter.
The bird flu aftermath also continues to haunt manufacturers in the egg business. In the latest reported quarter, Post reported a 15.9% decline in egg volumes sold through its Michael Foods segment due to a reduction in the company's egg supply for sale. But through an adjusted pricing strategy, egg dollar sales fell only 2.9%.