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Wholesale egg prices take surprising jump
By Jim Downing - jdowning@sacbee.com
Published 12:00 am PDT Wednesday, July 2, 2008
Story appeared in BUSINESS section, Page D5
A cracked egg is removed at a processing plant in Livingston, Merced County. Wholesale prices have increased 27 percent since mid-May. Florence Low / Sacramento Bee file, 2007
After falling more than a third from March's record highs, wholesale egg prices have shot up 27 percent since mid-May.
That's an unusual jump for this time of year, when egg prices tend to slump.
Economists tie the increase to ever-higher corn prices, which have made egg farmers hesitant to expand their flocks.
In addition, a sizable export shipment of eggs last month, sent to Japan and Iraq, apparently tightened domestic supplies, driving prices up, according to Don Bell, an expert in egg and poultry economics at the University of California, Riverside.
The supermarket markup for eggs varies widely, but retail prices tend to rise and fall with fluctuations on the wholesale market.
Egg prices usually respond quickly to changes in supply, said Tom Silva, a vice president at J.S. West Milling, a large egg producer in Modesto.
"All it takes is a few eggs on the short side to drive that market," he said.
Egg prices generally rise during the winter months, when baking increases. Demand peaks around Easter.
On wholesale markets in California, eggs now are selling for $1.49 a dozen, Silva said. The price topped out at $1.82 in late March before diving to $1.18 in May.
Rising corn prices have increased the cost to produce one dozen eggs by about 30 cents in the past two years, Silva said. Diesel expenses are up as well, but today's wholesale prices still afford Silva's company a healthy margin over its total production costs of $1.10 a dozen.
The high production costs appear to have contributed to a shrinking of the national laying flock, which has about 1 million fewer hens than last year at this time, Bell said.
However, data from the last few months show that egg producers are starting to increase the size of their flocks.
One modern laying hen can supply 1.5 average Americans with eggs, Bell said. With the nation's population growing at roughly 3 million a year, about 2 million new hens a year are needed to keep pace.
About the writer:
- Call The Bee's Jim Downing, (916) 321-1065.
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