Why egg prices are surging — but chicken prices are falling: It’s an ‘act of God’ event, says trade strategist

Which (price change) came first, the chicken or the egg?

Grocery prices are increasing at their fastest pace in decades — none more so than eggs. Yet chicken prices fell in October.

It may seem counterintuitive that egg and chicken prices moved in opposite directions.

The dynamic is primarily due to a severe outbreak of bird flu in the U.S. — which has killed many egg-laying hens but has largely left chickens raised for meat production unscathed, according to economists.

“A lot of things are up since 2020,” said Bill Lapp, president of Advanced Economic Solutions, a consulting firm specializing in food economics. “But the recent spike is extraordinary in the shell-egg as well as egg-product markets.”

Surging egg prices are primarily the result of one of the worst-ever outbreaks of avian flu in the U.S.

About 50.3 million birds have been impacted by the virus since early February, according to recent data from the Centers for Disease Control and Prevention. These figures include birds such as turkeys and ducks, too.

Bird flu is relatively rare in the U.S. The last bout was in 2015, when a record 50.5 million birds were impacted, the CDC said. The flu hadn’t emerged in at least a decade or two prior to that, Lapp said.

Here’s why this matters: Avian flu, which is generally carried by wild birds such as ducks and geese, is “highly contagious,” the New Jersey Department of Agriculture warned last month. It’s also extremely lethal; it kills 90% to 100% of chickens, often within 48 hours, according to the CDC.

Farmers generally must kill their remaining birds — not by choice but due to federal rules meant to prevent spread, said Brian Moscogiuri, a global trade strategist at Eggs Unlimited, an egg supplier based in Irvine, California.

As a result, about 37 million egg-laying hens — “layers,” in industry shorthand — have died since the beginning of 2022, Moscogiuri said. They account for about 10% of U.S. production, he said.

Egg quantity has cratered in lockstep. About 8.8 million eggs were produced in September, down from about 9.7 million in December 2021, according to most recent data from the U.S. Department of Agriculture.

“It’s a supply disruption, ‘act of God’ type stuff,” said Moscogiuri, who called the situation “unprecedented.”

“It’s kind of happenstance that inflation is going on [more broadly] during the same period,” he added.

Bird flu typically arrives during the spring migration and disappears by the summer, experts said. But this year was different; the virus reemerged in September.

In October, the Agriculture Department revised its production forecast for table eggs downward for 2023 and the remainder of 2022 following “September detections” of bird flu.

That avian flu flare-up — and its associated death toll for egg-laying hens — is running headlong into peak demand season, when consumers use more eggs for holiday baking, experts said.

Consumer demand for eggs has also been buoyed by a pivot away from some higher-cost proteins amid broader food inflation, the Agriculture Department suggested in an October outlook report.

Elevated egg prices “could last into the first quarter of 2023,” Lapp said.

Meanwhile, chicken prices retreated in October, falling by 1.3% during the month.

The wholesale price of chicken breast has fallen below $1.20 a pound, a third of its peak around $3.60 over the summer, for example, Lapp said.

Chickens raised for meat consumption — known as “broilers” — aren’t affected by avian flu to the same extent as the “layers.”

“It’s two totally different styles of production, two totally different breeds of bird,” Moscogiuri said.

The life cycle of a broiler is much shorter — anywhere from 5.5 to 9 weeks, from hatch to slaughter, according to Vencomatic Group, a poultry consulting firm.

However, the life cycle for an egg-laying hen can be upwards of 100 weeks, Moscogiuri said. It can take about five to six months for layers just to reach full productivity, according to the Agriculture Department.

The latter are therefore more susceptible to bird flu since farmers must keep them alive for a longer time, experts said.

Broiler quantity is also up, contributing to lower chicken prices at the grocery store.

For example, about 865 million broiler chicks hatched in August — 2.9% higher than August 2021 and a monthly record, which had previously been set in March 2020, the Agriculture Department said.

Broiler “placements” have also climbed in recent weeks, hitting a record 194.2 million chicks in the week ended Sept. 17, according to the department. The agency raised 2023 production forecasts on that “optimistic” hatch and placement data.

Despite the recent retreat, chicken prices are still up 14.5% compared with October 2021, according to the CPI. Higher prices for commodities such as corn and soybeans — the primary ingredients in chicken feed — have likely contributed to inflation for chicken, as well as eggs. Higher energy prices also factor into elevated costs for food distribution, for example.