Summary of Key Points
Recently, egg prices have experienced a surge despite being in the off-season, with retail prices increasing by about 1 yuan per jin (500 grams) every two weeks. In some markets, the year-on-year increase has exceeded 70%. The main reason for this is that low egg prices last year led to farmers reducing their purchase of chicks, resulting in a current shortage of laying hens and insufficient supply. Although farmers have turned losses into profits due to the price increase, food processing companies have managed to maintain stable prices for their final products through advance stockpiling or long-term contracts. In the short term, egg prices are expected to remain high; however, as new chicks start laying eggs in the fourth quarter, the supply should increase and prices may stabilize.
1. How significant is the price increase? – A direct experience from the market and data
The most immediate impact for consumers is the frequent changes in prices: a vendor at a Suzhou farmers' market said that the wholesale price of a box of eggs has risen by 50-60 yuan, while retail prices have increased by 1 yuan per jin every two weeks. In Shanghai, the price of 675-gram local eggs went from 21 yuan at the beginning of April to 24 yuan now; in Beijing's Xinfadi market, the average price per jin on June 7th was 6.1 yuan, a 50% increase from two months ago and over 70% compared to the same period last year (3.5 yuan per jin).
The extent of the price increase varies across channels. Some fresh food platforms, which purchase directly from farms with annual contracts, have managed to keep their year-on-year increases within 10%, but in some markets, retail prices have risen by as much as 90%—meaning what cost 10 yuan last year now costs 19 yuan.
2. Why are prices rising during the off-season? – The issue with production cycles
The second quarter is usually a low-season for egg consumption (due to hot weather), but this time the opposite has happened, with supply falling short of demand:
1. Too few laying hens: Last year, low egg prices caused significant losses for farmers, so they were reluctant to buy chicks from April to January this year, leading to a shortage of laying hens and insufficient production.
2. Low inventory: Coupled with the small peak in demand during the May Day holiday, market inventory was nearly depleted, creating a tight supply-demand balance. With more people wanting to buy eggs and fewer available for sale, prices have risen.
3. The impact of the price increase varies greatly – farmers are happy, while companies remain stable
1. Farmers: Finally turning profits: Low egg prices last year caused many farmers to lose money, but with rising prices, they are now making a profit. For example, Xiaoming Co., which breeds chicks, reported that the industry has turned profitable since April, and farmers are more willing to invest in purchasing chicks.
2. Food companies: Little impact on prices: Eggs are used as raw materials for baking and egg products, but companies were well-prepared:
- Keming Food stockpiled in advance, so it was not affected by the price increase.
- Oufu Egg Industry has stable procurement prices due to long-term contracts with large suppliers.
- Taoli Bread also stated that there has been no significant impact on their business.
4. Will egg prices fall in the future? – High prices in the short term, potential relief in the fourth quarter
In the short term, since the number of laying hens has not increased and inventory is low, prices are likely to remain high for the next one or two months. Those hoping for a price drop will have to wait.
In the long term, farmers have started buying chicks again in the second quarter, and it will take 4-5 months for them to start laying eggs. By the fourth quarter, as supply increases, prices are expected to gradually decline, though they unlikely to fall as low as they were last year, as farmers still need to make a profit.
In summary
The rise in egg prices is part of a cyclical pattern: last year's losses led to reduced chicken breeding, resulting in a current shortage and price increases. Farmers are benefiting, while companies have managed to maintain stable prices. Consumers may face higher costs for now, but things should improve by the fourth quarter as supply increases.