Evie Liu
Egg prices have been rising for months, and there isn't any relief in sight. This could reignite consumer concerns about food inflation, which has been cooling, and spell trouble for President Donald Trump's administration.
Recent outbreaks of highly pathogenic avian influenza $(HPAI)$ has sharply reduced the number of laying hens in the country and shrunk the supply of eggs. Since January 2022, the influenza has led to the killing of more than 145 million domestic poultry across the country.
Egg prices experienced rounds of hikes in 2022. Although prices had come back down, they never returned to prepandemic levels before soaring again in 2024 on a new wave of infections.
According to the latest consumer price index data, prices for eggs rose 8.4% in December from the previous month, the biggest jump among all food categories. The gains came after a 8.2% hike in November. Prices are now 37% higher compared with a year ago.
Although retail prices can vary a lot depending on the state and type of retailers, the national average cost of a dozen grade-A large eggs was $4.15 in December, according to the Bureau of Labor Statistics. In January 2020, before the Covid-19 pandemic, the average price was $1.46 per dozen.
Things likely won't get better soon. In the past week, another 1.1 million commercial layer chickens were affected by a positive case of HPAI in Newton County, Missouri, bringing the total number of infected birds to over 8.7 million so far in the month of January.
"Producers remain on alert as HPAI continues to be detected frequently and more broadly across flocks and geographies," Pooran Sharma, a commodity analyst at Stephens, wrote in a note to clients this week.
If the bird flu continues to spread, egg prices will likely go even higher. That can be a problem for Trump, who has slammed the Biden administration for rising food prices and promised to bring down the cost of living once elected.
It can prove a challenging task. At the White House press briefing on Tuesday, the first of Trump's second term, press secretary Karoline Leavitt continued to blame the Biden administration when asked about the price of eggs still being high.
"There's a lot of reporting out there that's putting the onus on this White House for the increased cost of eggs," Leavitt said. "I'd like to point out to each and every one of you that in 2024 when Joe Biden was in the Oval Office, egg prices increased 65% in this country."
Leavitt added that the egg shortage is partially because the Biden administration "directed the mass killing of more than 100 million chickens." She didn't mention whether the Trump administration believes chicken flocks should be kept alive even when avian flu is detected.
Despite higher prices, demand for eggs -- a food staple in most households -- remains strong. This has helped boost the profits of egg producers and their stocks.
In its latest earnings report for the quarter ended in November, Cal-Maine Foods, one of the country's largest egg producers, reported earnings of $4.47 per share, beating Wall Street's estimate of $4.05. Net sales came at $954.7 million, also beating the consensus estimate of $751.5 million.
The strong results are driven by higher market prices, CEO Sherman Miller said in the earnings release, but robust demand for shell eggs -- partially due to seasonal boost leading up to Thanksgiving -- also resulted in a significant increase in the number of eggs sold in the quarter.
Sales were also boosted by the firm's latest acquisition of additional egg production assets completed in June. Cal-Maine stock has more than doubled over the past 12 months.
Egg producers have been accused of profiteering from the short supply and strong demand by raising prices more than necessary to boost profits. But there hasn't been widespread legal action on these grounds or definitive proof of illegal price gouging.
With the holidays over, it remains to be seen whether consumers reduce their egg purchases and seek alternative proteins if prices continue to go up.
Write to Evie Liu at evie.liu@barrons.com
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January 29, 2025 03:00 ET (08:00 GMT)
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