VOL. 18, NO. 4 / FALL 2023 / URNER BARRY'S REPORTER • 37
ESTHERVILLE
FOODS, INC.
Estherville, IA
SIOUXPREME
EGG PRODUCTS, INC.
Sioux Center, IA
SUN RISE
FARMS
Harris, IA
SONSTEGARD
FOODS, INC.
Springdale, AR
SONSTEGARD
OF GEORGIA
Gainesville, GA
PACKERS OF LIQUID, FROZEN, DRIED & SHELL EGGS
SONSTEGARD FOODS, INC.
Sioux Falls, SD • 605-338-4642 • sonstegard.com
of a rally and running their coolers low in
a declining market, waiting for the lowest
possible price. But with market values
unchanged for such an extended period of
time, buyers were simply buying what they
needed, as they needed it.
The streak eventually came to an end in
the second week of August, however, just
one day shy of a new record. After months
homogeny, back-to-school preparations
and heavy seasonal flock rotations brought
supplies into close balance-and buyers
back into the marketplace. After 75 days
of no change, prices increased $0.04 to
$1.34/dozen in the week ended August
11. But for all the flogging that eggs took
in the early part of the year for being so
high-priced, there's been very little mention
in the media of just how affordable they've
become once again. It's clear that while
low egg prices may sell eggs, they don't
sell headlines.
Article contributed by Karyn Rispoli-Pardue
krispoli@urnerbarry.com
After two years of intense volatility,
Midwest Large managed to remain
unchanged at that level for the next 10
and a half weeks-a stretch of stability
not witnessed since 1990! The last time
the market was even remotely that stable
was in 2012, when prices held for 46 days.
So, what led to this nearly unprecedented
level of steadiness in the marketplace?
Foremost, the unexpected end of the bird
flu. Given the tenacity of this particular
strain of HPAI, which continued to spread
throughout the fourth quarter, most
industry stakeholders predicted the bird
flu would be an ongoing issue this year.
As it turns out, the absence of the bird flu
had more of an influence on the market
than its presence.
Not only did it give farmers the opportunity
to repopulate the birds that were lost, but
it also prompted some to put in added
production to compensate for the future
outbreaks they were all-but-certain were
coming. But the outbreaks never came.
December 20, 2022 marked the last
known detection among layer farms,
leaving the market with a supply overhang.
Once shell egg prices reached a bottom,
that overhang started to apply pressure
to the egg products market. Much in the
same way that water seeks its own level,
eggs tend to spill over into whatever
channels provide the most profitability
until the "playing field" has been leveled-
and in this instance, it was further
processing channels.
Breaking stock values saw a meteoric
crash over a five-week stretch that ended
May 1, plunging 86% to a two-year low
of just $0.42/dozen. As with table-grade
eggs, egg products prices had also soared
to record-high prices amid the bird flu
outbreak. But once cheaper raw material
started flowing through the system, those
values also collapsed. And with that,
surplus-removal avenues that had long
been shut were once again reopened-
namely, dried processing and exports.
The supply-side is just part of the equation.
Demand, of course, is the other. And
there's no question that demand played
a significant part in helping to keep the
market stable for such a long period of
time. The sharp decline in wholesale
values eventually filtered down to the retail
level-some of which dropped to less than
$1.00/dozen-and consumers, after months
of paying exorbitant prices for eggs, were
extremely receptive to the new lower
pricing, even throughout the summer.
The summer is typically one of the year's
weakest demand periods when consumers
turn their attention to more seasonal
breakfast options, like cold cereal and fruit.
But faced with escalating grocery bills,
consumers this year appeared to be less
concerned with what's in season and more
concerned with what's affordable. The
Consumer Price Index from the Bureau of
Labor Statistics shows the cost of breakfast
cereal rose 5.1% in the year through July,
while egg prices declined by 13.7% in that
same period.
That kept product moving and values
steady. And that stability bred even
more stability. Buyers in foodservice
and distribution channels often "play the
market," loading up on inventory in front