Egg prices seen remaining strong

by Allison Sebolt
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KANSAS CITY — Egg prices will remain high and the market strong as long as the cost of feed, which consists largely of corn, remains high, analysts said in interviews with Food Business News.

"Until corn prices come down or until the supply of shell eggs becomes too large, you are going to see firm prices," said Richard Broad, vice-president of Bender Goodman, Inc., Jersey City, N.J.

In addition, some industry analysts believe feed prices, which are high due to ethanol demand, will continue to be passed along to consumers.

But Ron Ashton, president and chief executive officer of Primera Foods Corp., Cameron, Wis., said it’s more than just the cost of feed that is affecting prices.

"It’s not just the cost of feed, it’s the supply and demand of birds, and it will take some time for the whole supply/demand scenario to come back into balance again," Mr. Ashton said.

Mr. Ashton emphasized there are multiple factors affecting prices and said pushes for new regulations regarding bird cages could become a factor in the future as well.

While overproduction was a factor affecting egg prices a number of months ago, surplus has been greatly reduced recently.

"We have eliminated the constant surplus of production that we’ve had," one industry trader said. "We are more in line with the number of chickens that are needed to lay the eggs that are required for our needs."

Levels of egg production went back down to become more in line with demand around December and January, according to the trader. In addition, the egg product industry has used up its surplus inventory, which means egg product orders now are almost produced on an as-needed basis. Sellers no longer have to sell six months in advance, but may sell one or two months in advance.

However, the industry is at normal historical prices overall except for dried egg whites, which are higher than normal. Dried whole egg, dried egg yolk and frozen egg prices are not too far out of line for historical pricing numbers.

"It’s because we are able to sell based on costs, and the costs today are what they were prior to five years ago when we got into the surplus problems," the trader said.

The prices of table eggs are higher than normal due to costs of feed and as a result of production being under control.

For the week ended Aug. 10, prices were $2.80@3 per lb for whole dried eggs, which was up from $2.35@2.45 the week ended June 8. Dried whites were at $5.08@5.25 per lb the week ended Aug. 10, and whole frozen eggs were at 83@87c per lb, with frozen whites at 72@76c per lb that same week. The price of dried yolks was $2.15@2.30 per lb the week ended Aug. 10, up from $1.75@1.85 in the weeks ended June 8 and 15.

The trader predicted prices will increase during the last four months of the year with Thanksgiving and Christmas, and if January and February aren’t too cold, prices might recede somewhat. There also will be an immediate slight increase in prices with back-to-school demand, he said. Prices will be good in comparison to what they used to be. He said he didn’t predict overproduction becoming a problem in the near future, but that it will happen again.

In terms of egg replacements and substitutes, Mr. Ashton said Primera Foods has looked at ways to help customers economize. He said many people, especially those in the baking industry, have been hit with high prices on all sides.

"Most recognize the tremendous number of attributes they get from eggs that are very difficult to replace and get the same finished quality," Mr. Ashton said.

While Mr. Ashton said there hasn’t been a large increase in demand of egg replacements yet, he expects the demand to increase.

There is potential for a shell egg export order, and if it occurs experts said it will stabilize a potential decline in the market. Common countries for exports go to the European Union and the Pacific Rim.

This article can also be found in the digital edition of Food Business News, August 21, 2007, starting on Page 17. Click here to search that archive.

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