An uneasy calm in egg market amid A.I. outbreaks

by Ron Sterk
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Ron Sterk

The U.S. poultry industry, and specifically the egg industry, recovered more quickly than expected from the massive outbreak of highly pathogenic avian influenza (H.P.A.I.) in 2014 and 2015 that resulted in the culling of nearly 50 million chickens and turkeys, and sent egg and egg products prices to record highs. The recovery has been so robust that egg supplies have been ample if not burdensome over the past few months, and prices have been at multi-year lows.

Earlier this month a new case of H.P.A.I. was detected in a breeder flock in Lincoln County, Tenn., followed by a second outbreak in Tennessee last week along with cases of low pathogenic A.I. (L.P.A.I.) in several states. While L.P.A.I. is common across North America and does not pose a threat, the first outbreak of H.P.A.I. quickly followed by a second and the recent increase in L.P.A.I. outbreaks during the spring wild bird migration have caught the industry’s attention.

Since this past year numerous cases of H.P.A.I. have been reported across the world, from Ireland, to mainland Europe to Asia, with the most severe outbreak in South Korea, where more than 30 million chickens have been destroyed. More than 300 confirmed cases of human infection from the A.I. virus in China were reported by the World Health Organization this year.

Eggs
The U.S. poultry and egg industry recovered more quickly than expected from the massive outbreak of H.P.A.I. in 2014 and 2015.

People contracting A.I. is not a major concern in the United States. But control and spread of the disease within the poultry industry remains a concern, albeit with much more confidence that a repeat of 2015 is unlikely given the effort put into increased biosecurity since that time. Prior to 2015, many in the industry admit that biosecurity wasn’t a significant concern and practices may have been lax by many (not all) producers, which contributed to the rapid and widespread scope of the outbreak.

More comprehensive biosecurity measures may control the spread of A.I., but scattered outbreaks from wild bird migrations are much more difficult to control, especially in free-range production, which has become a major issue in Europe.

In January the H5N2 virus, a strain of the 2014-15 U.S. outbreak, was detected in a wild duck shot in Montana.

“This finding serves as a powerful reminder that there is still avian influenza circulating in wild birds, and producers need to continue to be vigilant about biosecurity to protect domestic poultry,” said Jack Shere, DVM U.S. Department of Agriculture Chief Veterinarian.

 

Nest run egg prices chart
 


The H7NX outbreak in Tennessee, which affected a flock of 73,500 chickens, fell within the Mississippi migratory bird flyway. Three new cases reported in Alabama last week in an area that borders Tennessee still were being tested.

“There is an urgent need for all poultry producers to be vigilant in maintaining biosecurity on farms, particularly with wild bird control at this time of year,” said John Glisson, DVM, vice-president of research programs for the U.S. Poultry & Egg Association, Tucker, Ga.

Evidence that biosecurity measures were working came from the containment of an outbreak of H.P.A.I. (H7N8) at nine turkey farms in Dubois County, Ind., in January 2016 that resulted in the culling of more than 400,000 chickens and turkeys.

Egg market remains calm

The egg market’s lack of reaction, as in price movement, indicated the industry is confident biosecurity measures will effectively control the spread of H.P.A.I. this year. And it may be in part an indication of the ample supply of eggs. After the Tennessee outbreak, some countries, including South Korea, moved to ban the import of U.S. poultry, eggs and egg products, mostly on a regionalized basis.

Trade sources suggest the move from a lack of egg supplies in 2015 to an oversupply in 2016 and 2017 was the result of rapid repopulation of laying flocks after the A.I. outbreak and the addition of cage-free egg production to meet growing demand without a like reduction in conventional egg production. Producers have been slow to reduce flock sizes because there are many young birds and sizeable investments.

A hoped-for boost in U.S. egg and egg products exports to supplement losses in South Korea never materialized and now has disappeared with South Korea’s ban.

Although breaking egg prices jumped to 2017 highs last week, prices still were well below cost of production and have been down about 90% or more from 2015 record highs since May 2016. Prices have been at historic lows during much of that time. Most egg products prices also have been at multi-year lows. The jump in prices last week was attributed mostly to increased retail features, which reduced the flow of excess eggs to breakers and was not seen as sustainable because retail egg supplies remain ample.

Trade sources do not expect any price reaction to the latest H.P.A.I. outbreaks, neither lower because of export bans nor higher due to market fear, although the second outbreak is concerning. Meanwhile, egg and egg products prices are expected to remain depressed until the industry comes to terms with its overproduction and begins to reduce the size of the laying flock.

Ron Sterk

 

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